CITY OF POMONA
COUNCIL REPORT
June 6, 2022
To: Honorable Mayor and Members of the City Council
From: James Makshanoff, City Manager
Submitted By: Kirk Pelser, Deputy City Manager
SUBJECT: APPROVING A N AFFORDABLE HOUSING DISPOSITION &
DEVELOPMENT AGREEMENT AND A SUBRECIPIENT AGREEMENT
FOR THE USE OF ARPA FUNDS BETWEEN THE CITY OF POMONA
AND NATIONAL COMMUNITY RENAISSANCE OF CALIFORNIA
______________________________________________________________________________
RECOMMENDATION:
1) It is recommended that the City Council adopt the following Resolution No. 2022 -77 (Attachment No. 1):
RESOLUTION NO. 2022-77 - A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF POMONA, CALIFORNIA , APPROVING AN
AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT
AGREEMENT BETWEEN THE CITY OF POMONA AND NATIONAL
COMMUNITY RENAISSANCE OF CALIFORNIA FOR THE
DEVELOPMENT OF CERTAIN REAL PRO PERTY LOCATED AT 501
EAST MISSION BOULEVARD (APN: 8335 -014-907, 910, 915, 916, 919, 920 & 921) PURSUANT TO GOVERNMENT CODE SECTION 37364, FINDING
SUCH PROPERTY EXEMPT FROM THE SURPLUS LAND ACT AND
FINDING THE SAME CATEGORICALLY EXEMPT FROM CEQA
2) It is recommended that the City Council adopt the following Resolution No. 2022- 105 (Attachment No. 2):
RESOLUTION NO. 2022-105 - A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF POMONA, CALIFORNIA, APPROVING A
SUBRICIPIENT AGREEMENT BY AND BETWEEN THE CIT Y OF
POMONA AND NATIONAL COMMUNITY RENAISSANCE OF
CALIFORNIA FOR THE DEVELOPMENT OF CERTAIN REAL
PROPERTY LOCATED AT 501 EAST MISSION BOULEVARD (APN:
8335-014-907, 910, 915, 916, 919, 920 & 921)
3) Authorize the City Manager to execute the Affordable Housing Disposition & Development Agreement (Exhibit A to Attachment No. 1 ) and the Subrecipient
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
Agreement (Exhibit B to Attachment No. 2) and all necessary associated documents, in substantially the form submitted herein.
EXECUTIVE SUMMARY:
The City of Pomona is the fee owner of approximately 1 .45 acres of real property located at 501 East Mission Boulevard the northeast corner of East Mission Boulevard and South Palomares Park Street (the “Site”). In order to provide for development of the Site as affordable housing, on February 1, 202 1, the City entered into an Exclusive Negotiating Agreement with National Community Renaissance of California . Approval of the Resolution and an Affordable Housing Disposition & Development Agreement (the “DDA”) will allow the City to sell the Site to National Community Renaissance of California, (the “Developer”) for development of a 75 unit affordable housing project.
FISCAL IMPACT:
The City will sell the Site to the Developer for the purchase price of $4,500,000 and will provide a $4,500,000 land loan to the Developer with the following loan terms:
A 55 -year loan term from the date on which the Developer’s construction financing converts to a permanent loan
3.00% simple interest rate
Annual payments of 50% of residual rec eipts (prorated between the other soft financing sources)
Any outstanding balances will be due and payable at the end of the 55-year term
The proposed project’s Development Impact Fees (DIF’s) are eligible by City policy to be treated as a loan. These DI F’s are estimated to total approximately $75 6,000. The DIF Loan will have the following terms:
A 55 -year loan term from the date on which the Developer’s construction financing converts to a permanent loan
3.00% simple interest rate
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
The City will provide the Developer with a grant from the City’s ARPA Coronavirus State an d Local Fiscal Recovery Funds (“SLFRF”) in the amount of $550,000, which shall be evidenced by a separate agreement between the City and the Developer (Exhibit B to Attachment No. 2). This amount is included in the FY 2022-23 Proposed Operating Budget under account 191-0101-52285- 00000.
PRIOR COUNCIL ACTIONS:
On December 7, 2020, the Council approved an Exclusive Negotiation Agreement (“ENA”) with the Developer. The ENA was executed on February 1, 2021.
