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HomeMy WebLinkAbout02-07-2017 Item 04 - Affordable Housing Fund Request for the Housing Authority of San Luis Obispo (HASLO) and Transitions Mental Health Association (TMHA) to Develop Bishop Street Studios Meeting Date: 2/7/2017 FROM: Michael Codron, Community Development Director Prepared By: Jenny Wiseman, Acting Housing Programs Manager Steven Orozco, Planning Technician SUBJECT: AFFORDABLE HOUSING FUND REQUEST FOR THE HOUSING AUTHORITY OF SAN LUIS OBISPO (HASLO) AND TRANSITIONS MENTAL HEALTH ASSOCIATION (TMHA) TO DEVELOP BISHOP STREET STUDIOS ($850,000) RECOMMENDATION Adopt a resolution approving an Affordable Housing Fund award in the amount of $850,000 for development of 34 affordable rental units located at Bishop Street Studios. DISCUSSION The Affordable Housing Fund (AHF) has been collected from commercial and residential developers to meet the City’s Inclusionary Housing Ordinance “in-lieu” of those developers providing actual housing units. State planning and zoning law requires the fund to be used only for the purpose that it was established – to support affordable housing in the City of San Luis Obispo. These funds are awarded at the City Council’s sole discretion, based on previously adopted criteria (Attachment A). Requests for AHF support are evaluated by staff and forwarded to the City Council for consideration. The project requesting funds is described below and evaluated for how it meets these criteria. Overview of Requests The Housing Authority of San Luis Obispo (HASLO) and Transitions Mental Health Association (TMHA) is requesting an allocation of $850,000 in Affordable Housing Funds for the Bishop Street Studios project (Attachment B). In collaboration between HASLO and TMHA, Bishop Street Studios will provide 34 affordable assisted living rental units for mental health clients in the City of San Luis Obispo. The project is located at the old “Sunny Acres” Site behind the former General Hospital. It consists of the rehabilitation of the old Sunny Acres building creating thirteen residential units, and the new construction of twenty-one additional units among three new buildings. One unit will be utilized for an on-site resident manager. The project also includes a management office as well as a resident community room. In September 2016, Bishop Street Studios was unanimously approved by the Architectural Review Commission and Cultural Heritage Committee. The project had one appeal filed, which was later unanimously denied by City Council in November 2016. Packet Pg. 37 4 AWARD CRITERIA In making its recommendations to the City Council for how AHF funds should be allocated, staff considers Council adopted criteria including: eligibility, need, suitability, timing, financial effectiveness and readiness (Attachment A). The following is an analysis of the requests relative to the criteria. Eligibility. Use of the AHF for the requested purpose will increase or improve the City’s affordable housing inventory and promote General Plan policies regarding housing, as follows: Bishop Street Studios Project is eligible for Affordable Housing Funds because it increases the City’s affordable housing inventory, and implements several General Plan policies regarding housing. The project will increase the supply of affordab le housing for very-low income households with the construction of 34 units. The proposed request is consistent with General Plan Housing Element Policies 3.1, 3.5, 3.7, 6.18, 8.1, 8.8, 8.11,8.12, and 8.20. Need. There exists a substantial or overarching need for the type of unit to be assisted, as follows: The City of San Luis Obispo has a substantial need for affordable housing to meet goals stated in the City’s General Plan Housing Element. This need is further evidenced by HASLO's long waiting lists for all of the affordable housing programs. TMHA operates housing in the City which is also at capacity, and hundreds of clients remain in need of an affordable, supported living environment similar to what Bishop Street Studios will provide. Bishop Street Studios will become a new permanent special needs housing resource for the community. Suitability. The project to be assisted is appropriate for its location both in terms of land use and design, as follows: Bishop Street Studios is ideally suited for this location. It is consistent with zoning and land use designations, and close to health and transportation services for residents. The design is respectful of the site context, and will rehabilitate the currently abandoned Sunny Aces building. The project does an excellent job of renovating the existing brick building, while adding new buildings that complement the restored Sunny Acres building as the center piece of the project. Bishop Street Studios suitability received unanimous approval by the Cultural Heritage Committee and Architectural Review Commission. Timing. The project would better serve the City’s needs if it were built immediately as opposed to later, as follows: The timing of this application is appropriate, and crucial, for the project to move forward. HASLO will be applying for Low Income Housing Tax Credits, the key source of project financing, by the March 1st state deadline. The state requires all local funding to be Packet Pg. 38 4 committed prior to applying for the Low-Income Housing Tax Credits. Financial Effectiveness. But for the requested assistance, the project would not be economically feasible; or AHF