HomeMy WebLinkAbout2010/03/23 Item 4
CITY COUNCIL
AGENDA STATEMENT
~f::. CIIT OF
-- (HULA VISTA
ITEM TITLE:
SUBMITTED BY:
REVIEWED BY:
MARCH 23, 2010, Item-.!f_
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA CONDITIONALL Y APPROVING
FINANCIAL ASSISTANCE, IN THE FORM OF A
RESIDUAL RECEIPTS LOAN IN AN AMOUNT NOT-TO-
EXCEED $385,000 FROM THE COMMUNITY
DEVELOPMENT BLOCK GRANT (CDBG) PROGRAM TO
SOUTH BAY COMMUNITY SERVICES, FOR THE
ACQUISITION AND REHABILITATION OF 1194-1196
TRENTON AVENUE FOR AJrERDABLE HOUSING
DEPUTY CITY MANAGE~EVELOPMENT SERVICES
DIRECTOR
CITY MANAGE~
4/5THS VOTE: YES D NO 0
SUMMARY
The City of Chula Vista has received a request fTom South Bay Community Services
(SBCS), to consider financial assistance to support the acquisition and rehabilitation of a 7
unit housing complex located at 1194-1196 Trenton A venue to operate as affordable
housing. Staff recommends providing a pre-commitment of $385,000 from its federal
Community Development Block Grant (CDBG) funds to assist SBCS in obtaining
additional affordable housing financing.
ENVIRONMENTAL REVIEW
The Environmental Review Coordinator has reviewed the proposed action for compliance
with the National Environmental Policy Act (NEPA) due to the use of Federal funds and has
determined that pursuant to Section 58.30 (b), Subpart D, Title 24 of the Code of Federal
Regulations, further review and environmental determination as appropriate, will be
required prior to appropriating and/or entering into an affordable housing agreement with
South Bay Community Services. During the pre-commitment phase, the proposed action
qualifies for a Certification of Exemption pursuant to Title 24, Part 58.34(a)(2)&(3) of the
4-1
MARCH 23, 2010, ITEML
PAGE 2 OF 6
Code of Federal Regulations and pursuant to the u.s. Department of Housing & Urban
Development (HUD) Environmental Guidelines.
RECOMMENDATION
Adopt the resolution.
BOARDS/COMMISSION RECOMMENDATION
The Housing Advisory Commission (HAC) would normally provide an advisory
recommendation on new affordable housing applications; however a quorum was
unattainable on this item due to two commissioners' employment with SBCS. The HAC
will receive an informational report on this item at their April 15th special meeting.
DISCUSSION
The developer has also submitted an application for funding through the County of San
Diego HOME Investment Partnership funds for Community Housing Development
Organizations (CHDOs). The City's intent to provide fmancial assistance is requested and
that the City Council adopt a resolution expressing its preliminary intention to commit
funding assistance. If successful in obtaining additional funding, a request for approval of
loan agreements will come back to the City Council.
The Proposed Proiect
1194-1196 Trenton Avenue consists of 3 I-bedroomll bath units, currently rented for $760
a month and 4 2-bedroomll bath units, currently rented for $925 a month. The proposed
development consists of 7 affordable rental units to meet the needs of extremely low income
former foster youth residents. The site is close to public transit and neighborhood services
and facilities, including another SBCS complex providing housing and services for former
foster youth.
The availability of rental units priced for extremely low income residents is not available in
the private rental market and this special needs population requires additional specialized
services. Studies show that 40% of the chronically homeless were once in the foster system
and 70% of the inmates on death row are former foster youth. The proposed 55-year term of
affordability guarantees the availability of such housing and services for the long term for
this special needs population.
Income and Rent Restrictions
It is proposed that 7 units will be affordable to and restricted for occupancy by extremely
low income households, for youth aging out of the foster system. The unit breakdown,
restrictions and estimated rents are summarized in the table below.
4-2
MARCH 23, 2010, ITEMl
PAGE30F6
Y
tI
tI
- e room es - onner oster out 0
TOTAL UNITS A VERAGE RENT
7 $421
This project model assumes continued funding for Foster Youth services trom the County
Health and Human Services Transitional Housing Program Plus (THP +). Should these
funds not be available in the future, the project would be made available to the general low
income population. The income and rent restrictions outlined above will be incorporated
into the Regulatory and Loan Agreements for the City Loan, which will be recorded against
the property.
Compliance with strict property management policies and procedures will ensure that
income and rent restrictions will be maintained for the full 55-year compliance period.
