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HomeMy WebLinkAbout08/17/2010, PH2 - AMENDMENTS TO THE 2010 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM TO REALLOCATE $150,000 FROM council Mrsri Due */h7/46 j Ac,Enaa Repom 1W.N.b` 2 CITY O F SAN LUIS O B I S P O FROM: John Mandeville, Community Development Director Prepared By: Michael Codron, Housing Programs Manager SUBJECT: AMENDMENTS TO THE 2010 COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM TO REALLOCATE $150,000 FROM PROPERTY ACQUISITION FOR AFFORDABLE HOUSING (313 SOUTH STREET) TO PUBLIC IMPROVEMENTS FOR AFFORDABLE HOUSING (2201 EMILY STREET). STAFF RECOMMENDATION Adopt a resolution approving the Human Relations Commission (HRC) recommendation to reallocate $150,000 of CDBG funding to Public Improvements for Affordable Housing (2201 Emily Street), under the condition that the CDBG allocation is made in the form of a loan to be repaid under certain circumstances. DISCUSSION Background ROEM Corporation is an affordable housing developer building a portion of the Villages at Broad Street Mixed-Use Project (VAB). The affordable housing component of VAB will include 42 affordable housing units, all designated for households earning 80% or below Area Median Income. The project has received a tax credit allocation from the California Tax Credit Allocation Committee. Additionally, the City has made a substantial financial contribution to the project in the form of a $1 million Affordable Housing Fund award and water, sewer and traffic impact fees exerimptions totaling over$750,000 (Attachment 1). Additional funding for the project was to be financed through the Federal Home Loan Bank of San Francisco's Affordable Housing Program (AHP). However, ROEM's 2009 application to the AHP program was not approved, leaving a $400,000 gap in the construction budget for the project. ROEM has been able to close most of this gap using other sources, but has now approached the City requesting a CDBG allocation (Attachment 2). These funds would be used to construct public improvements associated with the VAB project. Reallocation of CDBG Funding From 313 South Street The 313 South Street site is identified in the Housing Element (HE) as a site that should be evaluated for potential rezoning to allow for infill residential development (HE Program 6.12.G). ROEM is currently going through the planning and entitlement process to rezone the property to R-4 and develop a 68-unit affordable housing project. The City of San Luis Obispo has previously allocated a total of$215,331 in CDBG funds towards the acquisition of this site. The total local funding requested for development of the project is shown in the following table. /9# 2010 CDBG Funding Reallocation Page 2 Staff supports the proposed reallocation because it is likely that the funds will be repaid, and if they are not, the proposed $150,000 will not substantially reduce the feasibility of the South Street project. The following table shows the total amount of funding requested by ROEM for the development of 313 South Street. Funding Requested for 313 South Source Amount 2009-10 CDBG (allocated) $9,750 2010-11 CDBG allocated $205,581 2011-12 CDBG (proposed) $184,669 2011-12 HOME (proposed) $300,000 Affordable Housing Fund (proposed) $500,000 Deferred City Impact Fees and other Fee $1,200,000 Deferrals (proposed) Tota!Amount Requested $29400,000 Loan Repayment Now that the project is under construction, ROEM's 2010 AHP application will be more competitive, and is expected to receive funding, allowing for repayment of the proposed CDBG allocation. This temporary stop-gap measure is required by Citibank, the construction lender on the project. In the event that ROEM does not succeed in obtaining AHP funding, the loan would still be expected to be repaid to the City from unspent construction contingencies. ROEM is also a general contractor, and because rising construction costs have been contained by the current recession, it is reasonable to expect that funds will be available for repayment to the City at the close of construction. However, in the event that neither AHP funding, nor unspent contingency funds are available at the close of construction, the loan would be permanently applied to the VAB affordable housing project and repayment would not be required.. If$150,000 is reallocated from the 2010-11 CDBG allocation, and it is not repaid, the City may not be able to accommodate the total funding request for 313 South Street. The proposed reallocation amount is 6.2% of the total funding request, and staff does not believe that the feasibility of the project would be jeopardized if the full amount of the request is not approved. Human Resources Commission (HRC) On August 4, 2010, the HRC unanimously recommended approval of the re-allocation. The HRC noted that both the VAB and 313 South Street projects are priorities for funding because they will provide much needed affordable rental housing in the City. Public comment made during the meeting echoed this discussion, and staff noted for the Commission that affordable housing was named as the City Council's top priority for allocation of CDBG funding. FISCAL IMPACTS Decisions made regarding CDBG funding determine how the limited pool of funds the City receives through the County allotment is spent. To the extent that projects are funded through CDBG, the burden on the City's general fund, or the Affordable Housing Fund, to pay for those 2010 CDBG Funding Reallocation Page 3 projects is reduced. As a result, projects that receive CDBG funding have a positive fiscal impact on the City if they otherwise would have been paid for out of the general fund. ALTERNATIVES 1. The Council may deny the proposed reallocation. This alternative is not recommended because the development of affordable housing is the top priority for allocation of CDBG funding. 