funding “leverages” significant additional funding from other sources, as follows: The City's Affordable Housing Funds represent less than 15% of project costs, leveraging at least $6 million in other funds on Bishop Street Studios. Other sources include a HASLO Tranche B loan, Low-Income Housing Tax Credits, a private capital campaign, a SLO County Housing Trust Fund loan, County Home and CDBG funds, and City CDBG funding. Readiness. The project has all necessary City approvals and is ready to proceed, as follows: Bishop Street Studios has all of the necessary City discretionary approvals and is ready to proceed with detailed construction drawings. They are working with their architecture and engineering team to prepare and submit these drawings as part of a building permit application by early June. Should a Tax Credit Award be secured, HASLO/TMHA anticipates starting construction in December 2017. This schedule is conditional upon the state awarding Low-Income Housing Tax Credits in June. STATUS OF THE AHF A status report on the AHF is attached (Attachment C). The report indicates that if the proposed allocations are approved by the Cit y Council, the fund will retain $1,060,537 to allocate to future affordable housing projects. Staff is recommending funding for the request listed in the table below. The attached resolution (Attachment D) recommends funding for a total of $850,000. The proposed funding amounts to approximately 44% of the funds currently available to be allocated to new projects. Based on approximately four years of building permit activity, this amount of funding will be restored to the AHF by Winter 2018. Current Requests/Proposed Allocations AHF Available Balance $1,910,537 Bishop Street Studios 34 Units $850,000 Total Requests 34 Units $850,000 Net Available for New Programs if Current Request Approved $1,060,537 FISCAL IMPACTS The recommended allocations would be in the form of loans paid out of the AHF, which consists of in-lieu fees collected under the City’s Inclusionary Housing Ordinance. The AHF may only be used for projects or purposes that create or support affordable housing within the City. The project will have no impact on the General Fund. AHF loans typically have a 30-45 year term Packet Pg. 39 4 with a rate of 3-4% simple interest. The details of each loan will be finalized prior to release of funds and structured specific to each project’s financing package. Based on prior expenditures and pending commitments, there will be a balance of $1,060,537 remaining in the AHF after this award. ENVIRONMENTAL REVIEW The project to award affordable housing funds is exempt from environmental review per Section 15061 (b)(3) General Rule of the CEQA Guidelines. The project is only an action to award funding. However, during project entitlements, a Mitigated Negative Declaration of Environmental Impact was approved for Bishop Street Studios by the City Council on N ovember 15, 2016. ALTERNATIVES 1. Do not authorize an affordable housing fund award for the proposed project. This action is not recommended because the project appears to meet the criteria for AHF assistance and are consistent with the Housing Element of the General Plan. 2. Approve an AHF award for a different amount. The City Council can approve an award for a different amount other than the recommendation. This is not recommended as the project has carefully considered its need for assistance and the amounts requested reflect what is needed for successful financing of the project. 3. Continue consideration of the proposed award. The City Council can direct staff to return with additional information regarding the funding request so that a final decision on the award amount can be made. Staff does not recommend this action because applications for Tax Credits must be received by March 1, 2017, and must include a letter of commitment for funding. Attachments: a - Council Resolution No. 9263 b - HASLO (Bishop Street Studios) Funding Request c - Affordable Housing Fund Status Report d - Draft Council Resolution Packet Pg. 40 4 Packet Pg. 41 4 Packet Pg. 42 4 Packet Pg. 43 4 H ~SLO HOUSING AUTHORITY SAN LUIS OBISPO December 27, 2016 Jenny Wiseman Acting Housing Programs Manager 919 Palm Street San Luis Obispo, CA 93401-3218 SUBJECT: Bishop Street Studios -Request for Affordable Housing Funds Dear Ms. Wiseman, On behalf of HASLO and Transitions Mental Health Association we are hereby requesting an allocation of $850,000 in Affordable Housing Funds for the Bishop Street Studios Project. The City's Affordable Housing Fund consists of funds paid to the City by private developers in lieu of including affordable housing within their projects under the City's lnclusionary Housing Ordinance. Bishop Street Studios is a collaboration between HASLO and TMHA, and will provide 34 affordable assisted living rental units for mental health clients in the City of San Luis Obispo. The project is located at the old "Sunny Acres" site behind the former General Hospital. It consists of the rehabilitation of the old Sunny Acres building creating 13 residential units, and the new construction of 21 additional units in three new buildings. One of units will be utilized as an on-site resident manager unit. The project includes a management office and resident community room. Bishop Street Studios was unanimously approved by the Architectural Review Commission and Cultural Heritage Committee in September 2016. One appeal was filed, which was unanimously denied