Compliance with the income and rent restrictions will be subject to annual monitoring. The
developer has successfully managed low-income housing units in Chula Vista.
Proiect Mana!!:ement. Maintenance and Upkeep
The City and County assistance drive the strict management. maintenance and upkeep of
affordable housing developments. In order to attract private investment and public
assistance, developers of affordable housing need to ensure that the investment made will be
protected. Projects are required to establish a property management plan and to implement
and enforce the policies and procedures. Additionally, reserves for capital improvements
and operations are set aside on an annual basis. Projects are then monitored on an annual
basis for compliance with regulatory agreements.
Given the special needs population being served at the development. on-site security is
proposed at night and weekends, as well as a shared manager trom SBCS' existing
development for former foster youth.
Proposed Financin!!: ofProiect
With rents restricted to 30 percent and below of the Area Median Income (AMI) for a period
of 55 years, the net operating income is insufficient to support debt to cover project costs.
SBCS is seeking $50,000 in private grant funding, covering approximately 6 percent of the
estimated $780,000 cost. Therefore, there remains a fmancing gap of approximately
$730,000. The developer will be using County and City assistance for the estimated
$730,000 gap.
SBCS is seeking $345,000 through the competitive HOME CHDO Notice of Funding
Availability (NOFA). Additionally, SBCS has requested direct fmancial assistance of
approximately $385,000 or $55,000 per unit trom the City to close this financing gap.
4-3
MARCH 23, 2010, ITEM~
PAGE40F6
Staff is recommending that the City conditionally approve financial assistance (subject to
future loan agreement approval) in the form of a residual receipts loan in an amount not to
exceed $385,000 to assist with the financing gap. Financial assistance for the residential
units will be subject to negotiation of satisfactory terms of the Regulatory Agreement and
Loan Agreement and the approval of such terms and documents by the City at a later date.
A summary of the source of funds and cost per unit are provided in the table below.
Project Cost:
Sources of Funds:
PROFORMA SUBSIDY ANALYSIS
Cost
$ 780,000
Funds
Grant Funding
$
$
50,000
50,000
Subtotal
Subsidies:
City Subsidy (CDBG & HOME)
County of San Diego (MHSA NOFA)
Subtotal
TOTAL
$
$
$
$
780,000 $
385,000
345,000
730,000
780,000
Cost per Unit (7 Units)
City Subsidy per Unit
$
$
111,429
55,000
Form of Assistance
City assistance will be provided in the form of a residual receipts loan secured by a note and
deed of trust, amortized over fifty-five years. The outstanding balance shall accrue with
simple interest at 3 percent per annum. Payment of principal and interest, or portions
thereof, on the City loan shall be made on an annual basis, out of a fund equal to fifty (50%)
percent of the net cash flow of the project after reasonable operating expenses have been
paid (Residual Receipts).
More specific terms of the loan will be further negotiated. The required loan agreement and
associated documents will be negotiated and presented to the City for approval at such time
as final approval of the project is ready.
Conditions of Fundine:
It is recommended that funding approved for 1194-1196 Trenton Avenue be conditional, as
follows:
I. Approval of other Funding: Developer must secure all other funding necessary to
fund the project.
2. Maximum Funding Level: The City assistance is based upon the assumptions
presented within the sources and uses of funds, development budget, development
4-4
MARCH 23, 2010, ITEM~
PAGE50F6
profonna and other infonnation filed with the Affordable Housing Review
Application for the project as submitted and reviewed by the Community
Development Services Department. The City assistance is a maximum level of
participation. It is expected that any substantive revisions in such fmancing
assumptions which would lead to an increase in other resources available, would
therefore reduce the level of City assistance.
3. Environmental Review and Land Use Approvals: All necessary review and
approvals must be obtained.
4. Property Management: Developer must select a qualified property management
finn to manage the project.
5. Participation in the Crime Free Multi-Family Housing Program.
Development Risks
In its role as lender to the project, the City is exposed to three risks inherent to real estate
development. These risks generally include: 1) predevelopment (project does not get to
completion), 2) acquisition/rehabilitation (project cannot be completed, cost overruns,
contractor problems), and 3) operation (revenues do not cover expenses).
A number off actors mitigate these risks. First, a component of the development team has a
track record with other affordable housing projects. The presence of other major financial
commitments, such as the County investment, means that other stakeholders depend on the
short and long-tenn success of the project. By its nature, affordable housing presents some,
but very limited market risk because of the deeply discounted rents.
Assuming all financial commitments are secured, acquisition is expected in Spring 2010
with lease up of the project estimated by Summer 2010.
