Agenda Item No: L.3
AGENDA REPORT
DATE: November 18, 2025
TO: Mayor and Council
FROM: David Gassaway, City Manager
SUBJECT: Resolution 2025-232 HD Agreements for the Vista Ridge Motel Conversion
Approving the Loan Agreement and Regulatory Agreement Between City of Fairfield and Fairfield North Texas Street, LLC, Community Revitalization and Development Corporation, and Danco Communities; and Approving the Standard Agreement Between City of Fairfield and the California Housing and Community Development Department to Support the Rehabilitation of the Property Located at 3331 N. Texas St (Vista Ridge)
Funding Source: N/A
Contact: LaTanya Terrones, (707) 428-7454
RECOMMENDED ACTION
Adopt resolution.
STATEMENT OF ISSUE
The City of Fairfield has been awarded Homekey+ Program funds from the California Department of Housing and Community Development (HCD) to support the acquisition and rehabilitation of the existing hotel property at 3331 N. Texas Street. In order to facilitate the use of these funds and ensure compliance with long-term operational requirements, City Council must approve the Loan Agreement and the Regulatory Agreement and HomeKey+ Standard Agreement with the project’s developer entity and HCD.
DISCUSSION
The State of California established the Homekey+ Program to rapidly expand housing options for individuals and families experiencing or at risk of homelessness. In partnership with development and service providers, the City of Fairfield applied for and successfully secured Homekey+ funding to support the rehabilitation of the Vista Ridge Project, which will provide much -needed permanent supportive housing for homeless households with behavioral health conditions within the community.
The projec t represents a significant advancement in the City’s ongoing commitment to addressing homelessness and increasing access to safe, stable, and affordable housing.
On January 21, 2025, the council adopted Resolution No. 2025-14, approving the commitment of $1,000,000 from the Local Housing Trust Fund (LHTF) and $535,541 from the Prohousing Incentive Program (PIP) to support the Vista Ridge Project.
On February 4, 2025, the council adopted Resolution No. 2025 -25, authorizing submission of a joint application with Danco Group for Homekey+ funding. The joint applicant was later amended to include Fairfield North Texas Street LLC, a California limited liability company, as the Administrative General Partner; Community Revitalization and Development Corporation, a California nonprofit public benefit corporation, as the Managing General Partner; and Danco Communities, a California corporation, as the Limited Partner.
On September 19, 2025, the City received formal notification from HCD that its joint application had been approved for a Homekey+ award of $21,535,540 to support the Vista Ridge Motel Conversion Project.
The City will enter into a 20 -year contract with the developer to include 50 Project Based Vouchers, which will provide housing subsidies to the property for a minimum of 20 years. Under the U.S. Department of Housing and Urban Development (HUD) regulations, a Housing Assistance Payments (HAP) contract for Project -Based Vouchers (PBVs) may have an initial term of up to twenty (20) years. The Public Hou sing Agency (PHA) and the owner may agree to extend the contract for an additional term of up to twenty (20) years, subject to funding availability and continued compliance with program requirements. Extensions are typically pursued to ensure long-term housing affordability, project financial feasibility, and stability for residents. Extending the PBV contract helps maintain the availability of affordable housing units in the community and supports the ongoing success of projects that serve low-income households.
The Project -Based Voucher (PBV) contract will provide approximately $1,065,360 in housing subsidies the initial year, in addition to tenant rent contributions equal to 30% of each resident’s income. Rental income received from the PBV contract and tenant payments will be used to cover the operating costs of the property.
To accept the awarded funds, the City must enter into a Loan Agreement with the developer to formalize the City’s financial commitments to the project. Additionally, the City and t he developer will execute a Regulatory Agreement granting the City enforcement authority over all applicable State and local program requirements.
As part of HCD’s funding conditions, the City is also required to execute a Standard Agreement with the Stat e to officially accept the Homekey+ funds and adhere to all associated program requirements.
Project Overview:
Location: 3331 N. Texas Street, Fairfield, CA (Assessor’s Parcel Number [APN]: 0167-130- 030) Existing Use: 100-room, 3-story hotel
Proposed Use: Conversion into 51 units of permanent supportive housing (50 units + 1 manager’s unit) with onsite supportive services.
Renovations:
Reconfiguration of hotel rooms into larger units with kitchenettes Accessibility upgrades (15% mobility units, 10% communication units) New supportive service space, community room, property management offices, laundry facilities, and outdoor amenities (basketball court, gazebo, recreation areas) Energy-efficient systems, new appliances, upgraded Heating, Ventilation, an d Air Conditioning (HVAC), and code-compliant life safety improvements Exterior improvements including resurfaced parking lot, landscaping, fencing, and accessible pathways
Services:
The project will not operate as an assisted living facility but will provide onsite supportive services including health care access, case management, and life skills programs delivered by qualified service providers.
The Developer has entered into an agreement with Caminar, the County’s Coordinated Entry provider, to deliver supportive services to residents of the Vista Ridge Project. Each household will have access to case management services provided by Caminar, which include, but are not limited to, connections to mental health and health care services, eviction prevention collaboration, anger management and conflict resolution support, substance abuse support, and access to food pantry and nutrition resources.
