City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00806 6/11/2024 Discussion Item 4.
Approval to Execute a Loan Commitment in the Amount of $7.8 Million for the Central Sacramento Studios Phase II Project
File ID: 2024-00806
Location: 815 11th Street, District 4, Represented by Councilmember Valenzuela Recommendation: Adopt a City Council Resolution authorizing Sacramento Housing and Redevelopment Agency (SHRA) to 1) approve a $7.8 million loan commitment for the Central Sacramento Studios Phase II project; 2) execute a Loan Commitment Letter with Danco or related entity; 3) to amend SHRA’s budget; and 4) negotiate, enter, execute, and amend as needed all necessary documents associated with this transaction.
Contact: Christine Weichert, Director, Housing Finance, (916) 440-1353, [email protected], Sacramento Housing and Redevelopment Agency
Presenter: Roman Singh, Housing Finance Analyst, (916) 440-8547, [email protected], Sacramento Housing and Redevelopment Agency
Attachments:
1-Description/Analysis
2-City Council Resolution
3-Exhibit A Conditional Loan Commitment for Central Sacramento Studios Phase II 4-Vicinity Map
5-Building Rendering
6-Residential Project Summary
7-Cashflow proforma
8-Max Income and Rent Limits
Description/Analysis
Issue Detail: Central Sacramento Studios Phase I, formerly the Sutter House motel, is 92 permanent supportive units for formerly homeless residents. The project, which opened in November 2023, was funded with Homekey, Home American Rescue Plan (ARP), Permanent Local Housing Allocation (PLHA), Mental Health Services Act (MHSA), and Project Based Vouchers (PBVs). Each studio unit is equipped with a bathroom and a new kitchenette featuring a sink, two-burner stove, refrigerator, and microwave. The project includes 24-hour desk coverage, offices for case management, resident
File ID: 2024-00806 6/11/2024 Discussion Item 4.
services, property management, and a fitness center. Outdoor community space incorporated the existing swimming pool and parking lot, with new installations such as a dog park, designated smoking area, and sitting areas.
The development of Central Sacramento Studios Phase II entails the construction of a new 5-story transit-oriented residential building, on approximately 0.45 acres, at the intersection of H and 11th Streets A vicinity map and building rendering are included as attachments 4 and 5. The site is currently occupied by a vacant restaurant that will be demolished.
Project Description: The proposed project will be 52 units in total, including 35 studio units and 17 one-bedroom units. Each unit will include a full bathroom and a full kitchen with stove, sink, garbage disposal, and dishwasher unit. All affordable units will be reserved at 30% area median income (AMI).
There will be one one-bedroom unit reserved for the manager. Among the common areas and amenities provided are a lounge, multipurpose room, fitness room, bicycle storage on the ground floor, common room kitchen, laundry room on each floor, trash enclosure, dog park, and a roof terrace. Parking spaces and other amenities, such as the pool, will be shared between the two sites.
The project will be managed in conjunction with Central Sacramento Studios Phase 1 to ensure seamless operations and continuity of services.
Project Based Vouchers:
Project-Based Vouchers (PBV) to serve homeless families/individuals have been awarded to the 51 affordable units.
Project Developer: Danco Communities (Danco) is a Humboldt County-based affordable and market rate housing developer established in 1986. Danco has constructed over 25 affordable multifamily developments with over 700 units throughout California. Inclusive of Danco’s portfolio, they have seven (7) permanent supportive housing/special needs developments with an aggregate 348 units.
Phase I of the project, Central Sacramento Studios, was developed by Danco and has been successfully serving the community.
Property Management:
The proposed Property Management agent is Danco Property Management (DPM). There will be 24-hour desk coverage, in addition to management and maintenance staff.
DPM has over 15 years in property management experience in the western United States including single family, commercial, and affordable housing and currently manages over 2,000 multifamily units in California.
Resident Services: Lutheran Social Services of Northen California (LSS) will be the resident services provider for the project. LSS is a nonprofit organization that has provided services to low-income and formerly homeless individuals and families across North California. There will be 15 hours of resident services that will include workforce development support, education classes, counseling assistance and job search assistance.
File ID: 2024-00806 6/11/2024 Discussion Item 4.
Supportive Services: LSS will also be providing supportive services for the project in which 3 Full Time Equivalent (FTE) case managers will be dedicated to providing services to the formerly homeless residents. Services include assisting with paperwork, conducting intake processes, providing on-site case management, facilitating support groups, harm reduction strategies, addressing underlying social determinants of health and health education.
Security Plan: There will be 24-hour desk coverage and security patrol. The Project will include a security camera system at vehicular driveways, all points of access, stairways, and common areas.
Project Financing: The financing structure of this Project includes Housing Trust Funds (HTF), Local Housing Trust Funds (LHTF), Housing Opportunities for Persons With Aids (HOPWA) program funds.
A summary of SHRA financing is provided in the following table:
SHRA Funding Programs Amount
Construction and Permanent Financing
Housing Trust Funds (HTF) - City $ 3,900,000
Local Housing Trust Funds (LHTF) - State $ 3,700,000 Housing Opportunities for Persons With Aids (HOPWA) $ 200,000 Total $ 7,800,000
Funding sources, uses, and cash flow proforma for the Project are included in Attachments 6 and 7.
Proposed affordability requirements are summarized in the table below. See Attachment 8 for maximum income and rent levels.
Unit Type Units % of Units
Extremely Low Income (30%AMI, PBV) 51 98%
Manager’s unit 1 2%
Total 52 100%
Policy Considerations: The recommended actions are consistent with a) SHRA approved Multifamily Lending and Mortgage Revenue Bond Policies (Council Resolution 2019-0452 and Board Resolution 2019-0022), Affordable Housing Priority 2(i), New Construction of Permanent Supportive Housing and Homeless Housing; b) the 2021-2029 Housing Element Goals; H-2.1 Provide Opportunities for Affordable Housing Throughout the City; H-2.3, Assist in the Development of Affordable Housing; H-7.1 Housing First Principles; and H-7.4, Permanent Supportive Housing.
Economic Impacts: This multifamily residential project is expected to create 375.84 total jobs, 212.97 direct jobs and 162.86 jobs through indirect and induced activities) and create $31,319,730 in total economic output ($19,091,327 of direct output and another $12,228,403 of output through
File ID: 2024-00806 6/11/2024 Discussion Item 4.
indirect and induced activities).
The indicated economic impacts are estimates calculated using a calculation tool developed by the Center for Strategic Economic Research (CSER). CSER utilized the IMPLAN input-output model (2009 coefficients) to quantify the economic impacts of a hypothetical $1 million of spending in various construction categories within the City of Sacramento in an average one- year period. Actual impacts could differ significantly from the estimates and neither the City of Sacramento nor CSER shall be held responsible for consequences resulting from such differences.
Environmental Considerations:
California Environmental Quality Act (CEQA): CEQA review is underway for the proposed Project, and it is anticipated it will not result in any significant impacts of noise, air quality or water quality.
National Environmental Policy Act (NEPA): The Project is in the process of being analyzed in accordance with NEPA. The NEPA review will be completed prior to making any choice limiting action. It is anticipated that the review will result in a Finding of No Significant Impact.
Sustainability: The proposed Project has been reviewed for consistency with the goals, policies, and targets of the 2040 General Plan. If approved, this Project will advance the Land Use Goal 6, promote complete and inclusive neighborhoods throughout Sacramento that contain all the places and services residents need for everyday life within easy access from home and Goal 11.1 support and promote projects that demonstrate responsible energy use and an acceleration of renewable energy generation toward a net-positive energy future.
Commission/Committee Action: Sacramento Housing and Redevelopment Commission: At its May 15, 2024, meeting, the Sacramento Housing and Redevelopment Commission reviewed the staff recommendation for this item. The votes were as follows:
AYES: Amanfor, Duncan, Jefferson, Nunley, Ramos, Ross, Staajabu, Starks, Woo NOES: None
ABSENT: Griffin, Osmany
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 2040
File ID: 2024-00806 6/11/2024 Discussion Item 4.
