AGENDA
FINANCE COMMITTEE
SPECIAL MEETING NOTICE
APRIL 11, 2022
PUBLIC MEETING 3:45 P.M.
Members
Victor M. Gordo, Mayor
Felicia Williams, District 2
John J. Kennedy, District 3
Andy Wilson, District 7
STAFF
Matthew Hawkesworth, Director of Finance
Theresa Fuentes, Assistant City Attorney
Gloria Acevedo, Recording Secretary
MISSION STATEMENT
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with our history, culture and unique character.
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Items on the agenda may not be called in order listed. Agendas and supporting documents are available on the Internet at
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PURSUANT TO EXECUTIVE ORDER N-29 -20 ISSUED BY GOVERNOR GAVIN NEWSOM ON MARCH 17, 2020, THE SPECIAL FINANCE COMMITTEE MEETING
FOR APRIL
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VIDEOCONFERENCE/TELECONFERENCE.
TO
ACCESS THE MEETING:
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WWW.PASADENAMEDIA.ORG
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SPECIAL MEETING
AGENDA
FINANCE COMMITTEE
APRIL 11, 2022
Public Meeting: 3:45 P.M.
Council Chamber, Pasadena City Hall
100 North Garfield Avenue, Room S249
PUBLIC MEETING - 3:45 P.M.
ROLL CALL
PUBLIC COMMENT – LIMITED TO ITEMS ON THIS SPECIAL MEETING
AGENDA AND WILL BE HEARD AT THE TIME THE ITEM IS
CONSIDERED
APPROVAL OF MINUTES
March 14, 2022 Special Meeting
March 28, 2022 Cancellation Notice
NEW BUSINESS
1. APPROVAL OF AN AFFORDABLE HOUSING LOAN AGREEMEENT WITH
HERITAGE HOUSING PARTNERS FOR A CITY LOAN IN AN AMOUNT NOT TO EXCEED $2,000,000 TO ACQUIRE AND REHABILITATE PROPERTY AT 2322 E. FOOTHILL BOULEVARD FOR OPERATION AS A SIX-UNIT
AFFORDABLE RENTAL HOUSING PROJECT FOR HOMELESS AND
HOUSING INSECURE TRANSITION AGE YOUTH
INFORMATION ONLY
ADJOURN
APPROV
AL OF MINUTES
• MARCH 14, 2022 SPECIAL MEETING
• MARCH 28, 2022 CANCELLATION NOTICE
March 14, 2022
Special Finance Committee
Special Meeting Minutes
FINANCE COMMITTEE
Monday, March 14, 2022 ▪ 3:00 p.m.
Videoconference/Teleconference Council Chambers Room S249, Pasadena City Hall A. CALL T
O ORDER: The special meeting of the Finance Committee was called to order at 3:03 p.m. with Mayor Gordo, Vice Mayor Wilson, and Councilmembers Kennedy and Williams.
Attende
es (Absent as indicated):
Councilmembers Staff Guests
Mayor Gordo, Chair
Andy Wilson
John Kennedy Arrived (3:04 p.m.)
Felicia Williams
Matthew Hawkesworth
Theresa Fuentes
Tony Olmos
Kris Markarian
Phillis Hallowell
Vic Erganian
James Wong
Marvin Moon
Natalie Ouwersloot
Laura Rubio- Cornejo
Daniel Carlos
Gary Takara
Varoojan Avedian
Kim McKay, BRIDGE Housing Inc.
Anna Slaby, BRID GE Housing Inc.
Recording Secretary: Gloria Acevedo
B. PUBLIC
COMMENT- None
C. APPR
OVAL OF MINUTES
Februa
ry 14, 2022 Special Meeting
February 28, 2022 Cancellation Notice
The Mi
nutes were approved as submitted.
D. NEW BUSIN
ESS
1. AMEN
DMENTS TO FISCAL YEAR 2022 CAPITAL IMPROVEMENT PROGRAM BUDGET Mayor
Gordo introduced the item.
The Fi
nance Committee approved forwarding this report to the full City Council.