Caminar will dedicate 2.5 full -time equivalent (FTE) staff members onsite at the Vista Ridge property to ensure r esidents have consistent and timely access to the supportive services available.
Property Operations
The Vista Ridge property will operate as permanent supportive housing for individuals with a behavioral health issue who are at risk of homelessness or unhoused. All tenants must be referred through the County’s Behavioral Health Department, and referrals will be coordinated by Caminar, the County’s Coordinated Entry provider.
Priority for Residency:
Fairfield residents will receive first priority for available units Up to 10 units will be reserved for Veterans who meet the established eligibility criteria
Caminar has identified approximately 487 unhoused individuals who meet the priority criteria for this project. All referrals to Vista Ridge will come directly from Caminar. Each adult applicant must comply with and meet both the City of Fairfield’s Project-Based Voucher (PBV) regulations and eligibility requirements as well as the property management’s tenant screening criteria.
A few key Lease Provisions Include:
The property will operate as a Crime -Free Community, prohibiting residents from engaging in criminal activity and drug-use not permitted by law 24-hour onsite security/property management services will be maintained to address property management needs and ensure resident safety
Loan Agreement:
The City’s participation includes a Loan Agreement that consolidates multiple funding sources to support the project’s rehabilitation and long -term affordability. The total local investment amounts to $23,071,081, comprised of the following:
$500,000 – City Housing Trust Fund (local match contribution) $500,000 – HCD Local Housing Trust Fund (LHTF) Program
$535,541 – HCD Prohousing Designation Program (PIP) Funds $21,535,540 – HCD Homekey+ Funds
The Loan Agreement establishes the City’s financial participation, repayment structure, and conditions for affordability compliance throughout the loan term. These funds will be structured as a residual receipt loan, ensuring that repayment is based on available cash flow after operational expenses, and will remain secured by a deed of trust on the property. Full repayment of the loan will be due on the earlier to occur of (i) transfer of all or any interest in borrower, other than as permitted by the City, (ii) an uncured default under the loan, or (iii) 55 years after the date, a final certificate of occupancy is issued for the project. The City Loan shall bear simple interest at the rate of three percent (3%) per annum, commencing upon the date of the first disbursement of the City Loan. The City will subordinate its Deed of Trust securing the City’s loan to the project’s construction and permanent financing.
Regulatory Agreement:
As a condition of receiving this financing, the City must also approve a Regulatory Agreement.
This agreement governs long -term affordability, supportive housing, and operational standards for a minimum of 55 years from issuance of a certificate of occupancy for the project. This Agreement will be senior to all other encumbrances on the property.
Key compliance requirements include:
The project must operate as permanent supportive housing for a minimum of 55 Years Units must remain affordable to the designated income levels The project must maintain qualified on -site management and participate in annual monitoring for compliance
The property must remain in decent, safe, and habitable condition, with both interior and exterior maintenance standards enforced
The site must maintain compliance with City codes, crime prevention standards, and applicable state and federal regulations
The project must comply with program requirements of the funding sources
The Regulatory Agreement grants the City the authority to take corrective action in the event of noncompliance to ensure the continued integrity of the project and adherence to program standards.
FINANCIAL IMPACT
There is no impact on the City’s General Fund. Funding for the project is derived from dedicated housing resources, including the City’s Housing Trust Fund and State housing grant programs administered by HCD.
Administrative and monitoring responsibilities will be managed by the Housing Services Division and supported through allowable program funds or existing housing resources. Staff time associated with loan oversight and compliance monitoring will be absorbed within current capacity.
The City’s loan to the project is structured as a residual receipts loan, meaning repayment is contingent upon the property generating surplus cash flow after all approved operating expenses and reserve requirements have been met. As such, the City is unable to estimate whether annual loan payments will be received, as these payments depend on the project’s financial performance.
The City will monitor the project annually to determine if residual receipts are available. Any residual receipts received by the City will be used to support ongoing monitoring and compliance activities associated with the implementation of the project’s regulatory agreement.
PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION
This item was publicly noticed in accordance with the Brown Act.
ALTERNATIVE ACTION
The council may choose not to approve the Loan Agreement and Regulatory Agreement.
However, doing so would jeopardize the City’s participation in the Homekey+ Vista Ridge Project, resulting in the potential loss of $21,535,540 in state housing funds and delaying the delivery of urgently needed supportive housing units.
COORDINATED WITH
City Attorney’s Office and City Manager’s Office
STAFF CONTACT
LaTanya Terrones, Sr. Project Manager
(707) 428-7454
[email protected]
ATTACHMENTS
Attachment 2: Proposed Resolution
Attachment 3: Vista Ridge Proposed Loan Agreement
Attachment 4: Vista Ridge Proposed Regulatory Agreement Attachment 5: Vista Ridge Proposed Deed of Trust
Attachment 6: Vista Ridge Proposed Promissory Note
Attachment 7: Vista Ridge Proposed Subordination Agreement Attachment 8: HCD Standard Agreement Exhibits