City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-01130 6/11/2024 Consent Item 12.
Resolution Supporting the Application of Mutual Housing California and the Capitol Area Development Authority for the Local Government Matching Grants Program for the 8th and R Courtyard Affordable Housing Project at 805 R Street (Monarch Project) File ID: 2024-01130
Location: 805 R Street, District 4, Represented by Councilmember Valenzuela Recommendation: Adopt a Resolution supporting the application of Mutual Housing California and the Capitol Area Development Authority for the State of California’s Excess Sites Local Government Matching Grants Program for the 8th and R Courtyard Affordable Housing Project at 805 R Street (Monarch Project).
Contact: Ya-yin Isle, City Housing Manager, (916) 808-1869, [email protected], City Manager’s Office of Innovation and Economic Development Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: The Mutual Housing/Capitol Area Development Authority’s (CADA) affordable housing project at 805 R Street (Monarch Project) is a mixed-use affordable housing project, designed and programmed as a key neighborhood transit-oriented development project. Located on a half block infill site within the R Street Corridor in downtown Sacramento, the Monarch Project will transition a former State of California storage warehouse into affordable housing. Although the original financing application to the California Department of Housing and Community Development (HCD) showed a project with 242 units, the design for Monarch has since been revised to include a final total of 241 units; 239 units serving low-income households, and 2 manager units. Monarch will serve households that earn between 30% and 70% Area Median Income (AMI), including 30 units reserved for people experiencing homelessness or at-risk of homelessness. The project will also include 3,428 square feet of commercial space for art related and/or neighborhood serving businesses, 16,369 square feet of private and public outdoor spaces. Additionally, the project will continue the new R Street streetscape.
File ID: 2024-01130 6/11/2024 Consent Item 12.
In May 2022, the State of California selected Mutual Housing and CADA to develop an affordable housing project on State excess property, also making the project eligible for the State’s Excess Sites Local Government Matching Grants (LGMG) program. The LGMG program allocated funds for predevelopment and development costs to selected projects that receive a financial contribution from a local government. The LGMG program also requires a resolution from the City of Sacramento approving the Monarch Project budget and demonstrating the amount of local government contribution to the project.
On October 25, 2022, the City Council approved Resolution 2022-0328 committing City funds to the Monarch Project in the amount of $3,000,000. Subsequently, Mutual Housing submitted an application to the State for the LGMG program with a request for $10,000,000 and has been awarded a loan from the State in that amount. With a 2024 CalHFA Mixed-Income Program (MIP) award in March 2024, Mutual Housing is now in the process of entering into a Standard Agreement with the State for the LGMG program, thus requiring an approved Resolution from the City of Sacramento.
Policy Considerations: Support of the Mutual Housing/CADA LGMG loan application provides additional funding for the Monarch project at 805 R Street. The proposed affordable housing development will deliver much-needed affordable housing, consistent with Housing Element site inventory and the City's Regional Housing Needs Allocation (RHNA).
Economic Impacts: Development of these 241 units (239 affordable housing units and 2 manager units) will provide jobs in the City and stimulate additional jobs needed for the required housing development supply chain.
Environmental Considerations: This report concerns fiscal activities supporting a loan application that does not constitute a “project” as defined by the California Environmental Quality Act Guidelines Section 15378(b)(4). Environmental review of any project will occur before construction is authorized.
Sustainability: Development of this site at 805 R Street as a transit-oriented development with affordable housing furthers the goals of sustainability.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: The recommendation in this report furthers the City’s objective of providing a range of housing for community needs, including affordable housing. Staff are supportive of Mutual Housing/CADA applying for this LGMG Program grant through the State Department of Housing and Community Development, as it will assist in timely development of transit-oriented development.
Financial Considerations: Receipt of the State’s LGMG Program funds for this project would assist
File ID: 2024-01130 6/11/2024 Consent Item 12.
Mutual Housing/CADA in the development of the 241-unit mixed-use Monarch project at 805 R Street.
Local Business Enterprise (LBE): Not applicable.