by City Council in November 2016. Eligibility The project is eligible for the Affordable Housing Fund because it increases the City's inventory of affordable housing, and implements the City's General Plan policies regarding housing. Need There is a substantial unmet need for affordable housing in the City as documented by the City's Housing Element. This need is further evidenced by HASLO's long waiting lists for all of our affordable housing programs. Transitions Mental Health Association operates housing in the City which is at capacity. Meanwhile hundreds of clients remain in need of an affordable, supported living similar to what Bishop Street Studios will provide. HOUSING AUTHORITY OF SAN LUIS OBISPO 487 Leff Street PO Box 1289 San Luis Obispo, CA 93406 ph (805) 543-4478 fx (805) 543-4992 www.haslo.org Packet Pg. 44 4 Suitability The project is ideally suited for this location. It is consistent with zoning and land use designations, and close to health and transportation services for residents. The design is respectful of the site context; it does an excellent job of renovating the existing brick building while adding new buildings that complement and retain the restored Sunny Acres building as the center piece of the project. Bishop Street Studios suitability was reviewed and received unanimous approval by the Cultural Heritage Committee and Architectural Review Commission. Timing The timing is appropriate for this application to the City's Affordable Housing Fund. It is our intention to apply for Low-Income Housing Tax Credits, the final source of project financing, by the March 1st state deadline. The state requires all local funding to be committed prior to applying for the Low- Income Housing Tax Credits. Financial Effectiveness The City's Affordable Housing Funds represent less than 15% of project costs, leveraging at least $6 million in other funds on Bishop Street Studios. Other sources include a HASLO Tranche B loan, Low- Income Housing Tax Credits, a private capital campaign, a SLO County Housing Trust Fund loan, County Home and CDBG funds, and City CDBG funding. Readiness Bishop Street Studios has all of the necessary City discretionary approvals and is ready to proceed with detailed construction drawings. We are working with our architecture and engineering team to prepare and submit these drawings as part of a building permit application by early June. We anticipate the City completing its plan review, issuing the building permit, and HASLO/TMHA starting construction in December 2017. This schedule is conditional upon the state awarding Low-Income Housing Tax Credits on June 1. Bishop Street Studios will become a permanent new special needs housing resource in the community, and we are excited to be part ofthis collaboration. . ) . f/ I :c•r•~"/1~) \ \ ', Scott Smith Executive Director Housing Authority of San Luis Obispo Packet Pg. 45 4 City of San Luis Obispo Fiscal Status of Affordable Housing Fund January 16, 2017 - Point in Time Status Revenues, Expenditures and Changes in Fund Balance Expenditures Fiscal Year In-Lieu Fees Interest Rents BEGIN funds reimbursem ent BEGIN reuse funds* BEGIN City matching funds*Total Beginning Ending 2000-01 193,700 8,200 201,900 201,900 2001-02 464,900 20,000 484,900 201,900 686,800 2002-03 747,800 28,300 776,100 (215,000) 686,800 1,247,900 2003-04 60,500 8,500 69,000 (30,000) 1,247,900 1,286,900 2004-05 323,300 32,500 355,800 (30,000) 1,286,900 1,612,700 2005-06 1,863,700 68,500 1,932,200 1,612,700 3,544,900 2006-07 627,200 160,500 787,700 (530,000) 3,544,900 3,802,600 2007-08 682,400 155,600 838,000 (630,000) 3,802,600 4,010,600 2008-09 465,700 199,700 1,400 666,800 (892,500) 4,010,600 3,784,900 2009-10 (21,300) 32,600 9,000 270,000 290,300 (3,407,600) 3,784,900 667,600 2010-11 332,800 16,000 3,900 30,000 382,700 (39,800) 667,600 1,010,500 2011-12 848,800 21,900 870,700 (112,700) 1,010,500 1,768,500 2012-13 182,700 700 183,400 (30,000) 1,768,500 1,921,900 2013-14 777,300 12,700 100,955 117,857 1,008,812 (47,000) 1,921,900 2,883,712 2014-15 159,602 9,193 86,430 93,121 348,346 (697,000) 2,883,712 2,535,058 2015-16 625,506 34,414 659,920 (636,978) 2,535,058 2,558,000 2016-17 895,000 785 895,785 (399,360) 2,558,000 3,054,425 Cumulative Total 9,229,608 810,092 14,300 300,000 187,385 210,978 10,752,363 (7,697,938) 3,054,425 Commitments Not Yet Funded Commitment to the General Fund Transfer (52,000) Commitment for Iron Works Affordable Housing (920,000) Commitment to remaining BEGIN Downpayment Assistance Loans (171,888) Total Available for New Progams as of January 16, 2017 1,910,537 Revenues Fund Balance Packet Pg. 46 4 R ______ RESOLUTION NO. XXXX (2017 SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS OBISPO, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING FUND AWARD TO THE HOUSING AUTHORITY OF SAN LUIS OBISPO AND TRANSITIONS MENTAL HEALTH ASSOCIATION FOR BISHOP STREET STUDIOS IN THE AMOUNT OF $850,000 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 February 7, 2017, for the purpose of considering multiple requests for Affordable Housing Fund (AHF) assistance; and WHEREAS, the proposed project by the Housing Authority of San Luis Obispo (HASLO) and Transitions Mental Health Association (TMHA), meet eligibility criteria established by the City Council; and WHEREAS, Housing Element policies and programs encourage and support the maintenance and rehabilitation of existing affordable housing as well as the construction of new 