2. The Council may continue consideration of the proposed reallocation if more information is needed. Direction should be given to staff on additional information needed to make a decision on the funding request. ATTACHMENTS 1. Council Resolution No.10109 (2009 Series) 2. ROEM Funding Request 3. Draft resolution approving the proposed reallocation COUNCIL READING FILE 313 South Street Project Plans L:\Housing\CDBG\CARS\CDBGreallocation(ROEW.DOC RTTURNI 1 RESOLUTION NO. 10109 (2009 Series) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING AFFORDABLE HOUSING INCENTIVES FOR THE CONSTRUCTION OF A 42-UNIT AFFORDABLE RENTAL HOUSING PROJECT AT THE VILLAGE AT BROAD STREET(2238 Broad Street) WHEREAS, the City Council of the City of San Luis Obispo met in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on August 4, 2009, for the . purpose of considering a request by ROEM Corporation for affordable housing incentives;and WHEREAS, the project is eligible for affordable housing incentives because the developer has committed to providing 41 deed-restricted affordable units for a term of 55 years; WHEREAS, the project proposal indicates that 31 of these units will be affordable to very-low income households and 10 units will be affordable to low-income households; and WHEREAS, the total value of the incentive requested is $1.8 million, including $1,034,448 from the Affordable Housing Fund and$765,552 from impact fee deferrals; and WHEREAS, the affordable housing incentive will take the form of a $1.8 million soft loan,or forgivable loan,with a term of 30 years and a cost of 4% simple interest;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 presented at said meeting. NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows: SECTION 1. Findings. The City Council does hereby make the following findings in support of the proposed affordable housing incentives:. Eligibility: The project is eligible for AHF assistance because it will result in deed- restrictions for 41 low-income and very-low income units for a tern of 55 years. Need: There exists a substantial need for the proposed type of affordable housing. The building floor plans include 24 three-bedroom units, 16 two-bedroom units and two one- bedroom units. The level of affordability of a unit is based on affordability to an eligible household with an income represented as a percentage of Area Median Income (AMI). The income targeting for the ROEM proposal includes: 5 units @ 30%AMI 5 units @ 40%AMI 21 units @ 50%AMI 10 units @ 60%AMI R 10109 - ATTACHMENT 1 Resolution No. 10109 (2009 Series) Page 2 Based on the City's Affordable Housing Standards, this affordability targeting translates into 5 units affordable to extremely-low income households, 26 units affordable to very-low income households, and 10 units affordable to low income households. The City's Regional Housing Needs Allocation (RHNA) for the 2009-2014 period establishes a goal of 366 new extremely low-income and low-income units combined,and 254 new low income units. Suitability: The project is particularly suited to the mid-town location because residents will have access to schools, parks and employment opportunities in the surrounding urban area. Transportation options include bus routes and bike paths that are located immediately adjacent to the site. Timing: The timing of the award is critical because funding must be approved no later than August 17,2009, for the project to be eligible for the 2009 9%tax credit round. Financial Effectiveness: The proposed affordable housing fund award leverages substantial equity contributed by the developer and a State tax credit allocation of$1,493,365. Readiness: The project has all of its required City approvals and can be carried forward with the approval of the recommended financial incentives. Specifically, the project is located on one of three parcels that are part of a coordinated development plan. The Planning Commission has approved a use permit for the overall project, and the minor plan revisions proposed by ROEM have been determined to be consistent with the approved use permit. With respect to the remaining phases of the project, it is the City's expectation that they will also be carried out in a manner that is consistent with the approved Planning Commission use permit and the site plan. SECTION 2. Affordable Housing; Incentives. The City Council does hereby approve affordable housing incentives for ROEM Corporation in the amount of$1.8 million, including $1,034,448 from the Affordable Housing Fund and $765,552 from impact fee deferrals, subject to the following conditions. 