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HomeMy WebLinkAboutItem 12 - Consideration of an Affordable Housing Fund request from HASLO for an At-Risk Affordable Unit Department Name: Community Development Cost Center: 4007 For Agenda of: October 6, 2020 Placement: Consent Estimated Time: N/A FROM: Michael Codron, Community Development Director Prepared By: Cara Vereschagin, Housing Coordinator SUBJECT: CONSIDERATION OF AN AFFORDABLE HOUSING FUND REQUEST FROM HASLO FOR ACQUISITION OF AN AT-RISK AFFORDABLE UNIT LOCATED AT 1664 FOREMAN COURT AND ADMINISTRATIVE AMENDMENT OF THE 2019 ACTION PLAN OF HASLO’S 2019 COMMUNITY DEVELOPMENT BLOCK GRANT AWARD FOR SPECIAL NEEDS ACQUISITION/AT-RISK OF HOMELESSNESS CLIENTS PROJECT RECOMMENDATION 1. Adopt a Resolution approving the “silent second” City loan amount to be paid back to the City into the Affordable Housing Fund (AHF), upon the market-value resale of the affordable housing unit located at 1664 Foreman Court to the Housing Authority of the City of San Luis Obispo (HASLO), to assist with the acquisition of the existing property (Attachment A); and 2. Adopt a Resolution approving a recommendation to the Department of Housing and Urban Development (HUD) to approve an Administrative Amendment to the 2019 Action Plan to expand HASLO’s 2019 Community Development Block Grant (CDBG) award from a Special Needs Housing Acquisition project to include acquisition of property to house At- Risk of Homelessness clients (Attachment B). DISCUSSION Background of AHF Request The 3-bedroom duplex located at 1664 Foreman Ct. has been in the City’s Affordable Housing Program since its construction in 2003. The property is currently at-risk of falling out of the Program due to today’s current housing market conditions. The current owner has proposed to sell the unit at current market value, and thus will be required to pay back the City’s “silent second” mortgage lien on the property. The current Owner has agreed to sell the property to HASLO, and has in-turn requested the City Council consider awarding the incoming returned payment from the City’s lien, approximated to be around $55,000, to financially assist with the property’s acquisition (Attachment C). In turn, HASLO will retain the property as affordable rental housing for 55 years. Background of 2019 Action Plan Administrative Amendment One of the main reasons why this particular property is of interest to HASLO, is that they were awarded $336,815 of Community Development Block Grant (CDBG) funds from the 2019 Program Year to acquire an existing housing unit within the City to house low-income special needs clients (Attachment D). Item 12 Because the housing market in San Luis Obispo has remained strong and competitive, HASLO has experienced challenges acquiring property suited to house special needs clients, because of the additional amenities that must be provided in special needs-type housing. HASLO has recently experienced an influx of requests and inquiries on affordable housing opportunities due to the COVID-19 pandemic. Many of these requests are from families that are either homeless or at-risk of becoming homeless, due to the pandemic related economic crisis. Amending the 2019 Action Plan will expand the allowable use of the CDBG funds for HASLO to not only acquire property to house special needs clients, but also those at-risk of homelessness. Additionally, HASLO has a deadline of May 2021 to expend these CDBG funds, otherwise the funding will get absorbed back into the main funding pot of the City’s CDBG annual allocation and eventually reallocated to a future grant-eligible project (e.g. affordable housing, public works, or economic development projects). Policy Context The recommendations to adopt these two Resolutions to ultimately provide City funding to preserve at-risk affordable housing units, is supported by several goals, policies, and programs in the City’s Housing Element and the 2019-21 Housing Major City Goal. For example, Policy 6.21 of the City’s Housing Element states “actively seek new revenue sources, including State, Federal and private/non-profit sources, and financing mechanisms to assist affordable housing development for extremely low, very low and low- or moderate-income households and first- time homebuyers.” These recommendations are consistent with this policy because the returned payment the City will be receiving as a result of the property sale, as well as the expanded use of the CDBG funding will be used to financially assist HASLO to provide an affordable place to live for households at-risk of becoming homeless. Staff also