TO: City Council DATE: May 12, 2025 DEPARTMENT: Economic Development Department
PREPARED BY: Lacy Sallas, Grants Coordinator
PRESENTER: Lacy Sallas, Grants Coordinator; Cameron Johnson, AMG Associates AGENDA TITLE:
Receive Report and Consider Adopting City Council Resolution Authorizing Submittal of an Application to the California Department of Housing and Community Development for Funding Under the HOME Investment Partnerships Program; and If Selected, the Execution of a Standard Agreement, Any Amendments Thereto, and of Any Related Documents Necessary to Participate in the HOME Investment Partnerships Program
RECOMMENDATION
Adopt a resolution authorizing submittal of an application to the California Department of Housing and Community Development for funding under the HOME Investment Partnerships Program; and if selected, the execution of a Standard Agreement, any amendments thereto, and of any related documents necessary to participate in the HOME Investment Partnerships Program.
BACKGROUND
The State HOME program provides grants and loans to assist cities, counties and nonprofit community housing development organizations to create and retain affordable housing. HOME activities typically include housing rehabilitation, new construction, and rehabilitation for both single-family and multi-family projects. All activities must benefit low-income renters, homebuyers, or homeowners. HOME funds that are awarded to jurisdictions are generally paid out on a reimbursement basis, after eligible use and documentation of expenditures is approved by HCD. HOME income limits for project and program beneficiaries (that is, residential renters and homeowners) are the same as Community Development Block Grant (CDBG) income limits. Cities such as Fort Bragg that do not receive HOME funds directly from the Federal Department of Housing and Urban Development (HUD) are eligible to apply for competitive HOME funding from the State Department of Housing and Community Development.
On July 8, 2024, City Council received a preliminary report regarding a potential partnership with a developer, AMG Associates (AMG), to construct an affordable senior housing project. At that time, the Council requested to receive a presentation with more detail regarding the potential project before committing to submittal of an application for funding.
On December 30, 2024, the California Department of Housing and Community Development (HCD) released the Notice of Funding Availability (NOFA) for apporiximately $35 million in federal funds for the HOME Investment Partnerships Program (HOME). The funding for this NOFA is from the Departemnent’s Fiscal Year 2024 (FY24) HOME allocation from the US Department of Housing and Urban Development (HUD). As announced on Januray 14, 2025, and amended in the NOFA on February 11, 2025, the deadline was extended from March 24, 2025 to May 22, 2025, to allow more time for communities, devleopers, and tribes to apply for assistance.
During this time, the developer has been working to complete the planning phase of the project, in order to present a full picture to the City Council and the public before the Council considers partnering on an application. Prior to discussing this item of business, the City Council will have considered approval of the necessary entitlements and conducted a public hearing to solicit public input on the matter. Now, the City Council may consider whether to commit City resources to partner on a HOME IPP application to help fund construction of the project.
DISCUSSION AND ANALYSIS
Eligible activities under the FY24 HOME NOFA are as follows:
Project Activities:
Multifamily Rental Projects (new construction, acquisition only, and/or rehabilitation with or without acquisition); and First-Time Homebuyer (“FTHB”) Projects (subdivision development) Program Activities:
First-Time Homebuyer (“FTHB”) Programs, including infill new construction programs where feasible; Owner-Occupied Rehabilitation (“OOR”) Programs; and
Tenant-Based Rental Assistance (“TBRA”) Programs
Funding limits under the FY24 HOME NOFA are as follows:
CHDOs may apply for up to $4,5000,000 for a multifamily rental Project and up to $75,000 for CHDO operating costs, for a total maximum request of $4,575,000.
Developers may apply for up to $4,500,000 for a Project. Developers are not eligible for reimbursement of administrative costs or Project-related soft costs.Prior to issuing the Award letter, the Department will evaluate the financial feasibility of each Project and may, as necessary for Project feasibility or to prevent over subsidizing a Project in accordance with 25 C.C.R. § 8300 et seq., decrease the HOME award amount.
State Recipients (excluding Developers) may apply for up to $4,500,000 for a multifamily rental Project, up to $50,000 for administrative costs, and up to $50,000 for Project-related soft costs, for a maximum total request of $4,600,000. Please note that Project-related soft costs are included in the maximum per-unit-subsidy limit.
For State Recipient Applicants, maximum award limits apply only to the amount of HOME funds requested through this NOFA and do not include any HOME Program Income (PI) the Applicant proposes to use.
The proposed project, construction of affordable senior housing, qualifies for HOME funding as a Mulifamily Rental Project, and the City qualifies for HOME funding as a State Recipient. As a new construction Multifamily Renal Project, the proposed project would be subject to a State affordabiltiy period of 55 years and a Federal affordability period of 20 years.