General Plan, Downtown Housing Initiative and Initiation, Promise Zone and the Opportunity Zone.
Financial Considerations: The proposed financing includes $3.9 million in Housing Trust Funds, $3.7 million in Local Housing Trust Funds, $200,000 Housing Opportunities for Persons With Aids, Permanent Loan, Federal Tax Credits, and Solar Credits. The loans will bear 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 to monitor the regulatory restrictions and administration of the funds.
SHRA will also receive a fee equal to $100 per each SHRA-funded unit per year.
LBE - M/WBE and Section 3 requirements: Minority and Women’s Business Enterprise requirements and Section 3 considerations will be applied to all activities to the extent required by the federal funding and in accordance with SHRA’s Section 3 Economic Opportunity Plan
Resolution 2024-XXXX June 11, 2024 Page 1 of 2
RESOLUTION 2024-
Adopted by the Sacramento City Council
June 11, 2024
Central Sacramento Studios Phase II Project: Approval of Loan Commitment Comprised of Housing Trust Funds (HTF), Local Housing Trust Funds (LHTF), and Housing Opportunities for Persons With Aids (HOPWA) Funds (Commitment); Authorization to Execute the Commitment; Amend Sacramento Housing and Redevelopment’s Budget; Negotiate, Enter, Execute and Amend as Needed all Necessary Documents
BACKGROUND
A. The Housing Authority of the City of Sacramento and their co-applicant, Sacramento 11th Street LP (Danco Communities), or related entity (Developer), successfully applied for approximately $25 million in Homekey Program funds from the California Department of Housing and Community Development. The Central Sacramento Studios development included the acquisition and conversion of a motel into 92 permanent supportive housing units at 1100 H Street (APN 006 -0045-002-0000) and 815 11th Street (APN 006 -0045- 003-0000). Authorization to apply for Homekey funds was obtained through a separate Housing Authority resolution.
B. Central Sacramento Studios II is the second phase of the project intended to be developed on 815 11th street consisting of 52 permanent supportive housing units. Danco Group has applied to the Sacramento Housing and Redevelopment Agency ( SHRA or Agency) for a gap financing loan commitment of $ 7,800,000 for the construction, permanent, and operation financing of the Project.
C. The Project qualifies for funding under the Agency’s Multifamily Lending and Mortgage Revenue Bond Policies.
D. The California Environmental Quality Act review is underway for the proposed Project, and it is anticipated it will not result in any significant impacts of noise, air quality or water quality.
E. The Project is in the process of being analyzed in accordance wi th the National Environmental Policy Act (NEPA) . The NEPA review will be completed prior to making any choice limiting action. It is anticipated that the review will result in a Finding of No Significant Impact.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
SECTION 1.
Resolution 2024-XXXX June 11, 2024 Page 2 of 2
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.
The $7,800,000 Conditional Commitment comprised of $3,900,000 in HTF, $3,700,000 in LHTF, and $200,000 in HOPWA Funds with the Developer for the construction and permanent financing of the project is approved and allocated for the Central Sacramento Studios Phase II development which will provide 51 permanent supportive housing units and one exempt management unit.
SECTION 3.
SHRA is authorized to negotiate, enter into, execute and amend as needed the Commitment, funding agreement, and related documents for the construction, permanent, and operation financing of the Central Sacramento Studios Phase II development and transmit each to Danco Group, or related entity, as approved to form by Agency’s O ffice of the General Counsel, and perform other actions necessary to fulfill the intent of the Loan Commitment that accompanies this resolution, in accordance with its terms, and to ensure proper repayment of the Agency funds including, without limitation, subordination, extensions, and restructuring of such a loan consistent with Agency adopted policy and with this resolution.
SECTION 4.
SHRA’s budget is hereby amended to allocate $7,800,000 in HTF, LHTF, and HOPWA funds in the amounts specified in Section 2 above for the Central Sacramento Studios Phase II development.
TABLE OF CONTENTS:
Exhibit A – Loan Commitment
Exhibit A
Effective Date: June 11, 2024
Sacramento 11th Street II, L.P.
c/o Danco Communities.
Daniel J. Johnson, President/CEO
5251 Ericson Way
Arcata, CA 95521
RE: Conditional Loan Commitment for Central Sacramento Studios Phase II Dear Mr. Johnson:
On behalf of the Housing Authorities of the County and City of Sacramento (collectively, Agency), we are pleased to advise you of this Conditional Loan Commitment (Commitment) of construction, permanent, operation loan funds (Loan) comprised of $3,900,000 in Housing Trust Funds (HTF) and $3,700,000 in Local Housing Trust Funds (LHTF), and $200,000 in Housing Opportunities with Persons With Aids (HOPWA) for the purpose of financing the new construction, operation, and development of that certain real property known as Central Sacramento Studios Phase II located at 815 11th Street, Sacramento, California 95814 (Property). The Agency's decision is based on your application, and all representations and information supplied by you to it. If these representations and information change in a material manner without written approval of the Agency, this C ommitment is void. Agency's obligation to make the Loan is subject to the satisfaction of all the following terms and conditions and Borrower's execution of documentation that is in a form and in substance satisfactory to the Agency.
The Loan shall be made on standard Agency loan documents. Loan terms not in this Commitment and the attached loan document forms shall not be included in the final loan documents without additional environmental review and governing board approval. In the event of any discrepancies between terms stated in this C ommitment and the loan documents, the terms stated in th is Commitment shall be deemed to be terms of this Commitment.
Unless otherwise agreed in writing by the Agency in exercise of its absolute discretion, the following shall be considered condi tions to Agency approval of a financing commitment. The Agency may, in exercise of its absolute discretion, modify its requirements upon written notice to Borrower given at least sixty (60) days prior to close of escrow for the Property.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
This Commitment will expire December 11, 2025, unless a mutually agreed upon extension is made.
1. PROJECT DESCRIPTION: Central Sacramento Studios Phase II involves constructing a new 5-story residential building spanning 0.45 acres in downtown Sacramento at 815 11th Street. It will house 52 units, consisting of 35 studio units with one bathroom each, and 17 one-bedroom units with one bathroom. One of the one-bedroom units will be reserved for the manager. Common areas include a lounge, multipurpose room, fitness room, common room kitchen, laundry room on each floor, and a roof terrace. Parking spaces and amenities will be shared between the two sites.
2. BORROWER: The name of the Borrower for the Loan is Sacramento 11th Street II, L.P., a California limited partnership with Danco Communities or related entity as the lead development partner.
3. PURPOSE OF LOAN : The Loan is to be used by Borrower solely to pay the costs of construction, permanent, and operation financing and for such other purposes as Agency expressly agrees to in the loan agreement for the Loan, and such other agreements as may be generally required by the Agency for the use of the funding source for the Loan.
4. PRINCIPAL AMOUNT: The combined principal amount of the Loan will be the lesser of the following:
a. Seven Million Eight Hundred Thousand Dollars and No Cents ($7,800,000.00), or b. an amount to be determined prior to close of the Loan based on a project budget approved by Agency.
5. TERM OF LOAN: The Maturity Date of the Loan is 40 years from permanent financing, at which point any and all unpaid principal and interest on the loan will be due and payable.
6. INTEREST RATE: The Loan will bear simple interest at zero percent (0%) per annum.
Interest shall be calculated on the basis of a 36 5-day year and actual number of days elapsed.
7. ANNUAL REPAYMENT: Annual principal and interest payments shall be made according to the structure payment scheduled contained in the final Loan Agreement and as calculated to achieve a minimum annual debt service coverage ration of 1.2:1. Payments shall be applied first to outstanding interest accrued and unpaid and then to principal. All outstanding principal and interest is due and payable on the Maturity Date.
8. SOURCE OF LOAN FUNDS: Agency is making the Loan from the following sources of funds, and the Loan is subject to all requirements related to the use of such, whether Agency requirements or otherwise: Housing Trust Funds (HTF), Local Housing Trust Funds (LHTF), and Housing Opportunities for Persons With Aids (HOPWA). This Loan is conditioned upon Borrower’s acceptance of Agency’s requirements and conditions related to such lending programs and funding sources, including among others, the required forms
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
of agreements for the Loan; the requirements for covenants, conditions and restrictions upon the Property; and insurance and indemnity requirements.
