Fremont City Council Meeting: 03/05/24 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Affordable Housing
REVIEWED
Sponsors:
COUNCIL STAFF REPORT (ID # 5089) DOC ID: 5089
Updated: 3/1/2024 1:51 PM by Dina Lewis Page 1
ADOPT A RESOLUTION APPROVING ADDITIONAL FUNDING FOR THE DOUG FORD COMMUNITY APARTMENTS PROJECT - Approval of Additional Affordable Housing Funding for the Doug Ford Community Apartments Project and Making Findings of CEQA Exemption
Contact Persons:
Name: Lucia Hughes Dan Schoenholz
Title: Housing Manager Community Development Director
Div/Dept: Housing Community Development
Phone: 510-494-4506 510-494-4438
E-Mail: [email protected] [email protected]
Executive Summary: The purpose of this report is to recommend that the City Council appropriate an additional $1,350,000 in funding for the Doug Ford Community Apartments project (formerly known as the Irvington Affordable Senior Apartments project).
The additional funds will come from the City’s Affordable Housing Development Fund.
BACKGROUND: Abode Housing Development (Abode) (formerly known as Allied Housing) is a Fremont-based affordable housing developer and the primary provider in Fremont of supportive housing aimed at the homeless or those at risk of homelessness.
In 2018 and 2019, the City Council appropriated a total of $9 million from the Affordable Housing Development Fund for Abode to support the acquisition and construction of Doug Ford Community Apartments. The project also received financial support from the Alameda County A1 bond fund, State No-Place-Like Home funding, and tax credit financing. The 90- unit affordable senior housing development located at 4038 Irvington Avenue provides age - restricted units for seniors, veterans, and individuals that have experienced homelessness in one and two-bedrooms units.
The project was initially scheduled for completion by October 2022. However, the project did not achieve substantial completion until the late summer of 2023. The significant delay was primarily due to PG&E supply chain and staffing shortages, which many development projects have experienced during the past few years, but most notably during the pandemic. As a direct result of the delay, the project was confronted by a budget shortfall of approximately $1.7 million. Financing, labor, and other carrying costs continued to compound and escalate as the project was delayed.
DISCUSSION/ANALYSIS: Abode was able to reduce the budget gap to $1.35 million by obtaining an early equity pay-in from its equity investor. The early pay-in (at occupancy rather than at conversion to permanent financing, which occurs later) helped reduce the financing cost. Abode also sought additional financial assistance from the State Department of Housing and Community Development but was unsuccessful.
The $1.35 million requested from the City would allow Abode to repay themselves for staffing and overhead costs for which they had expected to receive a developer fee upon closing out their construction loan. Their anticipated developer fee was instead expended for Council Staff Report (ID # 5089) Meeting of March 5, 2024 Updated: 3/1/2024 1:51 PM by Dina Lewis Page 2
increased construction loan interest, increased insurance costs and additional soft costs.
Without the City’s additional financial support, Abode would need to accept the expenditures as a loss or incur additional hard debt at high interest rates to cover these costs. It would take the organization many years to recover from the loss and would negatively impact Abode’s ability to continue developing affordable homes in the future.
The additional $1,350,000 would be provided in the form of a 55-year residual receipts payment loan at a rate of 0% interest. It would bring the City’s total contribution to $10,350,000 or $115,000 per unit which is still well within the per-unit subsidy range of other affordable housing projects funded recently by the City.
Doug Ford Community Apartments achieved 100% occupancy in late 2023 and is a place that ninety formerly homeless and very-low income senior households can now call home.
Abode is in the process of closing out the construction loan and converting it to lower -cost permanent financing by around late-April, 2024. The City’s additional funding would be provided at the time of permanent loan closing.
FISCAL IMPACT: Sufficient funds are available for the recommended appropriation.
ENVIRONMENTAL REVIEW: Original approval of the Doug Ford Community Apartments Project was subject to SB35, and was therefore ministerial and not a project under CEQA.
The proposed additional funding for the project and amended loan documents are exempt from the California Environmental Quality Act (CEQA) as it does not constitute a project within the meaning of CEQA, without limitations, in accordance with CEQA Guidelines Section 15378(b)(2),(4) and/ or (5) and/ or 15061(b)(3), each as a separate and independent basis.
ATTACHMENTS:
• Resolution to Appropriate Add Funds for Doug Ford Apartments Final
RECOMMENDATIONS:
1. Adopt a resolution authorizing the City Manager or her designee to amend the existing loan documents to add an additional $1,350,000 in funding to the project and take such other actions as required to - increase the total loan amount to $10,350,000 to Allied 4038 Irvington, L.P. and making findings of CEQA exemption.
2. Appropriate $1,350,000 from Fund 196 (Affordable Housing Development Fund) for the Doug Ford Community Apartments project.