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AGENDA
NOTICE AND CALL OF SPECIAL MEETING
OF THE LAKEPORT CITY COUNCIL
Thursday, September 26, 2024 at 6:00 p.m.
City Council Chambers, 225 Park Street, Lakeport, California 95453 See Teleconferencing Instructions Below
TO THE MEMBERS OF THE CITY COUNCIL OF THE CITY OF LAKEPORT:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Lakeport City Council is hereby called to be held on Thursday, September 26, 2024 at 6:00 p.m. for the purpose of discussing and acting on the following:
1. Community
Development
Block Grant –
Disaster Recovery
(CDBG-DR)
Extension
Request:
Authorize the City Manager to execute a grant extension request letter.
Adjournment:
Dated: 09/23/2024
____________________________________
Hilary Britton, Deputy City Clerk
AGENDA
NOTICE AND CALL OF SPECIAL MEETING
OF THE LAKEPORT CITY COUNCIL
Thursday, September 26, 2024, at 6:00 p.m.
City Council Chambers, 225 Park Street, Lakeport, California 95453 Meeting Date: 09/26/2024 Page 1 Agenda Item # 1.0
376002.2
CITY OF LAKEPORT
City Council ☒
City of Lakeport Municipal Sewer District ☐
Lakeport Industrial Development Authority ☐
Municipal Financing Agency of Lakeport ☐
STAFF REPORT
RE: Community Development Block Grant – Disaster Recovery (CDBG-DR) Extension Request
MEETING DATE: 09/26/2024
SUBMITTED BY: Kevin Ingram, City Manager
PURPOSE OF REPORT: ☐Information only ☐ Discussion ☒Action Item WHAT IS BEING ASKED OF THE CITY COUNCIL/BOARD:
The City Council is being asked to authorize the City Manager to execute a 2018 CDBG-DR grant extension request letter to the California Department of Housing and Community Development which includes a reallocation of $2,396,301 in CDBG-DR funds from the Bevins Senior project to the Parkside Apartments project.
INTRODUCTION:
The California Department of Housing and Community Development (HCD) requested the City submit a letter requesting an extension of CDBG-DR Master Standard Agreement (MSA) whose term is scheduled to expire on December 31, 2024. The request for extension shall include an updated sources and uses schedule, timeline with milestones for securing funding sources, completing construction and lease-up, and a written narrative explaining why the project is poised to be competitive in receiving outstanding funding.
BACKGROUND:
On May 4, 2021, the Lakeport City Council adopted Resolution 2804 (2021) Approving an Allocation of Funding and the Execution of a Grant Agreement and Any Amendments Thereto From the CDBG-DR Program which authorized the City Manager to execute a MSA in the aggregate amount not to exceed $10,027,485 which included the City of Lakeport allocation of $2,433,284 and a County of Lake allocation of $7,594,201. Later that year, the City, in collaboration with the City of Clearlake, issued a joint Request for Proposals (RFP) to solicit developers to submit projects for this funding opportunity. In 2022, the City received applications for two projects: the Parkside Multi-Family Affordable Housing Project (Parkside) and the Bevins Senior Affordable Housing Project (Bevins). The applications were evaluated and scored according to grant policies and procedures, resulting in CDBG-DR conditionally awarding funding of $6,230,384 to Parkside and $2,396,301 to Bevins. The remaining $1,400,800 is budgeted to cover City staff and consultant general administration costs as well as project-related activity delivery. One reason the County chose to reallocate funding to the cities was that developing housing units lost to wildfires was more cost-effective due to easier access to utilities, more efficient because of the location outside a Fire Hazard Zone, and more beneficial for residents due to better proximity to jobs and services.
Meeting Date: 09/26/2024 Page 2 Agenda Item # 1.0
376002.2
For Parkside, in addition to CDBG-DR, on September 7, 2021, the Lakeport City Council adopted Resolution 2827 (2021) Authorizing the Application for the Permanent Local Housing Allocation (CPLHA) Program NonEntitlement Local Government Competitive Component in an amount not to exceed $5,000,000. Subsequently, the City received a grant award in the amount of $2,570,805 for the project. Of that amount a maximum of five percent (5%) is eligible to cover City staff and consultant general administration costs. The developer was also successful in being awarded a developer-initiated grant award under the Infill Infrastructure Grant Program (IIG) in the amount of $2,165,681.
