Susana Alcala Wood, City Attorney Jorge Oseguera, City Auditor Mindy Cuppy, City Clerk Howard Chan, City Manager John Colville, City Treasurer City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00425 April 12, 2022 Discussion Item 02
Title: Vista Nueva Homekey Project – Approval to Allocate Funds and Funding Agreement
Location: 140 Promenade Circle, District 3
Recommendation: Adopt a City Council Resolution authorizing the Sacramento Housing and Redevelopment Agency (SHRA) to a) negotiate, enter into, execute and amend from time to time a funding agreement comprised of $683,750 in Home Investment Partnership (HOME) program funds construction and permanent loan, with Jamboree Housing California, or related entity (Developer) for the Vista Nueva Homekey Development (Project); b) amend the SHRA budget; and c) make related findings.
Contact: Christine Weichert, Director of Housing Finance, 916-440-1353, [email protected]; Sacramento Housing and Redevelopment Agency
Presenter: Christine Weichert, Director of Housing Finance, 916-440-1353, [email protected]; Sacramento Housing and Redevelopment Agency
Attachments:
1-Description/Analysis
2-Vicinity Map
3-Project Rendering
4-Project Summary
5-City Council Resolution
File ID: 2022-00425 Discussion Item 02
April 12, 2022
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City of Sacramento
Description/Analysis
Issue Detail: On September 9, 2021 the State of California Department of Housing and Community Development (HCD) announced that it is making $1.45 billion dollars available through a Notice of Funding Availability (NOFA) for the Homekey Program. The Homekey Program provides funding to cities, counties, and other local entities, including housing authorities to convert motels, hotels, and other non-residential structures into permanent supportive housing and/or transitional housing for the State’s homeless population.
In October 2021, the Housing Authority received authorization to apply for Homekey funds to be used for the Vista Nueva Project (Project). At that time, an allocation of $8.9 million in local funds to serve as match and gap financing for the project was also approved. On October 15, 2021 the application was submitted to HCD and on December 21, 2021, HCD announced that the project had been awarded $29,010,350 in Homekey funds. Since that time staff has been conducting due diligence activities, closed the loan and the developer has acquired the property to move forward with rehabilitation and occupancy of the development. Occupancy is anticipated in the fall of 2022.
As part of the due diligence, Jamboree staff began discussions with both the building department and fire department. Three areas identified which add additional cost to the project are outlined below.
Fire Alarm
Jamboree’s General Contractor initial discussions with the Sacramento Fire Department in October of 2021 conveyed that the existing fire alarm system was acceptable. However, once a more detailed review of the permitted plans was conducted, it was determined that the building fire alarm system, including the fire control panel, would need to be upgraded at an additional cost of $271,000.
Laundry Expansion
Due to the large number of families that will be housed at this development, and to be incompliance with SHRA lending policies, staff is recommending increasing the size and scope of the laundry facilities to include eight (8) new washers and nine (9) new dryers for a total of 12 laundry sets, including an ADA compliant set. The cost for this is approximately $198,750.
Windows
The project architect initially assumed that the building was permitted and occupied with existing windows meeting egress requirements per building code. Upon further analysis, it was determined that the existing windows did not meet current building code requirements.
File ID: 2022-00425 Discussion Item 02
April 12, 2022
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City of Sacramento
As a result, the 132 windows in all bedrooms and studios will need to be replaced at an additional cost of $214,000.
SHRA staff is currently recommending an additional allocation to the project of $683,750 to cover these unanticipated project expenses.
Project Description: The Vista Nueva Project is the acquisition and rehabilitation of 140 Promenade Circle (formerly the Staybridge Suites Hotel) in Sacramento which will be converted into permanent and transitional housing for formerly homeless families/individuals.
The structure was built in 2007 on 2.29 acres. A Vicinity Map and Project Rendering are included as Attachments 2 and 3.
The Project will serve homeless households with at least one minor child. Ten of the units will be set aside as transitional units for families who will be provided services. In addition, the development will provide 106 permanent supportive housing units comprised of 53 studio, 39 one-bedroom, 14-two bedroom units and one (1) two-bedroom exempt management unit.
There will be a total of seventeen (17) Americans with Disabilities Act (ADA) accessible units.
