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HomeMy WebLinkAboutItem 5i. Authorize a Joint Application for Homekey Round 3 Grant Program in conjunction with People's Self help Housing Corporation (PSSHC) Item 5i Department: Community Development Cost Center: 4008 For Agenda of: 4/18/2023 Placement: Consent Estimated Time: NA FROM: Michael Codron, Community Development Director Prepared By: Teresa McClish, Housing Policy and Programs Manager Daisy Wiberg, Acting Homelessness Response Manager SUBJECT: AUTHORIZE STAFF TO SUBMIT A JOINT APPLICATION FOR HOMEKEY ROUND 3 GRANT PROGRAM IN CONJUNCTION WITH PEOPLE’S SELF HELP HOUSING CORPORATION RECOMMENDATION 1. Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis Obispo, California, authorizing Joint Application to and participation in the Homekey Program” in conjunction with People’s Self Help Housing Corporation (PSHHC) for a 20-30 unit permanent supportive and transitional housing project located at 920 Olive Street in a total not to exceed $18,000,000; and 2. Direct staff to work with PSHHC to complete due diligence necessary for the application; and 3. Authorize the City Manager, or their designee, to execute the grant documents ; and 4. Direct Staff to return to the City Council with a Memorandum of Agreement outlining partnership service, program, and funding commitments prior to accepting Homekey funds. POLICY CONTEXT The City’s General Plan 6th Cycle Housing Element1 includes Safety as Goal 1, and Program 1.7 states “Continue to support local and regional solutions to homelessness by funding supportive programs services and housing solutions.” Additionally, providing financial assistance to affordable housing projec ts is a theme supported throughout the Housing Element. Housing Element Goal 2 is Affordability, which specifically states “Accommodate affordable housing production that helps meet the City’s quantified objectives.” HE Program 2.9 states “Assist with the issuance of tax- exempt bonds, tax credit financing, loan underwriting or other financial tools to help develop or preserve at least 20 affordable units annually through various programs.” 1 City of San Luis Obispo 6th Cycle Housing Element Page 275 of 821 Item 5i Goal 3 in the HE is Housing Conservation, to Conserve existing housing and prevent the loss of safe housing and the displacement of current occupants, and Policies 3.3, 3.5 and Program 3.9 respectively state:  “Encourage the construction, preservation, rehabilitation or expansion of residential hotels, group homes, integrated community apartments, and single- room occupancy dwellings;”  “Encourage and support creative strategies for the rehabilitation and adaptation and reuse of residential, commercial, and industrial structures for housing;” and  “Work annually with non-profit organizations, faith-based organizations, or the Housing Authority of the City of San Luis Obispo to encourage rehabilitation of residential, commercial, or industrial buildings to expand extremely low, very -low, low or moderate income rental housing opportunities.” HE Goal 6 is Housing Production, which specifically states “Plan for new housing to meet the full range of community housing needs.” HE Program 6.20 states, “Continue to financially assist in the development of housing affordable to extremely low, very-low, low or moderate income households during the planning period using State, Federal and local funding sources, with funding priority given to projects that result in the maximum housing benefits for the lowest household income levels.” Additionally, the City’s Homelessness Response Strategic Plan includes Objective 2: to support efforts to establish emergency/transitional housing for key beneficiary groups including chronically homeless individuals, medically vulnerable individuals, and families, with a key task to establish partnerships with housing developers and homeless services providers to submit funding applications in coordination with the County (e.g., Homekey Grant Funding) that will provide new transitional and permanent supportive housing resources for families.2 Finally, the Financial Management Manual, Section 740, Grant Management Policy, discusses the importance of grant programs in accomplishing City goals and objectives. It also outlines that Council is to approve all grant applications in excess of $5,000 and delegate receipt and contract execution to the City Manager if delegation is allowed by the grantor agency. DISCUSSION 2 City of San Luis Obispo Homelessness Response Strategic Plan Page 276 of 821 Item 5i Background On March 29, 2023, The California Department of Housing and Community Development (HCD) announced the notice of funding availability (NOFA) of approximately $736 million in Round 3 Homekey funds to sustain and rapidly expand the inventory of housing for people experiencing homelessness or at risk of homelessness and who are, thereby, inherently impacted by or at increased risk for medical diseases or conditions due to the COVID-19 pandemic or other communicable diseases.3 The estimated Homekey funds for the Central coast geographic allocation is $22,657,376. The Homekey Program is a proven model for state, regional, and Local Public Entities to acquire, develop, and rehabilitate a broad range of housing types, including but not limited to hotels, motels, hostels, single family homes and multifamily apartments, adult residential facilities, manufactured housing, and to convert commercial properties and other existing buildings to Permanent or Interim Housing for those most in need. The NOFA provides guidelines for the expenditure of Homekey funds and the administration of the Homekey Program. Homekey funds will be available to eligible applicants for which the City qualifies, on a continuous basis from the release of the Homekey NOFA through July 28, 2023, or until the available funds are exhausted, whichever occurs first. Due t o the previous oversubscription of Homekey, eligible applicants are encouraged to submit their application as soon as possible. The application release date is April 24, 2023. An eligible entity may apply jointly with a non-profit