Title
Public Hearing to Consider Adoption of Joint Resolution Approving the Development List of Affordable Housing Projects and Funding Request for Such Projects as Requested by the Alameda Unified School District (AUSD). [City Council/SACIC] (Community Development)
Body
To: Honorable Chair and Members of the Successor Agency to the Community Improvement Commission of the City of Alameda
Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
This staff report recommends a process for implementing the provisions of the District Housing Fund contained in the 1991 Pass-Through Agreement between the Alameda Unified School District (AUSD) and the former Community Improvement Commission of the City of Alameda (CIC). The process would provide for approximately $1.8 million in Redevelopment Property Tax Trust Fund (RPTTF) money to be allocated to Rosefield Village, a 92-unit affordable housing project, and would release approximately $4.4 million to taxing entities currently being retained by the County Auditor-Controller during Fiscal Year (FY) 2020-21. On a going-forward basis, implementation of the District Housing Fund obligation under the 1991 Pass-Through Agreement would be managed by the Successor Agency. The Auditor-Controller would no longer hold RPTTF funds for this obligation.
BACKGROUND
In 1991, as part of establishing the Business and Waterfront Improvement Project (BWIP), the CIC approved a Pass-Through Agreement with AUSD that, among other things, established an AUSD (“District”) Housing Fund. The intent of the District Housing Fund was to provide AUSD with 40% of the CIC’s affordable housing set-aside funds to construct housing for District employees.
With the dissolution of redevelopment agencies and establishment of successor agencies in 2012, the status of the District Housing Fund was one of the items subject to unwinding by the Successor Agency to the CIC. At the time of dissolution, the District Housing Fund, which was controlled by the CIC, had a balance of $4 million. Working with the State Department of Finance (DOF), the CIC was able to retain the $4 million and expend those funds on affordable housing activities, including purchasing the former Island High School site on Everett from AUSD. Everett Commons, the 21-unit affordable family project, is now located on that property.
While the CIC retained the existing $4 million in 2012, an outstanding issue was how to handle the new funds that would accrue to AUSD pursuant to the Pass-Through Agreement going forward. The County of Alameda determined that it would retain those funds until the issue was resolved. (The County Auditor-Controller’s office handles all payments to taxing entities pursuant to pass-through agreements.) In addition to payments handled by the Auditor-Controller’s office, the DOF approves a Recognized Obligation Payment Schedule (ROPS) for all successor agencies. Successor agencies can only expend funds on approved enforceable obligations.
In 1990, the City entered into a Settlement Agreement with Modessa Henderson and Clayton Guyton (Guyton Agreement) which required that the CIC use its BWIP affordable housing set-aside funds to build housing affordable to households earning 80% or less of the Area Medium Income (AMI) until the City has constructed enough very low- and low-income units to satisfy the 1994 Regional Housing Needs Allocation (RHNA). [Normally, affordable housing set-aside funds can be spent on housing affordable to households earning up to 120% of AMI.] The parties to the Guyton Agreement are beneficiaries of the AUSD Pass-Through Agreement.
With the dissolution of redevelopment agencies, staff wanted to ensure that the Guyton Agreement was deemed an enforceable obligation by DOF as the City had not yet met its RHNA numbers for very low- and low-income units and access to tax increment funds would help ensure meeting the requirements of the Guyton Agreement. As a result, in 2016, DOF determined that the requirements of the AUSD Pass-Through Agreement dealing with the District Housing Fund were an enforceable obligation (the parties to the Guyton Settlement were beneficiaries of the Pass-Through Agreement) and should be included on the ROPS. DOF further required that, to be consistent with the Pass-Through Agreement, the funds needed to go through AUSD to any third party affordable housing developer if AUSD itself was not going to build the affordable housing.
In 2017, staff worked with AUSD and the Housing Authority on a Memorandum of Understanding (MOU) between AUSD and the Housing Authority that provides a process for the Housing Authority to propose affordable housing projects that are eligible for funding and for AUSD to approve those projects. The MOU outlines how funds are accessed and provides a housing unit set-aside for eligible District employees based on the amount of Housing Fund money contributed to the project. The AUSD Board of Trustees and Housing Authority Board of Commissioners approved the MOU in May 2018. The MOU identifies funding for specific projects through 2023.