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
BACKGROUND & DISCUSSION
The Property was transferred to City pursuant to Health and Safety Code (“HSC”) Section 34176, when the City of Pomona (“City”), as the entity that authorized the creation of the dissolved Redevelopment Agency of the City of Pomona (“RDA”), elected not to retain the housin g assets and functions previously performed by the RDA, and instead elected to transfer all rights, powers, assets, liabilities, duties and obligations associated with the housing activities of the RDA, excluding any amounts on deposit in the Low and Moderate Income Housing Fund, to the City, as provided in Resolution No. 2012-16 adopted on January 30, 2012.
The purpose of the DDA is to implement the City’s objective of improving and increasing the supply of affordable housing in the City of Pomona.
Scope of Development
The proposed scope of development can be described as follows:
1. The Site is comprised of approximately 1.4 5-acres of vacant land and is located within the Midtown Segment of the Corridors Specific Plan, which allows for a variety of commercial development including office, service/support and retail uses as well as mixed -uses such as live- work units, and residential multifamily and attached single -family development. The proposed Project is a legally conforming use.
2. The Project will have a total gross building area (GBA) of approximately 92,596 square feet.
The following breaks out the proposed GBA:
Gross Living Area 69,635 square feet
Community Room/Leasing Area (including 800 sf art gallery) 3,766 square feet Common Areas 19,195 square feet
Total Area 92,596 square feet
3. The building will be four stories and will provide 61 surface parking spaces.
4. The Project will include the following unit mix:
One-bedroom units 27
Two-bedroom units 27
Three bedroom units 21
Total units 75
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
5. The Developer is proposing to allocate the units to the following income categories (one unit will be occupied by a professional on-site manager)
1-Bdrm
Units
2-Bdrm
Units
3 - Bdrm
Units
Total
Extremely Low Income 8 4 3 15
Very Low Income 15 15 14 44
Low Income 4 7 4 15
Exempt Manager’s Unit 1 1
Total Units 27 27 21 75
The developer will also apply for eight Section 8 Project-Based Vouchers for qualified residents.
Developer Responsibilities
The Agreement requires the Developer to accept the following responsibilities:
1. Developer will purchase the Site from the City, in an “As-Is” condition, for the fair market value of $4,500,000 (Purchase Price). The Purchase Price is equal to the current appraised value.
2. Developer will be solely responsible for constructing and operating the Project buildings and developing the Site in accordance with the Scope of Development and the Schedule of Performance. Developer will also be responsible for all costs and expenses associated with the Project.
3. Developer shall design, construct and maintain the Project in accordance with all environmental mitigation measures and requirements, if any, of the City’s General Plan and Zoning Ordinance, and all permits and entitlements granted to the Developer
4. At completion, 74 of the 75 units will be restricted to Extremely -Low, Very-Low and Low Income households at Extremely -Low, Very-Low and Low Income rents, as defined by the California Health and Safety Code, and defined in the Regulatory Agreement, for a period of 55 years from the date of issuance of a Certificate of Completion for the Project.
5. Prior to close of escrow, Developer must provide the City with the following:
a. Demonstration that Developer has secured a bona fide award of Tax Credits and Senior Financing in amounts sufficient to provide for development of the Project and in accordance with the amounts and timing provided in the Project Budget/Proforma. b. Developer shall have obtained approval from the City for the requested entitlements for all improvements to be constructed on the Site.
c. Deposited into Escrow the PCO Statement, Grant Deed, Notice of Agreement, Regulatory Agreement, Construction Financing Security Instrument, La nd Loan Note, Land Loan Deed of Trust, Subordinate Loan(s) Security Instrument, Subordination Agreement, Subordinate Loan Land Use Restriction Agreements.
d. Shall not be in material Default in any of its obligations. e. Shall have obtained approval by the City of the affirmative fair housing Marketing Plan.
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
6. Developer will satisfy all conditions necessary to ensure that the Project conforms to all applicable CEQA and, if applicable, NEPA requirements.
7. Developer shall submit up to two consecutive applications to the California Tax Credit Allocation Committee (TCAC) to secure Tax Credit financing, beginning with the July 2022 application round. The Developer and Authority have agreed to meet and confer after two unsuccessful rounds.
City Responsibilities
The Agreement imposes the following responsibilities on the City:
1. City agrees to sell the Site to Developer for the Purchase Price and provide a $ 4,500,000 Land Loan to the Developer with the following loan terms:
a. A 55-year loan term from the date on which the Construction Financing Converts to the Permanent Loan;
b. A 3.00% simple interest rate;
c. Annual payments of 50% of residual receipts (prorated between the other soft financing sources);
d. Any outstanding balances will be due and payable at the end of the term; and e. Subordinated to the conventional permanent loan.