For Bevins, in addition to CDBG-DR, on March 19, 2024, the Lakeport City Council adopted Resolution 2942 (2024) Authorizing the Application for Home Investment Partnerships Program (HOME) in an amount not to exceed $12,200,000. Notices of awards for this program have not been issued by HCD, although self-scores have been posted and the Bevins project did not score well leaving little optimism this funding source will come to fruition. On August 27, 2024, City staff were informed by the project developer that without obtaining a HOME award this year the Bevins project lacks an executable financing strategy and would not be able to retain CDBGDR funding due to the absence of a feasible short-term funding plan.
BEVINS SENIOR PROJECT:
The proposed Bevins Senior Housing project is located on 3.1± acres of vacant land at 447 Bevins Street and is further described as APN 025-431-37. The project is a 40-unit senior rental apartment. With the exception of the manager’s unit, all units will be restricted to lower income households earning up to 60% of the area median income (“AMI”) for Lake County, adjusted for household size. The units will be newly constructed apartments in one, three-story residential building. The development will include a 1,000 sq. ft. community building with a common kitchen, exercise room, laundry facility, and business center. Additionally, the development will include covered picnic tables with a BBQ and pergolas made from non-combustible material, USPS approved pedestal mounted mailboxes, a community garden with raised planter beds, bocce ball court, and a fenced dog park.
PARKSIDE ENTITLEMENT TIMELINE:
• August 10, 2022 - Peter Schellinger of Waterstone Residential presented the project application to the Lakeport Planning Commission. The Commission reviewed the Initial Study and adopted the Mitigated Negative Declaration in accordance with the California Environmental Quality Act. • September 6, 2022 – The project application was presented to the Lakeport City Council for its first reading.
• September 20, 2022 – During the second reading, the City Council deferred the item to a future meeting.
• November 15, 2022 – The City Council discussed the item in depth and approved the project with a 3-1 vote.
• On December 6, 2022 – At the second reading, the City Council approved the zone change and general plan amendment, granting full entitlements to the Parkside Project.
PARKSIDE PROJECT BACKGROUND:
The proposed Parkside Project is part of the larger Parkside Residential Project, a mixed-use subdivision located on 15.16 acres (APN 005-030-51), which was previously evaluated in an Initial Study and Mitigated Negative Declaration prepared pursuant to the California Environmental Quality Act (CEQA) and adopted by the City of Lakeport Planning Commission on August 10, 2022. The Parkside Residential Project is based on a 96-lot singlefamily residential subdivision that was originally approved by the City in 2005. Following approval of this original residential subdivision in 2005, 14 homes were constructed on the east side of the Parkside Residential Project site. The remaining vacant portion of the Parkside Residential Project site was proposed for an increase in density, which triggered the City to reevaluate the project in 2022. This revised Parkside Residential Project amended the 96-lot single-family subdivision to include 176 total dwelling units, including 48 attached singlefamily units and 128 multi-family units located in 6-, 8-, and 12-unit two-story buildings. The revised Parkside Meeting Date: 09/26/2024 Page 3 Agenda Item # 1.0
376002.2
Residential Project also included a community facility, leasing office, parking and landscaping, and internal access roads.
Proposed Parkside Project
The proposed Parkside Project plans for the construction of 64 units of affordable housing on an approximately
3.02-acre portion of the Parkside Residential Project site. Specifically, the Project would include three primary components: affordable workforce/family housing; community support services with a common area community building and auxiliary spaces; and site amenities, such as sidewalks, picnic benches, a half-court basketball court, and playground.
These primary components consist of the following:
• Sixty‐four multifamily residential units (California Building Code Occupancy Classification R‐2 “Residential”) in five separate two‐story structures, located on the proposed site in locations close to common area amenities and waste refuse facilities. These structures would be connected by pedestrian sidewalks to vehicle parking, a half‐court basketball court, and picnic benches A stand-alone community building, approximately 2,111 square feet in size, which would consist of a community room with kitchen, leasing/manager’s office with storage, an exercise room, and a laundry facility with Americans with Disabilities Act (ADA)-compliant washers and dryers. Directly adjacent to the community building would be a 1,901-square-foot tot lot playground with age-appropriate activity systems and structures.
Parkside Project Environmental Initial Study
A thorough and complete environmental Initial Study for the Parkside Project was performed in accordance with the California Environmental Quality Act. The purpose of this Initial Study (IS) is to provide a basis for determining whether to prepare an Environmental Impact Report (EIR) or a Negative Declaration. An IS is intended to satisfy the requirements of the CEQA (Public Resources Code, Div. 13, Sec. 21000-21177) and the State CEQA Guidelines (California Code of Regulations, Title 14, Sec 15000-15387).