As a result of DOF’s approval of the Pass-Through Agreement as an enforceable obligation, the Successor Agency can include funds as part of its annual ROPS consistent with the funding amount approved in the MOU. DOF has approved the Successor Agency’s annual ROPS since 2016, with funds included for affordable housing projects as provided for in the Pass-Through Agreement. The MOU establishes a process for the Housing Authority to make funding requests to AUSD for affordable housing projects that implement the terms of the Pass-Through Agreement. The Successor Agency has been transferring to the Housing Authority funds approved on its ROPS schedule, pursuant to the MOU.
At the same time, since 2012, the County Auditor-Controller has retained the amount of funds that would be eligible to be placed in the District Housing Fund in an account as it has waited for direction on the disposition of those funds. With DOF’s approval of the Housing Fund portion of Pass-Through Agreement as an enforceable obligation, the Successor Agency has received those funds via the ROPS process. This has created a process whereby the Successor Agency receives funds through the ROPS process and the County continues to hold funds pending resolution of this issue. The end result is that funds are available and are being used for affordable housing and a corresponding amount of money is being held by the County Auditor-Controller that should otherwise be distributed to the taxing entities.
The County has accumulated approximately $6.27 million in that account. It is estimated that approximately $1.84 million of those funds should be made available for affordable housing projects pursuant to the Pass-Through Agreement. The balance of funds ($4.43 million) held by the County Auditor-Controller is not obligated under the terms of the Pass-Through Agreement by reason of having been satisfied through the ROPS process should be distributed to the affected taxing agencies. If this issue is not addressed, funds that should otherwise be distributed to taxing entities (including the City) will continue to accumulate and remain undisbursed.
At this time, all parties would like to resolve this issue and have agreed to a path forward, which is discussed in more detail below.
DISCUSSION
As provided in the Pass-Through Agreement, AUSD has requested the Successor Agency and City review and approve its FY 2020-21 list of prioritized housing programs and projects (development list) and a related funding request at a noticed public hearing. AUSD‘s letter making this request is attached as Exhibit 1. The Successor Agency’s review is limited to whether or not the proposed projects and programs are consistent with the requirements of the Pass-Through Agreement, the Community Redevelopment Law, the Guyton Agreement, and the City's review is limited as to whether or not the proposed projects and programs are consistent with the Housing Element of the General Plan. Assuming such findings are made by the Successor Agency and the City, the Successor Agency and City are to approve the development list and the funding request.
As noted in the attached letter, AUSD’s development list includes one project, Rosefield Village, and a funding request of $1.84 million. Rosefield Village is an existing Housing Authority property that will be redeveloped to increase the total number of affordable apartments. The property currently includes 53 housing units. The redevelopment project will demolish 40 of these units and replace them with a new 78-unit apartment building with community spaces and on-site property management offices. Additionally, five of the other buildings on the property will be renovated. When complete, the $77 million redevelopment and renovation project will provide 92 rental units. The project will be affordable to households earning between 20 and 80% of AMI. Construction is anticipated to begin in late summer 2020.
This project is consistent with the Pass-Through Agreement, the Community Redevelopment Law, and the Guyton Agreement as it is located in the former BWIP, is serving households earning a maximum income of 80% of AMI, and will set-aside a certain number of units for eligible AUSD employees.
The project is also consistent with the City’s Housing Element:
Goal #1: Provide housing services and opportunities to support, maintain, and enhance Alameda’s diverse community and excellent quality of life and provide for the housing needs of Alameda's future residents and regional housing needs.
Policy HE-1: Support public and private efforts to increase the supply of housing in Alameda consistent with the City's environmental, climate action, transportation, historic preservation, and economic development policy objectives.
Goal #2: Provide housing that meets the City’s diverse housing needs, specifically including affordable housing, special needs housing, and senior housing.
Policy HE-2: Expand the City’s supply of affordable rental and ownership housing for extremely low-, very low-, low-, and moderate-income households.