2. Per City Policy, the project’s DIF’s will be treated as a loan, estimated to total approximately $755,000. The DIF loan will have the following terms:
a. A 55 -year loan term from the date on which the Developer’s construction financing converts to a permanent loan
b. b)3.00% simple interest rate
c. c)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; and d. d)Subordinated to the conventional permanent loan
3. The City will provide the Developer with a grant from the City’s ARPA Coronavirus State and Local Fiscal Recovery Funds (“SLFRF”) in the amount of $550,000, which shall be evidenced by a separate agreement between the City and the Developer (Exhibit B to Attachment No. 2).
4. Prior to close of escrow, City must provide the Developer with the following:
a. Deposited into escrow executed Grant Deed, FIRPTA Affidavit, Notice of Agreement, Regulatory Agreement, Subordination Agreement.
b. Shall not be in Material Default in any of its obligations. c. Provided a written approval to the Developer for the Marketing Plan.
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
5. City is to approve any Property Manager that is not the Developer. City will also have the ability to require the Developer to hire a third -party management company acceptable to the City if there are problems with the management company.
6. The City will have the ability to remove the property manager if there are property management issues.
7. The City Regulatory Agreement will be placed on the Property for a term of 55 years from the Certificate of Completion date, and will not be subordinated to any other loans. The Authority Regulatory Agreement will restrict the units as follows:
a. Not less than eight (8) of the 1 -bedroom units, four (4) of the 2 -bedroom units, and three (3) of the 3-bedroom units are to be restricted to Extremely-Low Income Households; b. Not less than fifteen (15) of the 1-bedroom units and fifteen (15) of the 2-bedroom units, and fourteen (14) of the 3 -bedroom units are to be restricted to Very -Low Income Households; and
c. Not less than four (4) of the 1-bedroom units, seven (7) of the 2-bedrom units, and four (4) of the 3-bedroom units are to be restricted to Low Income Households.
Environmental Review
The City Council of the City hereby finds and determines that the DDA involves the sale of surplus government property, and the sale of surplus government property is exempt from environmental review under the California Environmental Quality Action pursua nt to a Class 12 categorical exemption. Specifically, the government property is not located in an area of statewide, regional or area wide concern as defined in State CEQA Guidelines, section 15206(b)(4). The Property is not located in any of the following: the Lake Tahoe Basin, the Santa Monica Mountains Zone, the California Coastal Zone, an area within ¼ mile of a wild and scenic river, the Sacramento -San Joaquin Delta, the Suisun Marsh, or the jurisdiction of the San Francisco Bay Conservation and Development Commission. Therefore, the City Council’s adoption of this Resolution and approval of the DDA is exempt from CEQA review. The City Council of the City hereby further finds and determines that none of the exceptions to the categorical exemptions in State CEQA Guidelines, section 15300.2 applies. Specifically, the proposed project would not result in a cumulative impact of successive projects of this same type in the same place. The City can only sell this Property once. Moreover, the City’s disposal of this surplus land does not involve a reasonable possibility that the sale will have a significant effect on the environment due to unusual circumstances. There is nothing unusual about the disposal of surplus land that would lead to an environmental ef fect.
The Property is not located within or adjacent to a highway officially designated as a state scenic highway. Thus, the sale of the Property would not result in damage to scenic resources within such a designated highway. The Property is not on the Co rtese list compiled pursuant to Government Code Section 65962.5. The Property is not a historical resource and thus the sale of it would not impact such a resource. Thus, none of the exceptions to the categorical exemptions applies. The DDA is exempt from environmental review and no further environmental documentation is required by the California Environmental Quality Act.
Approval of DDA and ARPA Funds Agreement with National Community Renaissance of California
COUNCIL PRIORITIES & GOALS:
City Council Priority 2: Economic Development – Goal J: Encourage the development and maintenance of quality housing opportunities for all.
Prepared by:
________________________
Kirk Pelser
Deputy City Manager
ATTACHMENT(S):
Attachment No. 1 - Resolution No. 2022-77 with Exhibit A - Affordable Housing Disposition & Development Agreement between the City of Pomona and National Community Renaissance of California
Attachment No. 2 - Resolution No. 2022-105 with Exhibit A – Legal Description and Exhibit B- Subrecipient Agreement between the City of Pomona and National Community Renaissance of California
Attachment No. 3 - Project Site Plan and Elevation Drawings