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CITY of BRISBANE
Monday, April 10th, 2023 at 3:00PM ● Hybrid Meeting
Brisbane City Hall, Large Conference Room, 50 Park Place, Brisbane, CA The public may observe/participate in the Subcommittee meetings by using remote public comment options or attending in person. Subcommittee members shall attend in person unless remote participation is permitted by law. The Subcommittee may take action on any item listed in the agenda.
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Affordable Housing Subcommittee Agenda
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SUBCOMMITTEE MEMBERS:
Mayor Davis, Councilmember Lentz
ROLL CALL
A. Consider any request of a City Councilmember to attend the meeting remotely under the “Emergency Circumstances” of AB 2449
PRESENTATIONS AND DISCUSSION ITEMS
B. Affordable Housing Strategic Plan: Project Update
C. Discussion of an Affordable Housing Project, Type, Location D. Review Visitacion Garden Senior Housing: Bridge Ground Release Expiration/Renewal
PUBLIC COMMENT
ADJOURNMENT
2 File Attachments for Item:
A. Affordable Housing Strategic Plan: Project Update
3 A.
AHSP Update Page 1 of 2
Printed on 50% recycled paper Providing for Today, Preparing for Tomorrow
CITY COUNCIL SUBCOMMITTEE AGENDA REPORT
Meeting Date: 4/10/2023
From: John Swiecki, Community Development Director
Subject: Affordable Housing Strategic Plan Update
Background
In August 2021 the City contracted with ECONorthwest (ECONW) to prepare an Affordable Housing Strategic Plan (AHSP). The primary goals of the AHSP are:
• Work with the Council and community to identify programmatic funding goals, objectives, and priorities for the City’s current affordable housing fund balance of approximately $4 million;
• Evaluate options for ongoing revenue streams for future affordable housing development;
• Review preliminary updated inclusionary and density bonus ordinance recommended by the Planning Commission;
• Identify options for administering the City’s current and future inventory of deedrestricted affordable housing units; and • Develop affordable housing strategies specifically for the Baylands subarea of the City.
In March 2022 ECONW led a goal setting workshop with Council regarding funding priorities.
In June 2022, ECONW met with this subcommittee to review and vet the guiding principles from the March 2022 workshop, consider funding priorities for current fund balance (approximately $4 million) and future funds, and review options for new revenue sources. The resulting direction from this subcommittee included:
- Affirmation of AHSP guiding principles (see attachment) - Prioritize using existing fund balance to construct new units - Pursue commercial nexus fee as primary source of new revenue Discussion/Current Status
AHSP Review and Adoption: Staff is currently reviewing the draft AHSP and anticipates releasing it in late April for public review, followed by a review by this subcommittee in May and subsequent review and adoption by the full Council in June. This aligns with the timeline in the adopted 2023-2031 Housing Element for adopting the AHSP and implementing several Housing Element policies. The AHSP will contain internal references and citations to relevant Housing Element policies to clearly show how relevant Housing Element policies will be implemented.
Existing fund balance/production of new housing units: The adopted Housing Element contains several policies that align with the priority identified by this subcommittee to 4 A.
AHSP Update Page 2 of 2
Printed on 50% recycled paper Providing for Today, Preparing for Tomorrow program existing affordable housing funds for new affordable housing construction. Staff anticipates revisiting potential opportunities and partners with the Council in 2023. The site at 70 Old County Road may be evaluated as a potential affordable housing site as community engagement efforts move forward, depending on community feedback and discussion by the full Council.
Commercial nexus fee: In March of this year, Council authorized expanding ECONW’s contract to provide the required nexus and feasibility study updates to support adoption of a commercial linkage fee by this summer ahead of anticipated commercial projects.
That work is expected to be completed by June and the Council can expect to see an implementing ordinance or resolution adopting the recommended fee by fall of this year.
Next Steps
The draft AHSP will be released in late April. This subcommittee will review the AHSP and provide any recommendations or feedback to staff in early May, followed consideration by the City Council in June.
Attachments
1. AHSP guiding principals/”pillars” (previously reviewed) _______________________
John Swiecki, Community Development Director
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4/10/2023 Subcommittee Attachment 1
Affordable Housing Strategic Plan:
Guiding Principles/”Pillars”
• Increase Housing Production
• Preserve Affordable Housing
• Access for Special Populations
• Leverage Private Investment
6 A.
File Attachments for Item:
C. Review Visitacion Garden Senior Housing: Bridge Ground Release Expiration/Renewal 7 C.
BRIDGE Lease Renewal Page 1 of 3
Printed on 50% recycled paper Providing for Today, Preparing for Tomorrow
CITY COUNCIL SUBCOMMITTEE AGENDA REPORT
Meeting Date: 4/10/2023
From: John Swiecki, Community Development Director
Subject: Visitacion Garden Senior Housing; Bridge Ground Lease Expiration/Renewal
Background
The Visitacion Garden Senior Housing development at 8 Visitacion Avenue contains 14 apartment units for low- and moderate-income seniors (age 62+) and includes a senior recreation center (“Sunrise Room”). The former Brisbane Redevelopment Agency (RDA) purchased the site in 1995 for $440,000. The RDA then partnered with BRIDGE Housing, a non-profit affordable housing developer, to design, construct, and manage the affordable senior housing development. The RDA made two construction loans to BRIDGE in the amount of $900,000 from the low- and moderate-income housing fund and $1.4 million from bond proceeds. San Mateo County also contributed a $175,000 loan from affordable housing funds. Construction was completed in November 1999.
