Amanda Newman
April 17, 2009
Local developers Mike, Marc and Matt Willcuts of Coyote Homes Inc., approached the Newberg City Council April 6 with an unusual request: that the city help them push through a subdivision development.
Their Orchard Lair subdivision was originally going to be spread over the next couple of years, but the Willcuts have gathered together some investors and have the opportunity to complete it in nine months.
"They've worked hard with their subs," City Manager Dan Danicic said, "but they're not quite there when it comes to doing the numbers, so they came to the city to ask us to consider ... reducing some of our fees in light of the economy (and) the benefit to the city to have a project completed, not to mention the scope and the magnitude of the people they employ here locally."
Mike Willcuts said the project employs 147 people in Newberg and would directly impact 242 others, such as mortgage brokers and real estate agents.
"They would like to see the project successfully completed; I think the city has an interest in that, too," Danicic said.
He added that city staff looked for "creative ways to make this work." Although March 31 was the deadline for paying system development charges before the 2009 increases go into effect, and the Orchard Lair SDCs have not yet been paid, the city allowed the project to fall under the lower 2008 rates because the permits had been submitted in December.
They also considered delaying the SDC due date. SDCs are due up front, but Danicic said the city doesn't "technically" need them then. They would like to make them due, instead, when the development has a certificate of housing. For the lease-option deals the Willcuts plan to offer, considered a form of affordable housing by the city, they would consider delaying the SDC due date until the houses have been actually purchased. They have also considered rolling back the fees to 2007 rates. As city staff cannot grant fee reductions, these decisions must be made by the council.
The council asked city staff to look into the issue and bring a formal recommendation before them at their April 20 meeting. So far, they seem amenable to the requests.
"I think this company is a great partner for the city and even if there's only a few affordable in this development, they have built affordable housing all over," said Councilor Denise Bacon. "I think we should do whatever we can do to help them out."
"This looks like a creative way to look at getting people into homes that otherwise might not," Councilor Bart Rierson said. But he added that he would like to see a more clear outline of the effect on the city and cautioned that, "if we do for one developer, we'll have to do for other developers."
The affordable housing angle is an important one for the city, which for some time has been looking at ways to encourage such development.
Marc Willcuts explained that he and his brothers have been working to include affordable housing in the development from the beginning and "as we've moved forward with the project, it's gotten more and more affordable, with the economy (and low) interest rates."
He said that first-time homebuyers can currently qualify for an $8,000 tax credit, but it is only available through the end of November. Because many of Orchard Lair's potential buyers would not be able to complete a purchase by then, particularly if they need to improve their credit, the Willcuts developed their lease-option program. Buyers will pay $1,300 a month in rent, $300 of which will go toward their down payment. After two years, that amounts to $7,200.
This option was only possible with a lot of cooperation on many levels, Willcuts continued. Developers usually can't offer lease-option deals, because construction loans for new houses have to be paid off within a year or upon occupancy. But Banner Bank agreed that if the Willcuts found additional funding and got the project going, they would give them five years to pay off the loans. Investors put up $2.5 million last week, and the developers have until April 29 to bring everything together.
The Willcuts said they are short $800,000. Rolling back the SDC charges to 2007 rates would save them $455,000 and the brothers also plan to approach others, such as the state and the school district, about lowering their fees.
"Once we have a feel for how the city is going to act, we'll approach the other entities," Marc Willcuts said.