Resolution of the Governing Body
Adopted by the Sacramento City Council
RESOLUTION NO.____________
A RESOLUTION OF THE GOVERNING BODY OF _____________________ SUPPORTING THE APPLICATION OF _____________________ FOR THE LOCAL GOVERNMENT MATCHING GRANTS PROGRAM; APPROVING _______________
BUDGET FOR THE LOCAL GOVERNMENT MATCHING GRANTS PROGRAM WHEREAS:
A. On January 15, 2019, Governor Gavin Newsom signed Executive Order No.
N-06-19, which allows the production of Affordable housing on state-owned Excess Sites (“Excess Sites”). The Executive Order authorizes the Department of General Services (“DGS”) and the Department of Housing and Community Development (“Department”) to identify and prioritize Excess Sites for sustainable, cost-effective, and innovative multi-family Affordable housing projects.
B. On ___________ DGS and the Department selected ___________________ to develop Affordable housing at _______________________________ (“selected project”) pursuant to Executive Order No. N-06-19.
C. Chapter 111, Statutes of 2021 (Assembly Bill (AB) 140) makes several statutory changes for the purpose of implementing the housing and homelessness provisions of the Budget Act of 2021, which establishes the Excess Sites Local Government Matching Grants (“LGMG”) Program (hereafter, “Program”) to be administered by the Department.
D. The Program was allocated up to $30 million to provide funds for Predevelopment and Development Costs to selected projects that receive a financial contribution from a Local Government, as defined pursuant to Health and Safety Code section 50704.80(b). Funding for the Program is made available pursuant to Health and Safety Code section 50704.81(a)(2).
E. The Department has issued a Notice of Funding Availability (“NOFA”), dated May 5, 2022, for the Program pursuant to Health and Safety Code section 50704.83(f).
F. The Program requires contribution from ________________________________ to ____________________ for ____________________________ (“Applicant”) to apply for Program funds pursuant to Health and Safety Code section 50704.82. Towards that end, Applicant is submitting an Application for Program funds (“Application”) to the Department for review and consideration.
__________________________________
G. The Program requires a resolution from _______________________________ pursuant to Health and Safety Code section 50704.82(b(1)(A) approving the ___________________ budget, including all sources, and demonstrating the amount of Local Government Contribution to the Applicant for Predevelopment and Development Costs for ____________________, and the requested amount from the Program.
THEREFORE, IT IS RESOLVED THAT:
1. The ____________________________________________ supports _______________________ submitting an Application to the Department to receive Program funds for ________________________ to develop Affordable housing on the state-owned Excess Site.
2. The ____________________________ is authorized to submit the approved _________________ Project Budget (“Attachment 1”) and Anticipated and Committed Project Sources (“Attachment 2”) to the Applicant to include in their Application. Attachment 1 and Attachment 2 demonstrate the requested amount from the Program, __________________ that will be allocated to the Applicant, and all other sources for Predevelopment and Development Costs associated with the development of Affordable housing on the state-owned Excess Site.
Attachment 1: ________________ Budget
Attachment 2: Anticipated and Committed Project Sources PASSED AND ADOPTED at a regular meeting of the __________________ of the ___________ of ___________ held on ________ by the following vote:
Instruction: Fill in all four vote-count fields below. If none, indicate “0” for that field.
AYES: _____ NOES: _____
AB SENT : _____ ABSTAIN: _____
_________________________________________
STATE OF CALIFORNIA
_________ of ________________
I, __________________, ________ Clerk of the _________ of ________________, State of California, hereby certify the above and foregoing to be a full, true and correct copy of a resolution adopted by said _________________ on this ___ day of _____________, 20____.
_ , Clerk of the of
_____________________, State of California
By: _____________________________________
Note: The attesting officer cannot be the person identified in the Resolution as the authorized signer.
