Title
Recommendation to Authorize the City Manager to Negotiate and Execute a Loan Agreement and Related Documents with Island City Development (ICD) for HOME Partnership Investment Program (HOME) Funds in the amount of $248,740 at 3% Simple Interest for the Del Monte Senior Housing Project and Appropriate $53,537 in HOME Program Income. (Community Development 481005)
Body
Body
To: Honorable Mayor and Members of the City Council
From: Jill Keimach, City Manager
Re: Recommendation to Authorize the City Manager to Negotiate and Execute a Loan Agreement and Related Documents with Island City Development (ICD) for HOME Partnership Investment Program (HOME) Funds in the amount of $248,740 at 3% Simple Interest for the Del Monte Senior Housing Project and Appropriate $53,537 in HOME Program Income
BACKGROUND
The City is one of eight members of the Alameda County HOME Consortium. The Alameda County Housing and Community Development Department is the lead agency for the Consortium. The cities of Alameda, Fremont, Hayward, Livermore, Pleasanton, San Leandro, Union City and the Urban County are all members of the Consortium. Together, this group receives and shares an annual allocation of federal HOME Investment Partnership Program funds (HOME) from the Department of Housing and Urban Development (HUD). The 2016 allocation for the Alameda County HOME Consortium is $2,178,668. The City of Alameda currently has $248,740 of HOME Funds available for a housing development project. These funds are a combination of its annual allocation of HOME monies, program income from prior years and re-programmed funds.
To receive HUD funding each year, the City of Alameda, in conjunction with the Alameda County HOME Consortium, must complete a five-year strategic plan called a Consolidated Plan. The Consolidated Plan was approved by the City Council in May 2015. Each year, the City of Alameda must write an Action Plan, outlining specific projects and funding resources that will meet the Consolidated Plan goals. The Fiscal Year (FY) 2016-17 Annual Action Plan was approved by Council on May 3, 2016, and included a recommendation to fund an eligible future housing project in the amount of $148,275 in HOME funds. In addition, the City has approximately $53,537 in unused HOME funds program income and another $46,928 in unused HOME project funds from prior years that are available for affordable housing development (total available funding is $248,740).
The City of Alameda has a services agreement with the Housing Authority of the City of Alameda (AHA) to administer the City HOME program in order to create high quality affordable housing in Alameda. As required by law, on June 14, 2016, the AHA released a Housing Development Request for Proposals (RFP). The invitation was published on the AHA website and sent to the CDBG/HOME interested parties email list. Only one project in Alameda qualified for the funds. Therefore, only one proposal was submitted. The AHA’s affiliated non-profit, Island City Development (ICD), submitted a proposal for the Del Monte Senior Housing project.
The Del Monte Senior Apartments, a 31-unit, 100% affordable, senior housing development. The unit mix includes thirty (30) one-bedroom apartments, and one (1) two-bedroom manager’s apartment. Property amenities include community garden space, a multi-purpose community room and central laundry facilities. The apartments will serve senior households with incomes up to 60% of the Area Median Income, with most households at or below 50% of median income.
DISCUSSION
In December 2014, the City approved the Del Monte Master Plan and Development Agreement for the 11.06-acre property located at 1501 Buena Vista Avenue. The Development Agreement included the transfer of adjacent City-owned parcels in order to facilitate the development of affordable housing. The total development budget for Del Monte Senior Apartments is approximately $15 million. The Master Developer (Tim Lewis Communities) will contribute $3.6 million to AHA as a part of the overall development agreement. The AHA will lend the funds to the project for 55 years as a residual receipts loan. Additional funding includes conventional financing and equity raised through 9% Low Income Housing Tax Credits. Staff is requesting approval of a $248,740 HOME loan to complete the project funding. A more detailed budget is attached as Exhibit 1.
The recommended terms for the ICD HOME Loan agreement include:
• 3% simple interest
• 55-year term
• Repaid from residual cash flow
The City HOME Funds are required to be committed by December 31, 2016, or funds will be redistributed into the County HOME construction pool. Project construction will start in December 2016, and construction is expected to be completed in early 2018.
Staff is requesting that the City Manager be authorized to negotiate and execute a Loan Agreement and related documents with ICD for HOME Funds in the amount of $248,740 for the Del Monte Senior Housing Project on the terms noted above. In addition, it is requested that the City Council appropriate $53,537 in HOME program income to complete the funding for the Del Monte project loan.
FINANCIAL IMPACT
There is no impact to the General Fund from authorizing the City Manager to negotiate and execute a HOME-funded loan agreement for the Del Monte Senior Housing project. The current project budget already provides for $195,203 in allocated HOME funds. An additional $53,537 in HOME program income must be appropriated to complete the requested funding of $248,740.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This project is consistent with the Community Development Block Grant (CDBG)/ HOME Five-Year Consolidated Plan (FYs 2015-20) and the CDBG/HOME FY 2016-17 Annual Action Plan previously approved by the City Council.
ENVIRONMENTAL REVIEW
This project is subject to compliance with NEPA as HOME funds are Federal monies. The project completed all environmental review requirements, including a Finding of No Significant Findings (FONSI) and a Request for Release of Funds (RROF). The project received Authority to Use Grant Funds from HUD on March 29, 2016.
RECOMMENDATION
Authorize the City Manager to negotiate and execute a loan agreement and related documents with Island City Development for the HOME Partnership Investment Program (HOME) Funds in the amount of $248,740 for the Del Monte Senior Housing Project and appropriate $53,537 in HOME program income.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Claudia Young, Rent & Community Program Director
Exhibit:
1. Del Monte Senior Apartments Development Budget
2. Draft Contract for the Use of HOME Funds between Island City Development and the City of Alameda