Title
Recommendation to Authorize the Interim City Manager to Reallocate Fiscal Year 2022-23 HOME Investment Partnerships Program Funds and Execute a Grant and Regulatory Agreement with the Alameda Affordable Housing Corporation (AAHC), Known as the Alameda Housing Authority, for Rehabilitation at China Clipper in the Amount Not-to-Exceed $300,000.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Sections 15194 (Affordable Housing) and 15301 (Existing Facilities). (Housing and Human Services 201)
Body
To: Honorable Mayor and Members of the City Council
From: Adam W. Politzer, Interim City Manager
EXECUTIVE SUMMARY
The City of Alameda (City) receives HOME Investment Partnerships (HOME) funds through its participation in the Alameda County HOME Consortium (Consortium). Alameda County Housing and Community Development (ACHCD) is the lead agency for the Consortium and awards jurisdictions HOME funds for eligible projects on an annual basis. In Fiscal Year (FY) 2022-23, the City received an award of $359,293.13. In addition, the City received a one-time allocation of HOME American Rescue Program (HOME ARP) funds for the Dignity Village project.
On June 7, 2022, City Council conditionally approved FY 2022-23 HOME funds for 1245 McKay Avenue Senior Housing development and 500 Mosley Avenue Permanent Supportive Housing development. Of the $359,293.13, $2,770.96 has been expended leaving the current balance at $356,522.17. The remaining HOME funds from FY 2022-23 are set to expire on June 30, 2026. Staff proposes to reallocate up to $300,000 in FY 2022-23 HOME funds to rehabilitate the China Clipper facility which would help maintain and preserve existing affordable housing.
BACKGROUND
Title II of the Cranston-Gonzales National Affordable Housing Act (NAHA) of 1990 created the HOME program. The HOME program provides financing for a wide range of affordable housing programs and activities that benefit low- and moderate-income households and special populations such as the elderly and persons with disabilities. The HOME program is funded through the Department of Housing and Urban Development (HUD) and is the largest federal block grant for states and local governments.
As the lead agency of the Consortium, ACHCD provides HOME funds to Consortium members for eligible projects under HUD regulations. Each year, ACHCD releases a HOME application for all Consortium members who may be interested in receiving HOME funding. In October 2021, the City applied to receive FY 2022-23 HOME funds. ACHCD awarded the City $359,293.13 in HOME funds to support affordable housing development. On July 1, 2022, Alameda County executed a subrecipient agreement with the City for an allocation of HOME and HOME ARP funds. ACHCD has a 4-year project completion deadline whereby the term of the agreement ends on June 30, 2026. Funds that are unexpended by the deadline return to the HOME Consortium funding pool.
DISCUSSION
The City issues a HOME Request for Proposals annually to solicit applications from various organizations to undertake projects that create and retain affordable housing in Alameda. Qualified applicants must have experience in developing, owning and/or operating regulated affordable housing in California along with the ability to complete their proposed project.
From 2018-2023, Mercy Housing California, in partnership with Alameda Point Collaborative, applied for HOME funds. Throughout this time, the City conditionally awarded Mercy Housing Permanent Local Housing Allocation (PLHA), Affordable Housing Unit Fee (AHUF), and HOME funding for affordable housing development costs at 1247 McKay Avenue. As with most affordable housing projects, securing funding presents many challenges and is extremely complicated. Developers face a widening funding gap where rising expenses for labor, materials, and insurance outpace the income generated by rent-restricted units. Mercy Housing has not yet closed the funding gap for the 1247 McKay Avenue project, however, they are actively working to secure the final funding.
Since Mercy Housing has not yet started construction of the project, they cannot draw down the allocated HOME funding of $359,293.13. As described above, the FY 2022-23 HOME funds must be expended by June 30, 2026, per HUD requirements, so City staff researched options for a different eligible rehabilitation project to avoid losing the allocated HOME funding. China Clipper, owned by the AAHC (an affiliate of the Housing Authority which manages the property), was identified as a viable option with rehabilitation projects that could be completed by June 30, 2026.
China Clipper is a family project with 26 units located at 460 Buena Vista Avenue. The City is already a lender on the project through a 1998 HOME loan restricting 11 units for very low- and low-income tenants. Furthermore, the property is sixty-two years old and needs a new roof, and exterior paint, as well as other common area upgrades. The reallocated HOME funds will be utilized to support the common spaces for a larger number of tenants, and therefore represent a strong investment for the long-term preservation of 26 units in Alameda. The cost of construction and labor is estimated to be $218,925. There is also expected to be a 10% oversight fee for project management. AAHC is in the process of procuring contractors and subcontractors to meet the tight turnaround time. Therefore, the final amounts for the entire project including oversight fees are to be determined so this action is to request reallocating $300,000 which is sufficient funding if the final construction cost is higher. Approval to execute the HOME grant agreement will allow the AAHC to provide much needed repairs at China Clipper and will expend most of the FY 2022-23 HOME funds by June 30, 2026. Any remaining unexpended funds will no longer be available and will go back into the total funds for ACHCD Consortium members for future distributions.
ALTERNATIVES
• Authorize the Interim City Manager, or designee, to execute an agreement in the Amount Not-to-Exceed $300,000 to provide financial assistance to the AAHC for rental rehabilitation.
• Direct staff to revise the grant agreement and authorize the Interim City Manager, or designee, to execute the agreement based on specified revisions.
• Decline to move forward with the grant agreement to provide financial assistance to rehabilitate China Clipper.
FINANCIAL IMPACT
There is no impact on the General Fund. The grant funds are available and budgeted to the Housing and Human Services HOME Fund (Fund 201). Not approving the reallocation of HOME funds will result in the loss of a full $356,522. Approving the grant agreement results in utilizing up to $300,000 for major repairs at the China Clipper facility.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
These actions support the City Strategic Plan goals and initiatives. HH3 - Further the preservation, rehabilitation, or construction of affordable housing in Alameda and research other innovative affordable programs to increase affordable housing. This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
Under federal law, the execution of agreements and final funding commitments related to this action are subject to satisfactory environmental clearance pursuant to 24 CFR Part 58.
In accordance with the California Environmental Quality Act (CEQA), this action is categorically exempt from further environmental review pursuant to CEQA Guidelines Sections 15194 (Affordable Housing) and 15301 (Existing Facilities).
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the Interim City Manager to reallocate fiscal year 2022-23 HOME Funds and execute a grant and regulatory agreement with the AAHC, known as the Alameda Housing Authority, for rehabilitation at China Clipper in the amount not-to-exceed $300,000.
Respectfully submitted,
Amy Wooldridge, Assistant City Manager
By,
C’Mone Falls, Housing and Human Services Manager
Andre Fairley, Management Analyst
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. HOME Grant Agreement - China Clipper
2. HOME Regulatory Agreement