Policy HE-3: Create rental, homeownership, and other housing opportunities for special needs populations such as the elderly, homeless and people at risk of becoming homeless, people with physical and/or developmental disabilities, single-parent households, and young adults.
Policy HE-7: Promote the conservation and rehabilitation of the City’s existing housing stock.
Staff recommends that the Successor Agency review the development list and funding request and determine that the Rosefield Village project as described above is consistent with the Pass-Through Agreement, the California Redevelopment Law and Guyton Agreement. Staff also recommends that the City Council find that the Rosefield Village project is consistent with the Housing Element of the General Plan.
If the Successor Agency and City Council make the necessary findings and the Successor Agency approves the development list and the funding request, AUSD is expected to request that the County Auditor-Controller release directly to the Housing Authority funds required for Rosefield Village. For FY 2020-21, the County Auditor-Controller will remit to the Housing Authority approximately $1.84 million in funds and disburse the remaining $4.43 million in funds not obligated under the Pass-through Agreement to affected taxing agencies.
In the future, the Successor Agency will report the obligation on its ROPS schedule. This allows the Successor Agency to receive RPTTF funds from the County Auditor-Controller for eligible housing projects to satisfy the obligations under the Pass-Through Agreement and the MOU. The County Auditor-Controller will cease making deposits into the District Housing Fund as implementation is being handled through the ROPS process.
ALTERNATIVES
• It is recommended that the Successor Agency review the development list and funding request and determine that the Rosefield Village project as described above is consistent with the Pass-Through Agreement, the California Redevelopment Law and Guyton Agreement and that the City Council find that the Rosefield Village project is consistent with the Housing Element of the General Plan.
• The Successor Agency could direct staff to work with the County Auditor-Controller and AUSD to determine a different resolution to the issues described above. This alternative would impact the ability of the Rosefield Village project to move forward as sufficient funding would not be available to complete the permanent financing for the project.
• The Successor Agency could decline to move forward with the process described above. This alternative would result in jeopardizing the funding for Rosefield Village as well preclude the County Auditor-Controller from disbursing approximately $4.43 million to the taxing entities.
FINANCIAL IMPACT
Approval of process for resolving the issues described above to enforce the provisions of the Housing Fund contained in the AUSD Pass-Through Agreement has a positive impact on the City’s General Fund. Funds are currently being retained by the County Auditor-Controller. If those funds are released, the City’s General Fund would receive approximately $1.3 million in FY 20-21. The City receives approximately 30% of each property tax dollar ($4.43 million x 30% = $1.3 million) that is released from the RPTTF to taxing agencies because it is not needed for either pass through payments or Successor Agency enforceable obligations. In addition, the City would continue to receive an annual allocation of its share of the property tax revenue that would otherwise continue to be held by the Auditor-Controller pending resolution of this issue.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The process for resolving the issues described above to enforce the provisions of the District Housing Fund contained in the AUSD Pass-Through Agreement is consistent with the Pass-Through Agreement, the Guyton Agreement and the DOF-approved ROPS.
ENVIRONMENTAL REVIEW
Adoption of this joint resolution is not subject to further environmental review because it is an implementation of governmental fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment other than a project that has been subject to prior environmental review, i.e., the Rosefield Village Project. CEQA Guidelines, section 15378 (b)(4).
CLIMATE IMPACTS
There are no climate impacts from approving the process for resolving the issues described above to enforce the provisions of the District Housing Fund contained in the AUSD Pass-Through Agreement.
RECOMMENDATION
It is recommended that the Successor Agency and City Council:
1. Conduct a Public Hearing; and
2. Adopt a Joint Resolution Approving the Development List of Affordable Housing Projects and Funding Request for Such Projects as Requested by the Alameda Unified School District.
CITY MANAGER’S RECOMMENDATION
The City Manager recommends adoption of the Joint Resolution approving the Development list of Affordable Housing Projects and funding request for such projects as requested by the Alameda Unified School District.
Respectfully submitted,
Debbie Potter, Community Development Director
Michael H. Roush, Chief Assistant City Attorney
Financial Impact section reviewed,
Nancy Bronstein, Human Resources Director and Interim Finance Director
Exhibit:
1. AUSD Letter
cc: Eric Levitt, City Manager