Fremont City Council Meeting: 05/17/22 07:00 PM
3300 Capitol Avenue Div/Dept: Community Development
Fremont, CA 94538 Category: Grants
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4606) DOC ID: 4606
Updated: 5/12/2022 8:11 AM by Alberto Quintanilla Page 1 STATE AFFORDABLE HOUSING GRANT - Resolution Authorizing Submission of a Grant Application to the State of California's Local Housing Trust Fund Program Contact Persons:
Name: Sharon Jones Dan Schoenholz
Title: Special Assistant Community Development Director Div/Dept: Community Development Community Development
Phone: 510-494-4500 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: The State Department of Housing and Community Development (HCD) recently issued a Notice of Funding Availability (NOFA) for $57 million in funding for the Local Housing Trust Fund Program (LHTF). Because the City has created an ongoing source of local funding for affordable housing through in lieu fees paid by market rate developers under the Affordable Housing Ordinance and through linkage fees paid by non- residential development, the City is eligible to apply for the maximum award of $5 million.
Staff recommends that Council adopt a Resolution authorizing submittal of an application for $5 million and authorizing execution of a contract for LHTF funds if the City’s application is successful.
BACKGROUND: The LHTF Program provides matching grants for the development or rehabilitation of affordable rental housing projects, Permanent Supportive Housing, transitional housing, affordable homebuyer/homeowner projects, Accessory Dwelling Units and emergency shelters. In 2014, Fremont received a grant of $1.7 million which was used to support the development of Stevenson Terrace, a 79-unit affordable housing development serving households at or below 60% Area Median Income (AMI).
In 2020, Fremont received a $5 million LHTF grant. In a separate item on today’s agenda, staff recommends that Council adopt a Resolution committing the $5 million LHTF grant to the development of the 3900 Thornton affordable housing project, as a binding commitment to expend the awarded funds, along with City matching funds.
The LHTF Program supports local entities that have identified and committed on-going sources of local affordable housing trust funds. In lieu fee programs like that established in the City’s Affordable Housing Ordinance and commercial linkage fee programs meet HCD’s definition of a local, non-traditional, on-going affordable housing funding source. LHTF Program grants must be matched dollar-for-dollar by grant recipients. At least 30% of LHTF Program and local matching funds must be expended on assistance to extremely low income (ELI) households with income of no more than 30% AMI. No more than 20% of funds may be expended on assistance to moderate income households (income of no more than 120% AMI). Remaining program funds must be expended on assistance to lower income households with income of no more than 80% AMI.
HCD evaluates and awards grants using multiple criteria, including the extent to which the applicant:
• Provides matching funds from sources other than local impact fees or in lieu fees; Staff Report (ID # 4606) Meeting of May 17, 2022
Updated: 5/12/2022 8:11 AM by Alberto Quintanilla Page 2 • Commits to expend less than 20% of its funds to serve moderate income households;
• Has completed a first phase funding process for multifamily rental projects and announced on its website the status of each project;
• Commits to using funds for new construction of rental housing restricted to households with income of no more than 60% AMI;
• Has measurable community needs to serve lower income households that are paying more than 50% of their income in rent; and
• Exceeds the minimum 40% threshold of grant funds that have been committed to projects.
The tie breaker criterion, if needed, is the extent to which the application identifies specific multifamily rental projects for which the trust fund has issued Letters of Intent (LOIs) to developers for construction or permanent financing.
DISCUSSION/ANALYSIS: As described above, the City is eligible to request funding from the LHTF Program because the City has established locally generated, ongoing sources of funding for affordable housing. In addition, as a past grantee, the City has demonstrated its ability to spend down LHTF funding in a timely manner. The City also has an adopted Housing Element in compliance with the State’s Housing Element law and has submitted its Annual Program Report for the current or prior year by the application deadline of May 25, 2022. Further, the City must commit at least 40% of the $5 million Program funds awarded to the City in 2020. As mentioned earlier, in a separate item on tonight’s agenda, staff is requesting Council to adopt a resolution authorizing a commitment of $5 Million in 2020 LHTF to the 3900 Thornton affordable housing development.
Staff proposes to include in its grant application a commitment to dedicate 40% of grant funding for ELI households, which exceeds the basic grant requirement and has been shown to be attainable in recently proposed projects in Fremont, such as City Center Apartments and the Doug Ford (Irvington) Senior Apartments. Staff also proposes that funds be provided for the MidPen Housing Affordable Housing on Osgood project (41965 and 42021 Osgood Road), a 191-271 unit affordable housing development, which includes approximately 39-53 ELI units. The Affordable Housing on Osgood project was submitted in response to the City’s NOFA issued in May of 2021. On November 2, 2021, Council approved a total of $14 million to finance acquisition and pre-development. MidPen anticipates an additional $11.5 million will be needed from the City and/or other sources for construction which the Council has not yet appropriated. The $5 million in LTHF funding would offset the funding needed from the City allowing City funds to be redirected to support future affordable housing projects.
The grant application deadline is May 25, 2022. Receipt of full or partial funding through the LHTF Program would provide at least a small offset of affordable housing funding that was lost with the elimination of Redevelopment and would allow for the creation of new affordable units at deep levels of affordability.
Staff Report (ID # 4606) Meeting of May 17, 2022
Updated: 5/12/2022 8:11 AM by Alberto Quintanilla Page 3 FISCAL IMPACT: Receipt of the grant would reduce the need for City funding for eligible projects, allowing City funds to be redirected to create more affordable units than would otherwise be possible.
In addition to predevelopment, construction loans or deferred payment permanent financing loans at simple interest rates no higher than 3% per annum, eligible uses of funds include administrative expenses of up to 5% of LHTF Program grant funds and 5% of Matching funds.
ENVIRONMENTAL REVIEW: The grant application is exempt from CEQA pursuant to, without limitation, each as a separate and independent basis, CEQA Guidelines Section 15378 (fiscal activities that do not involve commitment to a specific project that will result in any significant physical impact on the environment), Section 15061(b)(2) (no possibility of significant effect on the environment).
ATTACHMENTS: None.
LINKS: None
ATTACHMENTS:
• Draft Reso 2022 LHTF Application 05172022
RECOMMENDATION: Adopt a Resolution authorizing the City Manager, or designee, to submit an application for $5 million in grant funds from the State’s Local Housing Trust Fund (LHTF) Program, authorizing execution of a contract for LHTF Program funds if the City is selected for funding, and making findings of CEQA exemption.