March 14, 2022
Special Finance Committee
2. PROPO
SITION A LOCAL RETURN FUND EXCHANGE WITH THE CITY OF HIDDEN HILLS Mayor
Gordo introduced the item and Laura Rubio-Cornejo; Director of Transportation gave a brief overview.
Vice
Mayor Wilson thanked Ms. Cornejo for engaging in this opportunity.
Mayo
r Gordo requested any new similar opportunities to be brought to the Finance Committee
The Fi
nance Committee approved forwarding this report to the full City Council
3. APPR
OVAL OF BUSINESS TERMS OF THE SECOND AMENDMENT TO DEVELOPMENT, LOAN AND LEASE AGREEMENT NO. 23,370 WITH BRIDGE HOUSING INC. INCLUDING ADDITIONAL CITY FUNDING IN AN AMOUNT NOT TO EXCEED $2,000,000 FOR THE
DEVELOPMENT OF THE HERITAGE SQUARE SOUTH PERMANENT SUPPORTIVE HOUSING PROJECT FOR CHRONICALLY HOMELESS SENIORS AT 710 N. FAIR OAKS AVENUE
Mayor G
ordo introduced the item.
Mayor
Gordo asked if this action would allow the City to see the project finalized without further requests for funding. James Wong, Senior Project Manager, stated that this is the last piece of funding that will allow the project to move forward. Anna Slaby indicated BRIDGE Housing Inc. has taken the project out to bid and secured additional funding to cover the gap.
Vice M
ayor Wilson asked for clarification of the original funding structure that had a certain expectation of City support and if the action is in-line with that expectation. Mr.
Wong responded that the project increased by $10 million due to construction costs; however, the developer was able to reduce the gap to $2 million. The $2 million gap is the additional loan amount to the previous $5 million loan that City Council approved.
Mayor G
ordo asked about the terms of the commercial component. Mr. Wong responded that no changes were made to the action the City Council took in May of 2020; 7,500 sq. ft., of noncommercial space remains in the scope of the development.
Mayor Gordo also asked how the developer plans to use the space. Anna Slaby, from BRIDGE Housing Inc., stated they have engaged a potential cafe tenant and are aiming to reach out to potential service providers that support the local community.
March 14, 2022
Special Finance Committee
Councilmember Kennedy thanked BRIDGE Housing Inc., the City Council for its leadership, the Finance Committee, William Huang, and James Wong for bringing this much-needed project to the most vulnerable members of the community.
The Fi
nance Committee approved forwarding this report to the full City Council.
4. QUARTE
RLY INVESTMENT REPORT - QUARTER ENDING DECEMBER 31, 2021 Mayor
Gordo introduced the item and Vic Erganian, Deputy Director of Finance/Treasurer, provided a PowerPoint presentation and responded to questions.
Vice M
ayor Wilson asked if there were any benchmarks of other City Environmental, Social, and Governance investment targets and if so, how does the City compare. Mr.
Erganian stated there are no guidelines or standards on how to invest. Matthew Hawkesworth, Director of Finance, added that after staff spoke to two-dozen entities across the country on the subject, he found everyone invests differently.
Coun
cilmember Kennedy asked if a recession is unavoidable. Mr. Erganian responded that every dollar not invested in goods or services can slow the economy. Vice Mayor Wilson asked if the City is in a good position to weather a recession and if there are any recommendations for the overall financial health of the City. Mr. Erganian stated there is no certainty, the forecast models 1-2 years out show a slow-down if inflation persists, and that more facts on the economy are needed to make an assessment on the City’s position.
Mayor G
ordo expressed concern for contracts that are indexed to the Consumer Price Index (CPI) and asked if language can be added to vendor contracts indexed to CPI that would keep the City from paying permanent high fees. Mr. Hawkesworth stated that most contracts have a cancellation or termination clause allowing the City to end the agreement if found to be in a poor contract. Mayor Gordo requested for staff to closely monitor contracts that have an impact to all of the funds and to engage negotiations whenever possible.
The Fi
nance Committee approved forwarding this report to the full City Council.
