Report to City Council
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TO: Mayor and City Council Acting in its Capacity as
Chairman and Commissioners of the Moreno Valley
Housing Authority (HA)
FROM: Brian Mohan, City Manager and Executive Director
AGENDA DATE: June 17, 2025
TITLE: JOINT PUBLIC HEARING PROPOSED DISPOSITION
OF REAL PROPERTY; CONSIDERATION OF HOME
INVESTMENT PARTNERSHIP AGREEMENT S WITH
MARY ERICKSON COMMUNITY HOUSING FOR THE
LANTANA COURT AFFORDABLE OWNERSHIP
HOUSING PROJECT (REPORT OF: CITY MANAGER )
(DISTRICT 1)
TITLE SUMMARY: Joint Public Hearing for proposed disposition of real property; consideration of affordable housing agreement, cooperation agreement, and reimbursement agreement
among Moreno Valley Housing Authority, City of Moreno
Valley, and Mary Erickson Community Housing for the
Development of Lantana Court Affordable Ownership
Housing Project (Report of: City Manager) (District 1)
DISTRICT: District 1
Recommendation(s)
That City Council and Housing Authority:
1. Adopt City Council Resolution 2025 -XX to (a) approve disposition of Site pursuant to HOME Investment Partnership and Affordable Housing Agreement (Lantana Court) between the Moreno Valley Housing Authority and Mary Erickson Community Housing (b) approve (i) Cooperation Agreement (Lantana Court) between City and Authority, and (ii) Reimbursement Agreement for Public Improvements (Lantana Court Affordable
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Housing Project) among City, Authority and Developer, and (c) authorize the Mayor and/or City Manager to execute and City Clerk to attest such Agreements, (c) authorize City Manager to make non -substantive revisions to, and carry out such Agreements, including implementing documents, as approved by the City Attorney (or special council), and (d) make certain other findings.
2. Adopt Housing Authority Resolution 2025 -XX to (a) approve disposition of Site pursuant to HOME Investment Partnership and Affordable Housing Agreement (Lantana Court) between the Moreno Valley Housing Authority and Mary Erickson Com munity Housing, (b) approve (i) HOME Investment Partnership and Affordable Housing Agreement (Lantana Court), (ii) Cooperation Agreement (Lantana Court) between City and Authority, and (iii) Reimbursement Agreement for Public Improvements (Lantana Court Affordable Housing Project) among City, Authority and Developer, (c) authorize Chair and/or City Manager to execute and City Clerk to attest such Agreements, (d) authorize Executive Director to make non -substantive revisions and carry out Agreements, including implementing documents, as approved by the City Attorney (or special council), and (e) make certain other findings.
3. Authorize the City Attorney (or special council) to finalize the Agreements, prepare related instruments and implement the Lantana C ourt Affordable Ownership Housing Project as presented in this report.
4. Authorize City Manager/Executive Director to execute implementing documents and instruments to the Agreements subject to the approval of the City Attorney (or special council).
5. Approve budget adjustments to the adopted budget as set forth in the Fiscal Impact section of this report. This project will be funded with HOME Program, Measure A, and the Authority's Low to Moderate Income Housing Asset Fund.
SUMMARY
This report requests the City Council and Housing Authority Board to conduct a duly noticed joint public hearing about the proposed disposition of real property and to consider and take action on: (a) HOME Investment Partnership and Affordable Housing Agreement (Lantana Court) (“AHA”) between Authority and Developer, (b) Cooperation Agreement (Lantana Court Project) (“Cooperation Agreement”) between City and Authority, and (c) Reimbursement Agreement for Public Improvements (Lantana Court Affordable Housing Project) (“Reimbursement Agreement”) among City, Authority and Developer (together, “Agreements”).
DISCUSSION
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Attached with this report are the proposed Agreements, including attachments and exhibits, for consideration and action, as applicable, by the City Council and Housing Authority Board.
Developer, Mary Erickson Community Housing, is a California nonprofit public benefit corporation experienced in the ownership, operation, management, and maintenance of affordable housing developments, including re ntal and ownership affordable housing projects in Southern California. Developer also qualifies as a Community Housing Development Organization (“CHDO”) as defined in the HOME Regulations, in particular Section 24 CFR 92.300. As a CHDO, Developer is a private nonprofit, community-based organization that has staff with the capacity to develop and operate affordable housing for the community it serves.
