To: Timothy Rood, Community Development Director
CITY OF HERCULES
From: Suzy Kim and Mark Sawicki, Directors
RSG, INC.
Date: May 7, 2026
SUBJECT: REVIEW OF Development proposalS: HERCULES HOUSING SUCCESSOR AGENCY NOFA (2026) The City of Hercules (“City”) serves as the Housing Successor Agency (“Housing Successor”) to the former Hercules Redevelopment Agency (“Redevelopment Agency”). The Housing Successor’s Low and Moderate Income Housing Asset Fund (“Housing Asset Fund”) had a $6.2 million cash balance as of June 30, 2025. The balance is primarily from loan repayments related to homeowner and developer loans issued by the former Redevelopment Agency.
The City issued a Notice of Funding Availability (“NOFA”) in October 2025 inviting developers to submit proposals to develop affordable housing utilizing up to $5 million in Housing Asset Funds. Three developers submitted proposals as shown in Table 1.
Table 1:
Developer Proposals
Developer
Community Housing Works (“CHW”)
Satellite Affordable Housing Associates (“SAHA”)
Eden Housing (“EDEN”)
Project Name
Bayline Apartments
Sycamore Crossing
Victoria Green
# of Units
83 100
66 new units
+132
rehab units
City staff and RSG, Inc. (“RSG”) evaluated each proposal based on the following criteria, as descried in the NOFA:
developer qualifications and experience,
financial capacity,
alignment with community and Housing Element goals,
project readiness and economic viability, and
project eligibility and affordability.
RSG scrutinized development pro formas for each proposal and found they all have reasonable cost assumptions that comply with California Tax Credit Allocation Committee rent limits, operating expense minimums, and reserve requirements.
City staff and RSG recommend awarding $5 million to the CHW Bayline Apartments project based on the following key factors:
Proposes the deepest level of affordability
Serves the highest number of new residents based on bedroom count Produces 82 new units that count toward the City’s Regional Housing Needs Allocation (“RHNA”) Meets income and age limit restrictions for Housing Asset Fund expenditures Meets Housing Element goal to facilitate development serving a special needs population Estimates positive cash flows sufficient to cover expenses and debt service CHW owns the proposed site
CHW brings strong experience and financial capacity
CHW is furthest along in development application efforts While all the projects and developers are worthy of support, City staff and RSG recommend funding one project, versus splitting the $5 million award between multiple projects. This approach better ensures that the funded project will be more competitive for other key funding sources and, thus, have a higher chance of successful and timely development.
Table 2 presents key components of each development proposal for City Council’s consideration.
Table 2
Developer Proposal Summary
Developer
CHW
SAHA
Eden
Project Name
Bayline Apartments
Sycamore Crossing
Victoria Green
Location
Bayfront Boulevard
Sycamore Ave. & San Pablo Ave.
Paradise Drive
(near Victoria Crescent W)
APN
404-490-102-5
404-490-101-7
404-020-098
404-020-099
404-030-050
Population Served
Individuals and families
(62 units)
Persons with Intellectual and Developmental Disabilities (IDD) (21 units)
Individuals and families
(100 units)
Seniors
(66 new units)
Reserve the right to change if it conflicts with existing regulatory agreements Individuals and families
(132 existing units)
Unit Type
1, 2, and 3 bed
Studio, 1, 2, and 3 bed
Studio and 1 bed
Studio, 1, 2, and 3 bed
Number of Units by Income Level:
New Units
New + Rehab
30% AMI
29 11
7 21
50% AMI
16 30
45 85
60% AMI
27 58
13 67
80% AMI
10 23
Manager
1 1
1 2
# of Units
83 100
66 198
# of Permanent Supportive Housing Units
0 0
0 0
Weighted Average Bedroom Size
1.74 1.69
0.71 1.69
Est. Resident Count
269
260
92 508
Target Income Levels as % of Total Units:
30% AMI
35%
11%
11%
11%
50% AMI
19%
30%
69%
43%
60% AMI
33%
59%
20%
34%
80% AMI
12%
0%
0%
12%
Manager
1%
1%
1%
1%
Weighted Average Affordability Level
49% AMI
54% AMI
50% AMI
53% AMI
Building Size and Scale:
Total Building Square Footage
95,980
102,660
46,681
Number of Buildings
2 1
1 new
Number of Stories
4 5
3 Development Cost:
New Units
New + Rehab
Total Development Cost (net of land)
$60,430,339
$77,897,924
$34,427,523
$40,427,523
Total Development Cost per Unit (net of land)
$728,076
$778,979
$521,629
$204,179
Developer Fee (net of contributions)
$2,800,000
$3,842,078
$5,919,086
Total Amount of City Funding Requested