ATTACHMENTS
Attachment 1: Project Budget
Attachment 2: Anticipated and Committed Project Sources
Attachments
Attachment 1: Project Budget (from Program Application) Development Budget 11/9/2022 v1
Total Project
Costs
LAND COST/ACQUISITION
Land Cost or Value $0
Demolition $0
Legal $0
Land Lease Rent Prepayment $0
Total Land Cost or Value $0
Existing Improvements Cost or Value $0
Off-Site Improvements $0
Total Acquisition Cost $0
Total Land Cost / Acquisition Cost $0
Predevelopment Interest/Holding Cost $30,000
Assumed, Accrued Interest on Existing Debt
(Rehab/Acq) $0
Excess Purchase Price Over Appraisal $0
REHABILITATION
Site Work $0
Structures $0
General Requirements $0
Contractor Overhead $0
Contractor Profit $0
Prevailing Wages $0
General Liability Insurance $0
Other: (Specify) $0
Other: (Specify) $0
Other: (Specify) $0
Other: (Specify) $0
Total Rehabilitation Costs $0
Total Relocation Expenses $0
NEW CONSTRUCTION
Site Work $4,290,370
Structures $66,715,627
General Requirements $1,371,550
Contractor Overhead $3,167,356
Contractor Profit $3,904,762
Prevailing Wages
General Liability Insurance $1,230,000
Other: On-site Improvements; Commercial $1,320,335
Off-Site Improvements $981,000
Other: (Specify)
Other: (Specify)
Total New Construction Costs $82,981,000
ARCHITECTURAL FEES
Design $1,750,000
LGMG Round 1 Page 1 of 3 Development Budget
Supervision $0
Total Architectural Costs $1,750,000
Total Survey & Engineering
CONSTRUCTION INTEREST & FEES
Construction Loan Interest $10,979,733
Origination Fee $432,500
Credit Enhancement/Application Fee
Bond Premium
Cost of Issuance $243,302
Title & Recording $198,000
Taxes
Insurance
Accrued interest on soft loans $736,060
Other: (Specify)
Other: (Specify)
Total Construction Interest & Fees $12,589,595
PERMANENT FINANCING
Loan Origination Fee $190,000
Credit Enhancement/Application Fee
Title & Recording $20,000
Taxes $0
Insurance $0
Perm Lender Legal $35,000
Other: (Specify)
Total Permanent Financing Costs $245,000
Subtotals Forward $97,595,595
LEGAL FEES
Legal Paid by Applicant $80,000
Other: (Specify)
Total Attorney Costs $80,000
RESERVES
Operating Reserve $681,221
Replacement Reserve
Transition Reserve
Rent Reserve
Other: (Specify)
Other: (Specify)
Other: (Specify)
Total Reserve Costs $681,221
CONTINGENCY COSTS
Construction Hard Cost Contingency $4,024,100
Soft Cost Contingency $250,000
Total Contingency Costs $4,274,100
OTHER PROJECT COSTS
TCAC App/Allocation/Monitoring Fees $164,000
Environmental Audit $10,000
Local Development Impact Fees $3,227,530
LGMG Round 1 Page 2 of 3 Development Budget
Permit Processing Fees $50,000
Capital Fees
Marketing $235,000
Furnishings $150,000
Market Study $7,500
Accounting/Reimbursable
Appraisal Costs $7,500
Builders Risk Insurance $1,300,000
Cost Audit $18,000
Syndication Consultant $75,000
Other: (Specify)
Other: (Specify)
Other: (Specify)
Total Other Costs $5,244,530
SUBTOTAL PROJECT COST $107,875,446
DEVELOPER COSTS
Developer Overhead/Profit $14,743,020
Consultant/Processing Agent
Project Administration
Broker Fees Paid to a Related Party
Construction Oversight by Developer
Other: (Specify) $0
Total Developer Costs $14,743,020
TOTAL PROJECT COST $122,618,466
End of Document
LGMG Round 1 Page 3 of 3 Development Budget
Attachments
Attachment 2: Anticipated and Committed Project Sources 1 Bank Perm Loan, if Any 2 CalHF A Mixed Income Program (MIP) 3 Capit ol Area Development Authority 4 City of Sacramento NA City of Sacramento Fee Waivers
NA SMUD Smart Homes Incentives
NA Accrued Interest on Soft Loans
NA GP Equity
NA Deferred Developer Fee
NA Tax Credit Equity 4%
Development Sources
$736,060
$3,000,000
NA Not Applicable
Local Government Contribution from a Local Funding Source No Not Applicable
Permanent-Period
Amount
$18,210,200
$8,000,000
$8,000,000Yes
Yes
$1,533,997
$272,250
$112,618,466Total Sources before Eligible LGMG Award Amount Local Government Contribution from a Local Funding Source NA
NA
NA Tax Credit Type
Not Applicable
No Not Applicable
Yes Local Government Contribution in the form of Local Fee Waivers Total Sources including Eligible LGMG Award Amount
$10,000,000
$122,618,466
Not Applicable
Not Applicable
$8,347,721
$1,200,000
$63,318,238
Eligible LGMG Award Amount
Committed? Type of Local Government Contribution, if applicableLien No. (or NA)
Source and Program Name
(in lien priority order)
No
LGMG Round 1 Page 1 of 1 Dev Sources & Elig. Award Amt