City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00787 5/7/2024 Consent Item 2.
(City Council) Commitment of Prohousing Incentive Pilot Grant Funding to the San Juan Apartments Project and Approval of Grant Agreement between the City of Sacramento and Sacramento Housing and Redevelopment Agency [Published for 10-Day Review 04/24/2024] File ID: 2024-00787
Location: District 6, Represented by Councilmember Guerra Recommendation: Adopt a Resolution authorizing the City Manager or City Manager’s designee and SHRA to: a) execute a grant agreement and related documentation allocating the City’s $2,500,000 in Prohousing Incentive Pilot (PIP) funding to SHRA for the San Juan Apartments (Project); b) authorizing the transfer of $2,500,000 in PIP funding to SHRA for closing of the Project upon receipt of funding from the California Department of Housing and Community Development.
Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected]; Axel Magallanes, Housing Analyst, (916) 808-1844, [email protected], Office of Innovation and Economic Development
Presenter: None.
Attachments:
1-Description/Analysis
2-Resolution
3-PIP Grant Agreement
Description/Analysis
Issue Detail: In March 2023, staff applied for $2.5 million in Prohousing Incentive Pilot (PIP) grant funds through the State’s first grant program designed to incentivize local governments to pursue Prohousing Designations, rewarding those with the Prohousing Designation with additional funding to accelerate affordable housing production and preservation (Resolution No. 2023-0065). The City was subsequently awarded $2.5 million to provide gap financing for an identified Affordable Housing project.
City staff worked in partnership with SHRA to identify an eligible project through SHRA’s Affordable Multifamily Housing Loan Program and allocated these funds to the San Juan Apartments Project.
The project will consist of a total of 113 (1BR, 2BR, and 3BR) units. Amenities onsite will include
File ID: 2024-00787 5/7/2024 Consent Item 2.
landscaped courtyards, picnic tables, a laundry facility, and dedicated parking spaces. The development will also include a community room with a kitchen, management and resident services offices, a playground for school-aged youth, and a swimming pool.
Policy Considerations: According to Sacramento City Code Section 3.04.020, all agreements specified in section 3.04.010 involving income or expenditure of $250,000 or more, require approval of the city council, for signature by the city manager or designee. Additionally, the 2021-2029 Housing Element contains policies and programs related to the Prohousing Designation and assisting affordable housing projects, including:
Housing Element Policy 2.3 Assist in the Development of Affordable Housing. The City and SHRA shall assist affordable housing developments through site identification, direct funding, supporting funding applications, land donation, expedited permit review, and other incentives.
Housing Element Program 11 Prohousing Designation. The City shall strive to receive and maintain through the sunset date of January 1, 2025, the State’s Prohousing Designation by demonstrating a sufficient number of policies that significantly contribute to accelerating housing production. Jurisdictions that receive a Prohousing Designation will receive incentives in the form of additional points or preferences in the scoring of competitive State funding grant program in the areas of housing, transportation, infrastructure, and land use.
This item was published for 10-day review on April 24, 2024, in compliance with the City Code.
Economic Impacts: The City investment in an affordable housing project is estimated to infuse the economy with new jobs, with the provision of this funding and resulting housing construction. There will also be positive economic impact in stabilizing housing costs and preventing homelessness, reducing the rent burden and other community costs for persons experiencing homelessness and at- risk individuals, and providing a platform for additional income and spending capacity amongst these community residents.
Environmental Considerations:
California Environmental Quality Act (CEQA): The current action is the establishment of a funding mechanism to finance various activities, including any environmental review necessary for the development of the housing project. The establishment of a funding mechanism is not a project pursuant to CEQA Guidelines section 15378(b)(4).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
File ID: 2024-00787 5/7/2024 Consent Item 2.
Rationale for Recommendation: The actions recommended in this report will assist the City in meeting its obligation to expend PIP funds in accordance with the State’s guidelines and aid in the production of affordable housing.