The IS examined the potential impacts of the Parkside Project including, but not limited to, impacts to biological resources, noise, cultural resources transportation/traffic, wildfire, air quality, hazards & hazardous materials and more. Ultimately, the IS was adopted by the Lakeport Planning Commission through a Mitigated Negative Declaration finding that the Parkside Project would not create significant environmental harm, or that the environmental impact has been mitigated to a less than significant level.
During public meetings on the Parkside Project, residents have expressed concerns about potential traffic impacts, especially during emergencies, and building high-density housing in a fire-prone area. These concerns are understandable, and safety remains a top priority for City staff. The Initial Study addresses these issues, as summarized below.
A Traffic Impact Analysis for the Parkside Project, conducted by Ruettgers & Schuler Civil Engineers (April 2022), assessed 176 residential units (48 single-family and 128 multifamily). The project is projected to generate 101 AM peak hour trips, 125 PM peak hour trips, and 1,410 daily trips. The analysis found no conflicts with circulation system policies, including transit, roadway, bicycle, and pedestrian facilities, as several improvements are planned. While construction may cause temporary traffic disruptions, the project will not result in inadequate emergency access. The site and surrounding area meet all design criteria and standards for emergency access.
Parkside is located outside a Fire Hazard Zone, as determined by CAL Fire, and is classified as a Non-Very High Fire Hazard Severity Zone within the County of Lake’s Local Responsibility Area. The Lakeport Fire Protection District serves the area, with any location in the City accessible within three to five minutes. The proposed residential development is situated along Fenway Street and Yankee Avenue, near Parallel Drive and State Route 29 onramps, providing quick access for emergency evacuation without increasing wildfire risk. Additionally, the flat terrain offers easier access for firefighters, slows fire spread, allows effective use of firebreaks, and ensures safer conditions for aerial support, all of which significantly reduce wildfire risk.
Meeting Date: 09/26/2024 Page 4 Agenda Item # 1.0
376002.2
Parkside Project Emergency Vehicle Access Bridge
Although not required by the Initial Study, in an effort to address neighborhood concerns about emergency access, the project developer plans to build an Emergency Vehicle Access (EVA) Bridge across Forbes Creek, connecting Wrigley Street with Craig Avenue. This bridge will be for emergency vehicles only. A 12-foot-wide gravel access road will be constructed from the end of Wrigley Street to the bridge and will continue to Craig Avenue. Gates or removable bollards will prevent non-emergency vehicle access.
The bridge will feature a 12-foot clear width with crash-rated railings, constructed from steel with steel or concrete decking. It will span the creek without requiring work inside the channel, supported by concrete abutments placed at least 5 feet beyond the creek bank. The bridge will be built to HS20-44 load rating standards per AASHTO, with the underside elevated at least 1 foot above the 100-year flood elevation.
On January 10, 2024, the Lakeport Planning Commission adopted a Mitigated Negative Declaration, confirming that the bridge project will not significantly impact the environment, as per the Initial Study by the Lakeport Community Development Department. The developer is now progressing with the bridge project and complying with federal floodplain management requirements, as a small section of the parcel is within a floodplain.
Parkside Project Financial Considerations
The Parkside project currently has a budget of $34,442,205 that would construct 64 units. 63 of those units will be rented as affordable units and the remaining unit will be reserved for the on-site manager. The 63-unit lowincome breakdown is as follows:
(a)
Bedroom
Type(s)
(b)
Number
of Units
Average
Square
Feet
(c)
Proposed
Monthly Rent
(Less Utilities)
(d)
Monthly
Utility
Allowance
(e)
Monthly Rent
Plus Utilities
(c + d)
(f)
% of Area
Median
Income
2 Bedrooms 7 795 $582 $12 $594 30%
2 Bedrooms 4 795 $780 $12 $792 40%
2 Bedrooms 7 795 $978 $12 $990 50%
2 Bedrooms 13 795 $1,160 $12 $1,172 60%
3 Bedrooms 8 1,067 $673 $12 $685 30%
3 Bedrooms 4 1,067 $902 $12 $914 40%
3 Bedrooms 7 1,067 $1,131 $12 $1,143 50%
3 Bedrooms 13 1,067 $1,300 $12 $1,312 60%
In addition to the construction of housing units, the project also includes a budget of $5,208,171 for on and offsite improvements. The off-site improvements currently included in the project are the connection of Wrigley St. to Craig Ave with the installation of an Emergency Vehicle Access (EVA) bridge and roadway, sidewalk, water, sewer and storm water improvements to Fenway Ave and Yankee Ave. These infrastructure improvements are the impetus to future development of the adjacent sites including the 38 units of market rate cluster homes.