9. Borrower acknowledges that, as a condition of the Agency’s making of the Loan, the Property will be subject to restrictions on future sales and rentals which may result in less income to Borrower than could otherwise be realized, and that such restrictions run with the land, and during their operational term, will bind all successors in interest.
___________ (Borrower Initial)
10. ACCELERATION: Agency shall have the right to accelerate repayment of the Loan in the event of a default under any Loan Document or upon sale, transfer or alienation of the Property except as specifically provided for in the Loan documents.
11. SECURITY: The Loan shall be evidenced by promissory note(s) secured by a deed of trust with assignment of rents against the fee and/or leasehold interest in the Property and Improvements, which shall be a lien upon the Property and Improvements subject only to liens senior to the Agency’s lien securing loans from a conventional lender or other lender and such other items as the Agency may approve in writing. The Loan shall also be secured by security agreements. The Agency may subordinate said deeds of trust in order to accommodate completion of the development of the Property. The Agency will not subordinate the regulatory agreement(s) to said deeds of trust in order to preserve the affordable housing covenants.
12. LEASE AND RENTAL SCHEDULE: All leases of the Property and Improvements shall be subject to Agency's review and approval prior to execution. Borrower shall not deviate from the rental schedule presented in Borrower's application for the Loan without Agency's prior written approval ; provided, however, that such approval shall not be required for annual adjustments to rental rates as permitted by the California Tax Credit Allocation Committee.
13. PROOF OF EQUITY : Borrower shall provide proof of equity for the Property and Improvements in the amount of no less than $21,625,000 in Low Income Housing Tax Credit Equity. If LIHTC equity goes below $21,625,000 the equity must be offset by an increase in deferred developer fee or other non-Agency funding source.
14. OTHER FINANCING: Borrower, as a requirement of the Loan, shall procure and deliver to Agency evidence satisfactory to Agency that Borrower has obtained the following described financing which may be secured by a lien upon the Property and Improvements superior or subordina te to Agency's liens, and which shall be otherwise on terms and conditions acceptable to Agency:
a. As a condition precedent to disbursement of the remainder of the Agency loan, construction financing from a private lender(s) in an amount(s) sufficient to
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
complete construction of the Property according to a scope of work as approved by Agency and made for a term not less than that specified in the Schedule of Performances for completion of construction, and in any event not less than the time necessary to fu lfill all conditions precedent to funding of the permanent financing.
b. Commitments for permanent financing sufficient to “take out” all liens senior to the Agency’s lien.
c. Such commitments for financing shall not require modification of Agency loan documents, or any term of this commitment letter.
d. Such commitments shall not be based upon sources and uses of Project funds that are different from those approved by Agency for the project or be subject to conditions which require amendment of the DDA, OPA or other agreements.
15. EVIDENCE OF FUNDS : Prior to the first disbursement of the Loan, Borrower must demonstrate evidence of adequate and assured funding to complete the development of the Project in accordance with the Agency's requirements. Borrower's eviden ce of available funds must include only one or more of the following: a) Borrower equity; b) firm and binding commitments for the Project from financial institution(s) or from other lender(s) approved by Agency in its absolute discretion; and c) Agency’s c ontribution, provided, however, that Agency is not obligated by this letter to make any contribution not stated in the terms of the letter.
16. SOILS AND TOXIC REPORTS : Borrower has submitted to the Agency a hazardous substances report made in accordance with the American Society for Testing and Materials "Standard Practice for Environmental Site Assessments; Phase I Environmental Site Assessment Process" (Designation E1527 -13) prepared by a licensed or registered environmental engineer or other qualified party prior to Loan closing. Borrower must, as a condition of disbursement of Loan funds, provide assurances satisfactory to the Agency that hazardous materials are not present on the Property or that any hazardous materials on the Property will be remediated and that no further remediation is then required by the environmental agency having responsibility for monitoring such remediation.
17. LOAN IN BALANCE: Borrower will be required to maintain the Loan "in balance". The Loan is "in balance" whenever the amount of the undisbursed Loan funds, the remaining sums to be provided by the Borrower and the loan funds from other project lenders or the equity investor are sufficient, in the sole judgement of the Agency, to pay for the remainder of the work to be done on the project as required by written agreement with the Agency.
Should the Agency determine that the Loan is not "in balance", the Agency may declare the Loan to be in default.
18. PLANS AND SPECIFICATION : Final plans and specification s, if any, for the project must be in accord with the proposal approved as part of the Loan application. Final plans and specifications will be subject to Agency's final approval prior to the disbursal of Agency Loan funds. Borrower must obtain Agency's prior written consent to any change in the approved plans and specifications or any material deviation in construction of the project. The final plans shall incorporate all related mitigation measure s, environmental conditions required, if any, for compliance with approvals under CEQA, and/or NEPA, or
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
the U.S. Department of Housing and Urban Development as conditions of approval of the project.
19. ARCHITECTURAL AGREEMENT: The architectural agreement (Agreement) , if any, for the preparation of the plans and specifications and other services shall be subject to Agency's approval. Agency may require an assignment of Borrower's interest in and to the Agreement as security for the Loan.
20. CONSTRUCTION CONTRACT: The construction contract ( Contract), if any, and any change orders issued thereunder, and the contractor (Contractor) to be retained by Borrower to construct the Improv ements shall be subject to Agency's approval. Agency may require an assignment of Borrower's interest in and to the Contract as security for the Loan. Agency may require Contractor to provide a performance and payment bond in a form acceptable to Agency for the amount of the Contract.
21. ECONOMIC OPPORTUNITY EMPLOYMENT REQUIREMENTS : The Loan will require that to the greatest extent feasible, opportunities for training and employment be given to lower income residents in and around the area of the project. Borrower will instruct its Contractor and its subcontractors to utilize lower income project area residents as employees to the greatest extent feasible.
22. RETENTION AMOUNT: The Agency shall retain ten percent (10.0%) of the total amount of the Loan as retention and shall be released when the Agency determines all conditions to final disbursement of the Loan have been satisfied.
23. COST BREAKDOWN: Borrower shall deliver to Agency for Agency's approval prior to commencement of work a detailed cost breakdown o f the cost of constructing, financing and other costs of developing the Improvements, which breakdown conforms to the project plans and specification and the budget approved with this C ommitment. Borrower shall also deliver a list of all contractors and s ubcontractors to be employed in connection with the construction of the Improvements. If required by the Agency , Borrower shall also submit copies of all bids received for each item of work to be performed as well as copies of executed contracts and subcontracts with acceptable bidders.
All contracts, subcontracts, contractors, and subcontractors shall be subject to Agency's approval prior to close of the Loan. Agency also reserves the right to require performance and material payment bonds on any or al l contractors, or in lieu of bond a letter of credit acceptable to Agency.
Agency shall make disbursements of the Loan based on a cost breakdown that lists line items in cost categories. Agency shall require that Borrower provide documentation supporting all requests for disbursement of Loan funds, including proof of work done and actual expenditure. Agency shall conduct inspections of the Property to assure that the work was done before making a disbursement.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
24. START OF CONSTRUCTION : Borrower shall commence construction at the earliest possible date subject to the conditions of this Agency and other involved lenders, but no later than sixty (60) days following the close of construction financing.
25. OTHER LENDER DRAW: “Other Lender Draw” means a draw request or other request for disbursement submitted to another lender for the Project. Borrower shall concurrently submit to Agency any Other Lender Draw. Delivery of such Other Lender Draw shall be made in the same manner as any other notice, except that it shall also be marked “OTHER LENDER DRAW REQUEST” and delivered to the person named in writing by Agency as the recipient of such requests or, in the absence thereof, to Agency’s Portfolio Management office. Borrower shall provide Agency with true, accurate and correct copies of each Other Lender Draw, if any, including without limitation all supporting information, documents, and other required submittals. Agency shall have the right to reject an Other Lender Draw, for failing to comply with the Loan, for changing the Project in any material way, or for impairing the ability of Agency to enjoy the practical realization of its rights under the Loan and its related instruments. If Agency rejects an Other Lender Draw, Borrower shall withdraw the notice for such Other Lender Draw and shall not accept and shall return to Agency any disbursement on account of such Other Lender Draw.
