MEETING DATE:
March 22, 2022
APPROVAL OF REPLACEMENT HOUSING PLAN AND MODIFIED PROJECT GAP FINANCING AMOUNT WITH AFFIRMED HOUSING FOR THE MARIPOSA II PHASE 2 (AKA ALORA) AFFORDABLE HOUSING COMMUNITY
Recommendation
Recommendation
ADOPT the attached Resolution approving modified project gap funding for the affordable housing development Mariposa II Phase 2 and the updated Replacement Housing Plan for Mariposa II Phase 2
Body
Board or Commission Action (If not applicable, please state not applicable below)
Resolution No. SHA 2016-018 dated April 26, 2016 authorizing predevelopment loan and DLA (Phase 1)
Resolution No. SHA 2016-8190 dated April 26, 2016 authorizing transfer of 22 units and the DLA (Phase 1)
Resolution No. 2019-8675 dated September 24, 2019 authorizing Mariposa II (Phase 1) a predevelopment loan, relocation loan, replacement housing plan, and modification to a previously authorized DLA
Resolution No. SHA 2020-040 dated June 25, 2020 authorizing Mariposa II (Phase 1) project gap financing and modification to a previously authorized DLA (Phase 1)
Resolution No. 2020-8779 dated June 25, 2020 authorizing Mariposa II (Phase 1) project additional gap financing from the proceeds of 3 formerly City-owned apartment complexes (Phase 1)
Relevant Council Strategic Theme (If not applicable, please state not applicable below)
Planning for the Future
Relevant Department Goal (If not applicable, please state not applicable below)
Facilitate Affordable Housing Production
Executive Summary
The current Mariposa affordable housing community at 604 Richmar Avenue is an ageing 71-unit apartment complex that was acquired, rehabilitated and converted to affordable housing by Affirmed Housing in the late 1990s. The complex is now at the point in the life cycle of the buildings where complete demolition and reconstruction is necessary. The redeveloped Mariposa II project is envisioned as a two-phased multifamily, new construction affordable housing community totaling 196 units on the same site as the old 71 unit Mariposa Apartments.
Phase 1 has demolished 40 existing units and will replace them with 100 units. Phase 2 will demolish 31 existing units and replace them with 96 units. Additionally, the current deed restrictions will reset to 55 years as each new phase is completed.
As of February 2022, the Mariposa II Phase 1 site has been demolished and is currently undergoing redevelopment construction. The project is set to be completed as of April 2023.
In September 2019, resolution 2019-8675 authorized the rollover of the existing Redevelopment Agency (RDA) loan made to the legacy Mariposa project in 1997.
In June 2020, SHA resolution 2020-040 authorized gap financing to Mariposa II Phase 1 for $5,372,926.00 (sum of $550,000 predevelopment loan and the $4,822,926.00 of the net proceeds received by the City pursuant to the sale of the former city properties).
The City 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 at the California Tax Credit Allocation Committee (TCAC) for 9% low income housing tax credits.
The City is also being asked to approve the updated Replacement Housing Plan required by Community Redevelopment Law.
Discussion
In May 2019 the City Council approved entitlements for Mariposa II Phase 1 and in October 2021 the City Council approved entitlements for Mariposa II Phase 2. As with many other projects, for funding reasons, Mariposa is being redeveloped in two phases. Phase 1, will consist of 100 new residential apartments. Phase 2, will consist of 96 new apartments, bringing the total to 196 at the completion Phase 2. Additionally, the current deed restrictions will reset to 55 years as each new phase is completed.
In order to continue to apply for additional funding at the State level (low income housing tax credits), the project requires a formal funding commitment from the Agency.
In September 2019, Resolution 2019-8675 authorized the rollover of the existing Redevelopment Agency (RDA) loan made to the legacy Mariposa project in 1997.
In June 2020, SHA Resolution 2020-040 authorized gap financing to Mariposa II Phase 1 for $5,372,926.00 (sum of $550,000 predevelopment loan and the $4,822,926.00 of the net proceeds received by the City pursuant to the sale of the former city property).
As of February 2022, the Mariposa II Phase 1 site has been demolished and is currently undergoing redevelopment construction. The project is set to be completed as of April 2023.
Other external sources of funding for Phase 2 have been exhausted. The Developer has applied for the maximum HOME award for which it is eligible from the County of San Diego in the amount $2,643,027. The next step is to secure the final gap funding commitment from the Agency and then apply for competitive 9% low income housing tax credits via the Tax Credit Allocation Committee (TCAC) in this year and, if necessary, next year as the award process is extremely competitive.
In summary, the City Council and/or the SHA are being asked to approve the Agency’s funding commitment to Phase 2 and approve the modified project gap funding in the amount of $7,000,000 in order to fund Mariposa II Phase 2 to the degree to be sufficiently competitive to compete for 9% low income housing tax credits in 2022 and, if required, in 2023. The source is the accumulation of affordable housing in-lieu fees required under the Inclusionary Ordinance, fund 203.
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, 22 deed restricted affordable units in the three former City-owned apartment complexes are slated for temporary removal from the inventory until Mariposa II (Phase 1) is completed. The removal of these 22 units is temporary and will be only for the time that it takes to build the new project. Furthermore, an additional 40 deed restricted affordable units on the site of the future Mariposa II (Phase 1) are slated for temporary removal from the inventory until the new project is completed. The removal of these 40 units is temporary and will be only for the time that it takes to build the new project. The Replacement Housing Plan prepared by Affordable Housing Information Services, LLC maps the replacement process in considerable detail on a unit-for-unit and bedroom-for-bedroom basis. 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 $7,000,000, paid from the City Affordable Housing Fund (fund 203). The total amount will be budgeted in the FY 22-23 and FY 23-24 budgets as necessary.
Attachment(s)
1. 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