Meeting Date: 09/26/2024 Page 5 Agenda Item # 1.0
376002.2
FUNDING CHALLENGES:
As developers assemble the necessary funding stacks required to complete affordable housing projects, it is common to rely heavily on government subsidies. One of the main examples of this type of funding is through the California Tax Credit Allocation Committee (CTCAC). In 2024 Parkside was unsuccessful in receiving an allocation in rounds 1 and 2 of the 9% CTCAC applications. At both times Parkside was extremely competitive in the Rural Apportionment set-aside and would have been funded had rare anomalies within the process not occurred. Below is a snapshot of scores published by CTCAC for Round 2:
It is worth noting that Parkside was the highest-scoring CDBG-DR project in the state. The competition for this program is exceptionally high, with numerous DR projects vying for the same funding source. State agencies are aware of this challenge and are working toward a solution. On August 28, 2024, city staff met with staff and executives of HCD CDBG-DR to discuss project viability, grant extension and next steps. Lakeport staff were made aware that HCD CDBG-DR is under significant pressure from the Federal Department of Housing and Urban Development (HUD), the originators of this funding source, to reclaim any unused funding for projects that have no near-term viable path to construction. HCD CDBG-DR is developing a strategy to prioritize the remaining incomplete DR projects, mentioning that there would likely be a consolidation of the remaining sources of funding within the 2018 DR program to ensure completion of some percentage of the remaining projects. It is staff’s understanding that out of the original 30 2018 DR projects, 8 incomplete projects remain.
During that conversation, HCD acknowledged the significant loss of homes in Lake County due to the recent fire emergencies, the difficult path that Parkside has faced through the CTCAC process, and ultimately expressed their desire to support the Parkside project to fruition.
CTCAC
NUMBER PROJECT NAME HOUSING TYPE
ANNUAL
FEDERAL
CREDIT
REQUESTED
TOTAL
STATE
CREDIT
REQUESTED
POINTS
SELF
SCORE
TOTAL
TIE-BREAKER
SELF SCORE SET ASIDE
CA-24-073 Summer Oaks Large Family $2,500,000 $8,555,188 109.00 77.761% Rural apportionment (HOME) CA-24-111 Parkside Apartments Large Family HR $1,713,181 $0 109.00 73.806% Rural apportionment (CDBG-DR) CA-24-156 Clark Road Apartments Large Family HR $2,500,000 $8,333,321 109.00 68.903% Rural apportionment (CDBG-DR) CA-24-166 Clark Road Apartments Phase II Large Family $2,500,000 $8,333,321 109.00 58.903% Rural apportionment (CDBG-DR) CA-24-096 Lincoln Street Senior Apartments Seniors $2,061,726 $0 109.00 58.018% Rural apportionment (CDBG-DR) CA-24-081 Lakeridge Circle Apartments Large Family $2,500,000 $0 109.00 56.975% Rural apportionment (CDBG-DR) CA-24-165 Brookview Senior Villas Seniors $2,500,000 $3,737,436 109.00 54.882% Rural apportionment (HOME) CA-24-100 Cypress Lane Senior Apartments Seniors $2,325,712 $5,748,814 109.00 54.187% Rural apportionment (CDBG-DR) CA-24-079 Cambria Pines Apartments Large Family $1,090,218 $3,634,061 109.00 49.652% Rural apportionment (HOME) CA-24-123 Lone Oak Senior Apartments II Seniors $1,401,048 $0 109.00 44.263% Rural apportionment (HOME) CA-24-122 Bevins Street Senior Apartments Seniors $1,945,400 $0 109.00 25.139% Rural apportionment (CDBG-DR) CA-24-121 Orchard View Apartments II Large Family $1,504,695 $430,000 109.00 14.219% Rural apportionment (CDBG-DR) Meeting Date: 09/26/2024 Page 6 Agenda Item # 1.0
376002.2
Due to the competition in the CTCAC 9% round, the developer applied to the CTCAC 4% round, also known as the California Debt Limitation Allocation Committee (CDLAC), on August 27, 2024. Based on the published selfscoring, Parkside remains highly competitive. Among the projects with maximum CDLAC points, Parkside’s tiebreaker currently ranks 3rd. In CDLAC Round 1 of 2024, three rural projects were awarded.