26. COMPLETION OF CONSTRUCTION: Borrower shall complete the construction of the Improvements no later than twenty-four (24) months following the close of construction financing.
27. SECURITY CAMERAS AND OUTSIDE LIGHTING : Project shall include installation of a security camera system at vehicular driveways and additional exterior lighting, and security patrols, all as approved by the Agency.
28. INSURANCE PROVIDER : Each policy of insurance required under the Loan shall be obtained from a provider licensed to do business in California and having a current Best's Insurance Guide rating of A VII, which rating has been substantially the same or increasing for the last five (5) years, or such other equivalent rating, as may reasonably be approved by Agency's legal counsel.
29. PROPERTY INSURANCE: Borrower shall procure and maintain property insurance and during construction Builder's Risk completed value insurance in a form and substance approved by Agency. Coverage shall be for protection against loss of, or damage to the Improvements or materials for their construction to their full insurable value. Borrower shall also procure and maintain insurance against specific hazards affecting Agency's security for the Loan as may be required by Agency, governmental regulations, or any permanent lender. All such policies shall contain a standard mortgagee loss payable clause in favor of Agency. The insurance required shall be written with a deductible of not more than $25,000.00.
30. COMMERCIAL GENERAL LIABILITY AND OTHER INSURANCE:
Borrower shall carry insurance as set forth below effective prior to the disbursement of the Loan, and such insurance shall be maintained in full force and effect at all times and work is performed in connection with the project. Such insurance coverage must list the
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Agency as an additional insured, and must be approved in writing by Agency prior to the disbursement of the Loan.
a. Commercial general liability insurance, in Insurance Services Office (ISO) policy form CG 00 01 or equivalent, with limits of liability not less than: $1,000,000 per occurrence, and $5,000,000 general aggregate, all per location of the project, such coverage to include contractual liability to include bodily injury, property damage and personal injury;
b. Personal injury insurance with the employment exclusion deleted, unless the Agency gives prior written approval for the employment exclusion to remain in the policy;
c. Commercial automobile liability insurance for any vehicle used for or in connection with the project, in an amount not less than $1,000,000 and approved in writing by Agency; and
d. Workers’ compensation and all other insurance required under applicable law, in the amount required by applicable law or by Agency, whichever amount is greater.
31. TITLE COMPANY: Borrower must procure a Title Company in the Sacramento region.
Title Company is the insurer of title and the escrow holder. The Title Company is Placer Title Company – Sacramento Commercial Division located at 301 University Avenue, Suite 120, Sacramento, CA 95825.
32. TITLE INSURANCE: Borrower must procure and deliver to Agency a n ALTA Lender's Policy of Title Insurance, together with such endorsements as Agency may require, including but not limited to ALTA endorsement nos. 9.6 and 9.7 (or CLTA endorsemen t nos. 100 and 116) and ALTA endorsement no. 25 (or CLTA endorsement no. 116) insuring Agency in an amount equal to the principal amount of the Loan and covenants, conditions or restrictions of the Loan, that Agency's Deed of Trust constitutes a third lien or charge upon the Property and Improvements subject only to such items as shall have been approved by Agency. There must be no exceptions permitted for mechanics liens.
Title insurance for the Loan must be issued by a title insurer approved by Agency.
33. ORGANIZATIONAL AGREEMENTS: Borrower must submit to Agency certified copies of all of Borrower’s organizational documents, including all amendments, modifications or terminations: if a corporation, Borrower's Articles of Incorporation and By -Laws; if a partnership, its Partnership Agreement and, as applicable, Certificate of Limited Partnership or Statement of Partnership; if a Limited Liability Company, its Articles of Organization and its Operating Agreement; and in all cases with all exhibits and amendments to such documents, fictitious business name statements, other related filings or recorded documents and such related documents as Agency may request. If it is a corporation, Borrower must submit a corporate borrowing resolution referencing this Loan.
If Borrower is other than a corporation, Borrower must submit such proof of authority to enter this Loan as may be required under the organizational documents.
34. PURCHASE OF PROPERTY : Borrower shall provide Agency with copies of all documents relating to Borrower's purchase of the Property.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
35. FINANCIAL INFORMATION: During the term of the Loan, Borrower shall deliver to Agency within 120 days of the end of each fiscal year an audited income and expense statement, a balance sheet, and a statement of all chan ges in financial position signed by authorized officers of Borrower. Prior to close of the Loan and during its term, Borrower must deliver to Agency such additional financial information as may be requested by Agency. Agency reserves the right to review and approve financial statements and other credit information and references prior to closing. During the term of the Loan, Borrower must deliver to Agency a monthly rent -roll including household composition information and operating statements with respect to the Property and Improvements, as Agency may request.
36. MANAGEMENT AGREEMENT: Prior to execution, Borrower must submit to Agency any agreement providing for the management or operation of the Property or Improvements by a third part y, that will include 24-hour desk coverage, which agreement is subject to Agency Approval.
37. AFFIRMATIVE FAIR MARKETING : Borrower agrees to follow the Agency’s Affirmative Marketing Policies that require outreach to groups least likely to apply for the housing based on local demographic information, providing sufficient marketing time prior to lease Up (as defined in the Affirmative Marketing Policies), and lotteries or other method for initial Lease Up and initial waiting list creation, as agreed upon by the Agency a nd Borrower prior to the start of Lease Up.
38. RESIDENT SERVICES AGREEMENT : Prior to execution, Borrower must submit to Agency any agreement providing for the resident services by a third party which agreement is subject to Agency Approval. The agreement must include on -site resident services according to the following minimum schedule of fifteen (15) hours per week:
a. Coordinator: Four (4) hours per week (maximum)
b. Additional Programming: Balance of minimum eleven (11) hours per week shall include, but are not limited to:
i. Workforce development support and activities.
ii. Education classes such as nutrition, exercise, health resources, health insurance application assistance, Annual onsite health fair and ESL classes. iii. Socialization activities such as community building events. iv. Other services such as transportation assistance, counseling assistance and employee readiness and job search assistance.
39. SUPPORTIVE SERVICES AGREEMENT : Prior to execution, Borrower must submit to Agency any agreement providing for supportive services by a third party which agreement is subject to Agency Approval.
a. 3 Full Time Equivalent (FTE) case managers will be provided to dedicate supportive services for the formerly homeless residents.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
40. LOW INCOME HOUSING TAX CREDITS (LIHTC): Borrower represents that as a condition of closing this Loan it is applying for an allocation of LIHTC’s and agrees to perform all actions and to meet all requirements to maintain the LIHTC allocation if granted.
41. SMOKE-FREE ENVIRONMENT: 100% of the buildings and units must be smoke free (including all forms of smoking that create secondhand smoke that impacts the health of nonsmokers). In addition, all indoor common areas must be smoke-free. Clearly-marked designated smoking areas must be provided.
42. DOCUMENTATION: This letter is not intended to describe all of the requirements, terms, conditions and documents for the Loan, which shall also include customary provisions and documents for an Agency transacti on of this type. All documents to be delivered to or approved by Agency must be satisfactory to Agency in all respects. Borrower must promptly deliver to Agency any further documentation that may be required by Agency.
43. CONSISTENCY OF DOCUMENTS: As a material obligation under this C ommitment, Borrower shall assure that the loan documents for the Project are consistent with lender's commitment approved by the Agency and comply, in all respects, with this Commitment.
44. CHANGES OR AMENDMENTS: No documents or contracts which are to be delivered to Agency or are subject to Agency's review or approval shall be modified or terminated without the prior written approval of Agency.