As a note, the City applied for a Tenant Based Rental Assistance Program under the FY22-23 HOME NOFA, and that application is currently pending. The pending FY22-23 Program application does not affect and will not be affected by submittal of a Multi-Family Rental Project application for funding for the senior housing project.
The proposed project has a total anticipated budget of $25,000,000.00, that will be financed through a combination of a HOME loan, low income housing tax credits, and permanent financing. The proposed HOME application would be a low interest multi-year loan that would be paid back by the developer to the City. The City would retain the repaid funds in the City’s Housing Trust Fund which can then be used for other housing projects. The proposed HOME application is for a total of $4,600,000. Of that total, $4,500,000 will fund the loan to the developer; $50,000 will fund project-related soft costs, such as compelation, review, and execution of loan documents and affordability covenants; and $50,000 will fund administrative costs of the HOME program, such as annual reporting, funds request, and financial management.
Proposed HOME Budget
Loan to Developer
$4,500,000
Project-related Soft Costs
$50,000
Administrative Costs
$50,000
Total
$4,600,000
The proposed project, the Hazelwood Senior Apartments, is a 49-unit senior housing new construction project located on 2.99 +/- acres of land identified as APN 018-210-29. With a mix of 41 one-bedroom units (613 gross sq. ft.) and 8 two-bedroom units (802 gross sq. ft), the proposed project will target seniors earning up to 30-60% of the area median income for Mendocino County. The Project will provide 75 parking stalls, inclusive or guest parking. Each unit will have at least 1 covered parking space.
The newly constructed units will be apartments in 1 three-story residential building. The type of construction will be wood frame supported by perimeter foundations with concrete slab flooring. This type of construction will allow the building to conform to the natural terrain with only minor amounts of grading. The exterior will be a combination of hardipanel and shake siding with Class A composite roof shingles and stone veneer accents. Architectural accents will be incorporated, providing an aesthetically appealing exterior that blends with the character of the surrounding neighborhood and the community of Fort Bragg. The development will meet Title 24 energy efficiency standards. Minimum construction standards will be adhered to in order to assure that a quality family housing development is provided.
The buildings will be oriented appropriately throughout the site with the intent to create a community concept for families to enjoy while remaining social and active. The development will include a 2,367 sq. ft. community building with a common kitchen, exercise room, laundry facility, and business center. Additionally, the development will include covered picnic tables with BBQs and pergolas made from non-combustible material, a bocce ball court, a community garden with raised planter beds, and a fenced dog park. An on-site resident manager will provide assistance and management while residing in a two-bedroom manager’s unit.
Within the units, tenants will enjoy standard features such as refrigerators, exhaust fans, dishwashers, disposals and ranges with ovens. All units feature an outdoor patio or balcony and storage space. The design of these apartments will adhere to all necessary requirements to satisfy Section 504 as well as any additional mandates that the local jurisdiction deems appropriate.
AMG’s current estimates score this project at 1324 out of the 1550 maximum possible points. Historically speaking, 1324 is a winning score and has been for the last several funding cycles, and we are therefor optiminstic about our success. HCD is expected to release the award list on July 7, 2025. If awarded, AMG would submit for 9% tax credits around March of 2026, and break ground by Fall or Winter of 2026.
Staff recommends partnering with the developer on an application for HOME IPP funding, as this project supports many housing-related goals set by the City’s current Housing Element and strategic planning 2024-2027 documents (discussed below and more fully in the Staff Report attached to item 7A). As no other developers have requested that the City partner on a HOME IPP application, there are no other projects competing for City Council consideration at this time.
Should the City Council wish to pursue an application for funding for this project, they must adopt of a resolution authorizing submittal of the application and execution of a subsequent Standard Agreement, including any documents necessary for participation in the HOME program. If the proposed resolution is adopted, AMG staff will prepare all application documents, and City staff will complete application documents requiring City information or approval. Although AMG will prepare and complete as much of the application as they are able, there is still a significant portion of the application that will require City staff to dedicate time. AMG and City staff will work together to ensure all required documents and information are submitted to HCD prior to the application deadline.
FISCAL IMPACT/FUNDING SOURCE
If the proposed resolution is adopted, the fiscal impact will be negligible. AMG staff will complete the bulk of application forms, but City staff will need to spend time preparing necessary forms prior to application submittal, and entering the application in eCivis (HCD’s grants management portal). AMG has agreed to allow the City to recoup staff hours spent on the HOME application by charging the hours to the project’s Developer Deposit Account (DDA).
If the application is successful and funds are awarded, staff time spent on project-related tasks and grant administration (reporting, funds requests, etc.), will be funded by the grant’s Project-related Soft Costs and Administration funds on a reimbursement basis. The City will realize additional financial benefit in the future, as repaid loan funds may be utilized for future housing projects as allowable.
