City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00525 4/9/2024 Consent Item 16.
Approval of Loan Agreement for 13th/C Street Housing Project [Published for 10-Day Review 03/28/2024]
File ID: 2024-00525
Location: 1300-1310 C Street, District 4, Represented by Councilmember Valenzuela Recommendation: Adopt a Resolution authorizing the City Manager or the City Manager’s designee to: 1) establish the 13th/C Street Housing Multi-Year Operating Project (I02189060); 2) transfer $1.4 million from the Sacramento Entrepreneurial Development Academy Phase 1 Project (I02183000) in the Innovation and Growth Fund (Fund 2031) to I02189060; 3) transfer $600,000 from the Housing Trust Fund commitment of Measure U (Fund 2401) to I02189060; 4) transfer $1 million from the Housing Trust Fund commitment of General Fund (Fund 1001) to I02189060; 5) execute the attached $3 million loan agreement and related documents with SKK Development for the development of 127, including 64 affordable housing units at 1300-1310 C Street (Attachment 2, Exhibit) 6) execute a regulatory agreement for affordable housing for the Project, subject to City Attorney review and approval as to form, and 7) take any necessary budgetary and administrative actions needed to implement and administer the loan agreement and related documents; and continue to April 9, 2024 for approval.
Contact: Leslie Fritzsche, Community Investment Manager, (916) 808-5450, [email protected]; Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected]; Axel Magallanes, Housing Analyst, (916) 808-1844, [email protected], City Manager’s Office of Innovation and Economic Development
Presenter: None.
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A: Loan Agreement for 13th/C Housing Project
Description/Analysis
Issue Detail: The site at 1300-1310 C Street is a .58-acre property at the corner of 13th and C streets that currently contains a vacant warehouse building and a vacant parcel. The property owner,
File ID: 2024-00525 4/9/2024 Consent Item 16.
Comani/Phoenix Fund II, LLC., an affiliate of SKK Developments, proposes to develop 127 studio units on the site. In order to provide 65 of the units at an affordable rent for a period of 30 years, the developer has requested a City loan of $3 million. The loan is proposed as a 30-year 4.1% percent interest loan with repayment from project cash flow. A copy of the proposed loan agreement including a regulatory agreement is attached.
The project has been submitted for entitlements and is currently under review. It is anticipated that the project, if funded, would be under construction by the end of 2024 with a projected opening in 2026.
Policy Considerations: With Sacramento seeing some of the highest increases in rent in recent years, home prices continuing to rise, and the supply continues to not meet demand, housing continues to be a priority of the City. The provision of the proposed loan will aid in the development of additional housing in the Central City which is supported by the City’s General Plan.
The Sacramento City Code Section 4.04.020 and Council Rules of Procedure (Chapter 7, Section E.2.d) mandate that unless waived by a 2/3 vote of the City Council, all labor agreements, and all agreements greater than $1,000,000 shall be made available to the public at least ten (10) days prior to council action. This item was published for 10-day review on March 28, 2024, in compliance with the City Code.
Economic Impacts: The City investment in this project is estimated to infuse the economy with a minimum of 112 jobs, 42 direct and 70 indirect, with the construction of these housing units. The greater economic impact will be providing homes to an estimated 127 residents, allowing them the opportunity to live near the job center of Sacramento’s downtown.
Environmental Considerations: It has been determined that the proposed activity is not a project pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15378(b). The activity described in this report is the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. As a result the proposed activity is not subject to CEQA pursuant to CEQA Guidelines Section 15060(c)(3). Appropriate environmental review consistent with the requirements of CEQA will be completed prior to action on the Planning entitlements required of the project. Projects such as this located within the Central City Specific Plan area may be exempt from CEQA review pursuant to Public Resources Code (PRC) Section 21155.4 if they meet the requirements of that section. PRC 21155.4 and CEQA Guidelines Section 15182, applies to residential, mixed-use, or employment centers that: 1) are in a transit priority area; 2) implements and is consistent with a specific plan for which an EIR has been prepared; and 3) is consistent with the general use designation, density, building intensity, and applicable policies of Sacramento Area Council of Governments’ (SACOG) Sustainable Communities Strategy (SCS) (MTP/SCS).