45. ACCEPTANCE OF THIS COMMITMENT: Borrower’s acceptance of this Commitment shall be evidenced by signing and delivering to Agency the enclosed copy of this letter.
Until receipt of such acceptance by Agency, Agency shall have no obligation under this letter. Agency may withdraw this Commitment at any time prior to Borrower’s acceptance.
Signatures appear on the following page.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Sincerely,
__________________________________
La Shelle Dozier, Executive Director
The undersigned acknowledges and accepts the terms and conditions of the Commitment and Scope of Development and Rental Property Minimum Construction Standards (Exhibit 1), and has executed this Commitment as of the Effective Date.
BORROWER:
Sacramento 11th Street II, L.P., a California limited partnership By: Danco Communities, or related entity
By: _________________________________
Daniel Johnson, CEO/President
Attachment:
Exhibit 1 - Scope of Development and Rental Property Minimum Construction Standards
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Exhibit 1 - Scope of Development
SCOPE OF DEVELOPMENT
Permanent Supportive Housing
The development includes new construction of 5-story transit-oriented residential building affecting approx. 0.45 acres of a the parcel in downtown Sacramento at the corners of H & 11th Streets, at 815 11th Street, Sacramento, CA 95814
The development consists of (52) units comprised of (35) studio with one-bathroom, (17) one- bedroom with one-bathroom, Inclusive of this unit mix, (1) unit will be exempt for management staff. The common areas and amenities include lounge, bicycle storage, multipurpose room, fitness room, and a roof terrace.
All work shall comply with Federal and State Americans with Disability Act (ADA) accessibility requirements, as well as any other requirements stipulated by the funding sources. When there are differences, the stricter shall prevail. The Borrower is responsible for notifying their architect and/or engineer of all funding sources used on the Project. The architect and/or engineer must indicate these funding requirements in the Project’s plans/scope of work.
I. Mitigation Measures:
Reserved - TBD. (None currently)
II. Mitigation Monitoring Plan:
Reserved - TBD. (None currently)
III. Building Exteriors:
1. Asphalt Pavements: The development will include approximately 2 onsite uncovered surface parking spaces There will be one new van accessible parking space. The parking lot and drive aisles will be improved to conform to finished grades. The remainder of parking is existing, and no new work is required.
2. Balconies: There are no balconies. The project includes one common outdoor terrace area on the 5th floor level.
3. Site Lighting: The site will be lit with Title 24 compliant wall packs, pole lights and other luminaires for all parking and outside public spaces and will be of LED or similarly energy efficient type.
4. Non-Smoking: The Project is 100% non-smoking.
5. Landscaping and Courtyard: Landscaping is designed with drought tolerant plants and trees. Trees will be planted throughout the parking lot to meet City shading requirements.
The area on the east side of the building includes a landscaped courtyard with benches, patio area, and fenced dog area.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
6. Mailboxes: New mailboxes will be installed inside the main lobby area.
7. Site Fencing: The project will include approx. 140 linear feet of new vertical rail fencing. There will be two new accessible gates with panic exit devices and access control system with communications to the 24-hour help desk.
8. Stormwater: The development will meet storm water requirements through use of City standards for urban parcels.
9. Roof: The building will have a flat roof and parapets, as well as portions of sloped roof with standing seam metal panels, PV panels, and mechanical equipment. The flat roof areas will have a PVC membrane roofing system which complies as a cool roof.
10. Siding: The building skin will be painted stucco and fiber cement siding.
11. Offsite Improvements: Public offsite improvements consist of street frontage improvements including new sidewalks, curbs, gutters, landscaping, and lighting.
Existing elements will be maintained where feasible.
IV. Building Interiors
1. Accessible Units: All dwelling units will be adaptable in this elevator building. The required number of units will also include mobility and communication features as required by CBC Ch. 11B.
2. Non-Smoking: The Project will have 100% non-smoking units.
3. Fire Alarm System: The building will be protected by a fire alarm system per NFPA 72.
4. Fire Sprinkler System: The building will be protected by a fire sprinkler system per NFPA 13.
5. Appliances: All apartment kitchens will have brand new Energy Star rated appliances where applicable, including refrigerator with freezer combination, electric stove and range, dishwasher and garbage disposal.
6. Bathtubs and Toilets: All apartments will have a bathtub or shower with full one unbroken surround panel per wall made of solid surface. Restrooms will have water efficient toilet and fixtures, and bath accessories.
7. Doors: All interior and exterior doors will have matching hardware finishes. All unit entry doors will have deadbolt locks, keyed latch assemblies, and viewers. All doors will meet current egress and accessibility standards.
8. Cabinets, Counters and Sinks: All apartment kitchens will have modular all plywood construction cabinets, granite countertops, and stainless-steel sink. Microwave shelving will be provided, All apartment bathrooms will have a vanity, and granite vanity top with integral sink. All cabinetry face frames, doors and drawer faces will be per the architectural specifications.
9. Ceilings and Walls: Low or no VOC paint will be used in building interiors.
10. Windows: All apartments will have energy efficient vinyl dual pane windows. Windows designed to open will have screens. The Borrower is responsible for providing an Operating Procedure Outline Sheet (OPOS) for window washing systems where applicable, per Cal-OSHA requirements. All windows will meet current egress standards.
11. Blinds: Blinds will be provided in all apartment windows.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
12. Electrical and Lighting: All apartments will have high efficiency lighting, ceiling fans, exhaust fans vented to the exterior and bathroom humidistat fans. Central air conditioning and forced air heat will be provided. Any exterior mounted electrical, mechanical, and plumbing systems will be protected from vandalism. Wiring from telephone/data/cable suppliers will be installed within walls, attic spaces, and/or crawl spaces. Conduits are not allowed to be mounted on the exterior of the buildings.
13. Flooring: Apartment interiors will have luxury vinyl plank (LVP) flooring throughout, except in bathrooms where they will have vinyl sheet flooring.
14. Plumbing Fixtures: All apartments will have new water efficient plumbing fixtures.
V. Community Amenities
1. Management Office and Lobby: The furnished management office and lobby will have LVP flooring, energy efficient lighting and HVAC systems.
2. Ceilings and Walls: Low or no VOC paint will be used in all building interiors.
3. Community Restrooms: The two community restrooms on the first floor will be CBC chapter 11B compliant, have low-flow bathroom fixtures, sink, solid surface countertop, and bathroom accessories. Bathroom walls will have glazed wall tile to 48 inches high.
4. Amenity spaces located on the 1st Floor: The community room, south lounge, and fitness rooms will have LVP flooring, energy efficient lighting, all furnishings and HVAC systems. These spaces will be ADA / CBC Ch.11B compliant.
5. Common Kitchen: The common room kitchen will be ADA compliant and include all plywood construction cabinet, granite countertop, and stained concrete New Energy Star rated appliances (refrigerator, electric stove, electric oven, microwave, garbage disposal and dishwasher), energy efficient lighting, HVAC system and water efficient plumbing fixtures will be installed.
6. Elevator: One hydraulic elevator will be installed in accordance with CBC.
7. Hallways and Stairs: Residential hallways and stairs will be of durable LVP flooring.
Stairs will have non-slip concrete treads, landings and closed risers.
8. HVAC & Plumbing Systems: Each apartment will have its own PTAC style heat pump air conditioning and heat with its own thermostat. Residential hallways will have mini- split heat pumps and outside air units. Stairwells will not have heating or air conditioning.
Water heating will be provided by centralized common heat pump water heaters on each floor level. Bathroom exhaust fans will be humidistat controlled.
9. Laundry Facility: There will be a laundry room on each floor level, including accessible appliances.
10. Signage: A comprehensive signage package will be implemented throughout the development including all common area signage, unit ID, wayfinding, code, fire, life and safety signage.
11. Trash & Recycling Enclosure: There will be a trash enclosure, constructed with CMU block with concrete apron, near the parking lot with a full roof cover and secure perimeter. This will include an accessible gate, LED lighting, floor drains, and hose bib .
12. Bicycle parking: There is a secure bicycle storage room located in the ground floor.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
13. Security Cameras: There will be interior and exterior web-based security cameras; the equipment will record events for primary ingress/egress points to and from the site, parking lots and indoor and outdoor common areas where people will be congregating.
