MEETING DATE:
January 23, 2024
SUBJECT:
Title
RESOLUTION NO. SHA 2024-048 - APPROVING AN AMENDED DEVELOPER LOAN AGREEMENT WITH NATIONAL COMMUNITY RENAISSANCE (VILLA SERENA APARTMENTS LIMITED PARTNERSHIP) FOR THE VILLA SERENA II PHASE 2 AFFORDABLE HOUSING COMMUNITY AND AUTHORIZING THE CITY MANAGER TO EXECUTE THE SAME AND TO TAKE ASSOCIATED ACTIONS
Body
Recommendation
Recommendation
ADOPT resolution approving an amended developer loan agreement by and among the Successor Housing Agency of the City of San Marco, the City of San Marcos and Villa Serena Apartment Limited Partnership, and authorizing the City Manager to execute the same and to take associated actions.
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)
Resolution No. SHA 2022-8995 dated March 22, 2022 authorizing RHP and modified loan
Resolution No. SHA 2023-047 dated July 25, 2023 authorizing modified project loan financing
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 is the redevelopment of the former 136-unit Villa Serena affordable housing development on the same site. Villa Serena 2 began with predevelopment in 2014. The project is a two-phase development; Villa Serena II Phase 1 (85 units) was completed in March 2023. The affordable housing developer, National CORE, intends to develop Phase 2 (63 units) by the end of 2025. The project will have a net gain of 12 units with a denser room count throughout both developments. Villa Serena II Phases 1 & 2 will provide a significantly improved, sustainable, and more efficient development over the former property. Villa Serena II will also add parking, additional two and three-bedrooms, upgraded community room, outdoor amenities, as well the inclusion of new State required energy efficient code requirements.
Discussion
Phase 1 Partial Loan Refund: The City of San Marcos in its capacity as the Successor Housing Agency made a loan in the amount of $9,867,129, to Villa Serena II Phase 1 to Villa Serena Apartments Limited Partnership, a California limited partnership ‘Developer’. See Attachment 2, Promissory Note dated March 30, 2021. At the completion of Phase 1, the Developer identified a $1,254,712 cost savings from the Phase 1 project. The Developer requests to return the $1,254,712 cost savings from Phase 1 and apply it to increase the Phase 2 project loan.
Increased Phase 2 Loan: The City of San Marcos in its capacity as the Successor Housing Agency made a loan in the amount of $3,483,098, to Villa Serena II Phase 2, see Attachment 2 Promissory Note dated March 30, 2021. This loan was amended with an Amendment to Promissory Note (Villa Serena II -Phase 2) on June 1, 2021, see Attachment 2. The below noted amendments bring the total Phase 2 loan to $10,727,491 as noted in the below chart.
There are no fiscal changes to the project loan agreements; the current Amended Loan Document (Attachment 3) will document the final loan amounts previously approved. The loan term is 55 years with 3% annual interest payable from residual receipts, which are identified as gross income, less allowable operating expenses as outlined in the Loan Agreement.
|
City of San Marcos Fund Description |
Amount |
|
Original Principal |
$3,483,098 |
|
New Loan Request - approved March 22, 2022 |
$5,300,000 |
|
Final Request - approved July 25, 2023 |
$1,944,393 |
|
Total |
$10,727,491 |
The Villa Serena Phase 2 project, located at 339 Marcos Street in the Richmar neighborhood, and is comprised of the following unit mix ranging in affordability levels from 30% to 60% of the area median income.
|
Unit Type |
Number of Units |
Average Unit Size |
|
One Bedroom |
12 |
677 SF |
|
Two Bedroom |
30 |
941 SF |
|
Three Bedroom |
21 |
1,034 SF |
|
Total Units |
63 |
921 SF |
The developer, National CORE, applied for 9% tax credits from the State of California Tax Credit Allocation Committee in August 2023 and successfully received waitlist funding for Villa Serena II Phase 2 in December 2023. Residents were notified of the project timeline and relocation process via a community meeting on December 28th and certified mail. The developer has dedicated Relocation Specialists to work with tenants to help them prepare to vacate units by May 1st 2024. The project will begin construction in June 2024 and is anticipated to be completed by June 2026. The Housing & Neighborhood Services division has contacted with all affordable development partners in the City of San Marcos to request prioritization on waitlists for any of the Villa Serena Phase 2 tenants. All tenants will receive financial assistance to support relocation activities in addition to administrative assistance in applying for and identifying new housing options. Current residents will have priority to return to the property but will be required to income qualify for the new property.
Staff recommends that the City and the Successor Housing Agency approve the amended developer loan agreement, included as Attachment 3. The result of the approved loan agreement will improve the Successor Housing Agency and the City of San Marcos affordable housing portfolio with a new development scheduled for completion by 2026.
Environmental Review
All requirements of CEQA have been met with a Mitigated Negative Declaration (ND 16-002) which was previously adopted for the project and all potential impact 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
There is no direct fiscal impact to approving updated loan agreements, all financial contributions were approved via Resolution No. SHA 2023-047 dated July 25, 2023 authorizing modified project loan financing.
Attachment(s)
1. Resolution No. SHA 2024- dated January 23, 2024, approving an amended developer loan agreement with National Community Renaissance (Villa Serena Apartments Limited Partnership) for the Villa Serena II Phase 2 affordable housing community
2. Promissory Notes
3. Second Amendment to Development and Loan Agreement
4. Project Site Plan
Prepared by: Sylvia Solis Daniels, Housing & Neighborhood Services Manager
Reviewed by: Tess Sangster, Community & Economic Development Director
Approved by: Michelle Bender, City Manager