HOUSING ENVIRONMENT AND ECONOMICS:
The broader conversation around housing, particularly affordable housing, is complex and multifaceted. Housing shortages and affordability challenges are influenced by Federal and State policies, impacting local municipalities in significant ways. However, the benefits of affordable housing go beyond providing shelter; these projects can profoundly affect employment, household financial stability, public health, and overall economic activity. Since 2015, Lake County has lost more than 1,800 homes to wildfire. Some estimates indicate more than 60 percent of Lake County has burned in the decade from 2011 to 2021. Approximately 1,400 low-income renter households in Lake County do not have access to an affordable home. Approximately 75% of low-income households in Lake County are paying more than half of their income on housing costs. Below is an analysis of how affordable housing projects, such as the Parkside, positively impact Lakeport and the surrounding areas. In a recent discussion with the on-site manager at the Martin Street Phase I and II affordable housing projects it was communicated the between the two projects there are 260 families on their waitlists.
1. Employment and Economic Growth:
Affordable housing construction and development contribute directly to job creation. According to the National Association of Home Builders (NAHB), for every 100 affordable rental units built, approximately 161 local jobs are supported during the construction phase, and 44 permanent jobs are created post-construction in industries such as property management, maintenance, and local service providers. These jobs stimulate the local economy, benefiting Lakeport by increasing employment opportunities for residents.
Application
Number Project Name Construction Type Housing Type City County Total
Units
Low Income
Units
Market Rate
Units
Tie-Breaker Self
Score
CDLAC Total
Points
24-771 4575 Scotts Valley Apartments New Construction Large Family Scotts Valley Santa Cruz 100 99 0 111.615% 120 24-716 Livingston B Street New Construction Large Family Livingston Merced 80 79 0 99.529% 120 24-664 Parkside Apartments New Construction Large Family Lakeport Lake 64 63 0 89.865% 120 24-623 Dry Creek Commons New Construction Large Family Healdsburg Sonoma 58 57 0 86.016% 120 24-644 Saggio Hills Phase I New Construction Large Family Healdsburg Sonoma 48 47 0 82.944% 120 24-724 River Grove II New Construction Large Family Oakhurst Madera 50 49 0 68.845% 120 24-669 Sendero Apartments New Construction Large Family San Luis Obispo San Luis Obispo 60 59 0 64.199% 120 24-691 Pacific Crest Commons New Construction Large Family Truckee Nevada 55 54 0 56.049% 120 24-675 Mountain Townhomes New Construction Large Family Mount Shasta Siskiyou 25 24 0 44.277% 120 24-699 Kingfisher II New Construction Large Family Mammoth Lakes Mono 72 72 0 43.110% 120 24-763 Palm Villas at Red Bluff New Construction Large Family Red Bluff Tehama 61 60 0 95.000% 119 24-645 Brookview Senior Villas New Construction Seniors Fallbrook San Diego 61 60 0 90.027% 119 24-665 Baler Place New Construction Large Family Hollister San Benito 53 52 0 86.963% 119 24-625 Mills Ranch Apartments New Construction Large Family King City Monterey 40 39 0 73.792% 119 24-637 Oasis Villas I Apartments New Construction Large Family Thermal Riverside 80 79 0 71.259% 119 24-612 Newman Gardens New Construction Seniors Wasco Kern 51 50 0 68.919% 119 24-715 Lakeview Terrace New Construction Large Family Corcoran Kings 72 71 0 67.845% 119 24-620 Greenfield Commons II New Construction Large Family Greenfield Monterey 100 99 0 67.511% 119 24-688 Sunset Rose Senior Apartments New Construction Seniors Holtville Imperial 32 31 0 34.791% 119 24-712 Madrona Meadows New Construction Large Family Scotts Valley Santa Cruz 288 285 0 140.313% 110 24-764 The Ridge at Ralston New Construction Large Family Belmont San Mateo 65 64 0 85.693% 110 Meeting Date: 09/26/2024 Page 7 Agenda Item # 1.0
376002.2
Additionally, the construction industry itself stimulates a multiplier effect within the local economy. For every dollar spent on residential construction, a significant portion circulates back into the community through local purchases, supplies, and services. This economic activity supports local businesses, further enhancing economic resilience.
2. Reducing High-Cost Burden Households:
Affordable housing alleviates the financial strain on households facing severe cost burdens. Households that spend more than 30% of their income on housing costs are classified as “cost burdened.” In Lake County, the rate of cost-burdened renters is notably high—close to 50%, according to U.S. Census data.