Policy Considerations: The recommended actions for the development are consistent with:
1) SHRA’s previously approved Multifamily Lending and Mortgage Revenue Bond Policies, Affordable Housing Priority 2(i), Conversion of Non-Residential to Residential Use for Permanent Supportive Housing and Homeless Housing; and 2) the 2021-2029 Housing Element, a) Goal 2, Increasing Affordable and Workforce Housing Production, H-2.1 Provide Opportunities for Affordable Housing Throughout the City of Sacramento, H-2.3 Assist in Development of Affordable Housing, H-2.10 Awareness and Support, H-2.11 Conversions to Affordable Housing, b) Goal 7, Housing for People Experiencing Homelessness, and Policies H-7.1 Housing First Principles, H-7.4 Permanent Supportive Housing; and c) Goal 8, Increasing Accessible Housing. The Project is located in an Opportunity Zone that provides a federal tax incentive for investors, who invest in real estate projects and operating businesses located in designated low-income communities through deferral and partial tax reductions of reinvested capital gains and forgiveness of tax on new capital gains (enacted into federal law through the Tax Cuts and Jobs Act of 2017).
Economic Impacts: Not applicable.
File ID: 2022-00425 Discussion Item 02
April 12, 2022
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City of Sacramento
Environmental Considerations:
California Environmental Quality Act (CEQA): The project has been analyzed in accordance with the California Environmental Quality Act (CEQA) and has been determined to be exempt from CEQA pursuant to CEQA Guidelines §15301. National Environmental Policy Act (NEPA):
Pursuant to NEPA regulations at 24 CFR §58, an Environmental Assessment (EA) was prepared and it was determined that the project will have no significant impact on the human environment.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies and targets of the Sustainability Master Plan and the 2035 General Plan. If approved, this Project will advance the Land Use Goal 2.1, Complete Neighborhoods to promote livability and safety for residents of all ages, incomes, and cultural backgrounds. Characteristics of Complete Neighborhoods include a well-maintained housing facility.
Commission Action: Sacramento Housing and Redevelopment Commission: It is anticipated that, at its April 6, 2022 meeting, the Sacramento Housing and Redevelopment Commission will approve the staff recommendation for this item. Staff will notify the Council in the event this does not occur.
Rationale for Recommendation: The actions recommended in this report enable SHRA to continue to fulfill its mission of providing a range of affordable housing opportunities in the City and are consistent with SHRA’s previously approved Multifamily Lending and Mortgage Revenue Bond Policies, the City of Sacramento’s 2021-2029 Housing Element as part of Sacramento’s 2035 General Plan, and the Opportunity Zone.
Financial Considerations: The recommended additional funding for this project is $683,750 in HOME Funds. The SHRA HOME loan will have a zero percent interest rate and a 40-year term. SHRA will collect an annual payment of 0.125 percent (12.5 basis points) of the total SHRA funding amount for monitoring the regulatory restrictions and administration of the funds. SHRA will also receive a fee equal to $100 per each SHRA-funded unit per year.
Local Business Enterprise (LBE) - M/WBE and Section 3 requirements: Local Business Enterprise requirements do not apply to this report. Minority and Women’s Business Enterprise requirements and Section 3 will be applied to all activities to the greatest extent possible and as required by federal funding and in accordance with SHRA’s Section 3 Economic Opportunity Plan. The Developer and General Contractor will work with SHRA’s Section 3 Coordinator, to promote employment opportunities.
Attachment 2
Attachment 3
Vista Nueva
Project Rendering
Address
Year Built
Acreage
Unit Mix and Rents ELI (30% AMI) PBV ELI (30% AMI) Transitional Total Studio/1 Bath 53 10 63
1 Bedroom/1 Bath 39 0 39
2 Bedrooms/2 Bath 14 0 14
Management Unit (2 Bedrooms) 00 1
Total Units 106 10 117
Square Footage Unit Size (sq.ft.) Total
Studio/1 Bath 400 25,200 sq. ft.
1 Bedroom/1 Bath 513 20,007 sq. ft.
2 Bedrooms/2 Bath 788 11,820 sq. ft.
Community Area 24,098 sq. ft.
Total Gross 81,125 sq. ft.
