( V # G
Santa Clara Valley Housing Group, Inc.
January 4'h, 2022
Open Letter to the City of Hercules
Dear City Council, City Staff, and Residents of the City of Hercules, We are providing this letter for the upcoming January 18" City Council Meeting regarding the Mello-Roos Financing District for the Hilltown Project. Below, I will address in writing comments anć questions that we heard from the City Council during the previous October 19t meeting #1- Is a Mello-Roos Financing District needed for the project to advance? For the project to advance today, a Mello-Roos Financing District is absolutely needed. With the current costs to improve and develop the project due to the unique site characteristics, amount of dirt that needs to move and infrastructure that needs to be installed, the only way for the project to move forward is for a Mello-Roos financing District to be formed
#2- Cost of Improvements covered by Mello-Roos vs. what Santa Clara Valley Housing Group will be covering?
The total costs of horizontal improvements and impact fees (i.e. grading, joint trench, oil line relocations, storm drains, street work, bioretention, environmental cleanup, impact fees, etc.) is approximately $86.5 million (note that this does not include the costs to build the actual homes).
Therefore, we are asking the City Council to approve a Mello-Roos District not to cover all the costs, but rather help to provide some assistance to get this long-awaited project moving forward. As noted previously, without assistance in the form of a Mello-Roos Financing district, this project cannot move forward.
Below is a probable breakdown of costs the Mello-Roos District will cover vs. the costs Santa Clara Valley Housing Group will cover based on which Scenario the City Council Approves:
• Scenario #1 (1.80% max tax)
Construction Costs funded by Mello (approx. $20m) vs. SCHG (approx. $66.5m) • Scenario #2 (1.90% max tax)
• Construction Costs Funded by Mello (approx. $24m) vs. SCHG (approx. $62.5m) • Scenario #3 (2.00% max tax)
• Construction Costs Funded by Mello (approx. $28m) vs. SCHG (approx. $58.5m) * Scenario #3 is the preferred option as it generates the largest amount of funding which is critical to move the project forward and SCHG will cover the remaining amount (approx. 70% of the total costs)
404 Saratoga Avenue, Suite 100 Mailing Address:
Santa Clara, CA 95050-7062 P.O. Box 58171
Facsimile: 408-985-6050 Santa Clara, CA 95052-8171
#3- Commitment to transparency for sales regarding the Mello-Roos? By law, we are required to clearly disclose that there is a Mello-Roos Financing District to prospective buyers before anyone purchases a home. We will ensure that all sales staff notifies potential buyers early and often that there is a Mello-Roos for the development. We acknowledge and agree that it is extremely important to share this information with prospective buyers early on so that they can factor that cost in prior to making any decisions.
#4- What will be the cost for HOA dues?
While it is too early to provide the City Council with a concrete number for the HOA dues, from our expertise in this area and research in the City of Hercules and surrounding cities with similar developments in scope and size, we believe the cost will be approximately $300-$350 per month depending on the size of the unit.
The reason that we are unable to provide a concrete number at this time is the documents and specifications on buildings and common open space need to be provided to the California Department of Real Estate to review and approve. This process typically takes place as the residential units are being constructed. Therefore, we are unable to move forward with submitting HOA document to the CDRE as we are at least a year or two out from being able to begin that process. #5- Affordable Housing?
Per the Development Agreement for the Hilltown project, Award Homes agreed to provide 5% of the units as Affordable Housing units sold at a moderate-income level. As noted previously, without approval of the requested Mello-Roos Financing District, the development cannot move forward and therefore, the Affordable Housing units cannot be built. #6- Starting Date?
Lastly, if the City Council approves the Mello-Roos District, preferably Scenario #3, the project could begin as soon as Spring 2022 or at the latest Spring 2023 depending on the timing for the formation of the Mello-Roos District and final adoption by the City Council and timely approval of grading plans, improvement plans and final map.
However, as previously noted, without approval of a Mello-Roos Financing District, the project cannot advance.
Should you have any questions or comments on the above, please feel free to contact me directly at [email protected] or Cory Kusich directly at [email protected]. We will both be present at the January 18" City Council Meeting as well to address any comments or questions.
Sincerely,
Ae shatt
Stephen E. Schott
Vice-President