$5,000,000
$5,000,000
$5,000,000
City Funding per Unit
$60,241
$50,000
$75,758
$25,253
Development Costs Include Prevailing Wage
Yes
Yes
No
Site Control
Yes, owns site
Yes, with execution of Purchase & Sale Agreement by May 2026 with final option expiring Dec 2026 Yes, owns site
Cash Flow
Positive NOI,
Maintains 1.15 debt service coverage that increases each year, Soft loan repayments begin in Year 11
Positive NOI,
Maintains 1.15 debt service coverage that increases each year, Soft loan repayments begin in Year 7
Negative NOI after 24 Years,
Debt service coverage declines after Year 12,
No soft loan repayments
Table 2
Developer Proposal Summary
Developer
CHW
SAHA
Eden
Project Name
Bayline Apartments
Sycamore Crossing
Victoria Green
Sources of Funding:
Federal LIHTC Equity (4%)
$31,319,886
$24,979,955
Federal LIHTC Equity (9%)
$24,357,564
Federal Home Loan Bank Aff Hous Prog (AHP)
$1,500,000
HCD: Aff Hous and Sust Comm ("AHSC")
$17,303,893
$26,350,208
HCD: Multifamily Housing Program ("MHP")
$7,722,481
Contra Costa Co. (HOME)
$2,529,197
$2,135,143
Contra Costa Co. (Measure X)
$458,865
City of Hercules
$5,000,000
$5,000,000
$5,000,000
East Bay Regional Center
$3,150,000
Deferred Developer Fee
$1,400,000
$1,145,213
$2,351,804
Seller/Developer Carryback Loan
$15,697,047
Income from Operations
$734,878
GP Capital Contribution
$4,538,944
$100
Permanent Loan
$8,047,000
$11,454,378
$11,422,618
Total Sources
$62,246,519
$81,308,629
$70,044,026
Developer Qualifications and Experience:
Years of Experience
Nearly 40 years
Over 50 years
58 years
Development Portfolio
Developed over 5,100 apartments in 53 communities, with 1,500 units in the pipeline Completed 75 affordable communities in the Bay Area. House over 4,000 residents Developed or rehabilitated over 12,930 units statewide
Other Factors
Submitted SB 35 development application
If SAHA is unable to secure AHSC allocation, its alternate plan is HCD MHP funding. To be competitive for MHP projects on public land, SAHA asks City to purchase development site and lease to SAHA to shield City from property responsibilities before closing.
Simultaneous resyndication and rehabilitation of existing project to leverage tax credits in support of new construction
1/4 of construction budget for rehab;
3/4 of budget for construction of new units
Table 2
Developer Proposal Summary
Developer
CHW
SAHA
Eden
Project Name
Bayline Apartments
Sycamore Crossing
Victoria Green
Housing Successor Compliance:
Minimum 30% @ 30% AMI, Maximum 20% @ 60-80% AMI
Number of 30% AMI Units
29 11
7 21
Housing Asset Fund Subsidy Per 30% AMI Unit
$172,414
$454,545
$714,286
$238,095
Total Development Cost Per Unit (net of land)
$728,076
$778,979
$521,629
$204,179
Can Allocate Full Request to 30% AMI (Per Unit Funding Less than Total Dev Cost) Yes
Yes
No
No
SB 341 Compliance by Income Level
Complies, can allocate all funding to 30% AMI
Complies, can allocate all funding to 30% AMI
Subsidy per 30% AMI unit exceeds development cost
Subsidy per 30% AMI unit exceeds development cost
Percent Senior Units
0%
0%
100%
33%
SB 341 Compliance by Age
Yes
Yes
Exceeds 50% maximum for seniors
Alignment with Community Goals / Housing Element Needs:
Senior Housing Project (Program H2-3)
no
no
yes
Alternative Housing Model (Program H2-5)
no
no
no
Housing Choice Vouchers (Program H1-3)
no
no
no
Housing for Persons with Special Needs (Program H4-1)
yes
no
yes
Policy 1.5 Encourage development of new special needs housing for seniors, single parents, families, large families, the disabled, including those with developmental disabilities, and extremely low-income households yes
yes
yes
Policy 1.6. Use density bonuses and other incentives to facilitate the development of new housing for extremely low, very low- and low-income households in conformity with State law yes
yes
yes
Policy H4.5 Encourage housing serving special needs such as elderly and disabled yes
no
yes
RHNA Fulfillment:
# of Units That Fulfill Remaining RHNA Need (2025 remaining need) Very Low or 50% AMI
(343 Units)
45 41
52 0*
Low or 80% AMI
(196 Units)
37 58
13 0*
Moderate or 120% AMI (125 Units)
0 0
0 0
Above Moderate
(309 Units)
0 0
0 0
* Per Gov Code Section 64500, only substantial rehabilitated units that receive more than $60,000 per unit of City funding can be included for RHNA reporting. According to Eden’s proposal, the $5 million NOFA funding would be used for constructing the new units and not for the rehab units.
Timothy Rood, Community Development Director
CITY OF HERCULES
May 13, 2026