14. Play Structure: Not required or proposed for this project.
15. Broadband: Broadband infrastructure meeting the requirements of 24 CFR 5.100 is required for this project.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Attachment 1: Lender’s Minimum Construction Standards
This attachment is from Exhibit 2 from the Lender’s Multifamily Lending and Mortgage Revenue Bond Policies.
RENTAL PROPERTY MINIMUM CONSTRUCTION STANDARDS
The following is a list of the required minimum construction standards that must be incorporated into projects participating in SHRA’s Multifamily Financing and/or Mortgage Revenue Bond programs. All rental units and sites associated with these projects must meet or exceed these standards. Exceptions to these standards may be made for properties subject to U.S. Department of Housing and Urban Development replacement reserve requirements that allow for renovation over time rather than at recapitalization (e.g., Rental Assistance Demonstration conversions for conventional public housing).
Note: For rehabilitation projects, all of the following standards shall apply. The non-rehabilitation sections below shall apply to new construction projects.
Useful Life Expectancy – Rehabilitation only
SHRA shall reference the current edition of FannieMae’s “Instructions for Performing a Multifamily Property Condition Assessment, Appendix F. Estimated Useful Life Tables” in determining the useful life for all building components and systems located within the project. A remaining useful life of 15 years or more is required for all building components and systems located within the approved complex. All items on the FannieMae tables with useful lives indicated to be less than 15 years shall be replaced.
General Requirements
A. All materials funded under this loan must be new unless previously approved. Recycled items mu st be approved in writing by SHRA prior to their use.
B. All work shall comply with Federal and State ADA accessibility requirements, as well as any other requirements stipulated by the funding source(s). When there are differences the stricter of the two shall apply.
The developer is responsible for notifying their architect and/or engineer of all funding sources used on the project. The architect and/or engineer must indicate these funding requirements in the project’s plans/scope.
C. All units shall be approved for occupancy by the local Building Department or any other Agency Having Jurisdiction (AHJ) at the conclusion of the work and prior to occupancy.
D. Web-based security cameras and the equipment to record events are required for primary ingress/egress points to and from the site and for the principal parking and indoor and outdoor common areas where people will be congregating.
E. Site lighting is required for all parking and outside public spaces, and shall be of LED or similarly energy efficient type. The lenses on the exterior lights shall be cleaned with all oxidation removed or replaced. Light poles shall be new or painted, and shall be structurally sound and stable.
F. The developer’s architect is responsible for providing an Operating Procedure Outli ne Sheet (OPOS) for window washing systems where applicable, per Cal-OSHA requirements.
G. SHRA encourages the use of energy and water-efficient systems wherever they may be incorporated into the project.
General Requirements – Rehabilitation only
A. Any component of the project which does or may present a health or safety hazard to the public or tenants shall be corrected to the satisfaction of the local Building Department or AHJ.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
B. A clear pest inspection report will be required at the conclusion of the construction work for rehabilitation projects.
C. For all structures where disturbance of any hazardous materials (e.g. lead, asbestos, mold, etc.) will occur, a clearance report from an environmental consultant is required.
D. Projects deemed historically significant landmark by either the City of Sacramento or the National Register of Historic Places shall consult with the State Historic Preservation Officer (SHPO), and shall conform to the Secretary of the Interior Standards for the Treatment of Historic Properties.
Site Work
A. Trees and large shrubs must be trimmed, grass areas must be mowed, and all planter areas must be weed -free.
The landscape design shall incorporate a sustainable design appropriate for the Sacramento Valley. Vegetation that assists in minimizing crime and enhances public safety is preferred. Trees compromising building envelope materials (roofing, siding, windows, etc.) and/or structural integrity (including foundations) must be removed.
An arborist shall be consulted for an opinion on trees prior to major branch trimming, root cutting or tree removal. All trees, bushes and other plants that are to be removed shall have the root ball removed by grinding or by mechanical means. A landscape plan describing the above must be provided to SHRA for approval.
B. All landscaped areas must be served by a programmable automated irrigation system. The irrigation controller shall be a “Smart Controller” that senses rain to reduce water use. Irrigation shall be desig ned to use bubblers and other water saving measures. Irrigation must not spray on building. Sprinklers should minimize overspray that runs to storm drain drop inlets. Areas that show evidence of erosion of soil shall be landscaped to eliminate problems. The landscape plan must be approved by SHRA and applied.
C. For gated communities containing swinging vehicle gates, driveways shall be striped to show the area under the gate swings for safety purposes.
D. All projects shall contain trash enclosures with concrete aprons. Trash enclosures shall be made of cinder block or stucco. Trash enclosures shall be accessible to all tenants. Provisions for tenants with disabilities must be addressed in the project Scope of Development or the project plans.
E. All projects shall meet the parking requirements of the local Agency Having Jurisdiction (AHJ) over the project. "Grandfathered Projects" will need to show that they are in fact “Grandfathered” or otherwise exempted by the local AHJ. Otherwise, all projects shall meet the governing ADA requirements for parking.
F. A two percent (2%) slope shall be maintained for a distance of five feet from all structures and no standing water shall remain on the site. Provide an on- site drainage system if necessary.
G. Stairways in common areas must include closed risers and non-slip concrete finish or other slip-resistant material on the treads.
H. Exterior mounted electrical, mechanical, and plumbing systems must be protected from vandalism.
I. For family projects of 50 or more units, a minimum of one school age-appropriate play structure is required. For family projects of 100 or more units, a minimum of one school age and one toddler -appropriate play structure is required.
Site Work – Rehabilitation only
A. All landscaping and irrigation systems must be in a well-maintained condition.
B. All fencing must be in good and serviceable condition. Existing fencing that is to remain shall be free of flaking
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
paint, rust, or any other signs of failure. If existing fencing shows any signs of failure, it shall be repaired, painted and restored to look new. All chain link fencing must be removed and replaced with fencing of another approved material. All pedestrian gates hardware must be functional and in new or near -new condition. Access Control systems are required at exterior pedestrian gates.
C. All driveways and sidewalks must be in good condition. All cracked or uplifted areas (more than ¼”) shall be repaired or replaced.
D. The asphalt shall be in good condition, with no alligator cracking, longitudinal cracking, potholes, or standing water. Repairs to portions of parking lots not suitable for new coatings shall be performed by removing and replacing damaged paving. A new seal-coat or slurry-coat shall then be applied to the entire parking lot surface.
Parking spaces shall be restriped, including ADA aisles and other applicable striping/painting.
E. All site accessories (bollards, benches, tables, play equipment, bike racks, mailboxes, shade structures, BBQs, sheds, etc.) shall be replaced or in good repair (cleaned, painted and/or re-coated).
Building Envelope and Moisture Protection – Rehabilitation only
A. All areas exposed to moisture must be sealed and watertight. Buildings showing evidence of water intrusion shall have the areas inspected by a licensed architect/engineer or by a certified water intrusion expert. A water intrusion report shall be submitted to SHRA, and shall include the cause of the issue and a resolution to eradicate the water intrusion. If the inspection cannot be completed until the demolition phase of the project, the report shall describe a procedure to inspect the issue during demolition.
B. Roofing must have 15 years or more of remaining life with no visible signs of leakage. For roofs containing composition shingles, a maximum of two layers of shingles are allowed (including any proposed new layers).
Provide evidence that the roof system has a 15-year life remaining on the manufacturer’s warranty.
C. All siding must have 15 years or more of remaining life. Hairline cracks in stucco must be sealed and painted with elastomeric paint. If requested by SHRA, a statement by a licensed architec t and/or engineer that the existing siding contains at least 15 years of useful life remaining shall be provided.
D. Fireplaces must be clean and meet applicable air quality standards. Chimneys shall be clean and must be inspected by a certified chimney inspector for structural integrity. All recommended structural repairs shall be performed.
