Ledcor Properties Corporation
660 W. Baker St., Bldg. C Suite 101
Costa Mesa, CA 92626
December 11, 2023
Mr. Dante Hall
City Manager
City of Hercules
111 Civic Drive
Hercules, CA 94547
RE: Request for Amendment to Affordable Housing Plan Implementation Agreement
Dear Mr. Hall:
Pursuant to the Affordable Housing Plan Implementation Agreement (the "Agreement") executed on July 21, 2021, by and between the CITY OF HERCULES (the "City"), HERCULES LAND PARTNERS LP, HERCULES BLOCK Q&R DEVELOPMENT PARTNERS LP, and HERCULES BLOCK N DEVELOPMENT PARTNERS LP (the "Owner"), please accept this letter requesting to amend the Agreement.
The Agreement stipulates the requirements of providing affordable housing in the Waterfront District Master Plan. As you may have been briefed, we are presently moving forward to entitle Blocks K, L, M, P, & O with 175 for-sale townhome units in-lieu of rental apartments and entitle Blocks E & G for a hotel use.
Section 2.2 of the Agreement requires the "Owner shall construct a number of Affordable Units equal to at least 5% of the total residential units within the entire Project."
In the homebuilder industry, the builders are accustomed to marketing, qualifying, and closing on the sales of affordable units within their projects, but they do not provide this service after the initial buyer. Managing the transactions for the next round of affordable buyer becomes the obligation of the jurisdiction to ensure the appropriate parties are obtaining the affordable housing. In light of the future demand on time, manpower, and cost for the City to manage the monitoring and qualifying of future affordable residents, we suggest an amendment whereby the Agreement is revised to include within the total count of affordable units provided in Block N under its workforce housing provisions.
One third or 58 of the 172 units at Block N are currently designated for persons and families whose adjusted gross income exceeds 60% but is less than or equal FICOR
GROUP
to 80% of the median income within Contra Costa County. Additionally, the next third are designated for persons and families whose adjusted gross income exceeds 80% but is less than or equal to 100% of the median income. These affordable requirements remain in place for a 30-year period during the bond repayment, but this can be verified as we move forward to amend the Agreement.
After the bonds are fully repaid, the apartment building at Block N becomes the property of the City and the affordability can continue, if desired.
The 58 units currently in service as 80% affordable at Block N would allow for no additional attordable within the for-sale units proposed at Blocks K, L, M, P, & O and most likely none throughout the remainder of the masterplan development based on potential development as this would provide for 73 units of affordable (58 at Block N and 15 at Blocks Q & R) and the 5% affordable unit obligation would be more than satisfied
Additionally, we are looking at the possibility of transacting the apartment building at Blocks Q & R to a workforce housing provider and this would assist the City with its Cycle 6 RHNA obligations pertaining to affordability.
This request will require some thoughtful amendment wording to the Agreement and perhaps to IDA Exhibit E that will benefit both the City and Owner in the future.
We would like to schedule an initial call to determine how we can move this request forward.
Very Truly Yours,
Shake entry,
Hercules Development Partners LP
By: Hercules Developments Inc., its general Partner
By: John M. Santry, Senior Vice President
CC: Tim Rood (via email)
Robert Davis (via email)