The RDA agency loan has a 30-year term, coterminous with the ground lease. The bond proceeds loan has a 40-year term, beyond the term of the ground lease.
Repayment of both loans are due at the respective expiration dates with interest (3% simple).
BRIDGE currently owns the building and improvements and manages the facility under a 30-year ground lease (“lease”) that expires in 2028, aligned with the term of the agency and bond proceeds loan repayment. The lease (attached) establishes the tenant household income levels (section 5.2), maximum rent calculations (section 5.3), and local preferences to determine tenant selection (section 5.5). These elements of the lease are discussed in more detail in the Discussion section below.
If the lease is not extended, ownership of the building and improvements on the site revert to the Housing Authority in 2028. The lease requires BRIDGE to make annual rent payments out of "Surplus Cash," which is defined in the lease generally as operating income from the development minus reasonable operating expenses. The City anticipated that surplus cash would gradually decline over time and projected $0 rent payments in years 26-30 of the lease.
BRIDGE Background: According to their website, BRIDGE was formed in 1983 to “spearhead new solutions to the worsening shortage of affordable housing” in the Bay Area. Since its inception, BRIDGE has grown to own or manage 126 affordable housing developments throughout the Bay Area, California, Oregon and Washington. In San Mateo County, BRIDGE’s portfolio includes ten properties (including Visitacion Garden).
BRIDGE’s role in affordable housing projects includes site acquisition, project design, construction, initial lease-up, and ongoing management. 8 C.
BRIDGE Lease Renewal Page 2 of 3
Printed on 50% recycled paper Providing for Today, Preparing for Tomorrow Household Income Levels Served: As described in Section 5.2 of the lease, the household income levels served by the development include:
• 30% area median income (AMI) or less: Two units
• 40% AMI or less: Two units
• 80% AMI or less: Two units
• 120% AMI or less: Eight units
Discussion
BRIDGE staff have proactively initiated preliminary conversations with City staff regarding the possible renewal of the lease. Staff will be meeting with BRIDGE staff in the near future to identify discussion points for potential lease renewal. Staff has also requested information from BRIDGE to address questions from City Council members regarding waitlist management and rent increase procedures. These items are addressed below and staff anticipates receiving additional information from BRIDGE in the coming weeks.
Waitlist Management: BRIDGE has an in-house waitlist team, based in their San Francisco offices, that manages the waitlist for Visitacion Garden. According to BRIDGE staff, there are currently 174 households on the waitlist. Given the size of this waitlist and the small size of the development, the typical wait times are considerable and vary based on preferences and the unit type available. Applicants with preference that qualify for a maximum 80% AMI unit will likely get contacted within a year for an available unit.
Households with preference that qualify for the four units restricted to 30% and 40% AMI will likely wait several years before contact regarding an available unit.
Applicants are chosen from the waitlist according to which preferences (see discussion below) they qualify for when completing their application. Applicants are required to provide proof that they meet any preference selected. When and if the active waitlist runs low, BRIDGE markets the property as outlined in section 5.5 of the lease. All marketing is conducted in a manner that follows Fair Housing Laws.
Preferences: Related to waitlist management, section 5.5 of the lease outlines the local “preferences” BRIDGE uses to determine which households on the waitlist are eligible when a unit becomes available, as follows:
• First preference: Current Brisbane resident
• Second preference: Immediate family members of Brisbane residents • Third preference: Current or most recently employed in Brisbane • Fourth preference: Households who were past residents of Brisbane (min. 6 months)
• Fifth preference: Households who were employed in Brisbane in the past (min. 6 months)
9 C.
BRIDGE Lease Renewal Page 3 of 3
Printed on 50% recycled paper Providing for Today, Preparing for Tomorrow Note that within the preference categories priority is based on the application date. Any modifications to these preferences would need to be negotiated through the lease renewal and would be subject to the legal restrictions of current Fair Housing laws.
Rent Increase Procedures: The calculations for maximum monthly rental charges are found in Section 5.3 of the lease, and summarized below:
• Max. 40% AMI (four units): 30% of 50% AMI (adjusted for household size) divided by 12
• Max. 120% AMI (eight units): 30% of 110% AMI (adjusted for household size) divided by 12
• Max. 80% AMI (2 units): Not specified in lease
The lease specifies that the household size shall be the number of bedrooms plus one (e.g., for a one-bedroom unit, the household size assumption would be two persons).
This formula allows rents to be increased annually to reflect changes in AMI. This could lead to significant challenges for households on fixed incomes. BRIDGE staff advises that annual increases are typically limited to 3%, significantly less than recent increases in AMI (e.g., the AMI increased by about 11% between 2021 and 2022). BRIDGE staff have stated that current rents are about 48% of the maximum they could charge under the terms of the lease. Rent increases of 5% were imposed on January 1, 2023, or about $24-$67 per month across the units. Any modifications to the maximum rent calculation would need to be negotiated through the lease renewal.
Fiscal Strength of Visitacion Garden: BRIDGE staff has preliminarily advised staff that the property is currently not profitable and projections indicate this will likely continue over the remaining term of the lease. While the City and BRIDGE anticipated surplus cash would decline in the final years of the lease, eliminating annual rent payments to the City, it was not anticipated that the property expenses would eclipse revenues to this degree. The long-term fiscal health of the property will likely be a significant factor in the City’s upcoming lease renewal discussions with BRIDGE.
Next Steps
Staff will begin conversations with BRIDGE regarding the mutual interest in renewing the ground lease this month. Staff will update this subcommittee and the full Council as those talks evolve and key discussion points are identified.
Attachments
1. 1998 BRIDGE Ground Lease
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John Swiecki, Community Development Director
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