C
ity Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01097 May 31, 2022
T
itle: Local Government Matching Grant (LGMG) Resolution for State Funding Application – 440 Arden Way State Surplus Property Affordable Housing Project Location: 440 Arden Way, District 2
Recommendation: Adopt a resolution documenting the local contributions being provided to the 440 Arden Way Affordable Housing Project and supporting the project’s application for State Local Government Matching Grant funds.
Contact: Danielle Foster, Housing Policy Manager, (916) 808-1869, [email protected]; Michael Jasso, Assistant City Manager, (916) 808-5704, [email protected]
Presenter: None.
A
ttachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: On January 15, 2019, Governor Gavin Newsom signed Executive Order N-06-19 (“the EO”), which allows housing production on excess state-owned properties (“Excess Sites”). The EO authorizes the Department of General Services (DGS) and the California Department of Housing and Community Development (HCD) to identify and prioritize excess state-owned property (“Excess Sites”) for sustainable, cost-effective, and innovative multifamily affordable housing projects.
Chapter 111, Statutes of 2021 (Assembly Bill (AB) 140), which makes several statutory changes for the purpose of implementing the housing and homelessness provisions of the Budget Act of 2021, establishes the Excess Sites Local Government Matching Grants Program (LGMG or “Program”). The legislation directs HCD to administer the Program for select projects on state excess sites to apply for funds for activities to enable affordable housing development. The Department will award all Program funds as grants to the project developer, in this case BRIDGE Housing Corporation, although awardees may elect to employ Program funds as a loan if that supports other financing options. The LGMG Program provides funds for Predevelopment and Development Costs of affordable housing on state excess sites where the developer has received a contribution or commitment of a contribution from a local government and/or housing authority in support of affordable housing development.
In 2020, the state identified their property at 440 Arden Way, the old Arden Armory site, as surplus and available for affordable housing development. After a two-part Request for Proposals process, the State selected BRIDGE Housing Corporation as the developer of the site with affordable housing. Additional details are provided below in the Project Description.
To date, the City has assisted in providing BRIDGE with funds from the Environmental Protection Agency (EPA) for completion of its Phase One environmental review and will provide the zero-dollar impact fee rate to the project, consistent with city policy on all deed- restricted affordable housing. The Sacramento Housing and Redevelopment Agency (SHRA) has provided a commitment of project-based vouchers for the project, which will support the provision of services at the site. These items are eligible for matching funds under the state LGMG Program. The attached resolution documents these commitments and supports Bridge in applying for these funds.
Project Description
BRIDGE Housing Corporation is proposing to transform the vacant land and unoccupied buildings at 440 Arden Way into a vibrant new affordable family housing development. Current designs include 124 units, serving households who earn between 25% and 60% Area Median Income (AMI), with 25% of units designated as permanent supportive housing. The unit sizes will include a mix of one-, two-, and three-bedrooms. The ground floor of the building is planned to include a childcare center, retail space, and community room.
BRIDGE Housing Corporation is partnering with: Lutheran Social Services of Northern California (LSS) to provide a variety of services to support residents, Child Action Inc to find a local childcare provider for the childcare center, and the Del Paso Boulevard Business Partnership to help find a local business for the retail space. The building is being designed by LPAS Architecture + Design in collaboration with Holmes structural engineering and TriCorp Group general contracting. Building design, parking, and landscaping plans have been modified in response to neighborhood feedback in an effort to further compliment the surrounding area and reduce potential impacts.
BRIDGE Housing Corporation and its partners believe that through the inclusion of high-quality affordable housing, a strong supportive services program, and partnerships with local businesses, 440 Arden Way will transform this site into a space that provides residents and surrounding community members and businesses with the opportunity for stability, economic growth, and personal health. Affordable housing on this site will support the surrounding commercial corridors and ensure that residents have expendable income for nearby businesses. This project is also transit-oriented development and will be developed immediately adjacent to a lightrail stop. Further, the plans for childcare services and retail space will offer neighborhood-serving support for local resident needs.
Policy Considerations: While this project is on state-owned property and not subject to City entitlement processes, the project design and features are consistent with City zoning and policies regarding transit-oriented development, affordable housing, and neighborhood services that ensure inclusive economic development. There is an ongoing critical need for affordable housing and childcare services, both being envisioned by this development.
Connection to lightrail makes this location ideal and the mature trees surrounding the parcel buffer its overall impact on the residential community to the south, allowing for full utilization of this opportunity site. Investment in this parcel is likely to inspire continued investment on Arden Way and Del Paso Boulevard, supporting the vibrancy of these commercial corridors. This action will support the project in leveraging local resources for state local matching funds.
Economic Impacts: This project will result in local construction jobs and related service jobs, while also providing residents with affordable housing and resulting expendable income to support local businesses.