ENVIRONMENTAL ANALYSIS:
This project was found to be statutorily exempt from CEQA pursuant to section 15332 - Class 32 InFill Development Projects and 15192 Infill Housing Development.
The project has not yet cleared NEPA review. If the project is awarded HOME funds, it will have to undergo successful NEPA clearance before those funds are to be made available.
STRATEGIC PLAN/COUNCIL PRIORITIES/GENERAL PLAN CONSISTENCY This project aligns with the following goals from the City’s Strategic Plan 2024-2028+:
Goal 1: Invigorate Economic Opportuntiy and Communtiy Vibrancy:
Goal 1E: Develop affordable and market-rate housing that is accessible for every arc of residents’ lifetime experiences including Fort Bragg’s permanent and temporary workforce, students, retirees, and newcomers who want to share our rich cultural and natural home.
Goal 5: Fund our Future with Finanical and Fiscal Resoponsiblity:
Goal 5B: Identify strategic partnerships to share investments and costs through a variety of models.
The State HOME mission is to assist cities, counties, developers, including Native American Entities, and nonprofit community housing development organizations (CHDOs) to create and retain affordable housing. This mission is consistent with the four broad primary goals of the City’s 2019 Housing Element:
The primary goals of the 2019 Fort Bragg Housing Element are to encourage, facilitate, support and help fund:
1. New market rate and affordable housing that serves our residents and businesses in Fort Bragg;
2. New affordable housing that serves our community’s special needs populations;
3. Preservation of our existing housing stock; and
4. New housing that meets our Regional Housing Needs Allocation.
This project is consistent with all Coastal General Plan policies. The project is supported by and helps implement many housing policies of the Coastal General Plan and the City’s Housing Element, as described briefly below and more fully in the Staff Report attached to Item 7A:
Goal H-2 Provide a range of housing, including single-family homes, townhouses, apartments, and other housing types to meet the housing needs of all economic segments of the community.
Policy H-2.7 Infill Housing: Encourage housing development on existing infill sites in order to efficiently utilize existing infrastructure.
The project includes studios and two- and one-bedroom apartments on an infill site.
Policy H-3.2 Encourage Senior Housing: Allow senior housing projects to be developed with density bonuses and flexible parking standards were found to be consistent with maintaining the character of the surrounding neighborhood consistent with the requirements of Policy H-3.5.
The proposed project would provide 48 affordable apartments for seniors.
Policy H-3.9 Housing for the Disabled: Continue to facilitate barrier-free housing in new development.
The project includes forty-nine ADA accessible residential units.
Policy H-4.1 Equal Housing Opportunity: Continue to facilitate nondiscrimination in housing in Fort Bragg.
This project will provide housing units without discrimination based on race, gender, sexual orientation, marital status, or national origin.
COMMUNITY OUTREACH
On February 24, 2025, the City Council conducted a legally noticed public hearing to discuss and consider preapproval of incentives.
On April 30, 2025, the Planning Commission conducted a legally noticed public hearing to discuss entitlements.
On May 12, 2025, the City Council will have conducted a legally noticed public hearing to discuss entitlements.
COMMITTEE REVIEW AND RECOMMENDATIONS
On July 8, 2024, City Council received a preliminary report on this potential project. At that time, the Council requested to receive a presentation with more detail regarding the potential project before committing to an application for funding.
On February 24, 2025, the City Council adopted a resolution providing preliminary preapproval of inclusionary housing incentives for the project.
On April 30, 2025, the Planning Commission considered the project and adopted a resolution recommending that the Council approve entitlements as amended.
On May 12, 2025, prior to receiving this presentation, the Council will have held a public hearing and considered approving the entitlements for this project.
ALERNATIVES:
Alternative 1: Do not adopt the resolution approving the application and request further information to be presented at a future City Council meeting before reconsidering the item. In order to meet the FY24 HOME deadline, the Council would need to schedule a special meeting prior to May 21, 2025.
Alternative 2: Do not adopt the resolution approving the application. This will result in the project being unfunded by FY24 HOME, which could cause the project to halt. As the City does not have another developer requesting partnership on a HOME application at this time, there would be no opportunity for the City to apply for a HOME project under the HOME IPP FY24 NOFA. Under this alternative, the City would not receive repaid loan funds to be used for future housing activities.
ATTACHMENTS:
Resolution
HOME Investment Partnerships Program Notice of Funding Availability FY24 NOTIFICATION:
Affordable Housing “Notify Me’ subscriber list
AGENDA ITEM NO. 8A
CITY COUNCIL STAFF REPORT