The Authority, as housing successor to the dissolved redevelopment agency, owns fee title to a vacant 1.4 -acre parcel located on the north side of Eucalyptus Avenue , Moreno Valley (as subdivided, Assessor Parcel Nos. (APN) 481 -270-065 to -071, plus Lot A (new cul-de-sac street to be constructed) formerly APN 481-270-058) (“Site”), which is a DOF-approved “housing asset”. The Site is the subject of the Agreements, this report, and the joint public hearing related to the proposed disposition of the Site for development of Lantana Court, a seven-unit affordable ownership housing project. Under the AHA, if approved, Authority will convey the Site to Developer for a nominal purchase price of Eight Dollars, then Developer will plan, construct, and offer for sale to Low Income Homebuyers at an Affordable Housing Cost seven (7) new homes for owner -occupancy during a 45 -year Affordability Period (“Offsite Improvements”) and certain offsite public improvements directly related and appurtenant, including a new cul -de-sac street and related utilities establishing public access to the Onsite Improvements from Eucalyptus Avenue (“Offsite Improvements”) (together, “Project”).
The seven new “Affordable Homes” will be single -story, detached single -family homes, about 1,626 square feet; there will be four (4) three-bedroom, two-bath, and three (3) four- bedroom, two -bath homes const ructed on the Site. The Affordable Homes will be “manufactured” homes, the construction type of which shall utilize and comply with the “MH Advantage” and “CHOICE Home” certifications for HUD -authorized manufactured residential structures. Each home will have an attached double-car garage, landscaped front and back yard utilizing water efficient landscaping . The Project will meet MoVal’s “Village Special” design features and comply with Department of Energy standards for a “Zero-Energy Ready Home” certified with installed PV Solar and Battery Storage. One Affordable Home will be ADA -accessible meeting the Uniform Federal Accessibility Standards. There will be no homeowners’ association, but all Affordable Homes will be subject to senior, non subordinate Homebuyer Covenants and a Homebuyer Loan Agreement. The Affordable Homes will be offered for sale, acquired by and for continuous owner-occupancy and resale to Low Income Homebuyers at an Affordable Housing Cost during the 45-year Affordability Period as described in the AHA.
Pursuant to the AHA, the Authority will subsidize development of the Project through certain “Authority Assistance” of $3,446,961 plus the value of the Site ($700,000), which is comprised of grants, loans, and in-kind professional services provided by Authority to Developer to acquire the Site, undertake construction of the Onsite Improvements and
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Offsite Improvements, sell the Affordable Homes to Qualified Homebuyers, all to complete the Project, including:
(A) HOME funds $1,686,961;
(B) LMIHAF funds up to $550,000 which includes the funding for Offsite Improvements as described in (C) below (i.e., from the $550,000, approximately $125,000 for Onsite Improvements and approximately $425,000 for Offsite Improvements);
(C) $1,200,000 of which up to $850,000 will be sourced from “Measure A” funds and approximately up to $425,000 will be sourced from LMIHAF or other MoVal funding source(s) to complete the Offsite Improvements, including the new street that MECH shall cause to be c onstructed in accordance with the Reimbursement Agreement and all applicable legal requirements and the City’s construction standards for public works improvements;
(D) Sale of the Site for $8.00 thereby grant of the fair market value of the Site ($700,000); and
(E) $360,000 of in-kind professional services incurred by MoVal including: (a) Engineering plans for Offsite Improvements street construction, (b) engineering and surveying to prepare Legal Descriptions (metes and bounds for eight (8) parcels that include Parcels 1 to 7, inclusive, for Affordable Homes plus Lot A for new cul -de-sac street and associated assessor parcel numbers); (c) Water Quality Management Plan (“WQMP”).
Developer will acquire the Site, undertake construction of certain Onsite Improvements and Offsite Improvements, sell the Affordable Homes to Qualified Homebuyers. The original subsidy will be evidenced in the Authority Loan Note and secured by the Authority Loan Deed of Trust and Authority Regulatory Agreement.