Environmental Considerations:
California Environmental Quality Act (CEQA): The action contained in this report will have no significant effect on the environment and are exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3). This report only supports documentation for the LGMG application at the state. The project was reviewed by the State of California, pursuant to their property jurisdiction, and the State completed the necessary CEQA analysis for the project proposal.
Sustainability: This transit-oriented development will further city policies related to greenhouse gas emission reductions and will incorporate sustainability features within the housing development.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: Adopting the attached resolution documents local resources provided to the project and supports BRIDGE Housing in their application for State LGMG funding. This action furthers local objectives to produce affordable housing, complies with State Regional Housing Needs Allocation (RHNA) requirements, carries out the City’s Housing Element and Sustainability objectives, and stretches local resources by leveraging state funding for this purpose. Staff recommends adoption of the attached resolution.
Financial Considerations: The recommended action in this report does not represent any new funding commitments to this project. Previously provided Phase One environmental report funding ($5,000) and the City’s standard zero-dollar impact fee will be used in combination with SHRA’s commitment of project-based housing choice vouchers for BRIDGE’s application for State LGMG funding. Supporting this application for grant funding furthers the project and leverages available state resources to its development.
Local Business Enterprise (LBE): Not applicable.
Resolution of the Governing Body
Applicants are encouraged to use this Resolution in content and form.
RESOLUTION NO.____________
A RESOLUTION OF THE GOVERNING BODY OF _____________________ SUPPORTING THE APPLICATION OF _____________________ FOR THE LOCAL GOVERNMENT MATCHING GRANTS PROGRAM; APPROVING _______________
BUDGET FOR THE LOCAL GOVERNMENT MATCHING GRANTS PROGRAM WHEREAS:
A. On January 15, 2019, Governor Gavin Newsom signed Executive Order No.
N-06-19, which allows the production of Affordable housing on state-owned Excess Sites (“Excess Sites”). The Executive Order authorizes the Department of General Services (“DGS”) and the Department of Housing and Community Development (“Department”) to identify and prioritize Excess Sites for sustainable, cost-effective, and innovative multi-family Affordable housing projects.
B. On ___________ DGS and the Department selected ___________________ to develop Affordable housing at _______________________________ (“selected project”) pursuant to Executive Order No. N-06-19.
C. Chapter 111, Statutes of 2021 (Assembly Bill (AB) 140) makes several statutory changes for the purpose of implementing the housing and homelessness provisions of the Budget Act of 2021, which establishes the Excess Sites Local Government Matching Grants (“LGMG”) Program (hereafter, “Program”) to be administered by the Department.
D. The Program was allocated up to $30 million to provide funds for Predevelopment and Development Costs to selected projects that receive a financial contribution from a Local Government, as defined pursuant to Health and Safety Code section 50704.80(b). Funding for the Program is made available pursuant to Health and Safety Code section 50704.81(a)(2).
E. The Department has issued a Notice of Funding Availability (“NOFA”), dated May 5, 2022, for the Program pursuant to Health and Safety Code section 50704.83(f).
F. The Program requires contribution from ________________________________ to ____________________ for ____________________________ (“Applicant”) to apply for Program funds pursuant to Health and Safety Code section 50704.82. Towards that end, Applicant is submitting an Application for Program funds (“Application”) to the Department for review and consideration.
__________________________________
G. The Program requires a resolution from _______________________________ pursuant to Health and Safety Code section 50704.82(b(1)(A) approving the ___________________ budget, including all sources, and demonstrating the amount of Local Government Contribution to the Applicant for Predevelopment and Development Costs for ____________________, and the requested amount from the Program.
THEREFORE, IT IS RESOLVED THAT:
1. The ____________________________________________ supports _______________________ submitting an Application to the Department to receive Program funds for ________________________ to develop Affordable housing on the state-owned Excess Site.
2. The ____________________________ is authorized to submit the approved _________________ Project Budget (“Attachment 1”) and Anticipated and Committed Project Sources (“Attachment 2”) to the Applicant to include in their Application. Attachment 1 and Attachment 2 demonstrate the requested amount from the Program, __________________ that will be allocated to the Applicant, and all other sources for Predevelopment and Development Costs associated with the development of Affordable housing on the state-owned Excess Site.
Attachment 1: ________________ Budget
Attachment 2: Anticipated and Committed Project Sources PASSED AND ADOPTED at a regular meeting of the __________________ of the ___________ of ___________ held on ________ by the following vote:
Instruction: Fill in all four vote-count fields below. If none, indicate “0” for that field.
AYES: _____ NOES: _____
AB SENT : _____ ABSTAIN: _____
_________________________________________
STATE OF CALIFORNIA
_________ of ________________
I, __________________, ________ Clerk of the _________ of ________________, State of California, hereby certify the above and foregoing to be a full, true and correct copy of a resolution adopted by said _________________ on this ___ day of _____________, 20____.