CONCLUSION
As stated within the City's Housing Element, the more pressing need for the City's
special needs lower income population is for quality affordable rental housing and in
general a more balanced and varied housing stock is recommended for Chula Vista. The
proposal of 7 additional affordable rental units for special needs extremely low income
households in the southwest meets both of these goals and provides a variety of benefits
such as a preferred location to neighborhood services, amenities and employment centers,
as well as long tenn affordability.
DECISION MAKER CONFLICT
Staff has reviewed the property holdings of the City Council and has found no property
holdings within 500 feet of the boundaries of the property which is the subject of this
action.
4-5
MARCH 23, 2010, ITEM~
PAGE 6 OF 6
CURRENT FISCAL IMPACT
Approval of this resolution indicates an intention by the City to provide financial
assistance for the acquisition and rehabilitation of 1194-1196 Trenton A venue to provide
affordable rental housing opportunities, once all other necessary financing for the project
is secured. The loan amount of $385,000 is already allocated in the CDBG Plan for
acquisition and rehabilitation of affordable housing development, but would be
appropriated at approval. Funds for staff support are budgeted in the personnel portion of
the Housing Authority budget.
ONGOING FISCAL IMPACT
There are no ongoing fiscal impacts of this action. Costs of City staff to monitor the
project going forward are included in funds received by the Housing Authority.
ATTACHMENTS
I. Locator Map
Prepared by: Stacey Kurz, Senior Project Coordinator, Development Services Department
4-6
i=d-~
~
~1f{2.
l~\,,"
em"'-
CHUA VISTA.
0[5]
[5][5]
[5][5]
GJ
Comm rcial
Cent r
CD
[[[J
ADA ST
fS]0
rsJ0
rsJl2J
Attachment 1
Staff has reviewed the property holdings of the City
Council and has found no property holdings within
500 feet of the boundaries of the property that is
subject to this action.
1194 - 1196 Trenton Avenue
A
NORTH
RESOLUTION NO. 2010-
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA CONDITIONALLY APPROVING FINANCIAL
ASSISTANCE, IN THE FORM OF A RESIDUAL RECEIPTS
LOAN IN AN AMOUNT NOT- TO-EXCEED $385,000 FROM THE
COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG)
PROGRAM TO SOUTH BAY COMMUNITY SERVICES, FOR
THE ACQUISITION AND REHABILITATION OF 1194-1196
TRENTON AVENUE FOR AFFORDABLE HOUSING
WHEREAS, the City of Chula Vista is an entitlement/participating jurisdiction for the U.S.
Department of Housing and Urban Development (HUD) funding programs and is awarded on an
annual basis a formula grant from the Community Development Block Grant (CDBG); and
WHEREAS, CDBG funds are designed to assist in the creation of affordable housing
opportunities for low income households through the acquisition and/or rehabilitation of affordable
housing; and
WHEREAS, South Bay Community Services ("Developer") proposes to acquire and
rehabilitate a 7 unit multifamily rental development, with units affordable to extremely low former
foster youth households at 30 percent of the Area Median Income (AMI) at 1194-1196 Trenton
Avenue (Lot16 of Map No. 2119) located north of Palomar Road in City ofChula Vista ("Project");
and
WHEREAS, Developer is applying for County of San Diego HOME Investment Partnership
funds for Community Housing Development Organizations; and
WHEREAS, additional financing is necessary in order to make the Project feasible; and
WHEREAS, the provision of affordable housing units like the Project is consistent with and
called for by the City's General Plan Housing Element and Consolidated Plan; and
WHEREAS, the City wishes to provide Developer with a pre-commitment of$385,000 from
its federal Community Development Block Grant (CDBG) funds to assist SBCS in obtaining
additional affordable housing financing; and
WHEREAS, the City's provision offunds to the residential use of the Project will directly
improve the City's supply of very low and low income housing; and
WHEREAS, the City's Housing Advisory Commission did, on the)'d day of March, 2010,
hold a public meeting to consider said request for financial assistance; and
4-8
Council Resolution No. 2009-
Page 2
WHEREAS, the Housing Advisory Commission, upon hearing and considering all testimony,
if any, of all persons desiring to be heard, and considering all factors relating to the request for
financial assistance, has recommended to the City Council that the conditional financial assistance be
approved because the Commission believes that the City's financial participation in the development
of the Project will be a sound investment based upon Developer's ability to effectively serve the
City's housing needs and priorities as expressed in the Housing Element and the Consolidated Plan
and the cost effectiveness of the City's financial assistance based upon the leveraging of such
resources; and
WHEREAS, the environmental coordinator has reviewed the proposed action for compliance with the
National Environmental Policy Act (NEPA) due to the use of Federal funds and has determined that
pursuant to Section 58.30 (b), Subpart D, Title 24 of the Code of Federal Regulations, further review
and environmental determination as appropriate, will be required prior to appropriating and/or entering
into an affordable housing agreement with South Bay Community Services.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CHULA VISTA HEREBY
DOES RESOLVE as follows:
I. Financial assistance in an amount not-to-exceed $385,000 from the City's CDBG funds to
Developer for the acquisition and rehabilitation ofthe Project is conditionally approved.
