HomeMy WebLinkAbout06-04-2019 Item 12 - Request of Affordable Housing Funds from Transitions Mental Health Association
Department Name: Community Development
Cost Center: 4008
For Agenda of: June 4, 2019
Placement: Consent
Estimated Time: N/A
FROM: Michael Codron, Community Development Director
Prepared By: Cara Vereschagin, Assistant Planner
SUBJECT: REQUEST OF AFFORDABLE HOUSING FUNDS FROM TRANSITIONS-
MENTAL HEALTH ASSOCIATION ($330,000)
RECOMMENDATION
Adopt a resolution (Attachment A) approving an Affordable Housing Fund grant in the amount
of $330,000 to assist with the acquisition and rehabilitation of an existing, 6-unit property, that
will be dedicated to low income persons, located at 527 Branch Street and 526 South Street.
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. Requests for AHF support are evaluated by staff and forwarded to the City
Council for consideration. The project requesting funds is described below and evalu ated for
how it meets these criteria.
Overview of Request
Transitions-Mental Health Association (TMHA) is requesting a grant of $330,000 of Affordable
Housing Funds to assist with acquisition and rehabilitation of an existing, 6-unit property
(Attachment B). The property will be deed-restricted affordable for a minimum of 55 years,
available to TMHA clients that are low income.
Policy Context
Providing financial assistance to affordable housing projects is a theme supported throughout the
City’s Housing Element (HE). HE Goal 2 is Affordability, which specifically states
“Accommodate affordable housing production that helps meet the City’s quantified objectives.”
HE Program 2.5 states “…Continue to manage the Affordable Housing Fund so that the fund
serves as a sustainable resource for supporting affordable housing development…” and “support
high-quality housing projects that would not be feasible without Affordable Housing Fund
support.” This request of TMHA to increase housing affordability for low income persons is in
alignment with this goal and program.
Packet Pg. 137
Item 12
Public Engagement
As this is a request for City Affordable Housing Funds, no public engagement is required.
AWARD CRITERIA
In making its recommendations to City Council for how AHFs should be allocate d, staff
considers Council’s adopted criteria (Attachment C), including; eligibility, need, suitability,
timing, financial effectiveness, and readiness. The following is an analysis of the request 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:
TMHA’s 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 six low income adults
living with mental health diagnoses.
Need. There exists a substantial or overarching need for the type of unit to be assisted, as
follows:
TMHA houses over 250 clients annually with the goal of creating supported, permanent
housing for adults with mental illness. Once opened, Bishop Street Studios will provide 34
housing units to this population. TMHA received around 300 applications for those units,
which demonstrates a clear continued need for this type of supported housing.
Suitability. The project to be assisted is appropriate for its location both in terms of land use
and design, as follows:
This project is appropriate for this location, since the two existing homes are currently being
utilized for residential use. The front house located on Branch Street is a 1-bedroom, 1-
bathroom cottage. On the same lot, facing South Street, are five units consisting of two
studios and three 1-bedroom lofts. The property is in close proximity to amenities, public
transportation, Meadow Park, and TMHA services.
Timing. The project would better serve the City’s needs if it were built immediately as oppose d
to later, as follows:
TMHA received around 300 applications for the 34 units under construction in the Bishop
Street Studios project, meaning there are approximately 266 community members in need of
safe, supportive housing. TMHA knows that stable housing and recovery go hand-in-hand.
This project will bring TMHA a few steps closer to providing housing for the hundreds of
San Luis Obispo residents living with mental health diagnoses.
Packet Pg. 138
Item 12
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:
TMHA will soon be awarded with a No Place Like Home (NPLH) grant, which provides
funds to house low income adults with mental health diagnoses. The NPLH grant will be in
the amount of $1,082,952, which leaves about a $330,000 balance to complete the purchase
of the property. TMHA’s request of $330,000 is a highly effective use of the City’s
Affordable Housing Funds, as the City will gain six units that will be affordable for a
minimum of 55 years.
Readiness. The project has all necessary City approvals and is ready to proceed, as follows:
The project did not need to obtain any City discretionary approvals. Upon the award of the
City, THMA plans to close escrow on the property as early as June 2019. THMA will then
make improvements to the units as needed and submit any plans to the City Building division
as necessary.
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: 2018-2019
Funding Identified: Yes
Fiscal Analysis
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund
State
Federal
Fees
Other: City AHF $330,000
Total $330,000
A current status report on the AHF is provided as an attachment (Attachment D). The report
indicates that as of May 3, 2019, the AHF as a balance of $2,323,597.95. If TMHA’s request is
approved by the City Council, the AHF will retain $1,993,597.95 of available funds for
assistance with future affordable housing projects.
Packet Pg. 139
Item 12
The recommended allocations would be in the form of a grant 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.
ALTERNATIVES
1. Do not authorize AHF awards for the proposed project. This action is not recommended
because the project meets all of the criteria for AHF assistance and is 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 this delay in time
would not allow for TMHA to close escrow on the property.
