Fremont City Council Meeting: 11/15/22 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Affordable Housing
SCHEDULED
Sponsors:
STAFF REPORT (ID # 4713) DOC ID: 4713
Updated: 11/9/2022 11:46 AM by Alberto Quintanilla Page 1 BELL STREET GARDENS AFFORDABLE APARTMENTS –Resolution Approving the Conditional Commitment and Execution of Agreement for $540,000 of Federal HOME Funds
Contact Persons:
Name: Lucia Hughes Robert Lopez
Title: Housing Manager CDBG Administrator
Div/Dept: Housing Human Services Department
Phone: 510-494-4506 510-574-2043
E-Mail: [email protected] [email protected]
Executive Summary: Staff recommends the City Council adopt a Resolution to conditionally approve the use of $540,000 of Fremont’s allocation of federal HOME funds for the Bell Street Gardens project; authorize the City Manager to determine if the funding is needed for the project in order to close its construction financing; and if the funding is needed for the project, to execute a loan agreement with the developer for the additional funds.
BACKGROUND: Resources for Community Development (RCD), a Bay Area-based non- profit housing developer, is the developer of the Bell Street Gardens affordable housing project. Bell Street Gardens will convert the Islander Motel building and construct a new building on two adjacent parcels to provide a total of 128 units of permanent affordable housing on approximately two acres. The housing will be accessible to households earning less than 50% of area median income (AMI), with 29% of the units at no more than 20% AMI, including special needs housing for individuals with disabilities and formerly homeless households.
The City has provided a total of $13,295,000 in funding for the project from a combin ation of affordable housing fees paid by market rate and commercial/industrial developers ($10,470,000); federal Community Development Block Grant (CDBG) funds ($1,825,000); and federal HOME funds ($1,000,000). The project also has secured funding from the Alameda County Measure A1 housing bond, the State’s Multifamily Housing Program, and the State’s Housing Accelerator Program, as well as bank loans.
DISCUSSION/ANALYSIS: The project’s financing package looked to be complete until recently. Due to high inflation, interest rate increases and impacts such as higher costs for insurance and other soft costs, RCD recently identified a funding gap of approximately $ 8.2 million. While RCD has secured $2.7 million in County funding commitments, secured $1 million in Fremont’s allocation of Federal HOME funds, and identified approximately $500,000 savings from developer fee deferral, there is a remaining gap of about $ 4 million.
In recognition that construction costs have increased sharply in recent months, the S tate Housing Accelerator Program has made $45 million in supplemental funding available for approved projects like Bell Street Gardens. RCD has applied for funds to eliminate the remaining financing gap but has not yet learned if their application was succ essful.
Staff Report (ID # 4713) Meeting of November 15, 2022
Updated: 11/9/2022 11:46 AM by Alberto Quintanilla Page 2 Alameda County housing staff recently identified that Fremont has $540,000 in federal HOME funds that are unallocated and could be used for the Bell Street Gardens project. A conditional award of the funds would help close the remaining funding gap if RCD’s application for State supplemental funding is unsuccessful.
Appropriation of $540,000 in HOME funds would increase the total City appropriation for the project to $13,835,000, or about $108,000 per unit. This subsidy is comparable to those provided to other affordable projects over the past several years.
FISCAL IMPACT: The proposed award of HOME funds requires a new appropriation in the amount of $540,000. This appropriation will be covered through the City’s share of the County’s federal HOME line of credit.
It should also be noted that as part of a May 2022 report to Council related to the award of $1,000,000 in HOME funding for Bell Street Gardens, staff had informed Council that $1,000,000 in Alameda County Measure A1 funds allocated to the project would likely no longer be needed, and that the County would likely be able to re-allocate the funds to a new another Fremont project. Due to the subsequent cost increases, however, the Bell Street Gardens project will use the entire County allocation and there will be no project savings available for another project.
ENVIRONMENTAL REVIEW: On November 20, 2018, the City Council adopted a Mitigated Negative Declaration for a General Plan Amendment, Rezoning and Discretionary Design Review Permit for the development of this project, located at 4101 Mowry Avenue and comprising the Bell Street Gardens Affordable Apartments Project; no further CEQA review is required because none of the circumstances specified in CEQA Guidelines Section 15162 necessitating preparation of subsequent environmental review are present or have occurred; and, as a separate and independent basis, the action is exempt pursuant to, without limitation, (1) CEQA Guidelines Section 15378 (fiscal activities that do not invo lve commitment to a specific project that will result in any significant physical impact on the environment); and/or Section 15061(b)(3) (no possibility of significant effect on the environment).
NEPA: The project is also subject to environmental procedures pursuant to the National Environmental Policy Act (NEPA), as amended, and implementing regulations set forth in 24 CFR Part 58. Consistent with NEPA regulations, the initial Environmental Review process and Authority to Use Grant Funds for federal HOME funds was completed on July 25, 2022. Per ACHCD, additional HOME funds can be added to the project as long as the scope of the project has not changed.
ATTACHMENTS: None.
ATTACHMENTS:
• Draft Resolution Bell HOME 540K
RECOMMENDATIONS:
1. Adopt a Resolution conditionally approving a loan of $540,000 in FY 2020/21 HOME funds to Resources for Community Development for the development of the Bell Street Gardens Affordable Apartments and authorizing the City Manager or designee to make Staff Report (ID # 4713) Meeting of November 15, 2022
Updated: 11/9/2022 11:46 AM by Alberto Quintanilla Page 3 the determination that the funding is needed to close a funding gap for the project and execute all necessary HOME-related loan and implementing documents with Resources for Community Development and Alameda County.
2. Appropriate $540,000 in HOME funds (Fund 103) to the Bell Street Gardens project.