or for profit corporation, a limited liability company (LLC), and/or a limited partnership (LP) as a Co-Applicant. One of the requirements for the Homekey Application is to provide a signed resolution (Attachment A) authorizing application for, and receipt of funds. Potential Homekey Project Overview The potential Homekey project would be located at the Homestead Motel site at 920 Olive Street. The motel, built in 1956, would be rehabilitated and re-purposed to house approximately 15 families in permanent supportive housing managed by People’s Self Help Housing Corporation (PSHHC) with supportive services onsite. The project would also include the rapid deployment of approximately 15 tiny modular structures for transitional housing serving families. The modular units are pre-fabricated structures designed specifically for residential use. In conjunction with housing, a portion of the project will include offices for service providers. The site would be staffed 24 hours per day, every day of the year, and is well located with safe and convenient access to services and downtown San Luis Obispo. Site work would include rehabilitation and/or expansion of existing motel rooms to include kitchenettes for family units, demolition, utility connections, grading and new hardscape security fence, and landscape. The site would operate for at least fifteen years as interim housing per the program’s duration requirement. 3https://www.hcd.ca.gov/sites/default/files/docs/grants-and-funding/homekey/Homekey-Round-3-Notice- of-Funding-Availability.pdf Page 277 of 821 Item 5i A conceptual site design is provided below and subject to modification as the project team, inclusive of staff from the City, County and PSHHC, assembles the Homekey application. PSHHC would be the co-applicant for the Homekey Program grant and project developer to use Homekey funds in the acquisition and rehabilitation of the buildings for permanent supportive housing and site preparation and placement of tiny structures for transitional housing on the property. The housing is intended to serve families who are homeless or at risk of becoming homeless. The strategy for using the site to house families will also enable 40 Prado Homeless Services Center to repurpose the existing family wing to provide additional beds and serve a broader range of clients at that congregate shelter. The City will waive all applicable service and permit fees and award a fee deferral loa n for impact fees as applicable and allowed by State law.4 The City, as Grantee, will encumber all interim and permanent housing units with a 30-year and 55-year affordability covenant, respectively, per Homekey Program Requirements.5 4 Pursuant to HSC section 50675.1.3, subdivision (i), Homekey Projects “shall be deemed consistent and in conformity with any applicable local plan, standard, or requirement, and any applicable coastal plan, local or otherwise, and allowed as a permitted use, within the zone in which the structure is located, and shall not be subject to a conditional use permit, discretionary permit, or any other discretionary reviews or approvals.” 5 At year 15 from the recordation of the Affordability Covenant, in circumstances where the Grantee has exhausted available operating funding and demonstrated to the Department that the Project is no longer feasible, the Department may approve an increase in income levels, to the minimum extent required for fiscal integrity, in five percent increments of Assisted Units up to 50 percent AMI. Page 278 of 821 Item 5i Applications will include a detailed project-specific supportive services plan, and Standard Agreement to encumber funds from the Homekey program. The Homekey Program is intended to meet urgent housing needs and as such requires aggressive implementation timelines. Homekey capital funds must be expended within eight months of the date of award. Acquisition, rehabilitation and/or construction must be completed twelve months form the date of award and full occupancy must be achieved by fifteen months from the date of award. As the lead applicant on the Homekey proposal, the City will formalize an agreement with PSHHC as the co-applicant and project developer. PSHHC will administer subrecipient agreements with the County of San Luis Obispo and service provi ders for the provision of ongoing funding and services. The Balay Ko Foundation, a nonprofit corporation, has committed up to $650,000 in gap funding for the project. City staff have also consulted with the County of San Luis Obispo’s Homeless Service Division staff on the project. Commitment of County operational funding to be applied for the project after the first two- years of Homekey funds will require action from the Board of Supervisors. If secured, County participation will be incorporated into the Homekey application and regulatory agreement. Those partnerships will be outlined in detail in the Homekey proposal, and memorandums of agreement will be executed if the City is awarded Homekey grant funding. Public Engagement As this is authorization to apply for grant funding, no public engagement is required. CONCURRENCE The Homelessness Response Steering Committee is in support of the application. ENVIRONMENTAL REVIEW As provided by Health and Safety Code section 50675.1.4, the guidelines allow for exemption of certain Round 3 Homekey Projects from the California Environmental Quality Act (CEQA).6 Evaluation of potential environmental impacts in accordance with CEQA will occur if during the application submittal or funding award it is determined that the project is not exempt per HSC section 50675.1.4. FISCAL IMPACT Budgeted: Yes/No Budget Year: 2022-23 Funding Identified: Yes/No 6HSC section 50675.1.4, subdivision (e) states, “The Department of Housing and Community Development may adopt guidelines for the expenditure of the funds appropriated to the Department, and for the administration of this program. The guidelines shall not be subject to the requirements of Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code.” Page 279 of 821 Item 5i Fiscal Analysis: Funding Sources Total Budget Available Current Funding Request