1. The funds shall be made available to ROEM Corporation in the form of a soft loan, or forgivable loan; with a term of 30 years at 4% simple interest. Periodic payments will be waived with the development of the approved affordable housing. 2. The funds will only be made available after an affordability agreement for the project has been recorded,ensuring the affordability of 41 units in the project for a period of 55 years. 3. Prior to release of funding, the applicant shall submit a management plan for resident service amenities to the Community Development Director for review and approval. The plan shall cover ongoing after-school programs for school age children and on-site educational classes including ESL and computer training for adults. The plan shall also include a program for activities conducted in the community room/recreation building. � 2-4.5- ATTACHMENT 1 Resolution No. 10109 (2009 Series) Page 3 Upon motion of Vice Mayor Settle, seconded by Council Member Carter, and on the following vote: AYES: Council Members Ashbaugh and Carter,Vice Mayor Settle, and Mayor Romero NOES: None ABSENT: Council Member Marx The foregoing resolution was adopted this 4th day of August 2009. Mayor David F. Romero ATTEST: Zr GAG El na Cano Interim City Clerk APPROVED AS TO FORM: Jon . Lowell City Attorney ATTACHMENT 2 EXQUISITE DETAIL ON A SOLID FOUNDATION OMr. Michael Codron Housing Programs Manager City of San Luis Obispo Community Development 919 Palm Street fy San Luis Obispo , CA 93401 '®• July 28,2010 RE: Request for Community Development Block Grant (CDBG funding Dear Mr. Codron, oWe respectfully submit this request to the San Luis Obispo City Council and the Human Relations Committee for an allocation of$150.000 in CDBG funds to assist in the financing of infrastructure and offsite improvements:associated with development of 2201 Emily Street,also known as The Village at Broad Street. The Village at Broad Street is a new construction ,100% affordable,multifamily community with 41 units restricted to low,very low, and extremely low income families earning between 30% and 60% of area median income.The project will bring much needed affordable housing units to the City of San Luis Obispo and will be an integral part of the larger redevelopment of the adjacent properties. The City of San Luis Obispo is currently supporting the project through a combination of affordable housing funds and fee deferrals (City Council Resolution no. 10109). The additional CDBG funding being requested is necessary in order to complete infrastructure work and offsite improvements which will directly benefit the low-income residents of the Village at Broad Street. A breakdown of activities and costs to be financed with CDBG funds is included as an attachment hereto. Please note that,per HUD regulations,CDBG funds will not be used to finance the construction of new housing units. We appreciate your consideration of this request and look forward to a continued partnership with the City of San Luis Obispo as we work to bring this important project to fruition. Please do not hesitate to contact me with any questions or concerns you may have. Sincerely, Joath Emamr Vi Pr sident ROEM Development Corporation Village at Broad Street Family Housing,L.P. 1650 Lafayette Street, Santa Clara, California 95050 Tel (408) 984-5600 Fax 408-984-3111 www.roemcorp.com ATTACHMENT2 Summary of Costs to be Financed by Community Development Block Grant (CDBG) Funds VILLAGE AT BROAD STREET APARTMENTS DEMOLITION Demolition work on Project Parcel $10,691.00 Subtotal-Demolition $10,691.00 WATER Water connection and meters $49,643.00 Subtotal-Water $49,643.00 SEWER Sewer Lateral Connection $3,571.00 Subtotal-Sewer $3,571.00 STORM DRAIN Storm main and lateral connection and drain inlets $53,914.00 Subtotal-Storm Drain $53,914.00 EARTH WORK Site Grading&Soil Export(portion of total cost) $32,181.00 Subtotal-Earth Work TOTAL $150,000.00 ATTRCHMEW 3 RESOLUTION NO. (2010 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING A REALLOCATION OF $150,000 OF 2010 CDBG PROGRAM FUNDS FROM PROPERTY ACQUISITION FOR AFFORDABLE HOUSING (313 SOUTH STREET)TO PUBLIC IMPROVEMENTS FOR AFFORDABLE HOUSING (2201 EMILY STREET). 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, Grover Beach, and Paso Robles 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 approved by the San Luis Obispo City Council on July 13, 1999 and as amended on September 7, 1999, 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 to consider a request to reallocate 2010 CDBG program funds; and WHEREAS,the Council has considered the City's adopted priorities for CDBG funding, public testimony, and the HRC and staff recommendations included in the agenda report; and WHEREAS, the proposed reallocation of $150,000 will ensure the completion of the affordable housing component of the Villages at Broad Street project and will not hinder the feasibility of the 313 South Street affordable housing project. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. Environmental Determination. The Council hereby determines that the proposed funding actions are not "projects" as defined by Section 21065 of the California Environmental Quality Act (CEQA), since they will not cause a direct or indirect physical change in the environment and do not involve the issuance of a lease, permit, license, certificate or other entitlement. Consequently, no further CEQA review is necessary. SECTION 2. 2010 Community Development Block Grant Program. The City Council hereby recommends that the Board of Supervisors amend the 2010 CDBG Action Plan to reallocate $150,000 from Property Acquisition for Affordable Housing (313 South Street) to Public Improvements for Affordable Housing (2201 Emily Street). SECTION 3. CDBG Funding to be granted in the form of a loan. The $150,000 CDBG award shall be made in the form of a limited term loan that will be repaid at the conclusion of the construction of the Village at Broad Street Project from Affordable Housing Program funding proceeds, from unspent construction contingencies, or from other available R�r /�rrG g WHO Resolution No. (2010 Series) Page 2 sources. If repayment of the loan from these sources is not possible, the CDBG recipient shall provide the Community Development Director with a written request to forgive the loan. The initial loan terms shall be for the duration of construction of the project, at zero interest. Upon motion of , seconded by and on the following vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this 17th day of August, 2010. Mayor David F. Romero ATTEST: Elana Cano, City Clerk APPRO D AS TO F stine Dietrick, City Attorney J W HCS LO COUNCIL L"'1 CDD DIR r-_' worldorcoNmusing CmlidonofSan Luis Obispo County' 0-r-A& L`FIN DIR August 17, 2010 CAGA9�"�*L ET-FIRE CHIEF ErATTORNEY rl�y� w DIR Board of Directors: ErCLERK/ORI© 1�PdLICECHF Mayor Dave Romero and City Council ❑ DEPT HEADS CrAso DIR DanaLiuisObisplley- o City of San Luis Obispo = 16 2-UTIL DIR San Obispo 990 Palm Street L7,-HR DA Planning&Building San Luis Obispo, CA 93401 Jerry Riouz-Vice Chair / San Luis Obispo Courcy `JLO LtY) rWdJ3 td" L& Housing Trust Fund Re: Support South Street.Apartments Marguerite Bader Health Carefar AB Michael Codron Dear Mayor Romero and Members of the Council: City of San Luis Obispo Steve Delmartini ...San Luis Obispo Realty The Workforce Housing Coalition was formed to encourage the creation and Charlie Ftuit reservation of more housing n an us Coast National Bank P g I. SLiObispo County that members of our Carol Harley local workforce can afford to buy or rent. We support residential projects Housing Authoriryofthe City of that will both enhance our community and use land and other resources San Luis Obispo Zelika Howard effectively. Cal Poly Cary&Regional Planing Er mina San Luis uisObispo The Coalition has reviewed the plans for the proposed South Street Chamber of Commerce Apartments and we wholeheartedly support the project as currently Domma Lewis Central coast proposed. The project will provide sorely needed affordable rental housing Mortgage Consultants for 68 families who live and work in our community. These units will be Bruce Silverberg SLO Green Bu en Build affordable for at least 55 years. SL Scott Smith Peoples'Self--Help Housing We believe that the project exemplifies smart growth and will be an asset to Vallerie Steenson Habiratfor Humanity our community. The project is located on a bus route and is convenient to for Sar Luis Obispo County employment, services and shopping. It is also close to schools and George Moylan in Memoriam recreational facilities. The project has a compact design that will use land Housing Luis very efficiently. As planned, it will also be one of the greenest and most City of San Luis Obispo Advisory Board: energy efficient residential developments in the city. Carl Dudley ...Mission CommuniryBank We encourage you to direct your staff to work with the developer to process Leslie Haus and San Luis Obispo County approve the project as quickly as possible. Staff should work to BuddersF=a=ge minimize any negative impacts that the project may have but should try not `'rlam Hill to reduce the number of units in the project their ll of affordability. San Luis Obispo County P ) or eve Board of Supervisors Steve Century 21 Hometown Realty Your clear support and direction for the project would be greatly appreciated Ce2 Annette Montoya at this time. PRECEIVED eoples'Self--Help Housing RED FILE James Patterson Sinter Boa Luis dgfSObispoCos yr AUG 17 2010 MEETING AGENDA Board ofSupervirors Craig Smith AM,CallforniaCentral SLO CITY CLERK DATEJ4i iu ITEM # P14,2,Coast Chapte Jerry Bonin Dana Lill C airperson Home Builders Association Workforce Housing Coalition of SLuis Obispo County of the Central Coact g an P t/ Support for the Workforce Housing Coafton does not imply support for the positions or acavia'es of number organizations. www.wticslo.om P.O.Box 293 San Luis Obispo CA 93406(8051546-2850