E. INFORM
ATION ONLY
5. FINAN
CIAL UPDATE - MARCH 2022
Mayor
Gordo introduced the item and Matthew Hawkesworth, Director of Finance, provided a PowerPoint presentation and responded to questions.
Vice M
ayor Wilson asked for an explanation on the signal and traffic light tax fund and asked if it is restricted. Matthew Hawkesworth, Director of Finance responded, that the
March 14, 2022
Special Finance Committee
tax is assessed on all electric bills and funds this General Fund unrestricted revenue category.
Counc
ilmember Williams inquired about the process to change the cannabis tax rate.
Mr. Hawkesworth responded that it would require an ordinance for City Council to amend the Pasadena Municipal Code or even a resolution to change the current rate in the code.
Mayor G
ordo asked if growth is available to the cannabis tax. Mr. Hawkesworth stated that the rate is at 4% and it could go up to 6%. Mayor Gordo requested a Memo with the details on how to increase this tax rate.
The Fi
nance Committee acknowledged receiving the report.
F. ADJ
OURN
With no
further business to come before the Finance Committee, the meeting adjourned at 3:56 p.m.
____________________
_____________
Victor M. Gordo Date
Chair, Finance Committee
____________________
_____________
ATTEST: Gloria Acevedo, Date
Recording Secretary
OFFICE OF THE MAYOR
CITY OF PASADENA
NOTICE OF CANCELLATION
FINANCE COMMITTEE
REGULAR MEETING
MARCH 28, 2022
NOTICE IS HEREBY GIVEN that the regular meeting of the Finance Committee, scheduled for Monday, March 28, 2022 at 4:00 p.m. in the Pasadena City Hall, 100 North Garfield Avenue, Pasadena, is cancelled.
Vi
Finance Co
I HEREBY CERTIFY that this notice, in its entirety, was posted on the Internet at www.cityofpasadena.neUcommissions/city-council-finance-committee and on the Council Chamber Bulletin Board, Room S249 and the Bulletin Board in the rotunda area, City Hall, 100 North Garfield Avenue, this 24th day of March 2022, by 5:30 p.m., and that copies hereof were faxed, emailed or delivered to each member of the City Council and to each local newspaper of general circulation, radio or television station requesting notice in writing, all of which recipients are identified on the distribution list set forth herein below.
DISTRIBUTION:
City Council
City Manager
City Attorney
Public Information Officer
Los Angeles Times
Pasadena Independent
La Opinion
Pasadena Journal
Pasadena Now
Pasadena Star News
Pasadena Weekly
Conversation Live
���ecreta�
Finance Committee
NEW BUSINESS
1. APPROVAL OF AN AFFORDABLE HOUSING
LOAN AGREEMEENT WITH HERITAGE HOUSING
PARTNERS FOR A CITY LOAN IN AN AMOUNT
NOT TO EXCEED $2,000,000 TO ACQUIRE AND
REHABILITATE PROPERTY AT 2322 E. FOOTHILL
BOULEVARD FOR OPERATION AS A SIX-UNIT
AFFORDABLE RENTAL HOUSING PROJECT FOR
HOMELESS AND HOUSING INSECURE
TRANSITION AGE YOUTH
Agenda Report
TO: Honorable Mayor and City Council
THROUGH: Finance Committee (April 11, 2022)
FROM: Department of Housing
April 25, 2022
SUBJECT: APPROVAL OF AN AFFORDABLE HOUSING LOAN AGREEMENT
WITH HERITAGE HOUSING PARTNERS FOR A CITY LOAN IN AN
AMOUNT NOT TO EXCEED $2,000,000 TO ACQUIRE AND
REHABILITATE PROPERTY AT 2322 E. FOOTHILL BOULEVARD FOR
OPERATION AS A SIX-UNIT AFFORDABLE RENTAL HOUSING
PROJECT FOR HOMELESS AND HOUSING INSECURE TRANSITION
AGE YOUTH
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1) Find that the proposed housing financing, acquisition and rehabilitation activity, as described in this agenda report, does not have a significant effect on the environment and has been determined to be categorically exempt under Class 1 (Existing Facilities) (State CEQA Guidelines Section 15301) and Class 26 (Acquisition of Housing) (State CEQA Guidelines Section 15326; 2) Approve a budget amendment appropriating $1,600,000 from the lnclusionary Housing Trust Fund's unappropriated fund balance to the Housing Department's FY 2022 Operating Budget to fund the proposed City loan for the Heritage Housing Partners Transition Age Youth Housing Project;
3) Approve certain key business terms, as described in this agenda report, of the proposed Affordable Housing Loan Agreement with Heritage Housing Partners; and
4) Authorize the City Manager to execute any and all documents necessary to effectuate the staff recommendation.
