MEETING DATE:
March 23, 2021
SUBJECT:
Title
RESOLUTION NO. 2021-8867 - APPROVING AN ADDITIONAL PROJECT LOAN FOR OFF-SITE SEWER WORK AND AUTHORIZING THE CITY MANAGER TO NEGOTIATE, FINALIZE, AND EXECUTE THE CONSTRUCTION AND PERMANENT FINANCING LOAN AGREEMENT FOR PHASE 1 OF THE REDEVELOPED VILLA SERENA II AFFORDABLE HOUSING DEVELOPMENT
Body
Recommendation
Recommendation
ADOPT resolution approving an additional project loan for off-site sewer work and authorizing the City Manager to negotiate, finalize, and execute the construction and permanent financing loan agreement for Phase 1 of the redeveloped Villa Serena II affordable housing development.
Body
Resolution No. SHA 2020-039 dated 25 Feb 2020 authorizing $5.25 million to Phase 1
Resolution No. SHA 2014-009 dated Sept 9, 2014 authorizing predevelopment loan and ENA
Resolution No. SHA 2014-011 dated Dec 9, 2014 authorizing SHSA
Resolution No. SHA 2016-019 dated Jun 14, 2016 authorizing CDLAC approval letter
Resolution No. SHA 2019-037 dated Jul 9, 2019 authorizing roll-over of the legacy loan and the Replacement Housing Plan
Relevant Council Strategic Theme
Planning for the Future
Relevant Department Goal
Facilitate Affordable Housing Production
Executive Summary
This affordable housing development, known as “Villa Serena II” to distinguish it from the ageing 136-unit Villa Serena affordable housing development on the same site, has been in the predevelopment phase since September 2014. The owner of the legacy project is National CORE. National CORE intends to redevelop the site with the new Villa Serena II project which received entitlements in February 2017. Villa Serena II will provide 148 residential units, a community room and leasing office to replace the current 136 units, for a net gain of 12 units along with a more diverse mix of bedrooms per unit throughout the new development. Villa Serena II also offers significantly improved sustainability and efficiency over its predecessor.
Upon receipt of the final funding needed to move this project forward in October 2020, National CORE began work to gain the necessary permits for closing. In the process of obtaining permits from Vallecitos Water District, it became clear that various changes to the context, including increases in flows in the area, required additional sections of off-site sewer pipe upgrades with the project. Subsequently, National CORE has now asked the City to approve an additional loan of up to $1,600,000.00 to fund these newly added sections of off-site sewer pipe upgrades required by VWD.
Discussion
This affordable housing development, known as “Villa Serena II” to distinguish it from the ageing 136-unit Villa Serena affordable housing development on the same site, has been in the predevelopment phase since September 2014. The owner of the legacy project is National CORE. National CORE intends to redevelop the site with the new Villa Serena II project which received entitlements in February 2017. Villa Serena II will provide 148 residential units, a community room and leasing office to replace the current 136 units, for a net gain of 12 units along with a more diverse mix of bedrooms per unit throughout the new development. Villa Serena II also offers significantly improved sustainability and efficiency over its predecessor.
The original Project loan authorized by the RDA for Villa Serena in 1997 was $5,884,000. In September 2014 the SHA approved a predevelopment loan of $777,953 and in July 2019 the SHA approved financial assistance to both phases of the Villa Serena II project by rolling-over an existing RDA loan while also approving the Replacement Housing Plan required by Community Redevelopment Law. In February 2020, Council approved additional financial assistance to Phase 1 of the Villa Serena II project by approving an additional project loan of $5,250,000.
In October of 2020, the project received the final funding needed to move the project forward from the Tax Credit Allocation Committee (TCAC). National CORE immediately began to work to gain the necessary permits for closing and was notified that Vallecitos Water District (VWD) required an update to the Water and Sewer Study from November 2018. The updated report was completed on October 21, 2020 and included four new sections of off-site sewer pipe upgrades. VWD mandated these sections now be required to be upgraded due to VWD’s new Master Plan and model, as well as an overall increase in the Richmar area flows.
These same four sections were also included in the VWD Technical Memorandum - Water and Sewer Study prepared for the Mariposa II project Affirmed Housing is developing. While the off-site sewer work is required for both the Villa Serena II and Mariposa II projects, due to National CORE’s more accelerated construction and closing schedules, Affirmed Housing and National Core agreed this work should be completed as part of Villa Serena II’s construction.
National CORE has provided construction estimates and plans from subcontractors that outline the scope of work and costs for the off-site sewer improvements. The overall costs are approximately $1,600,000.00 and include all hard costs, soft costs, contingency and overhead. If approved, the loan amount requested will be dispersed as an ‘up-to’ loan. Meaning National CORE will submit requests for payments and draw down on the loan only when needed.
In summary, the City Council is being asked to approve the additional loan request in the amount of $1,600,000 in order to fund the new Villa Serena II Phase I off-site sewer work mandated by VWD. This loan would be specifically for this purpose and cannot be utilized by National CORE for other purposes. If National CORE is unable to construct the project due to unforeseen circumstances, Affirmed Housing will need to construct the off-site sewer work with the Mariposa II development. In this event, City staff would request a subsequent Council action to loan the $1,600,000 additional funding to Affirmed Housing.
The $1,600,000 is budgeted in the Fiscal Year 2020-2021 budget and is funded with City Affordable Housing Funds (Fund 203).
Attached is a copy of the Vallecitos Water District Technical Memorandum and map of the off-site improvements that are being required.
Environmental Review
All requirements of CEQA have been met, in that Mitigated Negative Declaration (ND 16-002) has been previously adopted for the proposed project and all potential impacts related to cultural resources, geology/soils, hazards and hazardous materials, hydrology and water quality, land use and planning, public services, and transportation/traffic will be mitigated to a level less than significant.
Fiscal Impact
The $1,600,000 is budgeted in the Fiscal Year 2020-2021 budget in the City Affordable Housing Funds (Fund 203).
Attachment(s)
1. Resolution No. 2021 - 8867
2. Vallecitos Water District - Technical Memorandum - Work Order #235663
3. Construction and Permanent Financing Loan Agreement
Prepared by: Candi Roberts, Housing Programs Manager
Reviewed by: Beth Herzog, Administrative Services Manager, Development Services
Reviewed by: Dahvia Lynch, Director, Development Services Department
Approved by: Jack Griffin, City Manager