By providing housing at affordable rates, the Parkside Project will reduce the number of families experiencing severe cost burdens. Affordable rents allow families to allocate more of their income toward essential needs such as food, healthcare, education, and transportation. When households have more discretionary income, they are more likely to spend locally, directly boosting the municipal economy. The Center for Housing Policy reports that for every dollar saved on housing, up to $0.25 is reallocated to local spending on consumer goods and services, further strengthening the local economy.
3. Improved Health Outcomes:
There is a well-established link between affordable housing and improved health outcomes. Stable, quality housing reduces stress and contributes to better mental and physical health. Families living in affordable housing are less likely to experience overcrowded living conditions, which are associated with negative health outcomes, including respiratory conditions and increased vulnerability to communicable diseases.
The Robert Wood Johnson Foundation reports that individuals living in safe, affordable housing are less likely to visit emergency rooms and have fewer chronic health issues such as asthma and cardiovascular disease. In turn, this reduces the strain on local health services, which often bear the cost of treating residents who lack stable housing. Affordable housing also enhances residents’ access to preventative care and healthier lifestyles, as they can allocate resources toward medical services, nutritious food, and wellness activities.
4. Enhancing Educational Outcomes:
Stable housing is crucial for children’s academic success. Research by the National Low Income Housing Coalition shows that children in stable housing perform better in school, have higher graduation rates, and are less likely to experience the disruptions of moving frequently, which can negatively impact academic performance.
Affordable housing, by providing long-term stability, enables children to remain in their schools, fostering better educational outcomes.
Improved educational outcomes are a long-term benefit to the municipality, as higher graduation rates and educational attainment levels contribute to a stronger, more educated workforce in the future. This ultimately supports higher income levels for residents, increased productivity, and local economic growth.
5. Increasing Long-Term Community Resilience:
Affordable housing developments contribute to the overall resilience of a community. In times of economic downturn, affordable housing acts as a stabilizer, ensuring that residents are not forced out of their homes due to market fluctuations. This stability is particularly important in Lakeport, where housing markets may become volatile due to external economic factors such as rising inflation, interest rates, or labor shortages.
By investing in affordable housing, the City creates a foundation for sustained economic growth and resilience.
Residents who are financially stable are better equipped to handle economic shifts, contributing to a more adaptable and robust local economy. This, in turn, leads to stronger tax revenues for the City, as local businesses benefit from increased consumer spending.
Meeting Date: 09/26/2024 Page 8 Agenda Item # 1.0
376002.2
LEGAL ANALYSIS:
The California Legislature adopted a series of amendments to housing law to impact cities’ authority over affordable housing projects and potentially Lakeport’s decision-making regarding the Parkside Project.
Housing Accountability Act. Under the Housing Accountability Act (HAA), if a housing development project includes affordable units, the City cannot disapprove the project or condition approval in a manner that renders the project infeasible for development of the affordable units, unless it can make certain findings. (Gov. Code, § 65589.5, subd. (d)(1).) The HAA further defines “disapprove the housing development project” to include any instance in which a local agency does any of the following:
• “Votes on a proposed housing development project application and the application is disapproved, including any required land use approvals or entitlements necessary for the issuance of a building permit”;
• fails to meet statutory application processing timelines; and • fails to make the necessary CEQA determinations. (Gov. Code, 65589.5, subd. (h)(6).) The Parkside project is a housing development project that is entitled to protection under the HAA. While the City has issued all the relevant entitlements for the project, it is not clear whether refusing to execute a CDBGDR grant extension request letter would constitute a “disapproval” for purposes of the HAA.
Affirmatively Furthering Fair Housing. Recent amendments to the Housing Element Law require the City to affirmatively further fair housing. The obligation to affirmatively further fair housing includes “[s]trategies and actions to implement those priorities and goals, which may include, but are not limited to, enhancing mobility strategies and encouraging development of new affordable housing in areas of opportunity, … .” (Gov. Code, § 65583, subd. (c)(10)(A)(v).) Seeking grant funding for new affordable housing may be a new obligation under the Housing Element Law, though its application here is uncertain.
First, the City has not adopted an amendment to its Housing Element to incorporate these new requirements. Its regional Housing Element amendment cycle has not begun. Therefore, it is unclear whether these obligations bind the City, if the obligations have not been incorporated into the Housing Element of the General Plan.
Second, the obligation to affirmatively further fair housing is focused on promoting housing throughout the community “for all persons regardless of race, religion, sex, marital status, ancestry, national origin, color, familial status, or disability , and other characteristics protected by the California Fair Employment and Housing Act.” (Gov. Code, § 65583, subd. (c)(5).) A person’s economic status (e.g., very low, low, or moderate income households) is not a characteristic protected by the California Fair Employment and Housing Act. It is thus uncertain whether the Parkside project implicates a protected classifications to invoke the City’s duty to affirmatively further fair housing.