2. The above conditional approval is conditioned upon the requirement that Developer must secure all
other funding necessary to fund the project.
3. The above conditional approval is conditioned upon the requirement that Developer must select a
qualified property management firm to manage the project.
4. The above conditional approval is conditioned upon the requirement that Developer participate in
the Crime Free Multi-Family Housing Program.
5. The above conditional approval is conditioned upon the requirement that all necessary environmental
and land use review and approvals must be obtained.
6. The above conditional approval is subject to the City's approval ofan affordable housing and loan
agreement that shall include, at a minimum, the following terms and conditions:
a. The loan repayment will be secured by a Deed of Trust and Promissory note for the
property on behalf of the City ofChula Vista and recorded against the Project property.
b. The principal and interest on the loan will be amortized over fifty-five years and repaid
from cash surplus in annual installments.
4-9
Council Resolution No. 2010-
Page 3
c. Developer will be required to operate the Project consistent with the Regulatory
Agreement required by the Proj ect' s tax credit and bond financing, covenants imposed by
the Agreement, and any other project requirements.
d. Developer shall enter into a loan agreement with the City consistent with the terms set
forth above and with such any other terms as shall be required or approved by the City
Attorney.
7. That City assistance is based upon the assumptions presented within the sources and uses of
funds, development budget, development proforma and other information filed with the Affordable
Housing Review Application for the project as submitted and reviewed by the Development Services
Department. The City assistance is a maximum level of participation. It is expected that any
substantive revisions in such financing assumptions that would lead to an increase in other resources
available, would therefore reduce the level of City assistance.
8. This conditional approval remains subject to final approval by the City in its sole discretion.
Presented by
Approved as to form by
~~/W5I: /lV
Gary Halbert, PE AICP
Deputy City Manager/
Development Services Director
Bart Miesfeld
City Attorney
4-10
..
~ ~'i'tE~~~:'~(~l'e/()pmrlll Sem;a>J
','.'~~N.'.. ~:::~~r~ ..H......J~~ti~~:.~::~'.~:.~.
,....,.~"""-...........""1r:;-:::, :"': --:: -- --.' <,"'~ ~~- ---~;.~'-~.: '....;' "~" '. ",,'C" -. .".
. South Bay CommuqilY Seryi5=~~
1194~1196 Trenton Avenue
.ebuld Vista
"
._M,!,~n 23. 2010;
~'ft-.
~
,......,.......
~~~ ~'.;-,',:::-~-~iih,.;..;;.. ~[)"llel(ltJ1neIIlS('J'/lia~\"
bl "."", '''' ~~"'~- r
~, -'~,,'i:l~~l&D Depanmenl
.".~ ~lW~ .................................
"m'''',_",'~M' - .....~~U-~..f'l..".-.._..,-_... .. '_;~"';.-':;-'1':"'_7 .,.--. _._
- .. .. .......
,
~ S()U'tJiBay,'COnllnU.l~ties,SerVic'es'
~:~', ,J..
I.. .. --:;, ,~;J;Aipp~c~~.6,9-f{)r,acquisition'alld
~,~, rch;~bilitarion of7 unitcomple~
t:.."~'~~j ,:... V~I)'~lo'~'iricorric special needs rental
'c=J' "'<;hOl:;sin~;Enr ~~lOncr'fo~tcr_you~h' '
[;;;''-;'-':,'Z :,Z. J,>r~':co~~,innent,>o,f f~mmu>ru,t). . .
