HomeMy WebLinkAboutItem 06 - TMHA Reallocation of Affordable Housing Frunds from Branch Street Apartments to Bishop Street Studios
Department Name: Community Development
Cost Center: 4008
For Agenda of: July 7, 2020
Placement: Consent
Estimated Time: N/A
FROM: Michael Codron, Community Development Director
Prepared By: Cara Vereschagin, Housing Coordinator
SUBJECT: REQUEST OF TRANSITIONS-MENTAL HEALTH ASSOCIATION TO
REALLOCATE AFFORDABLE HOUSING FUNDS FROM BRANCH
STREET APARTMENTS TO BISHOP STREET STUDIOS
RECOMMENDATION
Adopt a Resolution (Attachment A) approving the reallocation of Affordable Housing Funds in
the amount of $20,644 from Branch Street Apartments to Bishop Street Studios.
DISCUSSION
The Affordable Housing Fund (AHF) allocations have been collected from commercial and
residential developers to meet the City’s Inclusionary Housing Ordinance “in-lieu” of those
developers providing actual affordable 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 C ouncil’s sole discretion, based on
previously adopted Award 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 evaluated for how it meets these criteria.
Overview of Request
On June 4, 2019, the City awarded Transitions-Mental Health Association (TMHA) a grant of
$330,000 of AHFs to assist with acquisition and rehabilitation of an existing, six-unit property
for new low-income affordable housing (Attachment B). The property was successfully acquired
and rehabilitated and is now home to six adults living with a mental illness diagnosis. TMHA
was able to finance this project with City AHF dollars and State No Place Like Home (NPLH)
program dollars. However, earlier this Spring, TMHA became aware that they were awarded
additional funds through the State NPLH program, thus resulting in an excess of $20,644 of the
City’s AHF allocation.
TMHA’s other recent affordable housing development, Bishop Street Studios, came in over-
budget, due to some additional, critical fire preventative construction. Because TMHA already
has an extra $20,644 for the Branch Street Project, they are requesting that the City allow them
to reallocate the excess for the additional work for Bishop Street Studios (Attachment C).
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Staff finds TMHA’s request consistent with the AHF Award Criteria, and previously loaned a
total of $850,000 in City AHFs to Bishop Street Studios in 2017 for construction of the
affordable housing development. If this reallocation is not approved, TMHA will need to seek
alternative financial means for the additional required construction work.
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.
Public Engagement
As this is a request to reallocate City Affordable Housing Funds, no public engagement is
required.
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: No
Fiscal Analysis
Funding Sources Current FY Cost
Annualized
On-going Cost
Total Project
Cost
General Fund
State
Federal
Fees
Other: Affordable
Housing Fund
$20,644 $0 $20,644
Total $20,644 $0 $20,644
The funding identified has already been expended in a form of a grant to TMHA. If the request
to reallocate the funds is not approved, TMHA would pay back the excess funding to the City to
be returned to the AHF balance.
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ALTERNATIVES
1. Do not reallocate the AHF awards for the construction. This action is not recommended
because the project meets all the criteria for AHF assistance and is consistent with the
Housing Element of the General Plan.
2. 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 would delay
time this critical construction.
Attachments:
a - Draft Resolution
b - Resolution No. 11016 (2019 Series) Approving AHF award to TMHA
c - AHF Reallocation letter from TMHA
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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 TO TRANSITIONS-MENTAL
HEALTH ASSOCIATION FROM BRANCH STREET APARTMENTS TO
BISHOP STREET STUDIOS ($20,644)
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, and awarded
Transitions-Mental Health Association (THMA) a grant of $330,000 of Affordable Housing Fund
(AHF) to assist with acquisition and rehabilitation of new low -income affordable housing (the
“Branch Street Apartments”) as declared by Resolution No. 11016; and
WHEREAS, since THMA’s successful acquisition and rehabilitation of the Branch Street
Apartments, THMA has become aware that due to additional State funding for the project, THMA
has an excess of $20,644 of the City’s AHF awarded for the project; and
WHEREAS, THMA has requested that the City allow it to reallocate the excess AHFs
from the Branch Street Apartments project for additional work on an additional affordable housing
development (the “Bishop Street Studios”); and
WHEREAS, the proposed project by THMA meets 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. AHF Reallocation to Bishop Street Studios. The City Council does hereby
approve a reallocation of AHF in an amount not to exceed $20,644, subject to the following
condition of approval:
1. Prior to expenditure of any AHF, TMHA shall enter into a contractual agreement with the City
outlining the terms of the reallocation grant.
2. Prior to expenditure of any AHF, TMHA shall submit invoices and proof of construction to
the City for the proposed additional improvements to the project.
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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 _______________________, seconded by _______________________,
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
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RESOLUTION NO. 11016 (2019 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING
FUND A WARD 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 affordab le housing inventory and implements several General Plan policies
regarding housing. The project will in crea e 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 type of
supported housing.
R 11016
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Resolution No. 11016 (2019 Series) Page 2
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 I-bedroom, I-bathroom cottage. On the same lot, facing South Street,
are five units consisting of two studios and three I-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 ifit 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.
R 11016
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Resolution No. 11016 (2019 Series) Page 3
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 Council Member Christianson, seconded by Council Member Gomez, and on the
following roll call vote:
AYES:
NOES:
ABSENT:
Council Members Christianson, Gomez, and Stewart,
Vice Mayor Pease and Mayor Harmon
None
None
The foregoing resolution was adopted this 4th day of June 2019.
Mayor
ATTEST:
Teresa Purrington, City Cl r
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, this \61 f day of ,}u.A/\:e , 2019.
R 11016
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