CITY OF POMONA
COUNCIL REPORT
March 7, 2022
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Kirk Pelser, Deputy City Manager
SUBJECT: ADOPTING RESOLUTION 2022-29, APPROVING A FEE DEFERRAL OF APPROXIMATELY $1.8 MILLION DOLLARS FOR A 100% AFFORDABLE HOUSING PROJECT AT 1321 E. HOLT AVENUE FOR THE EAST END VILLAGE HOUSING PROJECT AND AUTHORIZING THE CITY MANAGER TO EXECUTE DOCUMENTATION EVIDENCING CITY’S APPROVAL OF THE FEE DEFERRAL AND A DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT ON BEHALF OF THE CITY RECOMMENDATION:
It is recommended that the City Council adopt the following Resolution No. 2022-29 (Attachment No. 1):
RESOLUTION NO. 2022-29 – A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF POMONA, CALIFORNIA, APPROVING A FEE DEFERRAL OF APPROXIMATELY $1,800,000 MILLION DOLLARS FOR A 100% AFFORDABLE HOUSING PROJECT AT 1321 E. HOLT AVENUE FOR THE EAST END VILLAGE AND AUTHORIZING THE CITY MANAGER TO EXECUTE DOCUMENTATION EVIDENCING THE CITY’S APPROVAL OF THE FEE DEFERRAL AND A DEVELOPMENT IMPACT FEE DEFERRAL AGREEMENT ON BEHALF OF THE CITY EXECUTIVE SUMMARY:
Pomona Housing Development, LP (Developer) is an affiliate of the Cesar Chavez Foundation and proposes to develop the East End Village (Proposed Project), a 125-unit 100% affordable housing development at 1321 E. Holt Avenue. The project is subject to the City adopted schedule of Development Impact Fees (DIF’s) in the amount of approximately $1,809,567. Such deferral shall require the execution of an agreement acceptable to the City that contains terms to guarantee the final payment of the fees deferred. Accordingly, the Developer requests to defer the project related DIF’s for a loan period not to exceed 55 years, at 3% simple interest.
FISCAL IMPACT:
This proposed agreement would treat $1,809,567 of DIF’s associated with the project as a loan. Simple annual interest of 3.0% will apply to the principal loan amount of $1,809,567 and will be payable no later than the end of the 55-year affordable housing covenants associated with the project, or upon an earlier refinancing of the project. The 55-year term is a requirement of the California Tax Credit Allocation Committee (TCAC) guidelines. The Developer may make annual payments towards the principal loan amount based on residual receipts, as determined by the Developer, which are generated by the project.
DISCUSSION:
The Developer acquired the 2.3 acre Proposed Project site from the Pomona Unified School District in 2019 and has obtained all City of Pomona entitlements to proceed with the project. The project will have approximately 6,000 square feet of the ground floor space occupied by a community health clinic operated by East Valley Community Health and will provide 125 residential units in a five story configuration (Attachment No. 2).
As with nearly all affordable housing projects, many layers of financing are needed in order for a project to be feasible, and this typically includes some form of substantial tax credit allocation from the State. The deferment of the project’s related DIF would become a leveraging source for the Developer as they apply for 4% Tax Credits 2022. The allocation of TCAC credits is highly competitive. Projects which can demonstrate local government financial assistance score higher in the competitive process, increasing their odds of receiving a TCAC allocation.
Upon adopting new DIF’s in 2021, pursuant to Section 70-75 of Ordinance 4309, the City Council allowed for the deferral of DIF’s for housing projects that include 100% affordable units for low and very low-income households and such deferral shall require the execution of an agreement acceptable to the City that contains terms to guarantee the final payment of the fees deferred. As detailed in the table below, the CCF project’s estimated Development Impact Fee total is $ 1,809,567.
PW - Traffic Signal
$4,545.00
PW - Road and Highway
$4,545.00
Public Safety
$48,602.00
Park &Recreation Improvement Fee
$1,206,125.00
Water Connection
$540,125
Storm Drain
$5,625.00
Total Fees Per Unit
$14,476.54
Total Estimated Deferred Fees:
$1,809,567.00
COUNCIL PRIORITIES & GOALS:
City Council Priority 2: Economic Development – Goal J: Encourage the development and maintenance of quality housing opportunities for all.
ALTERNATIVE(S):
The City Council has the following alternatives:
1) Receive and file this report; or
2) Adopt Resolution No. 2022-29
Prepared by:
_____________________________
Kirk Pelser
Deputy City Manager
ATTACHMENT(S):
Attachment No. 1 – Resolution No. 2022-29
Attachment No. 2 - Project Site Plans
Approval of a Development Impact Fee Deferral Agreement