MEETING DATE:
March 22, 2022
SUBJECT:
Title
RESOLUTION NO. 2022-8995 - APPROVAL OF REPLACEMENT HOUSING PLAN AND MODIFIED PROJECT GAP FINANCING AMOUNT WITH NATIONAL CORE FOR THE VILLA SERENA II PHASE 2 AFFORDABLE HOUSING COMMUNITY
Body
Recommendation
Recommendation
ADOPT resolution approving modified project gap funding for the affordable housing development Villa Serena II Phase 2 and the updated Replacement Housing Plan for Villa Serena II Phase II
Body
Board or Commission Action
Resolution No. SHA 2014-009 dated Sept 9, 2014 authorizing predevelopment loan and ENA (Phase I)
Resolution No. SHA 2014-011 dated Dec 9, 2014 authorizing SHSA (Phase I)
Resolution No. SHA 2016-019 dated Jun 14, 2016 authorizing CDLAC approval letter (Phase I)
Resolution No. SHA 2019-037 dated Sept 9, 2019 authorizing rollover loan and RHP (Phase I)
Resolution No. SHA 2020-039 dated Feb 25, 2020 authorizing project loan and DLA (Phase I)
Resolution No. SHA 2021-8867 dated March 23, 2021 authorizing additional VWD project loan (Phase I)
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 bedroom mix throughout the new development. Villa Serena II also offers significantly improved sustainability and efficiency over its predecessor.
In July 2019, SHA resolution 2019-037 authorized the rollover of the existing Redevelopment Agency (RDA) loan made to the legacy Villa Serena project in 1998.
In February 2020, SHA resolution 2020-039 authorized gap financing to Villa Serena II Phase 1 for $5,250,000. In addition, in March 2021, SHA resolution 2021-8867 authorized an additional loan of $1,600,000 to cover required utility improvements mandated by Vallecitos Water District.
The SHA is now being asked to approve the final modified gap funding component for Phase 2 of the project in order to allow the Developer to apply for additional gap funding from the County, which is contingent on the city commitment being in place prior to applying for County funding.
The SHA is also being asked to approve the updated Replacement Housing Plan required by Community Redevelopment Law.
Discussion
In February 2014, the City Council approved entitlements for entire Villa Serena II project. For funding reasons, it will be built in two separate phases, similar to Westlake Village and Promenade at Creekside. Phase 1, on the west side of the project site, will consist of 85 new residential apartments. Phase 2, on the east side of the site, will consist of 63 new apartments, bringing the total to 148 at the completion Phase 2. After receiving project entitlements, the Developer began assembling components of the Phase 2 project funding from various public sources. That initial process is complete. In order to continue to apply for additional funding at the State and County level, either Multifamily Housing Program (MHP), low income housing tax credits or County of San Diego Innovative Housing Trust funds, the project requires a formal funding commitment from the Agency.
In July 2019, SHA Resolution 2019-037 authorized the roll-over the existing Redevelopment Agency (RDA) loan made to the legacy Villa Serena project in 1998.
In February 2020, SHA Resolution 2020-039 authorized gap financing to Villa Serena II Phase 1 in the amount of $5,250,000. And in March 2021, SHA Resolution 2021-8867 authorized an additional loan of $1,600,000 to cover required utility improvements mandated by Vallecitos Water District.
As of February 2022, the Villa Serena II Phase 1 site has been demolished and is currently undergoing redevelopment construction. The project is set to be completed as of December 2022.
Once the Agency commitment is in place the Developer will be able to apply for County funding which may include, Innovative Housing Trust funds, HOME funds and NPLH funds. Once these commitments are in place, the next step is to apply for competitive 9% low income housing tax credits via the Tax Credit Allocation Committee (TCAC), which may be as soon as next year and, if necessary, the following year as the award process is extremely competitive.
In summary, the City Council in its capacity as the SHA is being asked at the present time to complete the Agency’s funding commitment to Phase 2 and approve the modified project gap funding in the amount of $5,300,000 in order to fund Villa Serena II Phase 2 to the degree to be sufficiently competitive to compete for 9% low income housing tax credits in 2023 and, if required, in 2024.
Section 33413.5 of the Health and Safety Code requires that the agency adopt by resolution a Replacement Housing Plan for any units that would be destroyed or removed from the low-and moderate-income housing market. In this case, 136 deed restricted apartments in the old Villa Serena Apartments are slated for demolition and replacement on-site by the 148 new units in the project. The demolition and removal of these units is temporary and will be only for several years; i.e., the time required for demolishing the existing structures and building the new development. Therefore, the City Council as SHA is also being asked to approve the Replacement Housing Plan at this time.
Environmental Review
N/A
Fiscal Impact
If approved, the total fiscal impact would be $5,300,000 paid from the San Marcos Successor Housing Agency Fund (fund 250). The total amount will be budgeted in the FY 22-23 and FY 23-24 budgets as necessary.
Attachment(s)
1. SHA Resolution No. 2022 - XXX
2. GIS Exhibit depicting the project site
3. Replacement Housing Plan
Prepared by: Candi Roberts, Housing Programs Manager
Reviewed by: Tess Sangster, Community and Economic Development Director
Approved by: Jack Griffin, City Manager