File ID: 2024-00525 4/9/2024 Consent Item 16.
Sustainability: The 13th/C Street Housing Project is an infill site located in the Central City and its development will aid in reducing the carbon footprint by adding more housing near employment opportunities in the City. The recommendations in this report will result in increased affordable housing opportunities within the city that promote the increased connection of housing, workforce centers, and other amenities and services. Further linkage of these community components will result in reduced impact on the environment.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The proposed housing project would add 127 units to the core of downtown and would further the transition of this quadrant of the city from industrial uses to residential and mixed-use. The project is designed to be smaller studio units and its inclusion of half of the units at an 80% affordable rent level, will provide an opportunity for additional lower income residents to live in the core and in close proximity to the range of core’s employment and entertainment options.
The project will be developed by SKK Development, a company that has led the City in the development of housing units, particularly in the Central City. With over 30 years of experience, SKK has constructed over 4,000 plus multi-family units with a more recent focus on the transformation of the 16th street corridor.
Financial Considerations: On February 2, 2021, City Council set aside a commitment of $31.5 million in the City’s General/Measure U (GF/MU) available fund balance to the City Housing Trust Fund. To fully fund the $3 million loan agreement with SKK Development, staff recommends establishing the 13th/C Street Housing Multi-Year Operating Project (I02189060), transferring $1.4 million from the Sacramento Entrepreneurial Development Academy Phase 1 Project (I02183000) in the Innovation and Growth Fund (Fund 2031) to I02189060 and transferring $1.6 million from the Housing Trust Fund Commitment of Measure U (Fund 2401, $600,000) and General Fund (Fund 1001, $1 million) to I02189060.
Local Business Enterprise (LBE): The developer of the project, SKK Development, is a locally owned firm.
RESOLUTION NO. 2024-
Adopted by the Sacramento City
Council
April 9, 2024
Approval of the 13th/C Street Housing Project Loan Agreement
BACKGROUND
A. The City’s General Plan and the City’s Housing Element encourages the development of housing for all income levels with a particular focus on the development of underutilized infill sites.
B. The site at 13th and C Streets in the central area of the city of Sacramento is currently a blighted and vacant site containing an empty warehouse and vacant land.
C. Development of this site will put this blighted parcel back into productive use and provide housing for an estimated 127 households, 65 of which will be affordable to 80% Area Median Income (AMI) for 30 years.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or City Manager’s designee is authorized to establish the 13th/C Street Housing Multi-Year Operating Project (I02189060).
Section 2. The City Manager or City Manager’s designee is authorized to transfer $1.4 million from the Sacramento Entrepreneurial Development Academy Phase 1 Project (I02183000) in the Innovation and Growth Fund (Fund 2031) to the 13th/C Street Housing Project (I02189060).
Section 3. The City Manager or City Manager’s designee is authorized to transfer $600,000 from the Housing Trust Fund commitment of Measure U (Fund 2401) to the 13th/C Street Housing Project (I02189060).
Section 4. The City Manager or City Manager’s designee is authorized to transfer $1 million from the Housing Trust Fund commitment of General Fund (Fund 1001) to the 13th/C Street Housing Project (I02189060).
Section 5. The City Manager or the City Manager’s designee is authorized to execute the City Loan Agreement for 13th/C Street Affordable Housing Project Loan Agreement and related documents.
Section 6. The City Manager or City Manager’s designee is authorized to execute a regulatory agreement ensuring affordable housing for the 13th/C Street Housing Project subject to approval as to form by the City Attorney or the City Attorney’s designee.
Section 7. The City Manager or the City Manager’s designee is authorized to take any necessary budgetary and administrative actions needed to implement and administer the loan agreement and related documents.
Section 8. The City Manager or City Manager’s designee is authorized to execute any amendment to the loan agreement subject to approval as to form by the City Attorney or the City Attorney’s designee, if the amendment does not change the total loan amount, interest rate, or extend the term of the loan.
Section 8. Exhibit A is part of this resolution.
Table of Contents:
Exhibit A – City Loan Agreement for 13th/C Street Affordable Housing Project