Consequences. Recent amendments to state housing laws make a potential violation subject to severe consequences. In 2023, the Legislature expanded the California Department of Housing and Community Development’s (“HCD”) ability to enforce housing laws by enhancing its investigatory and administrative authority. (Gov. Code, § 65585, subd. (j).) If HCD determines there is a violation, it can refer the matter to the California Attorney General’s Office to file a suit to seek fines or injunctions against the City. (Gov. Code, § 65585, subd. (k).) If there are violations of the Housing Element Law, HCD can even decertify a city’s Housing Element (see Town of Portola). (Gov. Code, § 65585, subd. (h)(B).) Decertification results in stripping the City of its ability to regulate residential housing development — commonly referred to as the “Builder’s Remedy.” (Gov.
Code, § 65589.5.)
Meeting Date: 09/26/2024 Page 9 Agenda Item # 1.0
376002.2
Given the potentially harsh consequences and the ambiguity in the new amendments to housing laws, if the City Council is considering not approving the CDBG-DR grant extension request letter, the City Attorney’s Office recommends contacting HCD first. HCD routinely provides cities with technical assistance orally and in writing to interpret the new amendments to housing laws. The City Attorney’s Office recommends contacting HCD to shield the City with an administrative interpretation that may be cited if the City’s denial triggers a legal challenge.
STAFF RECOMMENDATION:
Staff recommends that the City Council authorize the City Manager to execute and submit the 2018 CDBG-DR extension letter which includes a reallocation of $2,396,301 in CDBG-DR funds from the Bevins Senior project to the Parkside Apartments project, enhancing Parkside’s chances of securing the necessary funding to complete the project.
OPTIONS:
1. Authorize the City Manager to execute a grant extension request letter.
2. Suggest amendments to the letter and authorize the City Manager to execute a grant extension request letter.
3. Direct staff to seek technical assistance from HCD regarding the potential impact of not authorizing the extension request.
4. Do not authorize the City Manager to execute a grant extension request letter.
FISCAL IMPACT:
☐ None ☐ $ Budgeted Item? ☐Yes ☐ No
Budget Adjustment Needed? ☐Yes ☐ No If yes, amount of appropriation increase: $ Affected fund(s): ☐ General Fund ☐ Water OM Fund ☐ Sewer OM Fund ☐ Other:
Comments:
COUNCIL PRIORITIES:
☐ Priority #1: Public Safety & Crisis Response
☐ Priority #2: Disaster Resiliency
☒ Priority #3: Good Governance & Fiscal Stability
☒ Priority #4: Capital Infrastructure Improvement
☒ Priority #5: Safe, Sustainable & Attractive Neighborhoods ☒ Priority #6: Economic Development
SUGGESTED MOTIONS:
Move to authorize the City Manager to execute a grant extension request letter. ☒ Attachments: 1. Draft extension letter
September 10, 2024
Joe Harney
Section Chief
Housing Programs, Disaster Recovery Branch
Via Email
RE: Parkside Apartments Project – City of Lakeport
Dear Mr. Harney,
The City of Lakeport extends its sincere appreciation to the department for its unwavering support of the CDBG-DR MHP projects within our impacted communities. Each project in the CDBG-DR MHP pipeline is deserving and vital. With this letter, we respectfully request an extension to the CDBG-DR MHP deadline for the Parkside Apartment Project, as additional time is required to align the necessary funding sources. Further details are provided below:
Project Details Requested Response of Requested Information Project Name Parkside Apartments
Lead Developer Danco Communities
DR-MHP Conditional Award Amount $6,230,384
Total Development Costs (current) $34,442,205
Remaining Funding Gap $16,530,877
Past Tax Credit/Bond Attempts for
project
Submittal in both 2024 rounds – 2nd
highest score but not funded.
Next funding applications to be
submitted
California Debt Limitation Allocation
Committee (CDLAC) on August 27,
2024.
Project Accomplishments in Securing Funding:
This project exemplifies the current backlog in the State of California’s affordable housing funding challenges. The project has submitted applications under the 9% tax credit round over the past three application cycles. Despite scoring the 2nd highest in two of the 2024 rounds, the project remains unfunded. Notably, no CDBG-DR project was funded despite being added to the set-aside for HOME and RHS apportionment, highlighting a significant issue within the funding programs.