On-site Amenities
Permanent Sources Total Per Unit Per Square Foot
HCD Homekey Grant 29,040,000 248,205 357.97 SHRA Loan 5,845,000 49,957 72.05 T New SHRA Loan 683,750 5,844 8.43 SHRA Grant 3,150,000 26,923 38.83 Building Hope (MHSA) Loan 2,120,000 18,120 26.13 Deferred Developer Fee 176,763 1,511 2.18 TOTAL SOURCES 41,015,513$ 350,560 505.58$ Permanent Uses
Acquisition 30,600,000 261,538 377.20 Construction Costs 4,667,887 39,896 57.54 Additional Construction Costs 683,750 5,844 8.43 Architecture & Engineering 170,000 1,453 2.10 Permits & Fees 268,858 2,298 3.31 Hard Cost Contingency 694,094 5,932 8.56 Soft Cost Contingency 306,344 2,618 3.78 Operating Reserve 1,864,580 15,937 22.98 Legal Fees 90,000 769 1.11 Developer Fee 1,000,000 8,547 12.33 Third Party Fees, Marketing, Other 590,000 5,043 7.27 TOTAL USES 41,015,513$ 350,560$ 505.58$ Management / Operations
Proposed Developer
Property Management Company
Operating Expenses 810,174$ 6,925 $ Property Management 70,200$ 600 $ Transitional Units Operations 315,214$ 2,694 $ Resident Services 290,417$ 2,482 $ Replacement Reserves 58,500$ 500 $ Taxes and Insurance 62,643$ 535 $ Domus Management Company
Jamboree Housing Corporation
Residential Project Summary
2.29 (99,752.4 sq. ft.)
2007
140 Promenade Circle, Sacramento 95834
Vista Nueva
Management, resident services and case management offices, community room with kitchen and lounging areas, computer space, laundry facilities, pool, picnic area with barbeque. Children’s tot lot and school aged playgrounds with fencing and gates, pet area, 75 vehicle parking spaces and 8 bike parking spaces.
Attachment 4
RESOLUTION NO. 2022 -
Adopted by the Sacramento City Council
on date of
VISTA NUEVA HOMEKEY PROJECT (PROJECT): AUTHORIZATION TO AMEND
THE SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY (SHRA) BUDGET TO ALLOCATE $683,750 IN HOME INVESTMENT PARTNERSHIP (HOME) LOAN FUNDS TO THE PROJECT; APPROVAL TO EXECUTE FUNDING AGREEMENT WITH JAMBOREE HOUSING OR RELATED ENTITY (DEVELOPER); APPROVAL
OF ENVIRONMENTAL FINDINGS
BACKGROUND
A. The Housing Authority of the City of Sacramento and their co-applicant, JHC-Vista Nueva LLC (Jamboree Housing Corporation), or related entity (Developer) , were awarded $29,010,350 in Homekey Program funds from the California Department of Housing and Community Development. The Vista Nueva development includes the acquisition and conversion of a motel into 106 permanent supportive housing and ten (10) temporary shelter for homeless families/individuals located at 140 Promenade Circle (APN 225-2110-049-0000). As part of the Developers due diligence after the award it was determined that additional funds were needed for the project.
B. The recommended actions are consistent with a) SHRA’s approved Multifamily Lending and Mortgage Revenue Bond Policies, adopted on December 3, 2019 b) the 2021-2029 Housing Element, which encourages the provision of a variety of quality housing types to encourage neighborhood stability, including options for extremely low-income households (Resolution No. 2021-0259); c) the Sacramento Promise Zone Plans and Goals, Sustainably Built Community sub-goal to increase housing types and transit growth to promote livability and connectivity within the Promise Zone (Resolution No. 2015 -263); and d) the 2013 -2024 Consolidated Plan (Resolution No. 2019 -0408), and 2021 Action Plan (Resolution No. 2020 - 0350).
C. The project has been analyzed in accordance with the California Environmental Quality Act (CEQA) and has been determined to be exempt from CEQA pursuant to CEQA Guidelines §15301. Pursuant to National Environmental Policy Act (NEPA) regulations at 24 CFR §58, an Environmental Assessment (EA) was prepared and it was determined that the project will have no significant impact on the human environment.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. All evidence presented having been duly considered, the findings, including environmental findings regarding this action, as stated above, are found to be true and accurate and are hereby approved adopted.
Section 2. Sacramento Housing and Redevelopment Agency (SHRA) is authorized to negotiate, enter into, execute and amend from time to time a funding agreement comprised of $ 683,750 in Home Investment Partners hip (HOME) program loan funds with Jamboree Housing California, or related entity (Developer) for the Vista Nueva Homekey Development (Project) and to execute other documents, as approved to form by its Office of the General Counsel (Counsel), and perform other actions required for the HOME program loan funds, including without limitation, negotiation, subordination, regulatory agreements, financial restructuring, and extensions, consistent with its adopted policy and with this resolution.
Section 3. SHRA’s budget is hereby amended to incorporate $683,750 in HOME loan funds for the Vista Nueva development.