MEETING DATE:
JUNE 14, 2016
SUBJECT:
Title
RESOLUTION NO. SHA 2016-021 - APPROVAL OF FULL APPLICATION FOR THE AFFORDABLE HOUSING & SUSTAINABLE COMMUNITIES PROGRAM FUNDING FOR THE EL DORADO II AFFORDABLE HOUSING PROJECT
Body
Recommendation
Recommendation
ADOPT a resolution of the City Council acting solely in its capacity as the Successor Housing Agency (SHA) to the San Marcos Redevelopment Agency approving the submittal of a full joint application for the Affordable Housing & Sustainable Communities (AHSC) Program funding with Orange Housing Development Corporation/C & C Development (Developer) for the El Dorado II affordable housing project and authorizing the City Manager to sign all necessary documents.
Body
Board or Commission Action
Planning Commission approval on April 28, 2014
City Council project approval on May 27, 2014
City Council/SHA approval of Developer Loan Agreement on December 9, 2014
City Council/SHA approval of AHSC preliminary application March 8, 2016
Relevant Council Strategic Theme
Planning for the Future
Relevant Department Goal
Facilitate Affordable Housing Production
Introduction
One of the City’s long term projects is the completion of the revitalization of the Richmar neighborhood, including the area between Mission Road and Richmar Avenue. To that end, the City Council approved on May 27, 2014 the El Dorado II project. The City has approved acquisition loans to the Developer totaling $9,537,238 from the Low/Mod Housing Increment fund for property assembly. The Developer has tried unsuccessfully twice to acquire funding via the standard 9% federal tax-credit program administered by the State. On March 8, 2016 the City Council approved a preliminary joint application for the AHSC funding. The project has received preliminary approval from the State to submit a full application for the AHSC program.
Discussion
The new El Dorado II development will be a mixed-use, multi-family, new construction affordable housing community consisting of 120 residential units, approximately 7,000 square feet of ground level commercial space and a community center on 3.8 acres. The Developer’s overall budget to complete the entire development is currently estimated to be $48.2 million and reflects the infrastructure requirements levied on the project.
The Developer has applied to the California Tax Credit Allocation Committee (CTCAC) for 9% low income housing tax credits for construction of the project, but due to the competitive nature of the program, did not receive funding in 2015 and the first round in 2016. Last year the State introduced a new funding program that can be used to fund affordable housing and transportation projects that help reduce greenhouse gas emissions; the Affordable Housing & Sustainable Communities (AHSC) loan program. The AHSC Program provides loans for capital development projects, including affordable housing development and transportation improvements that encourage walking, bicycling, and transit use resulting in fewer passenger vehicle miles travelled (VMT). Reduction of VMT in these projects will achieve greenhouse gas (GHG) emissions reductions and benefit disadvantaged communities. Applicable law requires that 50 percent of AHSC funds be utilized to provide housing opportunities for lower income households. The AHSC funds are also awarded on the merits of the projects and the Developer was successful in receiving an award in 2015 for one of their projects.
The 2016 AHSC allocations are allocated through a competitive process, based on the merits of the individual infill projects and areas. The application selection criteria include project readiness, housing affordability, housing density, proximity and access to transit, parks, employment centers, and consistency with a regional blueprint or similar regional growth plan. Both the Developer and the City believe the El Dorado II project will be competitive in the 2016 round of AHSC funding. By submitting a joint application between the Developer and the City, the El Dorado II AHSC application will be even more competitive since additional points are awarded for collaborative projects. In order for the project to receive the highest scoring possible, the existing loan agreement between the Developer and the City may require slight modification to the levels of affordability of the units being proposed to bring them in line with the States 4% tax credit limits. The project will remain 100% affordable with all units at income levels below 60% of the area medium average and agreed upon between the City and the Developer. On March 16, 2016 a joint AHSC application for the El Dorado II project was submitted to HCD which is administering the program. On April 26, 2016 the City and Developer were invited to submit a full application for the El Dorado II project. Notification of the AHSC awards will be made in September 2016.
The attached resolution is presented in support of the full AHSC application for El Dorado II. The application request is for an amount not to exceed $15,800,776. If selected, these funds will be used in conjunction with the States 4% tax credits (non competitive) funds to construct the El Dorado II project as well as sidewalks and other pedestrian and bike improvements in the Richmar neighborhood. Joint applicants for AHSC will be held jointly and severally liable for the completion of the project. The City as Successor Housing Agency (SHA) already has $9.5 million invested in seeing this project completed. The Developer will indemnify the City and the Developer will bear responsibility for the completion of the project and proper use of the AHSC funding.
Fiscal Impact
If the AHSC loan is awarded there will be some modest ongoing maintenance costs for those sidewalk and bicycle improvements that the City will have to absorb, which staff supports. As mentioned above, the Developer will receive the funds and indemnify and hold the City/SHA harmless for any default on the AHSC loan. In a default or the project does not receiving funding and move forward, the City/SHA would retain ownership of the properties already purchased with the $9.5 million of SHA funding. The developer will bear all costs associated with the application for, and compliance with, the AHSC Program. Regardless if the project receives an allocation of the AHSC funds it will not impact the City’s funding for the project. The City has a 15 year history of partnering with the Developer to create affordable housing. The El Dorado II will be the fourth such project built here in San Marcos.
Attachment(s)
Resolution
Project site plan
Submitted by: Karl Schwarm, Director, HANS
Approved by: Jack Griffin, City Manager