Agenda Item No: M.1
AGENDA REPORT
DATE: January 21, 2025
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2025-14 HD Danco Homes, LLC Allocation of Local Housing Trust Funds and Resolution 2025-15 First Amendment Community Development Block Grant
Approving the Allocation of Local Housing Trust Funds to Danco Homes, LLC. for the Acquisition and Redevelopment of Permanent Supportive Housing in the City of Fairfield
and Approving the First Amendment to the Fiscal Year 2024-2025 Community Development Block Grant Annual Action Plan and the Fiscal Year 2023-2022 Consolidated Annual Progress Evaluation Report
Funding Source: $249,866; Community Development Block Grant Fund and $1,000,000; Local Housing Trust Fund
Contact: LaTanya Terrones, (707) 428-745
RECOMMENDED ACTION
Hold public hearing and adopt resolutions.
STATEMENT OF ISSUE
Hold a public hearing and approve the First Amendment to the fiscal year (FY) 2024 -2025 Community Development Block Grant Program (CDBG) Annual Action Plan to reprogram prior year entitlement funds to promote the preservation of affordable multi-family housing. Adopt a resolution approving the City to enter into an agreement with Danco for $1,000,000 in Local Housing Trust funds.
DISCUSSION
Background
In August 2024, the Housing Services Department issued a Notice of Funding Availability (NOFA) to solicit eligible proposals for affordable multi -family rehabilitation projects in the City of Fairfield.
With homelessness identified as one of the City Council's key priorities, creating opportunities to prevent homelessness for those currently housed is critical. To support this effort, the City has allocated $1.4 million in funding for affordable housing preservation:
$1,000,000 from the City's Local Housing Trust Fund (LHTF) $474,530 from the City's CDBG Program
Funding Overview
Each funding source has specific eligibility criteria and regulatory requirements:
LHTF: Supports new construction, rehabilitation, or acquisition of affordable multi-family rental housing for individuals and families earning up to 60% of the Area Median Income (AMI). At least 65% of the units funded must be affordable to households earning no more than 30% AMI.
CDBG: Supports the rehabilitation of affordable rental housing for low - and moderate- income individuals and families earning less than 80% AMI. Rehabilitation must enhance residents' health and safety within the development.
Applicants could apply for either or both funding sources, depending on their project's alignment with the criteria. The funding will support new construction, acquisition, and/or preservation of affordable housing, ensuring long-term affordability (55 years or more).
This NOFA prioritizes pipeline projects capable of p romptly creating affordable units. It aims to provide gap financing at below -market interest rates, leveraging the City's investment with additional funding sources such as private bank loans, tax credits, and federal or state programs.
Application and Review Process
The City received proposals from four developers. City staff invited applicants to attend a pre - NOFA Q&A session to clarify any requirements before submission. A review panel consisting of two City employees (one from the City Manager's Office, and one from the Community Development Department) and one representative from Solano County evaluated the proposals.
Additionally, a fiscal consultant assessed the financial feasibility of each project and provided input for the panel's consideration.
The panel scored the proposals based on the following criteria:
Financial Feasibility
Project Approach and Concept
Community Support and Benefits
Developer/Property Owner Experience
The final developer scores were as follows:
Proposer Score
Orchard Crossing 61
Danco 58
Choc 54.5
Solano Affordable Housing Foundation 40
Funding Recommendations
Staff recommends funding the top two scoring applicants based on the eligibility of their proposals:
1. Orchard Crossing (CDBG Funding)
o Amount: $474,530
o This project qualifies for CDBG funds to support affordable multi -family rehabilitation.
The allocation includes:
$244,664 previously allocated in the FY 2024 -2025 CDBG Annual Action Plan for Multi - Family Preservation
$249,866 in unspent prior-year funds redirected for this purpose as an amendment to the FY 2024-2025 CDBG Annual Action Plan
o CDBG regulations require a public hearing for substantial amendments to the Annual Action Plan.
2. Danco (Local Housing Trust Fund)
o Amount: $1,000,000
o Danco's project involves purchasing and rehabilitating a local hotel to provide Permanent Supportive Housing for homeless and at -risk homeless populations. The project aligns with LHTF priorities and council goals.
Conclusion
The recommended allocations will ensure compliance with funding regulations and advance the City's goals to preserve and expand affordable housing. Both projects reflect the City's commitment to addressing homelessness and supporting at-risk populations.
FINANCIAL IMPACT
Approval of these resolutions will result in $249,866 in CDBG funds being allocated from prior year funds and a Commitment of $1,000,000 in LHTF funding.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
A public notice was published in the Daily Republic Newspaper on December 18, 2024, to enable the public to respond to the First Amendment to the FY 2024-2025 CDBG Annual Action Plan.
ALTERNATIVE ACTION
The council may choose not to approve the resolution to amend the CDBG Annual Action Plan.
However, this decision could result in the U.S. Department of Housing and Urban Development recapturing unspent prior-year funds.
The council may choose not to approve the resolution allocating $1,000,000 from the Local Housing Trust Fund. However, this could lead to non -compliance with the Housing and Community Development Local Housing Trust Fund Agreement and result in a missed opportunity to support the development of permanent supportive housing for homeless individuals.
COORDINATED WITH
N/A
STAFF CONTACT
LaTanya Terrones, Sr. Project Manager
(707) 428-7454
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution LHTF
Attachment 3: Proposed Resolution CDBG
Attachment 4: FY 2024-2025 Action Plan Amendment Summary