The HOME Program funds for onsite work and Measure A funds for offsite work will be transferred by the City to Authority pursuant to the Cooperation Agreement. The Offsite Improvements will include the new cul-de-sac and related public utilities for public street access to the Site from Eucalyptus Avenue, which MECH will cause to be constructed in accordance with the Reimbursement Agreement and applicable requirements and construction standards for public works improvements. Costs for Offsite Improvements that exceed $1.2M will be paid by Developer.
The Site will be sold by Authority to Developer for Eight Dollars ($8.00), which, in effect, will be a grant of the appraised land value of $700,000. During the construction phase, Developer and the Site will be subject to the AHA, and the senior, nonsubordinate Authority Regulatory Agreement recorded in the Official Records, County of Riverside that details the conditions, covenants, and restrictions a ffecting use of the Site, construction, permitting, bonding and insurance requirements for the improvements, and process for initial sale of the Affordable Homes to Qualified Homebuyers.
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Further, the AHA sets forth (1) senior, nonsubordinate Homebuyer Covenants that detail the terms of ownership, maintenance, refinancing, resale, and insurance of the Affordable Homes, (2) Authority’s rights under intercreditor and subordination instruments related to Developer’s Primary C onstruction Loan, (3) requirements f or Homebuyers’ first lien Purchase Money Loans issued by institutional lenders, (4) terms for subordinate downpayment assistance loans issued by governmental agencies, and (5) terms and conditions of the Homebuyer Loan Agreement that provide for a Homebuyer Loan to be issued by Authority to each Homebuyer that will be second lien, deferred mortgages. The HOME Program and HOME Regulations set the maximum per unit subsidy to the Affordable Homes, which includes both MoVal and County of Riverside HOME Funds invested in the Project. Upon conclusion of the sales to Initial Homebuyers, this HOME subsidy limitation will require Authority to grant Developer and thereby forgive and cancel $2,285,600 of the $3,446,961 Authority Loan. The remaining difference of $1,1 61,400 will be allocated to Authority’s Homebuyer Loans to the Initial Homebuyers, which equates to a principal amount of $169,900/unit for the three-bedroom homes and $160,600/unit for the four-bedroom homes. The Homebuyer Loans will be assignable and assumed upon resale to successor Qualified Homebuyers during the 45-year Affordability Period.
The Lantana Court Affordable Homes are required to be owner-occupied by Qualified Homebuyers during the 45 -year Affordability Period. Every Homebuyer shall income-qualify as a Low Income Household up to 80% of Area Median Income and buy the Affordable Home at an Affordable Housing Cost . Each Homebuyer, as owner, is subject to the senior, nonsubordinate Homebuyer Covenants that require owner-occupancy and establish maintenance standards, insurance requirements, resale restrictions and procedures, and strict prohibition against rental or lease of any part of the Affordable Home.
As required by Health and Safety Code (“HSC”) Sections 34312.3, 33431 and 33433, staff and the City’s housing/economic consultant have prepared a disclosure report about the proposed sale of the Site pursuant to the AHA. The report and AHA are included with this agenda item and have been available for public review at City Hall during publication of the Notice of Joint Hearing, which Notice was published twice, once a week for the two successive weeks prior to the public hearing.
In connection with the City and Authority’s land use review of and entitlement for the Project as approved in December 2023 and as posted in January 2024, staff determined the Project was previously and duly found to be (a) categorically exempt as covenanted affordable housing under the California Environmental Quality Act, Public Resources Code Section 21000, et seq. and implementing Guidelines at Title 14 Cal Code of Regs Section 15000, et seq. (together, “CEQA”), and (b) qualified for categorical exclusion and finding of no significant impact under the National Environmental Protection Act (“NEPA”).
All actions required by applicable law related to the AHA, Cooperation Agreement and Reimbursement Agreement have been taken in an appropriate and timely manner, and staff recommend the City Council and Authority Board adopt their respective resolutions
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approving disposition of the Site, the Agreements, and making findings of exemption and exclusion, respectively, under CEQA and NEPA.
