Attachment C
Additional Funding Request Letter from AFH
www.AFHusa.org O 714.897.3221 F 714.893.6858 www.AFHusa.org 15161 Jackson Street, Midway City, CA 92655
Seimone Jurjis
City Manager
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
RE: Avon River Apartments
1400 Bristol St., Costa Mesa, CA
Additional Funding Request
Dear Mr. Jurjis,
Avon River Apartments is a transformative new residential community that will provide 78 much-needed homes, including 76 supportive housing units serving households exiting homelessness and earning at or below 30% of Area Median Income. Designed with a thoughtful mix of studio and one-bedroom apartments, the development will offer residents stable, service-enriched housing in a high-quality community setting. The project also includes 10 dedicated units for veterans, ensuring those who have served our country have access to safe and supportive housing.
We are excited to share that construction of Avon River Apartments is nearing completion, with most resident move-ins anticipated in the weeks following the Fourth of July holiday.
This development represents an important milestone in expanding affordable and supportive housing opportunities in Orange County, and we are proud to bring such a beautiful and impactful community asset to the region. Avon River Apartments will serve as a lasting resource for the City of Newport Beach, the City of Costa Mesa, and the County of Orange for years to come.
We are particularly grateful to the City of Newport Beach, which made this community possible thanks to its contribution of $3,000,000.
Despite thorough due diligence, the project has faced significant cost increases, resulting in an increase in total costs of around 15%. While we have successfully secured over $2 million in additional funds post-closing, extraordinary " surprises have exhausted the project’s contingencies, and so we have asked our funding partners for additional funds.
The budget increases are primarily driven by major unforeseen conditions that emerged after construction began:
www.AFHusa.org O 714.897.3221 F 714.893.6858 www.AFHusa.org 15161 Jackson Street, Midway City, CA 92655
• Water Infrastructure Requirements (~$1.61 million): It was not anticipated that the water district would require existing water infrastructure throughout the property to be reconfigured and privatized, resulting in significant added costs, as this required extensive work in the public streets that had not been anticipated. This required installing new water service lines across Bristol Street, involving nighttime road closures, trenching, and new meters.
While in discussions with Mesa Water District regarding the impact of proposed line changes, it was revealed that an existing water line beneath the property had not been documented at the time of the property’s initial construction in the early 1970s. This project presented Mesa Water with an opportunity to upgrade and reconfigure existing water infrastructure, including privatizing the water line.
• Concealed Structural Roof Damage (~$1.67 million): During demolition, the team discovered a roof structure that a previous owner had built over, rather than remove.
The weight of this concealed structure damaged underlying joists, necessitating a full roof reconstruction and structural redesign. While exploratory testing of the structures had taken place, these hidden conditions were not able to identified earlier, as the building was occupied until the date of purchase.
The older roof was left in place by a former owner, who had constructed a new roof directly over it, resulting in a weight of 15 pounds per square foot. This unexpected condition resulted in sagging roof joists, requiring additional site visits, redesign by the structural engineer, significantly expanded demolition, and structural corrections to ensure a sound and safe building for future residents. Combined, these efforts added almost $1.7 million in project costs overall.
• Other Costs and Delays (~$1.03 million): Most of the added costs, around $639,000, are related to delays driven to manage the unforeseen structural issues and utility delays. These costs fall in the category of extended general costs, storage fees, and required repairs related to water damage during the time that the roof had to be repaired.
AFH has been proactive in filling these gaps and keeping construction on track, by:
www.AFHusa.org O 714.897.3221 F 714.893.6858 www.AFHusa.org 15161 Jackson Street, Midway City, CA 92655
• Securing nearly $2.1 million in additional funds post-close, from the City of Costa Mesa, CalOptima Health, and from the County’s Housing and Homelessness Assistant Program (HHAP) allocation.
• Deferring more than $1.4 million in developer fee that goes to cover AFH’s own costs, which means AFH is not covering its own cost to build this community.
There is a request pending with the County of Orange for additional funds, while the City of Costa Mesa has already committed an additional $350,000, increasing its contribution to $4,350,000. We are respectfully requesting that the City of Newport Beach match this contribution with an additional $262,500, increasing its total contribution to $3,262,500 to support the completion of these units.
We appreciate your partnership and consideration of this request to help deliver these essential housing units to our community.
Sincerely,
Milo Peinemann
Chief Executive Officer
American Family Housing
CC:
Tara Finnigan, Assistant City Manager, City of Newport Beach Andi Lau, Principal Project Manager, American Family Housing