Fremont City Council Meeting: 03/18/25 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5369) DOC ID: 5369
Updated: 3/14/2025 10:38 AM by Susan Gauthier Page 1
AFFORDABLE HOUSING AGREEMENT - Appropriate Funds and Adopt a Resolution Authorizing the City Manager to Execute an Acquisition Loan Agreement for $9.5 Million with Pacific West Communities, Inc. 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: On March 19, 2024, the City Council adopted Resolution 2024-09 approving a construction loan in the amount of $12 million, in the form of a 55-year loan at a rate of 3% simple interest, for the 240-unit affordable housing project proposed by The Pacific Companies and Maracor Development (TPC/Maracor) at 45021 Warm Springs Boulevard. TPC/Maracor has requested approval for $9.5 million of the funding award to be used for property acquisition, with the remaining $2.5 million to be used for construction costs.
BACKGROUND: The project is one of the three projects awarded under the City’s Notice of Funding Availability (NOFA) for affordable housing issued in August 2023. On March 19, 2024, the City Council awarded $12 million, in the form of a 55-year loan at a rate of 3% simple interest, to The Pacific Companies and Maracor Development to develop 240 units of affordable housing located at 45021 Warm Springs Boulevard. The City funding was to be used for construction.
DISCUSSION/ANALYSIS: The developer has submitted documentation required for project entitlements and the process of review is underway. TPC/Maracor contacted City staff in mid-January 2025 to discuss the project schedule. It was their intention to apply for tax credits on January 28, 2025 (which is the first round of California Debt Limit Allocation Committee (CDLAC) 2025 financing applications), however the first round did not include “enhanced credits.” The Warm Springs project is located in a HUD-designated Small Difficult Development Area (SDDA) and qualifies for enhanced tax credits. The developer depends on the enhanced credits for the funding necessary to construct the project, therefore, TPC/Maracor determined that it was not in the best interest of the project to apply for tax credits in January. This has delayed their timeline. TPC/Maracor will apply for the next CDLAC application round on May 20, 2025.
TPC/Maracor entered into a Purchase and Sale Agreement (PSA) for the property which has been amended and the purchase deadline extended until March 25, 2025. TPC/Maracor requested another time extension from the Seller who is unwilling to extend the closing date much further. The developer must have site control, either by ownership or via a valid PSA, to move forward with the project. The developer would acquire the property under the name of an affiliate entity, Pacific West Communities, Inc. (PWC).
Council Staff Report (ID # 5369) Meeting of March 18, 2025 Updated: 3/14/2025 10:38 AM by Susan Gauthier Page 2
TPC/Maracor has requested that the NOFA funding initially approved for project construction be used in part for the $9.5 million acquisition cost which is an allowable use of the City’s Affordable Housing funds per the NOFA Guidelines. The balance of the funding, or $2.5 million, would be for construction once it begins. TPC/Maracor has two projects in Fremont that are under construction: Osgood North and Osgood South apartments.
The experience of working with the developer has been generally positive for the City.
Of the $12 million previously authorized for construction, staff is recommending that the City Council approve a loan of $9.5 million to PWC to be used for acquisition at this time.
While use of City funds for acquisition was not requested in the developer’s original proposal under the NOFA, it is not unusual for affordable housing developers to use City funding for acquisition. If approved by Council, the City’s acquisition loan will be evidenced by a loan agreement and promissory note and will be secured by the land in addition to assignment of plans and specification and an Option to acquire the property if the project turns out to be infeasible. The remaining $2.5 million will be added to the City loan commitment when the project enters the construction phase.
FISCAL IMPACT: On March 19, 2024, the City Council appropriated $12 million from the Affordable Housing In-Lieu Fee Fund (Fund 196) for the construction of a 240-unit project proposed by The Pacific Companies and Maracor Development at 45021 Warm Springs Boulevard. Because staff did not anticipate the disbursement of funds during this fiscal year, staff did not budget the expenditure in this fiscal year’s operating budget. To disburse funding during this fiscal year, staff is requesting that the City Council appropriate $12 million from Fund 196, of which $9.5 million will be expended during this fiscal year. The remaining $2.5 million will be added to the City loan commitment when the project enters the construction phase. There is no additional fiscal impact.
ENVIRONMENTAL REVIEW: This action is exempt from the California Environmental Quality Act (CEQA) pursuant to, without limitation CEQA Guidelines Section 15061(b)(3) and/or 15378(b)(2), (4) and/or (5), and Section 15262 Feasibility and Planning Studies, each as a separate and independent basis. The action is a governmental fiscal or administrative action which will have no potential to adversely affect the environment, directly or indirectly. The project is currently undergoing CEQA analysis in the entitlement phase and is being reviewed for environmental impacts in accordance with CEQA Guidelines.
ATTACHMENTS:
• Draft Resolution TPC Maracor
RECOMMENDATION: Staff recommends that the City Council 1) adopt a resolution authorizing the City Manager to execute an acquisition loan in the amount of $9.5 million (in the form of a 55-year loan at a rate of 3% simple interest) with Pacific West Communities, Inc. for the 240-unit affordable housing project to be built at 45021 Warm Springs Boulevard and making findings of CEQA exemption, and 2) correspondingly, appropriate $12 million to the project from Fund 196 (Affordable Housing Fund), and 3) authorize the City Manager to amend the loan agreement with PWC prior to the start of construction to add the remaining $2.5 million in funding to the City loan commitment.