MEETING OF _____ _ AGENDA ITEM NO. ____ _
2322 E. Foothill Blvd.
April 25, 2022
Youth housing remains an unmet need in the City and throughout the region. According to a recent study, UCLA's "State of Crisis: Dismantling Student Homelessness in California", it's estimated that one (1) in five (5) California Community College students experience homelessness or are housing insecure. Community colleges have the highest rates of homelessness and housing insecurity across California's three public systems of post-secondary education. Currently, there are not enough housing opportunities that are affordable to students and growing housing insecurity among college students stemming from high rents poses serious barriers to educational achievement.
Critical interventions for youth experiencing homelessness include early and immediate access to interim housing and a clear pathway to long-term housing that will end their homelessness and promote early stabilization, so they can get connected to resources such as employment and education support.
The total project budget is $2,215,950, consisting of $1.3M for acquisition, $820,000 for property rehab construction, $69,450 for capitalized operating and replacement reserves, $15,000 for developer acquisition fee, $8,000 for construction period insurance, and $3,500 for transaction and title costs.
The Project is proposed to be financed with a City loan in the amount of $2,000,000 (drawn from lnclusionary ($1,600,000) and ARPA ($400,000) funds), $200,000 Developer private funds consisting of an anticipated grant from the Pasadena Community Foundation ("PCF") and a $15,950 Developer contribution. PCF will consider the Developer's funding request at its April 20, 2022 Board of Directors' meeting. The Developer is also exploring other potential sources, including additional grant funding. If HHP secures additional funding, the City's loan may be reduced or may be used to subsidize operating costs as needed.
HHP submitted a request to the City on February 24, 2022 for loan assistance in the amount of $2,215,950. Documentation received from HHP includes property inspection reports, a project budget, an annual budget for operation of the Property as affordable rental housing, and a 10-year cash flow analysis. HHP proposes to acquire the Property, make necessary renovations, and operate the Property as affordable rental housing targeting TAY students at Very Low income (50% of the Los Angeles County area median income) or below. If the operation of the Project as TAY housing becomes financially unsustainable at the City's determination, the Property may be operated as affordable rental housing for low-income persons at 60% of AMI.
Staff analyzed HHP's request and believes that the project financial assumptions are reasonable, the funding amount is in line with the subsidy levels provided by the City on other affordable housing projects, and that the proposed loan assistance for the project is an appropriate use of City housing funds. Accordingly, staff recommends that the City enter into an Affordable Housing Loan Agreement with HHP in connection with the Property. The staff recommendation was reviewed by the Internal Housing Loan Committee on April 7, 2022, which recommended approval.
2322 E. Foothill Blvd.
April 25, 2022
FISCAL IMPACT:
Approval of the recommended actions will increase the Housing Department's FY 2022 Operating Budget by the amount of $1,600,000 from the unappropriated fund balance of the lnclusionary Housing Trust Fund. The proposed City financing to implement HHP's acquisition and rehabilitation of the subject property will be drawn from the lnclusionary Housing Trust Fund (Account No. 23916003-816700-51047). Approval of this action will leave an unappropriated fund balance of approximately $1.26M in the lnclusionary Housing Trust Fund. The City funding for this project will be in the form of a loan secured by a deed of trust. The debt service on the City loan would be paid from the project's annual residual receipts which are not guaranteed.