finds consistency in HASLO’s request of utilizing the incoming silent second loan payment returning to the City upon the property’s market-rate resale consistent with the AHF Award Criteria, including eligibility, need, suitability, timing, financial effectiveness, and readiness. Public Engagement As this is a request for City AHFs, the project has a “notify” level of engagement under the Public Engagement and Notification Manual. Public comment can be provided to the City Council through written correspondence prior to the meeting and through public testimony at the meeting. Public engagement was previously incorporated in every step of the 2019 CDBG award process. All public hearings were noticed properly, and all outreach was consistent with the City’s public engagement manual. Additionally, the action to recommend an administrative amendment to the 2019 Action Plan, is consistent and allowable under the 2019 Community Participation Plan which follows HUD guidelines for public engagement. Item 12 CONCURRENCE The City Attorney’s Office has confirmed upon a market-rate resale 1664 Foreman Court, the City’s current owner-occupancy provisions within the deed of trust recorded on title will become extinguished, thus allowing HASLO tot operate the unit as a rental property. City staff also consulted with County Planning and Building staff on HASLO’s interest to purchase the property. County staff reviewed HASLO’s 2019 CDBG application for Special Needs Acquisition/At-Risk of Homelessness clients, the project description in the 2019 Action Plan as “Special Needs Acquisition,” and consulted the Urban County’s Community Participation Plan (CPP). County staff determined the proposal is consistent with Section II – Consolidated/Action Plans, Administrative Amendment requirements of the CPP to amend the 2019 Action Plan. ENVIRONMENTAL REVIEW The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. FISCAL IMPACT Budgeted: No Budget Year: 2020-21 Funding Identified: Yes Fiscal Analysis: Funding Sources Current FY Cost Annualized On-going Cost Total Project Cost General Fund State Federal $336,815 Fees Other: AHF ~$55,000 Total The property recently appraised for $600,000, thus the award of the approximate returned ~$55,000, as well as the $336,815 allowance of CDBG funds, leaves a remaining financing gap of about $208,000. This is a fair price for HASLO to preserve existing affordable housing. Should this deal successfully close escrow at the end of October, several accomplishments will have been achieved: 1. The unit will remain in the City’s Affordable Housing Program as an affordable rental unit for the community’s most vulnerable population. 2. Both the City and HASLO will remain in “good-standing” with HUD on the timely expenditure of CDBG funding. 3. The current owner of the property will have upward mobility in the housing market, which is one of the main goals the City’s Affordable Housing Program. Item 12 The City’s AHF currently has a balance of ~$2.3M. Of the available balance, $2M was previously committed earlier this year to Peoples’ Self -Help Housing for two new 100% affordable housing developments, Tiburon Place and Broad Street Place; thus there is a remaining amount of ~$330,000 for new affordable housing projects. ALTERNATIVES 1. Do not approve the returned payment from the City’s silent second lien to go back into the property by means of an award to HASLO. This action is not recommended because this is money the City never expected to gain from this affordable housing unit. 2. Approve the award payment in a different amount. This action is not recommended because HASLO has carefully considered their need for assistance and this amount reflects what is needed to successfully finance this acquisition. 3. Continue consideration of the proposed award and amendment. This action is not recommended because these decisions are on a very strict deadlines in-place by HUD and the property’s current owner. Attachments: a - Draft Resolution - Reallocation of Affordable Housing Funds upon the resale of 1 664 Foreman Ct. b - Draft Resolution - Administrative Amendment to 2019 Action Plan c - AHF Request Letter from HASLO for 1664 Foreman Ct. d - Resolution No. 10984 approving the 2019 CDBG Program Item 12 R ______ RESOLUTION NO. _____ (2020 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING THE REALLOCATION OF AFFORDABLE HOUSING FUNDS UPON THE MARKET-VALUE RESALE OF THE AFFORDABLE HOUSING UNIT LOCATED AT 1664 FOREMAN COURT TO THE HOUSING AUTHORITY OF THE CITY OF SAN LUIS OBISPO TO ASSIST WITH THE ACQUISITION OF THE EXISTING PROPERTY. WHEREAS, the City Council of the City of San Luis Obispo convened via teleconference on October 6, 2020, for the purpose of considering a request for Affordable Housing Fund (AHF) assistance; and WHEREAS, the proposed project by the Housing Authority of the City of San Luis Obispo (HASLO) meet the eligibility criteria established by the City Council; and WHEREAS, Housing Element policies and programs encourage and support the preservation of existing affordable housing in the City; and WHEREAS, the City Council has duly considered all evidence, including the testimony of the applicant, interested parties, and the evaluation and recommendations by staff at the said meeting. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. AHF Reallocation to HASLO for Acquisition of 1664 Foreman Court. The City Council does hereby approve a reallocation of AHF in an amount not to exceed the total amount of payment to be returned back to the City from the market-value resale of 1664 Foreman Ct., subject to the following condition of approval: 1. Prior to the close of escrow of 1664 Foreman Court, the City and HASLO will enter into an Affordable Housing Agreement and Declaration of Restricted Covenants evidencing the AHF award and rental provisions, which will be recorded on title of the property. Item 12 Resolution No. _____ (2020 Series) Page 2 R ______ SECTION 2. Environmental Determination. The California Environmental Quality Act does not apply to the recommended action in this report, because the action does not constitute a “Project” under CEQA Guidelines Sec. 15378. Upon motion of Council Member _____________, seconded by Council Member ____________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2020. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purrington City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on ___________________. ____________________________________ Teresa Purrington City Clerk Item 12 R ______ RESOLUTION NO. _____ (2020 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING A RECOMMENDATION TO THE DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT TO APPROVE AN ADMINISTRATIVE AMENDMENT TO THE 2019 ACTION PLAN TO EXPAND THE HOUSING AUTHORITY OF SAN LUIS OBISPO’S 2019 COMMUNITY DEVELOPMENT BLOCK GRANT AWARD FOR A SPECIAL NEEDS HOUSING ACQUISITION PROJECT TO INCLUDE ACQUISITION OF PROPERTY TO HOUSE AT-RISK OF HOMELESSNESS CLIENTS WHEREAS, the City of San Luis Obispo is a participating jurisdiction in the San Luis Obispo Urban County, along with the cities of Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, and the County of San Luis Obispo; and WHEREAS, said cities and County cooperatively administer several federal grant programs under the provisions of the Cooperative Agreement executed between the City and County on September 23, 2014, and under applicable U.S. Department of Housing and Urban Development Department (HUD) rules; and WHEREAS, pursuant to said agreement, the Urban County Public Participation Plan, and HUD rules, the City Council held a public hearing on February 19, 2019, to consider funding recommendations by the Human Relations Commission (HRC), to review applications for federal grant funding, and to consider public comments on community needs and the use of such funds; and WHEREAS, the Council considered applications for Community Development Block Grant (CDBG) funds, public testimony, the Urban County’s proposed One-Year Action Plan, and the HRC and staff recommendations included in the agenda report and approved the 2019 CDBG funding recommendations as Resolution No. 10984; and WHEREAS, the Housing Authority of the City of San Luis Obispo (HASLO) has requested to expand their awarded project scope to include the acquisition of property for special needs individuals and at-risk of homelessness clients; and WHEREAS, County staff reviewed HASLO’s 2019 CDBG application for Special Needs Acquisition/At-Risk of Homelessness clients, the project description in the 2019 Action Plan as “Special Needs Acquisition,” and consulted the Urban County’s Community Participation Plan (CPP). County staff determined the proposal is consistent with Section II – Consolidated/Action Plans, Administrative Amendment requirements of the CPP to amend the 2019 Action Plan; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Item 12 Resolution No. _____ (2020 Series) Page 2 R ______ SECTION 1. Administrative Amendment to HASLO’s 2019 Community Development Block Grant Project. The City Council recommends HUD to approve an administrative amendment to the 2019 Action Plan to expand HASLO’s 2019 CDBG Project to include the acquisition of property to