Doors and Windows
A. All dwelling/tenant units must have screens on all windows that are designed to open. Windows designed to open must have functional locks and must operate freely without excessive effort. All windows must be dual- paned (minimum), and shall meet or exceed the State of California’s currently applicable efficiency standards, and any other efficiency standards that may be dictated by the funding source or other governing bodies for the project.
B. All doors must have matching hardware finishes.
C. All exterior doors must have deadbolt locks, keyed latch assemblies, viewers, and screws in strike plates long enough to penetrate the door jamb framing by at least one inch. The dwelling entry door hardware shall have single action hardware to release deadbolt and latch assembly.
D. All sliding exterior doors shall have screen doors and shall have functional locks and must operate freely without excessive effort.
E. All doors and windows must meet current egress standards.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Doors and Windows – Rehabilitation only
A. Any windows showing signs of condensation or leakage of any kind shall be replaced. SHRA allows window replacement using retrofit windows when those windows are installed by trained professionals following manufacturer’s specifications. Retrofit windows must have a similar useful life as “new, construction” (i.e., nail fin) windows.
B. All doors and doorjambs must be in good condition. No damaged or worn doorja mbs or doors are allowed.
Doors and/or jambs beyond their useful life shall be replaced.
Casework
A. New cabinet boxes shall be made of plywood or solid wood. No particle board boxes will be allowed.
B. All counter tops shall be of solid surface or granite, and in very good condition with no significant scratches, burns or other imperfections.
C. Face frames, doors and drawer faces shall be solid hardwood. No plastic laminate finishes will be allowed.
Casework – Rehabilitation only
A. All cabinets shall be replaced or in very good condition, within their 15 year useful life, both structurally and in appearance.
Finishes
A. All dwelling unit kitchens shall contain luxury vinyl plank (LVP) flooring. Bathrooms must be floored with LVP, sheet vinyl or ceramic tile to provide a cleanable, impervious surface. Bedrooms, hallways, and living and dining rooms may be floored with carpeting, LVP or hardwood. Wear layer of LVP shall be at least 12 mils inside dwelling units. Tenant unit entries shall be floored with LVP or ceramic tile.
B. In common areas, corridors may be floored with LVP, glue-down carpeting, or carpet tiles. Community rooms and kitchens shall be floored with LVP. Wear layer of LVP in common/commercial a reas shall be a minimum of 20 mils thick.
C. Carpet shall meet or exceed the minimum standards as set by HUD’s UM-44D bulletin.
Finishes – Rehabilitation only
A. Floor coverings must be in good, useable condition - no holes, tears, rips, or stains.
B. All exterior and interior surfaces must be painted. No peeling, cracking, chipping, or otherwise failing paint will be allowed. All painted surfaces must be new, or in near new condition and appearance.
C. Acoustic (popcorn) ceiling texture must be removed and refinished with new texture to match wall texture.
Equipment
A. Dishwashers, refrigerator/freezer, oven, stoves and garbage disposals are required in all dwelling unit kitchens.
All appliances must be new or in very good operating condition. All appliances must be Energy Star rated, as applicable. Appliances slated for ADA units shall be per code requirements.
B. SRO projects are encouraged to provide the appliances listed above and will be reviewed and approved on a case-by-case basis.
C. All kitchens must have adequate cabinet and counter space. Installation of shelving for microwaves is required if over-the-range microwaves are not used, with the exception of ADA units.
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Furnishings
A. Dwelling units must have window coverings on all windows.
Special Construction
A. Non-habitable structures on property must be painted to match primary buildings and must be structurally sound.
B. Laundry facilities must, at a minimum, be consistent with CTCAC requirements of one washer and dryer for every ten dwelling units for family housing and one for every 15 units for senior and special needs projects. Ten percent of the total number of washer/dryers must be ADA-accessible machines (unless the ADA units contain their own laundry facilities). Solid surface countertops will be required within laundry rooms and countertops shall meet all ADA requirements.
C. Public pool areas shall have self-closing gate(s). Fences and gates at pool areas shall meet applicable current codes and standards. Joints between coping and concrete deck shall be appropriately caulked. Existing pools shall have no cracks in plaster or tile grout joints. The Developer is responsible for ensuring pool and surroundings meet all applicable current codes and standards. If a project contains two or more poo ls, at least one must remain following rehabilitation.
Mechanical/Plumbing
A. Water heaters must be installed per current applicable codes.
B. All common areas and tenant units must have heating and air conditioning. Wall mount (i.e. PTAC units) or central systems are acceptable. Evaporative coolers are not acceptable. HVAC units should be protected from vandalism, pursuant to discretion of SHRA.
C. Toilets, showerheads, faucets, and mixing valves shall be new and meet current water conservation codes.
D. Tub surrounds must be one unbroken piece per wall and must be of solid surfaces (such as “Swanstone” or other solid acrylic materials, quartz composites), or other similar materials. Fiberglass/acrylic surrounds are acceptable.
Mechanical/Plumbing – Rehabilitation only
A. All toilets, sinks, and tubs shall be chip and stain free.
Electrical
A. All units must have smoke/carbon monoxide detectors installed per current code.
B. Wiring from telephone/data/cable suppliers shall be installed within walls, attic spaces, and/or crawl spaces. No conduits are allowed to be mounted on the exterior of the buildings in new construction.
C. Broadband infrastructure meeting the requirements of 24 CFR 5.100* is required in all new construction projects of 4 or more units.
*Broadband infrastructure means cables, fiber optics, wiring, or other permanent (integral to the structure) infrastructure, including wireless infrastructure, that is capable of providing access to Internet connections in individual housing units, and that meets the definition of “advanced telecommunications capability” determined by the Federal Communications Commission under section 706 of the Telecommunications Act of 19 96 (47 U.S.C. 1302).
Sacramento Housing and Redevelopment Agency “Changing Lives” 801 12th Street · Sacramento, CA 95814 · www.shra.org
Electrical – Rehabilitation only
A. All electrical panels shall meet current code.
B. Any rehabilitation projects with un-grounded electrical systems shall be re-wired with grounded systems to meet current code.
C. For rehabilitation projects, switches, outlets and light fixtures shall be replaced with devices that meet current applicable codes.
D. Wiring mounted on the exterior of the surface may be allowed if it is concealed in conduit and conduit is painted to match exterior siding. For projects where exterior siding will be removed, this wiring shall be installed within walls, attic spaces, and/or crawl spaces.
Resident Services Community Space
All properties, regardless of project type (i.e. senior, family, or large family), must devote a minimum of 1,200 s.f. to actual resident services/community space. Resident services space includes common kitchens, computer rooms, meeting rooms and general gathering space. It does not include public restrooms, leasing offices, laundry facilities and lobbies. Common kitchens are required, including refrigerator, stove, garbage disposal, and dishwasher.
For existing buildings, these requirements shall apply unless SHRA deems there to be significant physical constraints.
End of Scope of Development.
J1!5HBA- Central Sacramento Studios Phase II
CHANGING LIVES
Ill Central Sacramento Studios
Phase II (815 11th Street)
Ill Central Sacramento Studios
Phase I ( 1100 H Street)
n ra acr
Studios Pha
11th
0 I
Feet
150
I
Central Sacramento
Studios Phase I
(1100HSt)
300
I
Attachment 1
SHRAGIS
April 22, 2024
Central Sacramento Studios Phase II Attachment 2
Attachment 3
Central Sacramento Studios Phase II
Residential Project Summary
Addresses 815 11th Street, Sacramento, CA 9.5814
Number of Units 52
ProjectT�� New Construction
Acreaae 0.31
Unit Mix and Rents 30%AMI ExemQt Management Unit Total
Studios 35 35
1BR/1BA 16 1 17
Total Units 51 1 52
Sguare Footage Unit Size (so.ft.) Total (so. ft.)
Studios 420 14,700
1BR/1BA 800 13,600
Common Areas 16,902
Total Gross 45,202
Resident Facilities Outdoor patio area with concrete patio, picnic tables, benches, chairs, landscaping, and a small fenced dog area with pet cleanup station and accessible gate access and bench.