Remaining Balance Annual Ongoing Cost General Fund State $18,000,000 Federal Fees $50,000 Other: Private Donation $650,000 Total $18,700,000 Homekey will fund a maximum grant amount per door (units at the time of acquisition), which includes both the acquisition cost and any needed rehabilitation or new construction based on the maximum grant amount; or the sum of the acquisition amount and any additional construction or rehabilitation expenses, as supported by an appraisal and such other reasonable documentation required by HCD. The baseline amount per door7 does not require a local match. Alternatively, funds are allocated based on sub- populations served for those experiencing chronic homelessness. Pursuant to the NOFA, acquisition and rehabilitation of the property and three years of operating subsidy is estimated to result in a project cost of $9,000,000. Per the Homekey grant provisions, it is recommended to identify an authorized dollar amount that is at least double the anticipated award. As such, the total authorized amount shall not exceed $18,000,000. An additional $650,000 in private donation funds have been committed as gap funding for the project. Regarding application costs, there is no grant application fee, however, in order to prepare the materials for application, costs related to due diligence may be needed (e.g. geotechnical survey). Staff and PSHHC anticipate these costs to be approximately $50,000, and reimbursable by the Homekey grant. ALTERNATIVES 1. Continue the recommendation to a later meeting. This alternative is not recommended as the application will be available on April 24, 2023 and eligible applicants are encouraged to submit their application as soon as possible to access funds while available. 2. Deny the recommendation. The Council may deny staff’s recommendation to apply for grant funding, based on findings of inconsistency with City policies and other applicable City regulations. ATTACHMENTS A - Draft Resolution authorizing application to Homekey Round 3 Grant Funds 7 Unit size -baseline capital amounts: studio or 1-bedroom $150k/door; 2-bedroom $175k/door; 3-bedroom $200k/door. Page 280 of 821 R ______ RESOLUTION NO. _____ (2023 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, AUTHORIZING JOINT APPLICATION TO, AND PARTICIPATION IN, THE HOMEKEY PROGRAM WHEREAS, the California Department of Housing and Community Development (“Department”) has issued a Notice of Funding Availability, dated March 29 , 2023 (“NOFA”), for the Homekey Program (“Homekey” or “Program”). The Department has issued the NOFA for Homekey grant funds pursuant to Health and Safety Code section 50675.1.3 (Assembly. Bill No. 140 (2021-2022 Reg. Sess.), § 20.); and WHEREAS, The City of San Luis Obispo (“The City”) desires to jointly apply for Homekey grant funds with People’s Self Help Housing (“Corporation”). Therefore, The City is joining Corporation in the submittal of an application for Homekey funds (“Application”) to the Department for review and consideration ; and WHEREAS, The Department is authorized to administer Homekey pursuant to the Multifamily Housing Program (Chapter 6.7 (commencing with Section 50675) of Part 2 of Division 31 of the Health and Safety Code. Homekey funding allocations are subject to the terms and conditions of the NOFA, the Application, the Department -approved STD 213, Standard Agreement (“Standard Agreement”), and all other legal requirements of the Homekey Program. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo to authorize the joint application to, and participation in, the Homekey program as follows: SECTION 1. Recitals. The recitals set forth above are hereby adopted as the findings of the City in adopting the policies herein. SECTION 2. Environmental Review. As provided by Health and Safety Code section 50675.1. the guidelines allow for exemption of certain Round 3 Homekey Projects from the California Environmental Quality Act (CEQA). Evaluation of potential environmental impacts in accordance with CEQA will occur if during the application submittal or funding award it is determined that the project is not exempt per HSC section 50675.1.4. SECTION 3. Findings. The City Council, after consideration of the Homekey Program and staff recommendations, makes the following findings: 1. The City is hereby authorized and directed to submit a joint Application to the Department in response to the NOFA, and to jointly apply for Homekey grant funds for an anticipated project cost of $9,000,000. Per the Homekey grant provisions, it is recommended to identify an authorized dollar amount that is at least double the anticipated award. As such, the total authorized amount shall not exceed $18,000,000. Page 281 of 821 Resolution No. _____ (2023 Series) Page 2 R ______ 2. If the Application is approved, the City is hereby authorized and directed to enter into, execute, and deliver a Standard Agreement in a total amount not to exceed $18,000,000, any and all other documents required or deemed necessary or appropriate to secure the Homekey funds from the Department and to participate in the Homekey Program, and all amendments thereto (collectively, the “Homekey Documents”). 3. The City acknowledges and agrees that it shall be subject to the terms and conditions specified in the Standard Agreement, and that the NOFA and Application will be incorporated in the Standard Agreement by reference and made a part thereof. Any and all activities, expenditures, information, and timelines represented in the Application are enforceable through the Standard Agreement. Funds are to be used for the allowable expenditures and activities identified in the Standard Agreement. Page 282 of 821 Resolution No. _____ (2023 Series) Page 3 R ______ 4. The City Manager of the City of San Luis Obispo, or their designee, is authorized to execute the Application and the Homekey Documents on behalf of the City for participation in the Homekey 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 _______________ 20 23. ___________________________ Mayor Erica A. Stewart 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 Page 283 of 821 Page 284 of 821