include real property acquisition to house at-risk of homelessness clients. SECTION 2. Environmental Determination. The project is exempt from environmental review per CEQA Guidelines under the General Rule (Section 15061(b)(3)). It can be seen with certainty that CDBG funding allocations could not have a significant effect on the environment. SECTION 3. Community Development Director Authority. The Community Development Director is authorized to act on behalf of the City in executing any other actions necessary related to this administrative amendment of the 2019 CDBG Program. Upon motion of Council Member _______________, seconded by Council Member ______________, and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this _____ day of _____________________ 2020. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Teresa Purington, City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick, City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, on _____________________. ____________________________________ Teresa Purington, City Clerk Item 12 Item 12 Item 12 R 10984 RESOLUTION NO. 10984 (2019 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING THE 2019 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM WHEREAS, the City of San Luis Obispo is a participating jurisdiction in the San Luis Obispo Urban County, along with the cities of Arroyo Grande, Atascadero, Morro Bay, Paso Robles, Pismo Beach, and the County of San Luis Obispo; and WHEREAS, said cities and County cooperatively administer several federal grant programs under the provisions of the Cooperative Agreement executed between the City and County on September 23, 2014, and under applicable U.S. Department of Housing and Urban Development Department (HUD) rules; and WHEREAS, pursuant to said agreement, the Urban County Public Participation Plan, and HUD rules, the City Council held a public hearing on February 19, 2019, to consider funding recommendations by the Human Relations Commission (HRC), to review applications for federal grant funding, and to consider public comments on community needs and the use of such funds; and WHEREAS, the Council has considered applications for Community Development Block Grant (CDBG) funds, public testimony, the Urban County’s proposed One-Year Action Plan, and the HRC and staff recommendations included in the agenda report; and NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Environmental Determination. The project is exempt from environmental review per CEQA Guidelines under the General Rule (Section 15061(b)(3)). It can be seen with certainty that CDBG funding allocations could not have a significant effect on the environment. SECTION 2. 2019 Community Development Block Grant Program Amendments. The City’s 2019 Community Development Block Grant Program is hereby approved, as shown in Exhibit A. The Community Development Director is authorized to approve final dollar amounts once HUD releases allocations with the direction to make up differences in the two amounts. Any additional increase in funding shall be allocated to HASLO and SLONP’s affordable housing project once increases for public services (15% of allocation) and program administration (20% of allocation) have been adjusted. SECTION 3. Board of Supervisors Consideration. The Council hereby forwards the above actions to the San Luis Obispo County Board of Supervisors for consideration prior to the Board’s final action on the Urban County’s 2019 Consolidated Plan. Item 12 Resolution No. 10984 (2019 Series) Page 2 SECTION 3. Community Development Director Authority. The Community Development Director is authorized to act on behalf of the City in executing grant agreements and other actions necessary to implement the approved Consolidated Plan and CDBG Program, including revisions to funding amounts for the 2019 CDBG Program if the City's actual CDBG allocation is different than expected. Upon motion of Vice Mayor Pease, seconded by Council Member Gomez, and on the following roll call vote: AYES: Council Members Christianson, Gomez, and Stewart, Vice Mayor Pease, and Mayor Harmon. NOES: None ABSENT: None The foregoing resolution was adopted this 19th day of February 2019. ATTEST: Teresa Purington City Clerk AS Y. Christine Dietrick City Attorney IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of San Luis Obispo, California, this day of , 2-o ti Teresa Purington City Clerk M, Item 12 Resolution No. 10984 (2019 Series) Page 3 R 10984 EXHIBIT A 2019 CDBG Preliminary Funding Recommendations Item 12 BLANK PAGE This page is intended to be blank so that you can print double-sided. Item 12