ALTERNATIVES
1. Adopt the City Council and Housing Authority Resolutions, respectively, that (a) approve (i) the disposition of the Site, (ii) HOME Investment Partnership and Affordable Housing Agreement (Lantana Court) , (iii) Cooperation Agreement, and (iv) Reimbursement Agreement; (b) authorize the City Manager and Executive Director to execute project related documents; (c) authorize the City Manager and Executive Director to consider and approve future amendments of such Agreements as approved by the City Attorney (or special counsel) that do not substantively increase or amend Moreno Valley’s obligations or materially change uses; (c) approve necessary revenue and expenditure appropriations. Staff recommends this alternative as it will allow the City and Housing Authority to dedicate this vacant parcel and housing asset to the development of Lantana Court affordable ownership housing.
2. Do not adopt the City Council and Housing Authority Resolutions, respectively.
Staff does not recommend this alternative as it will not allow the Moreno Valley to dedicate this vacant parcel and housing asset to development of affordable housing as required b y HSC Section 34176.1, and failure to proceed with the Project will impede achieving the goals and objectives of the City’s Housing Element, Consolidated Plan, Annual Action Plan, and the Authority’s affordable housing strategy and objectives, as a housing authority and housing successor, to cause development of covenanted affordable housing pursuant to the Housing Authorities Law and applicable provisions of the Dissolution Law..
FISCAL IMPACT
Under the Agreements, if approved, the City and Authority will invest $3,446,961 plus the value of the Site ($700,000) for development of the affordable ownership housing for the 45-year Affordability Period . Further, the City is authorized to reduce or waive development impact fees pursuant to the Municipal Code for this Project. There is no impact to the General Fund.
Description Fund GL Account No./Project Number Type
(Rev/Exp)
FY 25/26
Adopted Budget
Receipt of Grant/HOME Funds 2506 2506-99-99-92506-485000 Rev $1,686,961 Measure A 2001 2001-70-77-80001-720199
Project #: 801 0108-2001-99
Exp $ 850,000
HOME Programs 2506 2506-30-92-72657-733102 Exp $1,686,961 Housing Programs 8884 8884-30-92-20601-732101 Exp $ 550,000 In-kind Services 8884 8884-30-92-20601-620299 Exp $ 360,000
NOTIFICATION
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The public has been notified through the publication Notice of Joint Public Hearing and posting of the open meeting agenda for this joint meeting of the City Council and Housing Authority Board.
PREPARATION OF STAFF REPORT
Prepared By: Department Head Approval:
Valeria Martin Brian Mohan
Senior Management Analyst City Manager
Concurred By: Concurred By:
Joe Barron Dena Heald
Grants Division Manager Chief Financial Officer/City Treasurer
Legal Documents Prepared By:
Celeste Stahl Brady (Special Counsel)
Stradling Yocca Carlson & Rauth, LLP
CITY COUNCIL GOALS
Community Image, Neighborhood Pride and Cleanliness: Promote a sense of community pride and foster an excellent image about our City by developing and executing programs which will result in quality development, enhanced neighborhood preservation efforts, including home rehabilitation and neighborhood restoration.
Positive Environment: Create a positive en vironment for the development of Moreno Valley's future.
Public Facilities and Capital Projects: Ensure that needed public facilities, roadway improvements, and other infrastructure improvements are constructed and maintained.
The AHA, Cooperation Agreemen t and Reimbursement Agreement, together, implement the Housing Element of the City’s General Plan, continue to meet the City’s regional housing needs assessment (RHNA), and carry out the Authority’s obligation as the housing successor to cause development of covenanted affordable housing pursuant to the Dissolution Law, in particular HSC Section 34176.1, and further the objectives of the Housing Authorities Law.
CITY COUNCIL STRATEGIC PRIORITIES
1. Economic Development
2. Public Safety
3. Library
4. Infrastructure
5. Beautification, Community Engagement, and Quality of Life
6. Youth Programs
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Report Approval Details
Document Title: STAFFREPORT_FMS_CITY_HA_MECH_LANTANA_
COURT_AHA.docx
Attachments: - HOME Investment Partnership and Affordable Housing Agreement_Draft.pdf
- Resolution 2025-XX_City.pdf
- Resolution 2025-XX_Housing Authority.pdf
- Cooperation Agreement for HOME Program Funds Transfer for Lantana Court Project.pdf
- Lantana Court 33433 Report.pdf
Final Approval
Date:
Jun 11, 2025
This report and all of its attachments were approved and signed as outlined below:
Natalia Lopez
Dena Heald
Launa Jimenez
Brian Mohan
Patty Rodriguez