.~~-::-.> :..:. pevel~pm:~n~,Block,Grant (CDBG);
r :::Jj,fU:d~ ~38,~'OOO, "
...." ,"JI:',:...- '"C'%::~"t"'fI?!'"':;-'~.,':''f...i<'..:J',..;:~
"'''-/' ;'J;'
"'It:
~
;,.U-S
tHl.....""'A
[)Wc!OPW(,llt SalJi,~('s
~
C:::J .
i!IJ',~!,,!g.
c:::::J
'-~-'1
~'""'=
H
L,J
CD~S~:,pr.oject a~vantages
- ~lannin~priorjties" ' ',. .,' ,;
. ,:'~, Anriu~1 A,ciio.n~Cof'!solidate~Plan/CAPER
- Meets Consolid~icd Plan.goals/ohje~tive's
;-'ApP,licati.or'1:~ rt:que;si:::: allocation amount
~ Pr~ject size. does,not trigger o,ther federal-
,. requirements, "
,~ .
, ""'.scrv~s.targetcd.sp,cc~al ncci:Is p()pulatiori
. "",'OrigiriaJ'projcc~, tiinir:g:-
.!(
-......-"",..;.'"f;""-~.....,:
3----~~\ 'T
A:,'i.c\\ ~i'>''''~
.3/63/'10
.::h~
1
~'t/...
~
,",'"
t,u"ylSV\
.,_...~..,~....~.~'
~~~,.~l)ad(.lpm,~ntS('rfJires
E~~~~~ ..",.......?~p~:.!?!.~::.~~.:.
~-:'->'~'~'-"'-;_:.~~T'-"--::""""'" -:';:"'" ,,",,'- 7" "..~-;'
-
"il
. ~ i
;~' i I
i
,
!I,Qr..o.TlQ,q,
ii'IIII1
r"'~
...,,--'"
c:::J
"""<' - \~-
,;
~,- ..
,+..''--\.,C,~ ~"
~!I,-:
~
U..1~\'''IA
'~-t
". '.
II1II
rLoc..T~n
-
~
~,
C----
..' "
"-'"~
J'---
rl
I......!
Development Sf'mieN
'" D'.1!:!~?.~~;~,~;~..~
'"-;,~'-'-f:;o-.-",\ ..~/":'.;,,::~;
,\11,-:
~
~~,-:'!
F,IB', ' ,
c=J.
l\'!.~,"1.'lI
[ ;:!
r;----"!'" . ,."
L---J bedroom F~.I6s~aryoUm
eI.,~ .'O'~~
N~b'::~- ~~ ~~1i.~ikOmeb: Es.!L~ted
_ ~ 1Unl R:S1$t~~ll8Vel~ ~ Monthly Unit
" ,.---<;>; '!" ~ '.l-(~""'t. ~enl
30%
AMI $2~'i
, ;)alb<\
;lAMI'
AVERAGE REm
$421
3--:1
bedroom
'~.I6s!efy,6uih
2
~"~ ~~ .,~<6"._4"" De1w/oprm>1Il St'nJirn
l':-:::rw. ~~!~5;~:J~ ...........!?~1''!.~??~~~?:.~.
"-7"..-c.._~.._;rt.-'\"'"""'';,'';-''''' -" ---'< <~'--"-- - '- -' -+~
,.'w.t' "
..; ',- ";.1""
~ 'i J'Jl.ill'!.!JtM,i~Utl~lm'.M_^;~l'i ~.od- I
=:li~t{i~:~:;:~"~:~~~",, """ ::::: II
._.fiN~_: ;' ,_ 1m;,,,, I'm. _,",",,,,,,t A",,,d,,bk 1T"",i,," Pr<'~mm'MIP\ ~;I")
I,;",,"'" t"'''. - ,
,.- ...",,, ""m" ,,,,,,,,, -~:':l
I.JEy~~.~:~~~
~
~;,~.$
"...""l'~
~~j~~:::;:fe!OjJi'~;~;;~:;~;~~~;
~....,....,.~.,~<ei,>er;l."'"""'''"''._n.....n'''h.....m................
...-,._.~. ..-~. ""'!'i" 'r "'._";'''';'''"''-''1,'''''';;';'"_' rJ - ---."C' .- >.-~"
..It;" ~> ~ta,f!'re~&~nl?1,1d's.a~"?pti~~the;:,.,
fr:".':ic::-i(f'/~;;: - " rcsolu~on t.o'COndIUonal,ly af.':prove
__" .,: ~DBG, fun,ding/or $385,000
-,"
tw....,.-.....,..." ".n
~,.
-,~
'-1
f
I
r.;'.;
<:1,'
';c"
u,
I
,
l~j;:A:;,'.",,;:
.\
,,";'
,;iT'ft)?1, ,~,~'':;t-:-Ji,;;~! ,...,
3
1.l,-_J~~", --L1~~f<l'; ~,~~"~~~,' ~ .'~ :',~r~ ." -:-: ~~.;"':~,.;..,'~Aw1.a..!~~