Fremont City Council Meeting: 09/09/25 07:00 PM
3300 Capitol Avenue Div/Dept: Housing
Fremont, CA 94538 Category: Agreements and Contracts
SCHEDULED
Sponsors:
COUNCIL STAFF REPORT (ID # 5512) DOC ID: 5512
Updated: 9/4/2025 8:49 AM by Dina Lewis Page 1
3900 THORNTON LOAN EXTENSION – Adopt a Resolution Authorizing the City Manager to Extend the Term of Existing City Loan Agreement with Thornton Affordable Housing, L.P., an affiliate of Resources for Community Development Contact Persons:
Name: Lucia Hughes Wayne Morris
Title: Housing Manager Deputy Community Development
Director
Div/Dept: Housing Community Development
Phone: 510-494-4506 510-494-4729
E-Mail: [email protected] [email protected]
Executive Summary: Resources for Community Development (RCD) currently manages the development of 3900 Thornton affordable housing project located at 3900 Thornton Avenue owned by its affiliate Thornton Affordable Housing L.P. (the borrower). The City received a request from RCD to extend the term on the acquisition and pre-development loan agreement with the City to allow for additional time to secure sufficient financing for the project to start construction.
BACKGROUND: On November 2, 2021, as part of the Notice of Funding Availability (NOFA) process, the City Council approved an acquisition and pre-development loan of $7,600,000 to RCD for the 3900 Thornton affordable housing project. The initial loan term expired on April 1, 2025, the latest start date for construction. The loan agreement provided for one extension option of 180 days, which the City granted, and extended the loan to September 28, 2025, by an operating memorandum. Due to continuing funding challenges, RCD needs to further extend the City loan, which cannot be granted administratively. Staff is seeking Council approval to extend the loan term to September 28, 2027.
DISCUSSION/ANALYSIS: The predevelopment period for the project has been prolonged because of the extremely competitive nature of the state’s tax-exempt bond market. While the project has been awarded City funding, as well as State Affordable Housing and Sustainable Communities (AHSC) funding, construction cannot start until additional financing in the form of tax-exempt bonds and 4% tax credits are allocated to the project.
Despite four applications for tax-exempt bonds, two in 2024 and two in 2025, none have been successful. In both 2024 rounds and both 2025 rounds, less than 40% of the bond volume requested statewide was awarded. In 2024, only 22% of the bond volume requested for projects in the Bay Area was awarded, dropping to only 7% in Round I 2025.
RCD continues to position the project as competitively as possible by reducing project costs by 10% through value engineering and leveraging additional funds with a HUD 811 Project Rental Assistance award. In addition, in April 2025, RCD revised the unit mix for the project to qualify as “Large Family” housing, to take advantage of Fremont’s designation as a high resource area, which substantially improved the likelihood that the project would receive a tax-exempt bond allocation. The change to qualify the project for “Large Family” housing necessitated the reduction of the total number of apartments from 128 (originally proposed) to 116 and commensurately increasing the number of bedrooms from 188 to 207.
Council Staff Report (ID # 5512) Meeting of September 9, 2025 Updated: 9/4/2025 8:49 AM by Dina Lewis Page 2
Despite these efforts, they were not awarded funding in the May 2025 round. RCD will apply again in the next tax-exempt bond application round scheduled for September 2025. With the enhancements to the housing tax credits that came with the recent passage of the Fiscal Year 2025 Reconciliation Bill, RCD is optimistic that their application will be successful.
If awarded, the 116-unit affordable development could start construction in spring of 2026.
RCD is an experienced affordable housing developer. 3900 Thornton is RCD’s second affordable housing project in the city. RCD recently held a grand opening celebration for Bell Street Gardens, a 128-unit affordable housing development located at 38889 Bell Street. Staff has completed the review of the documents necessary for the borrower to demonstrate that it satisfies the conditions for the loan extension, including but not limited to, a certification of no default, an updated schedule of performance, and a statement from RCD that there is no adverse change in the financial condition of the borrower.
Staff is recommending an additional two-year loan extension for this project with a new expiration date of September 28, 2027, to allow for unforeseen delays to start construction.
FISCAL IMPACT: Predevelopment loans for affordable housing projects are typically extended and combined with additional City financial assistance at construction loan closing, in the form of a 55-year loan at a rate of 3% simple interest. On November 2, 2021, the City Council approved $7,600,000 to finance the predevelopment costs of the project. Once RCD can demonstrate project readiness for construction, staff will return to Council for the appropriation of the construction loan of $9,676,908 for a total of $17,276,908. There is sufficient funding in the Affordable Housing Ordinance Fund (Fund 196) for this appropriation.
ENVIRONMENTAL REVIEW: The City’s approval of the extension of loan term 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), 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. Furthermore, the proposed project was previously found to meet the criteria in Government Code Section 65913.4, amended via Senate Bill 35, thereby making it ministerially exempt from the requirements of CEQA.
ATTACHMENTS: None.
ATTACHMENTS:
• Draft Resolution Resources for Community Development Loan Extension
RECOMMENDATION: Adopt a resolution authorizing the City Manager, or designee, to amend the loan agreement and other implementing documents and take such other actions as required to extend the term of the acquisition and predevelopment loan agreement to September 28, 2027.