With its excellent ranking and scoring strategies, the project has now been submitted under the CDLAC 4% round and anticipates an award with a tie-breaker score of 89.865%. We expect selfscores to be published at the end of the first week of September, with official awards in December 2024.
Steps Taken to Secure Funding:
The project is highly leveraged with the CDBG-DR award of $6,230,384, Infill Infrastructure Grant (IIG) award of $2,165,681, and the Competitive Permanent Local Housing Allocation (CPLHA) at $2,570,805. The recent application will bridge the funding gap and allow the project to move forward. This project has aggressively pursued all available funding opportunities.
Current Total Development Costs:
The current total development costs for the project are estimated at $34,442,205. The current application submitted to CDLAC is attached to this email for reference.
Schedule of Funding to be Employed:
We have developed a comprehensive schedule for the deployment of the allocated funds as follows:
Anticipated Project Milestones Dates
CDLAC Application 8/27/2024
Secure CDLAC Funding 12/2024
Construction Loan Closing 6/2025
Construction start 6/2025
Construction completion 12/2026
Occupancy of all units 1/2027
Funding Gap Strategy:
The project is positioned to the highest degree. We respectfully request that the Department extend the CDBG-DR award to allow the project to secure funding through either 9% or 4% tax credits. This project is the most likely to be funded among the CDBG-DR projects, as evidenced by previous scores. Additionally, we request that the Department, along with upper management at HCD, discuss and request TCAC/CDLAC to allow CDBG-DR projects to compete in the rural set-aside if the project does not receive a high enough score in the RHS, HOME, and CDBG-DR apportionment.
Not allowing this to occur places CDBG-DR projects at an unfair disadvantage, particularly those serving the most vulnerable populations.
TCAC.Self.Score.Allocation.Table¿
Round.8..8680.TCAC.❺↘ .Credits
If the project is not funded in the CDLAC cycle, the City of Lakeport is prepared to reallocate CDBGDR MHP to position the project for funding under the first round of TCAC funding anticipated in March 2025. Providing this extension is necessary to ensure the transformative project has every opportunity to access the well-deserved TCAC funding it has demonstrated it deserves.
Considering this additional funding, a stress test through the financial model concluded that the Parkside Project could receive a tie breaker score of 100%, up from 89% reported in the most recent round of CDLAC applications.
We remain confident that, with your continued support and guidance, we will successfully achieve our project objectives and significantly contribute to the betterment of our community. We extend our deepest gratitude for your invaluable assistance and unwavering dedication.
Sincerely,
Kevin Ingram
City Manager
City of Lakeport
[email protected]
CTCAC
NUMBER PROJECT NAME HOUSING TYPE
ANNUAL
FEDERAL
CREDIT
REQUESTED
TOTAL
STATE
CREDIT
REQUESTED
POINTS
SELF
SCORE
TOTAL
TIE-BREAKER
SELF SCORE SET ASIDE
CA-24-073 Summer Oaks Large Family $2,500,000 $8,555,188 109.00 77.761% Rural apportionment (HOME) CA-24-111 Parkside Apartments Large Family HR $1,713,181 $0 109.00 73.806% Rural apportionment (CDBG-DR) CA-24-156 Clark Road Apartments Large Family HR $2,500,000 $8,333,321 109.00 68.903% Rural apportionment (CDBG-DR) CA-24-166 Clark Road Apartments Phase II Large Family $2,500,000 $8,333,321 109.00 58.903% Rural apportionment (CDBG-DR) CA-24-096 Lincoln Street Senior Apartments Seniors $2,061,726 $0 109.00 58.018% Rural apportionment (CDBG-DR) CA-24-081 Lakeridge Circle Apartments Large Family $2,500,000 $0 109.00 56.975% Rural apportionment (CDBG-DR) CA-24-165 Brookview Senior Villas Seniors $2,500,000 $3,737,436 109.00 54.882% Rural apportionment (HOME) CA-24-100 Cypress Lane Senior Apartments Seniors $2,325,712 $5,748,814 109.00 54.187% Rural apportionment (CDBG-DR) CA-24-079 Cambria Pines Apartments Large Family $1,090,218 $3,634,061 109.00 49.652% Rural apportionment (HOME) CA-24-123 Lone Oak Senior Apartments II Seniors $1,401,048 $0 109.00 44.263% Rural apportionment (HOME) CA-24-122 Bevins Street Senior Apartments Seniors $1,945,400 $0 109.00 25.139% Rural apportionment (CDBG-DR) CA-24-121 Orchard View Apartments II Large Family $1,504,695 $430,000 109.00 14.219% Rural apportionment (CDBG-DR)