Attachments:
a - Resolution
b - Affordable Housing Fund Request from TMHA
c - Adopted Affordable Housing Fund Criteria
d - Affordable Housing Fund Status Report
Packet Pg. 140
Item 12
R ______
RESOLUTION NO. _____ (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING
FUND AWARD TO TRANSITIONS-MENTAL HEALTH ASSOCIATION
FOR ACQUISITION OF AN EXISTING 6-UNIT PROPERTY TO BE
REHABILITATED AS AFFORDABLE HOUSING IN THE AMOUNT OF
$330,000
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 June 4, 2019, for the purpose of
considering a request for Affordable Housing Fund (AHF) assistance; and
WHEREAS, the proposed project by Transitions-Mental Health Association (THMA)
meet the eligibility criteria established by the City Council; and
WHEREAS, Housing Element policies and programs encourage and support 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 at the 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 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 regarding
housing, as follows:
TMHA’s 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
six low income adults living with mental health diagnoses.
2. Need: There exists a substantial or overarching need for the type of unit to be
assisted, as follows:
TMHA is houses over 250 clients annually with the goal of creating supported,
permanent housing for adults with mental illness. Once opened, Bishop Street
Studios will provide 34 housing units to this population. TMHA received around
300 applications for these units, which demonstrates a clear need for this t ype of
supported housing.
Packet Pg. 141
Item 12
Resolution No. _____ (2019 Series) Page 2
R ______
3. Suitability: The project to be assisted is appropriate for its location both in terms
of land use and design, as follows:
This project is appropriate for this location, since the two existing homes are
currently being utilized for residential use. The front house located on Branch
Street is a 1-bedroom, 1-bathroom cottage. On the same lot, facing South Street,
are five units consisting of two studios and three 1-bedroom lofts. The property is
in close proximity to amenities, public transportation, Meadow Park, and TMHA
services.
4. Timing: The project would better serve the City’s needs if it were built immediately
as opposed to later, as follows:
TMHA received around 300 applications for the 34 units under construction in the
Bishop Street Studios project, meaning there are approximately 266 community
members in need of safe, supportive housing. TMHA knows that stable housing
and recovery go hand-in-hand. This project will bring TMHA a few steps closer to
providing housing for the hundreds of San Luis Obispo residents living with mental
health diagnoses.
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:
TMHA will soon be awarded with a No Place Like Home (NPLH) grant, which
provides funds to house low income adults with mental health diagnoses. The
NPLH grant will be in the amount of $1,082,952, which leaves about a $330,000
balance to complete the purchase of the property. TMHA’s request of $330,000 is
a highly effective use of the City’s Affordable Housing Funds, as the City will gain
six units that will be affordable for a minimum of 55 years.
6. Readiness: The project has all necessary City approvals and is ready to proceed, as
follows:
The project did not need to obtain any City discretionary approvals. Upon the
award of the City, THMA plans to close escrow on the property as early as June
2019. THMA will then make improvements to the units as needed and submit any
plans to the City Building division as necessary.
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.
Packet Pg. 142
Item 12
Resolution No. _____ (2019 Series) Page 3
R ______
SECTION 3. AHF Award for Transitions-Mental Health Association. The City Council
does hereby approve an AHF award in an amount not to exceed $330,000, 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 with the City for the six (6) for-rent affordable housing
units located at 527 Branch Street and 526 South Street for a term of fifty-five (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 _____________________ 2019.
____________________________________
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, this ______ day of ______________, 2019.
____________________________________
Teresa Purrington, City Clerk
Packet Pg. 143
Item 12
Packet Pg. 144
Item 12
Packet Pg. 145
Item 12
Packet Pg. 146
Item 12
Packet Pg. 147
Item 12
Beginning Balance Credits
(USD) (USD)
11001 3,321,009.94 0.00
17001 12,500.00 0.00
31009 -239,228.44 0.00
32001 -2,323,597.95 0.00
33001 2,500,641.00 0.00
33002 -2,522,641.00 0.00
33003 22,000.00 0.00
33004 80,000.00 0.00
33005 -80,000.00 0.00
33006 301,179.45 0.00
46002 -1,139,363.00 0.00
47003 -12,500.00 0.00
71006 80,000.00 0.00Contract Services 0.00 80,000.00
Impact Fees and Special Assessments 0.00 -1,139,363.00
Miscellaneous 0.00 -12,500.00
Reserve for Encumbrances 0.00 -80,000.00
Retained Earnings 0.00 301,179.45
Revenue Budget Control 0.00 22,000.00
Encumbrances 0.00 80,000.00
Budgetary Fund Balance 0.00 2,500,641.00
Expenditure Budget Control 0.00 -2,522,641.00
Restricted - Other 0.00 -239,228.44
Undesignated 0.00 -2,323,597.95
Cash (including cash equivalents)0.00 3,321,009.94
Interfund 0.00 12,500.00
Fund 505 Affordable Housing Fund
Account Description Debits Ending Balance
(USD) (USD)
Ledger City of San Luis Obispo
Trial Balance Report Report Date 05/03/2019 11:07 AM
City of San Luis Obispo Page 1 of 1
Packet Pg. 148
Item 12