Title
Adoption of Resolution Authorizing Application to the County of Alameda for $1,663,654 of Measure A-1 Funds from the City Base Allocation; and Use of the $1,663,654 of Measure A-1 Funds for the Rebuilding the Existing Supporting Housing of Alameda Point Project (RESHAP). (Community Development 29061821)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
On November 8, 2016, Alameda County voters passed the Countywide Housing General Obligation Bond (Measure A1). The $580,000,000 bond program funds three homeownership programs and two rental housing development programs. Of the total housing bond, $425,000,000 is allocated to the Rental Housing Development Fund to assist in the creation and preservation of affordable rental housing for vulnerable populations. Of the total amount allocated to the Rental Housing Development fund, $225,000,000 is allocated as “Base City Allocation” funding for Alameda County jurisdictions based on a geographical allocation formula. The City of Alameda’s (City) Base City Allocation is $10,400,000.
In June 2018, the City entered into a Disposition and Development Agreement (DDA), as amended, with MidPen Housing Corporation (MidPen) and Alameda Point Collaborative, Building Futures With Women and Children, and Operation Dignity (the Collaborating Partners, and together with MidPen, the Developer).
Due to recent changes in the financial marketplace, staff anticipates a funding shortfall for the Rebuilding the Existing Supporting Housing of Alameda Point (RESHAP) development located within the West Midway project. As a result, staff recommends the City Council approve application to Alameda County for $1,663,654 of Measure A-1 funds to assist in the financing of the RESHAP affordable housing project. This approach is akin to the City Council’s $6,000,000 allocation to the Site A affordable housing project of the Base City Allocation to close a similar funding shortfall.
BACKGROUND
In June 2018, the City Council approved the RESHAP DDA reflecting development of a 9-acre area within Alameda Point. In June 2018, RESHAP assigned the Affordable Housing Implementation Plan contained in the DDA to MidPen, a highly qualified nonprofit affordable housing developer, thereby officially designating MidPen as the Qualified Affordable Housing Developer. The RESHAP project includes three hundred and nine (309) housing units, all of which must be made available at very low- and low-income levels. MidPen will construct, consistent with the amended DDA, two hundred (200) units to replace existing housing that has fallen into disrepair and is currently in substandard condition, and one hundred and nine (109) new units. The DDA provides for a donation of land from the City for the RESHAP project, and a market rate developer contribution of the required backbone infrastructure and the concrete pad/foundation. The RESHAP project will be located at the northwestern corner of the development parcel, beginning at the corner of Midway Ave and Pan Am Way.
Currently, developers such as MidPen are facing a financial environment not seen since the Great Recession of 2008, specifically with interest rates reaching levels much higher than most would have anticipated when the project was being structured. In addition, investors’ appetite for tax credits, another planned funding source for this project, is not anticipated to be as healthy as it was even one or two years ago. The net effect is a likely decrease in realized funding from selling such tax credits on the open market.
DISCUSSION
Of Alameda’s Base City Allocation from the Measure A-1 funds, $1,663,654 remains available for use. To comply with Alameda County requirements, City Council must apply to the County of Alameda for these funds and allocate use of these funds to a project via resolution prior to year-end. Similar to the allocation of Measure A-1 funds that was made to the Site A project, staff recommends applying to the County of Alameda for these funds and allocating the remaining $1,663,654 of Measure A-1 funds to the RESHAP project to supplement the required capital stack for the project. RESHAP’s proposed project funding or capital stack is described below.
|
Source of Funds |
Amount* |
Status |
|
Land Donation |
$ 4,290,000 |
Committed |
|
County of Alameda Measure A1 |
$ 1,663,654 |
City Council Approval Pending/County Approval Pending |
|
HCD Super NOFA - MHP |
$ 13,475,308 |
Apply June 2023 |
|
Tax Credit Investor Proceeds |
$ 33,944,775 |
Apply Spring 2024 |
|
GP Equity |
$ 100 |
Committed |
|
TOTAL SOURCES |
$ 53,373,837 |
|
*Based on most recent estimates
*As noted, the above chart represents the current best estimate of project funding.
Importantly, if the Measure A-1 funds are applied for and committed to the RESHAP project, RESHAP will be able to demonstrate the City’s commitment to the project when applying for additional funds, which should strengthen its applications for other funds.
ALTERNATIVES
• Apply to the County of Alameda for and allocate $1,663,654 of the Base City Allocation from Measure A-1 funds to the RESHAP project.
• Apply to the County of Alameda to allocate a smaller portion of the $1,663,654 of the Base City Allocation from Measure A-1 funds to the RESHAP project.
• Do not apply for or allocate any portion of the Base City Allocation from Measure A-1 funds to the RESHAP project
FINANCIAL IMPACT
There is no impact to the City’s General Fund from applying for and allocating $1,663,654 from the City’s Base City Allocation of Measure A-1 funds. The bonds are general obligation bonds issued by Alameda County that are repaid by property owners throughout the County of Alameda as part of their property tax bill.
If the City Council declined to approve application for and allocation of $1,663,654 of Measure A-1 funds for the RESHAP project, this may cause project delays in order to raise additional capital or, in the worst case scenario, the project may be terminated.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This project is anticipated to be built pursuant to a number of City documents including the Five-year Affordable Housing Pipeline, the Housing Element of the General Plan and the DDA.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in California Environmental Quality Act (CEQA) Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Adopt a resolution authorizing application to the County of Alameda for $1,663,654 if Measure A-1 funds; and use of the $1,663,654 of Measure A-1 funds for the Rebuilding the Existing Supporting Housing of Alameda Point Project (RESHAP). .
Respectfully submitted,
Lisa Nelson Maxwell, Community Development Director
By,
Scott Watson, Base Reuse Manager
Financial Impact section reviewed,
Margaret O’Brien, Finance Director
cc: Erin Smith, City Manager