Financial Considerations: This report commits the City’s $2,500,000 award of Prohousing Incentive Pilot grant funding from the California State Department of Housing and Community Development to SHRA to provide to the developer of the San Juan Apartments, subject to receipt of PIP funding.
Local Business Enterprise (LBE): None.
RESOLUTION 2024-
Adopted by the Sacramento City Council
COMMITMENT OF PROHOUSING INCENTIVE PILOT GRANT FUNDING TO THE
SAN JUAN APARTMENTS PROJECT AND APPROVAL OF GRANT AGREEMENT
BETWEEN THE CITY OF SACRAMENTO AND SACRAMENTO HOUSING AND
REDEVELOPMENT AGENCY
BACKGROUND
A. In November of 2016 , the City of Sacramento Housing Authority Board (Housing Authority) via resolution HA2016-022 approved a Vacant Lot Disposition Strategy for vacant Housing Authority -owned parcels and was given the authorization to release the Housing Authority -owned San Juan parcels (Site) as an Opportunity Site to be used for future affordable housing development. The Site was identified by the Housing A uthority to be exempt surplus land and its use as an affordable housing site with restrictions was consistent with California Government Code 25539.4.
B. In August of 2020, the Sacramento Housing and Redevelopment Agency (SHRA) released a Request for Proposals for an Affordable Housing Development for the Site.
C. In December of 2020, SHRA selected Mutual Housing California (Developer) to become the developer of the Site and submitted a response to the RFP with a proposed affordable housing development project to be located on the following parcels (Project):
1. 5258 Young Street (APN 026-0073-0003), located in the County owned by the Housing Authority of the County of Sacramento
2. 5266 Young Street (APN 026-0073-0004), located in the City and owned by the Housing Authority of the City of Sacramento
3. 5280 Young Street (APN 026-0073-0005), located in the City and owned by the Housing Authority of the City of Sacramento
4. 5300 Young Stre et (APN 0026 -0073-0006), located in the City owned by the Housing Authority of the City of Sacramento
5. 5320 Young Street (APN 0026 -0073-0007), located in the City owned by the Housing Authority of the City of Sacramento
6. 5340 Young Street (APN 0026 -0073-0008) located in the City owned by the Housing Authority of the City of Sacramento
7. 5700 Stockton Blvd. (APN 026-0073-014), located in the County owned by the Housing Authority of the City of Sacramento
8. 5716 Stockton Blvd. (APN 026-0073-017), located in the County owned by the Housing Authority of the County.
D. The Site has been split into two phases for feasibility purposes. Phase 1 includes properties 1-7. Phase 2 includes 5716 Stockton Blvd. (Properties listed in section E above.) The Developer has worked on behalf of the Housing Authority to obtain entitlements to develop the Site as affordable multifamily housing.
E. A loan commitment in the amount of $22,668,000 of City and County funding, inclusive of $500,000 in predevelopment funding from SH RA, was approved on February 7, 2023 to develop the site.
F. In March of 2023, the City of Sacramento applied for and was awarded $2.5 million in “Prohousing Incentive Pilot Program (PIP)” funding from the State of California.
After being awarded PIP funds, the City collaborated with SHRA to identify the San Juan Apartments as the eligible project for this funding.
G. On January 16, 2024, HCD awarded the City with a $2,500,000 PIP grant (“Grant”) and the City entered into the PI P Agreement. PIP funds may be used “for the development of an affordable rental housing project, and the local government makes the PIP assistance in the form of a loan to the sponsor of the project , the loan shall be evidenced through a Promissory Note se cured by a Deed of Trust.” (PIP Agreement No. 22-PIP-17863, Exhibit D)
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Manager or the City Manager’s designee is authorized to execute a grant agreement and related documents with the Sacramento Housing and Redevelopment Agency.
Section 2. The City Manager or City Manager’s designee is authorized to transfer $2,500,000 in PIP funds to SHRA for the closing of the Project, upon receipt of funding.