_ , Clerk of the of
_____________________, State of California
By: _____________________________________
Note: The attesting officer cannot be the person identified in the Resolution as the authorized signer.
ATTACHMENTS
Attachment 1: Project Budget
Attachment 2: Anticipated and Committed Project Sources
Attachments
Attachment 1: Project Budget (from Program Application) Development Budget 5/5/2022 v1
Total Project
Costs
LAND COST/ACQUISITION
Land Cost or Value
Demolition
Legal
Land Lease Rent Prepayment
Total Land Cost or Value $0
Existing Improvements Cost or Value
Off-Site Improvements
Total Acquisition Cost $0
Total Land Cost / Acquisition Cost $0
Predevelopment Interest/Holding Cost $93,824
Assumed, Accrued Interest on Existing Debt
(Rehab/Acq)
Excess Purchase Price Over Appraisal
REHABILITATION
Site Work
Structures
General Requirements
Contractor Overhead
Contractor Profit
Prevailing Wages
General Liability Insurance
Other: (Specify)
Other: (Specify)
Other: (Specify)
Other: (Specify)
Total Rehabilitation Costs $0
Total Relocation Expenses
NEW CONSTRUCTION
Site Work $1,684,706
Structures $38,500,670
General Requirements $1,820,775
Contractor Overhead $2,206,799
Contractor Profit
Prevailing Wages
General Liability Insurance $432,663
GC Contingency $1,260,185
P&P Bond $436,989
Escalation Contingency $7,943,963
Other: (Specify)
Total New Construction Costs $54,286,750
ARCHITECTURAL FEES
LGMG Round 1 Page 1 of 3 Development Budget
Design $2,221,470
Supervision $66,000
Total Architectural Costs $2,287,470
Total Survey & Engineering $796,856
CONSTRUCTION INTEREST & FEES
Construction Loan Interest $2,827,437
Origination Fee $425,819
Credit Enhancement/Application Fee
Bond Premium
Cost of Issuance $1,000,000
Title & Recording $40,000
Taxes
Insurance $1,605,000
Lender Legal $90,000
Acquistion Legal + Transfer Tax $100,000
Other: (Specify)
Total Construction Interest & Fees $6,088,256
PERMANENT FINANCING
Loan Origination Fee $42,152
Credit Enhancement/Application Fee
Title & Recording $10,000
Taxes
Insurance $95,600
Borrower Legal $95,000
Other: (Specify)
Total Permanent Financing Costs $242,752
Subtotals Forward $63,795,908
LEGAL FEES
Legal Paid by Applicant $90,000
Other: (Specify)
Total Attorney Costs $90,000
RESERVES
Operating Reserve $410,283
Replacement Reserve $124,000
Transition Reserve $417,857
Rent Reserve
Capitalized Operating Deficit Reserve $1,667,443
Other: (Specify)
Other: (Specify)
Total Reserve Costs $2,619,583
CONTINGENCY COSTS
Construction Hard Cost Contingency $2,714,338
Soft Cost Contingency $300,368
Total Contingency Costs $3,014,706
OTHER PROJECT COSTS
TCAC App/Allocation/Monitoring Fees $249,308
Environmental Audit
LGMG Round 1 Page 2 of 3 Development Budget
Local Development Impact Fees $468,624
Permit Processing Fees $1,114,443
Capital Fees
Marketing $750,355
Furnishings $220,000
Market Study $12,500
Accounting/Reimbursable $50,000
Appraisal Costs $23,000
Other: (Specify)
Other: (Specify)
Other: (Specify)
Other: (Specify)
Other: (Specify)
Other: (Specify)
Total Other Costs $2,888,230
SUBTOTAL PROJECT COST $72,408,427
DEVELOPER COSTS
Developer Overhead/Profit $9,904,753
Consultant/Processing Agent $75,000
Project Administration $7,500
Broker Fees Paid to a Related Party
Construction Oversight by Developer $100,000
Other: (Specify)
Total Developer Costs $10,087,253
TOTAL PROJECT COST $82,495,680
End of Document
LGMG Round 1 Page 3 of 3 Development Budget
Attachments
Attachment 2: Anticipated and Committed Project Sources General Partner Equity
Tax Credit Equity
Deferred Developer Fee
Total Sources
Bank Permanent Loan 4,215,193
HCD - Multifamily Housing Program
HCD - Infill Infrastructure Grant Program
HCD - LGMG
Federal Home Loan Bank of SF - AHP
City of Sacramento Fee Waivers
24,400,000
2,589,566
1,220,000
5,730,030
468,624
7,183,829
36,688,438
82,495,680