Permanent So urces Total Per Unit Per Square Foot
Permanent Loan $ 1,674,626.00 $ 32,204 $ 37.05
Federal Tax Credit Equity $ 21,625,000.00 $ 415,865 $ 478.41 HOPWA $ 200,000.00 $ 3,846 $ 4.42
Local Housing Trust Funds (SHTF) $ 3,700,000.00 $ 71,154 $ 81.85 Housing Trust Funds (HTF) $ 3,900,000.00 $ 75,000 $ 86.28 Solar Credits $ 240,104.00 $ 4,617 $ 5.31
TOTAL SOURCES $ 31,339,730 $ 602,687 $ 693.33
Permanent Uses Total Per Unit Per Square Foot
Acquisition $ - $ - $ -
Construction Costs $ 20,342,875 $ 391,209 $ 450.04
Architecture & Engineering $ 1,138,256 $ 21,890 $ 25.18 Permits/Fees $ 2,060,000 $ 39,615 $ 45.57
Hard Cost Contingency $ 1,139,946 $ 21,922 $ 25.22
TOTAL HARD COSTS $ 24,681,077 $ 474,636 $ 546.02
Soft Cost Contingency $ 192,082 $ 3,694 $ 4.25
Financing Cost $ 2,306,513 $ 44,356 $ 51.03
Operating Reserves $ 229,178 $ 4,407 $ 5.07
Rent Reserves $ 30,000 $ 577 $ 0.66
Capitalized Operating Subsidy Reserve $ 1,100,000 $ 21,154 $ 24.34 Legal Fees $ 115,000 $ 2,212 $ 2.54
Developer Fee $ 2,475,000 $ 47,596 $ 54.75
Third Party Fees, Marketing, Other $ 210,880 $ 4,055 $ 4.67 TOTAL SOFT COSTS $ 6,658,653 $ 128,051 $ 147.31
TOTAL USES $ 31,339,730 $ 602,687 $ 693.33
SHRA 1 g_er Unit Per Unit Cost Leverage
Leverage SHRA: Other
$ 150,000 $ 602,687 $1.00 : $4.02
Management / Exeenses
Proposed Developer Danco
Property Management Company Danco Property Management
Operating Expenses $ 287,117 $ 5,521 per unit
Property Management Fee $ 56,261 $ 1,082 per unit
Resident Services $ 408,140 $ 7,849 per unit
Taxes and Insurance $ 12,372 $ 238 per unit
Replacement Reserves $ 13,000 $ 250 per unit
Project Name Area Median Square Total Gross Utility Net Net Rent per Total Monthly Current Unit Type Income % (AMI) Number Feet Sq Feet Rent¹ Allowance Rent Sq Foot Net Rent Annual Rent Studio 30% 35 420 14,700 563$ 563$ 1.34$ 19,705$ 236,460$ 1BR/1BA 30% 16 800 12,800 603$ 603$ 0.75$ 9,648$ 115,776$ 1BR/2BA (Exempt Manager) 1 800 800 -$ -$ -$ -$
Totals 52 28,300 29,353$ 352,236$
¹Pursuant to 24CFR 983.301, contract rents approved by HUD may exceed the tax-credit rent limits; and the AMI change is due to income averaging regulation by CDLAC. The tenant rent will not exceed 30% of the household adjusted gross income with PBV.
Annual 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2041 Income Increase Per Unit Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 15 Gross Potential Rent 2.50% 370,068 379,320 388,803 398,523 408,486 418,698 429,165 439,894 450,892 462,164 522,896 Other Income 2.50% 13,112 13,440 13,776 14,120 14,473 14,835 15,206 15,586 15,975 16,375 18,527 Rental Subsidy 2.50% 653,825 670,171 686,925 704,098 721,700 739,743 758,236 777,192 796,622 816,538 923,838 Less Vacancy 5.00% -51,850 -53,146 -54,475 -55,837 -57,233 -58,664 -60,130 -61,634 -63,174 -64,754 -73,263 Effective Gross Income $985,154 $1,009,783 $1,035,028 $1,060,904 $1,087,426 $1,114,612 $1,142,477 $1,171,039 $1,200,315 $1,230,323 $1,391,997 Expenses
Operating Expenses 3.50% 5,915 307,567 318,332 329,473 341,005 352,940 365,293 378,078 391,311 405,007 419,182 497,857 Property Management 3.50% 1,159 60,268 62,378 64,561 66,820 69,159 71,580 74,085 76,678 79,362 82,139 97,556 Resident Services 3.50% 8,408 437,210 452,512 468,350 484,742 501,708 519,268 537,442 556,253 575,722 595,872 707,709 Taxes and Insurance 2.00% 248 12,872 13,129 13,392 13,660 13,933 14,212 14,496 14,786 15,081 15,383 16,984 Replacement Reserves 0.00% 250 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 13,000 Total Expenses 15,979 $830,917 $859,351 $888,776 $919,227 $950,740 $983,352 $1,017,101 $1,052,028 $1,088,172 $1,125,577 $1,333,106 Net Operating Income $154,238 $150,433 $146,252 $141,676 $136,686 $131,260 $125,376 $119,011 $112,143 $104,746 $58,892 Debt Service amount rate amort
Senior Loan $1,674,626 7.8% 35 $140,780.66 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ 140,780.66$ Balance 1,664,466.17$ 1,653,513.88$ 1,641,707.30$ 1,628,979.82$ 1,615,259.59$ 1,600,469.18$ 1,584,525.12$ 1,567,337.42$ 1,548,809.09$ 1,528,835.54$ 1,403,021.70$ SHRA Monitoring Fee $7,800,000 0.125% 14,150 14,150 14,150 14,150 14,150 14,150 14,150 14,150 14,150 14,150 14,150 Debt Service Subtotal $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 $154,931 Priority Distributions
Limited Partner Management Fee $7,500 3.00% 7,500 7,725 7,957 8,195 8,441 8,695 8,955 9,224 9,501 9,786 11,344 Managing General Partner Management Fee $5,200 3.00% 5,200 5,356 5,517 5,682 5,853 6,028 6,209 6,395 6,587 6,785 7,865 Administrative General Partner Fee $5,200 3.00% 5,200 5,356 5,517 5,682 5,853 6,028 6,209 6,395 6,587 6,785 7,865 Priority Distributions Subtotal 17,900 18,437 18,990 19,560 20,147 20,751 21,374 22,015 22,675 23,355 27,075 Net Cash after Priority Distributions ($18,593) ($22,935) ($27,669) ($32,814) ($38,391) ($44,422) ($50,929) ($57,934) ($65,463) ($73,540) ($123,114) Capitalized Operating Subsidy Reserve 1,100,000.00$ $18,593 $22,935 $27,669 $32,814 $38,391 $44,422 $50,929 $57,934 $65,463 $73,540 $123,114 HTF Loan
Principal Balance $3,900,000 0.00% 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 3,900,000 Payment 0 0 0 0 0 0 0 0 0 0 0
Balance $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 $3,900,000 LHTF Loan
Principal Balance $3,700,000 0.00% 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 3,700,000 Payment 0 0 0 0 0 0 0 0 0 0 0
Balance $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 $3,700,000 HOPWA
Principal Balance $200,000 0.00% 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 Payment 0 0 0 0 0 0 0 0 0 0 0
Balance $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 $200,000 Attachment 4 Central Sacramento Studios Phase II
Cash Flow Proforma
Attachment 5
Family Size 30% AMI
1 person 22,530$
2 person 25,740$
3 person 28,950$
Unit Size 30% AMI
Studio 563$
1 Bedroom 603$
Maximum Gross Rent Limits
¹Pursuant to 24CFR 983.301, contract rents
approved by HUD may exceed the tax-credit
rent limits. The tenant rent will not exceed 30%
of the household adjusted gross income with
PBV.
Central Sacramento Studios Phase II
MAXIMUM INCOME AND RENT LIMITS 2024
Rents at 30% of Area Median Income (AMI)
Low Income Housing Tax Credits, Housing Trust Funds, Local Housing Trust Funds, HOPWA
Maximum Gross Income Limits