Prepared by:
Ca,wfku L,,c/4--u-Md /()du,.,
Caroline Lockwood Nelson
Program Coordinator
Respectfully submitted,
�f�ttt::J{
Director of Housing
Department of Housing
Approval of Affordable Housing Loan Agreement w/
Heritage Housing Partners for 2322 E. Foothill Blvd
Finance Committee Item 1
April 11, 2022
Department of Housing
2 BACKGROUND
Department of Housing
3 BACKGROUND
Department of Housing
BACKGROUND
• Address: 2322 E. Foot hill Blvd (CD 2)
• Improvements: 5 vacant unit s previously used
as non-permitted residential rental built in 1924
(front) / c. 1972 (rear)
• Zoning: CG - allows for by-right transitional
housing or single room occupancy (“SRO”)
• Proposed Use: 6 units of Transition Age
Youth (“TAY”) housing w/ potential focus on
PCC students experiencing homelessness
assisted w/ PCC rent subsidy
4
Department of Housing
BACKGROUND
• Property listed for sale in Decem ber 2021
• Developer Heritage Housing Partners (HHP) in
escrow January 2022 t
o purchase at $1.3M
• HHP requested $2.2M City funding in February
2022 to acquire/
rehabilitate the property for
use as affordable rental housing for TAY pop.
• HHP has applied for a $200,000 grant from the
Pasadena Communi
ty Foundation
• HHP and PCC exploring a PCC rent subsidy
• Escrow scheduled to close on 5/ 25/22
5
Department of Housing
BACKGROUND
• Substantial rehab to provide a total of 6 units
• Operation of property as TAY housing
> HHP to master lease w/ a qualified operator
> Operator will manage property and provide
supportiv
e services to TAY tenants who are
homeless or at-risk of homelessness
> Housing for TAY population remains an unmeet need
Es
timated that one (1) in five (5) CA Community
College s
tudents is homeless or housing insecure
Access to interim housing and services help TAY
clients
meet their education/employment goals
6
Department of Housing
BACKGROUND
Project Budget
$1,300,000 Acquisition
820,000 Rehabilitation
69,450 Capitalized Reserves
15,000 Developer Fee
8,000 Insurance
3,500 Title and Escrow
$2,215,950 Total
Proposed Funding Sources
$2,000,000 City Loan
200,000 PCF Grant
15,950 Developer Contribution
$2,215,950 Total
7
Department of Housing
LOAN AGREEMENT TERMS
• City Loan Amount: $2,000,000
• Funding: Inclusionary ($1.6M ), ARPA ($0.4M)
• Interest Rate/Term: 1.50% / 55 years
• Re
payment: Based on Residual Receipts
• Affordability Reqt: Low incom e up to 60% AMI
> Recorded deed restrictions w/ 55-year term
> Can be operated as affordable rental housing for low- income
persons should TAY project prove unfeasible
• Marketing: City’s Local Preference Guidelines
> Possibility for PCC st udent preference depending on
source of operator’s funding
8
Department of Housing
9 FISCAL IMPACT
• Increase the Housing Department’s FY 2022 Operating
Budget by
the amount of $1,600,000 from the
unappropriated fund balance of the Inclusionary Housing Trust Fund
• The City financing to implement the project will be drawn from the Inclusionary Housing Trust Fund (Account No.
23916003-816700-51047), leaving an unappropriated fund
balance of approximately $1.26M
• Debt service on the City loan for the project would be paid from the project’s annual residual receipts which are not guaranteed
Department of Housing
10 RECOMMENDATION
• Find that the proposed housing financing, acquisition and rehabilit
ation activity, as described in the agenda report,
does not have a significant effect on the environment and has been determined to be categorically exempt under
Class 1 (Existing Facilities) (State CEQA Guidelines
Section 15301) and Class 26 (Acquisition of Housing)
(State CEQA Guidelines Section 15326);
• Approve budget amendment appropriating $1,600,000
from the Inclusionary Housing Fund unappropriated fund
balance to the Housing Department’s FY 20212 operating
budget for the HHP Transition Age Youth Housing Project;
Department of Housing
11 RECOMMENDATION
• Approve certain key business terms, as described in the agenda report
, of the proposed Affordable Housing Loan
Agreement with Heritage Housing Partners; and
• Authorize the City Manager to execute any and all
documents necessary to effectuate the staff
recommendation.