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 presented at said meeting. NOW, THEREFORE, BE IT RESOLVED, by the Council of the City of San Luis Obispo as follows: SECTION 1. Environmental Determination. The project to award affordable housing funds is exempt from environmental review per Section 15061 (b)(3) General Rule of the CEQA Guidelines. The project is only an action to award funding. However, during project entitlements, a Mitigated Negative Declaration of Environmental Impact was approved for Bishop Street Studios by the City Council on November 15, 2016. SECTION 2. Findings. The City Council does hereby make the following findings in support of the proposed AHF awards: 1. Eligibility: Use of the AHF for the requested purpose will increase or improve the City’s affordable housing inventory and promote General Plan policies rega rding housing, as follows: Bishop Street Studios Project is eligible for Affordable Housing Funds because it increases the City’s affordable housing inventory, and implements several General Plan policies regarding housing. The project will increase the supply of affordable housing for very-low income households with the construction of 34 units. The proposed request is consistent with General Plan Housing Element Policies 3.1, 3.5, 3.7, 6.18, 8.1, 8.8, 8.11,8.12, and 8.20. Packet Pg. 47 4 Resolution No. _____ (2017 Series) Page 2 R ______ 2. Need: There exists a substantial or overarching need for the type of unit to be assisted, as follows: The City of San Luis Obispo has a substantial need for affordable housing to meet goals stated in the City’s General Plan Housing Element. This need is further evidenced by HASLO's long waiting lists for all of the affordable housing programs. TMHA operates housing in the City which is also at capacity, and hundreds of clients remain in need of an affordable, supported living environment similar to what Bishop Street Studios will provide. Bishop Street Studios will become a new permanent special needs housing resource for the community. 3. Suitability: The project to be assisted is appropriate for its location both in terms of land use and design, as follows: Bishop Street Studios is ideally suited for this location. It is consistent with zoning and land use designations, and close to health and transportation services for residents. The design is respectful of the site context, and will rehabilitate the currently abandoned Sunny Aces building. The project does an excellent job of renovating the existing brick building, while adding new buildings that complement the restored Sunny Acres building as the center piece of the project. Bishop Street Studios suitability received unanimous app roval by the Cultural Heritage Committee and Architectural Review Commission. 4. Timing: The project would better serve the City’s needs if it were built immediately as opposed to later, as follows: The timing of this application is appropriate, and crucial, for the project to move forward. HASLO will be applying for Low Income Housing Tax Credits, the key source of project financing, by the March 1st state deadline. The state requires all local funding to be committed prior to applying for the Low-Income Housing Tax Credits. 5. Financial Effectiveness: But for the requested funding, the project would not be economically feasible; or AHF funding “leverages” significant additional funding from other sources, as follows: The City's Affordable Housing Funds represent less than 15% of project costs, leveraging at least $6 million in other funds on Bishop Street Studios. Other sources include a HASLO Tranche B loan, Low-Income Housing Tax Credits, a private capital campaign, a SLO County Housing Trust Fund loan, County Home and CDBG funds, and City CDBG funding. 6. Readiness: The project has all necessary City approvals and is ready to proceed, as follows: Bishop Street Studios has all of the necessary City discretionary approvals and is ready to proceed with detailed construction drawings. We are working with our architecture and engineering team to prepare and submit these drawings as part of a building permit application by early June. Should a Tax Credit Award be secured, HAS LO/TMHA anticipates starting construction in December 2017. This schedule is conditional upon the Packet Pg. 48 4 Resolution No. _____ (2017 Series) Page 3 R ______ state awarding Low-Income Housing Tax Credits in June. SECTION 3. Affordable Housing Fund Award, HASLO/TMHA (Bishop Street Studios). The City Council does hereby approve an AHF award in an amount not to exceed $850,000, subject to the following condition of approval: 1. Prior to release of any portion of the AHF award, the applicant shall enter into an Affordability Agreement, Deed, and Promissory Note with the City for 34 for-rent affordable housing units located at 1600 Bishop Street for a term of 55 years, which will be recorded against the title of the property. Upon motion of , seconded by , and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was adopted this ______ day of _______ 2017. ____________________________________ Mayor Heidi Harmon ATTEST: ____________________________________ Carrie Gallagher City Clerk APPROVED AS TO FORM: _____________________________________ J. Christine Dietrick City Attorney Packet Pg. 49 4 Resolution No. _____ (2017 Series) Page 4 R ______ 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 ______________, _________. ____________________________________ Carrie Gallagher City Clerk Packet Pg. 50 4