Agenda Report
Fullerton City Council
MEETING DATE: AUGUST 1, 2023
TO: CITY COUNCIL / SUCCESSOR AGENCY
SUBMITTED BY: SUNAYANA THOMAS, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT PREPARED BY: SUNAYANA THOMAS, DIRECTOR OF COMMUNITY AND ECONOMIC DEVELOPMENT
KELLEE FRITZAL, CONSULTANT
SUBJECT: AFFORDABLE HOUSING AND PROPERTY DISPOSITION AGREEMENT AND AFFORDABLE HOUSING AND LOAN AGREEMENT (HOME FUNDS) FOR POINTE COMMON AT 1600 WEST COMMONWEALTH AVENUE WITH META DEVELOPMENT, LLC
SUMMARY
Consideration of the Affordable Housing and Disposition Agreement and HOME Loan Agreement with Meta Housing Corporation for the construction of a 65-unit affordable housing project known as Pointe Common.
RECOMMENDATION
Adopt Resolution No. 2023-XXX.
RESOLUTION NO. 2023-XXX – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF FULLERTON, CALIFORNIA, APPROVING AN AGREEMENT AND AN AFFORDABLE HOUSING AND LOAN AGREEMENT (HOME FUNDS), BOTH BY AND BETWEEN THE CITY OF FULLERTON AND META DEVELOPMENT, LLC Approve Affordable Housing and Property Disposition Agreement by and between City of Fullerton and Meta Development, LLC.
Approve Affordable Housing and Loan Agreement (HOME Funds) by and between City of Fullerton and Meta Development, LLC.
Authorize City Manager, or designee, to (i) make non-substantive changes to the documents as necessary to finalize the documents, and (ii) implement the documents.
CITY MANAGER REMARKS
The City Manager recommends approval of both agreements. This will provide an additional 65-unit affordable housing project.
PRIORITY POLICY STATEMENT
This item matches the following Priority Policy Statements:
Fiscal and Organizational Stability
Infrastructure and City Assets.
FISCAL IMPACT
The developer will acquire the site from the City at fair market value through a land carryback note for $10,700,000 (AHPDA Land Loan) whereby the City will finance the sale. The City proposed to provide the project with a $1,000,000 HOME loan (City HOME Loan) and a $717,738 loan from the 2010 Taxable Housing Bonds (AHPDA Bond Loan). The developer would repay principal and three percent simple interest on these three loans over the 55-year term with residual receipts from the project, applying payments first to the AHPDA Land Loan until payoff, then to the AHPDA Bond Loan until payoff and lastly to the City HOME Loan with a balloon payment for the outstanding balance at the end of the 55-year term.
DISCUSSION
City Council declared the subject property as surplus and notified the State Housing and Community Development Department and all housing developers of this action in June 2020. The City received numerous responses and selected the top six developers to respond. City Council released a Request for Proposals (RFP) in March 2021 for development of affordable housing on this parcel. City Council reviewed five proposals for the site and selected Meta Housing Corporation as the developer. City Council directed staff to enter into an Exclusive Negotiating Agreement (ENA) with Meta Housing Corporation in August 2021. Meta Housing has designed the Pointe Common project consistent with the RFP standards.
Meta has worked with community members, staff and the Planning Commission to create a contemporary architectural building that will blend with the surrounding community. The development will provide landscaping, common open space areas, tot lot / children’s play area along with barbecue and picnic areas.
The Developer proposes to construct a 65-unit building on the 2.25-acre site, consisting of one-, two- and three-bedroom units restricted to extremely low, very-low- and low-income households for 55 years with one unit set aside for an onsite manager.
Staff currently anticipates that the Developer will receive funding for a portion of the project costs from the following sources:
A conventional loan.
Developer will apply for nine percent federal Low Income Housing Tax Credits (“Tax Credits”) that are competitively awarded by the California Tax Credit Allocation Committee (“TCAC”).
The Developer will apply for State of California Low Income Housing Tax Credits (“State Tax Credits”) that are also competitively awarded by TCAC.
The Developer will defer approximately $52,000 of their developer fee.
The City retained Keyser Marston Associates (KMA) to create a financial analysis of the project. The KMA financial analysis concludes that the warranted financial assistance for the proposed project totals $12,417,738, as requested by the Developer and that the Developer’s development cost estimates are reasonable given the current inflationary environment, entitlement status and type of construction. The HOME funds cannot be committed in IDIS until completion of a HOME Subsidy Layering Review (“HOME SLR”), which requires all funding commitments and HOME agreement committed and executed. Therefore, the HOME SLR will requires completion prior to the closing of the construction loan.
The City will review and approve a Management Plan, Management Agreement and Resident Services Plan to ensure the development continues as a positive member of the community. The City does have the right to review management of the property during the lifetime of the covenants. If the project generates cost, the City will select, where to allocate the cost saving (City HOME Loan). The City ensures that the Capital Reserves for maintenance of the project increases from the standard $250 per unit, per year by two percent until the amount reaches $350 as part of the Affordable Housing and Loan Agreement.
This disposition of this parcel provides an opportunity for households that desire urban living within a company and walkable neighborhood, opportunities for neighborhood support uses and amenities through a 65-unit restricted affordable housing project that also helps the City in reaching Regional Housing Needs Assessment requirements.
Attachments:
Attachment 1 – Draft Resolution No. 2023-XXX
Attachment 2 – Affordable Housing and Property Disposition Agreement Attachment 3 – Affordable Housing and Loan Agreement for HOME Funds cc: City Manager Eric J. Levitt
Affordable Housing Agreement – Pointe Common 1600 West Commonwealth Avenue August 1, 2023 - Page PAGE \* MERGEFORMAT 2