City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-02015 2/4/2025 Consent Item 7.
Grant Agreement with CADA for Monarch Affordable Housing Project (805 R Street) [Published for 10-day Review 1/23/2025]
File ID: 2024-02015
Location: 805 R Street, District 4 Represented by Councilmember Pluckebaum Recommendation: Pass a Motion authorizing the City Manager or the City Manager’s designee to execute the attached grant agreement with the Capitol Area Development Authority (“CADA”) in the amount of $3,300,000 (which includes $3,000,000 in American Rescue Plan Act (ARPA) funds and $300,000 in State Homeless Housing, Assistance, and Prevention Round 4 (“HHAP-4”) permanent housing funds) for development of the Monarch Affordable Housing Project at 805 R Street.
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-Monarch Affordable Housing Grant Agreement
Description/Analysis
Issue Detail: In May 2022, the State of California (“State”) selected Mutual Housing California, a California nonprofit public benefit corporation (“Mutual Housing”), and CADA to develop an affordable housing project on State excess property located at 805 R Street, Sacramento, California 95811, called the Monarch Project (the “Project”).
The 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 Project will transform a former State of California storage warehouse into affordable housing. The Project will include a total of 241 units comprised of:
two manager units and 239 units serving low-income households that earn between 30% and 70% Area Median Income (AMI). Such low-income units will include 20 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 and 16,369 square
File ID: 2024-02015 2/4/2025 Consent Item 7.
feet of private and public outdoor spaces.
On October 25, 2022, the City Council adopted Resolution No. 2022-0328 committing City ARPA reinvestment funds to the Project in the amount of $3 million. However, such $3 million in ARPA funding has not been dispersed yet and staff is now proposing disbursement of such funds to CADA.
Due to rising interest rates and unforeseen required off-site improvements, the cost of the Project has increased, necessitating an increased amount of gap financing. Accordingly, City staff recommends the City also contribute $300,000 of available HHAP-4 permanent housing funding to support the Project. The $3,300,000 from the City will be used for predevelopment and construction costs of the 241 housing units (with the HHAP-4 funds specifically allocated to the 20 homeless units). The City’s subsidy equates to $13,693 per unit.
On November 15, 2022, the City Council approved Resolution No. 2022-0353 authorizing the City Manager or the City Manager’s designee to submit the HHAP-4 grant funding application, enter into agreements with the State of California and accept the HHAP-4 grant funds. Of the $24,791,417 HHAP-4 funds awarded to the City of Sacramento, $4,572,254 was budgeted for delivery of permanent housing. Since that time, $3,223,000 has been allocated to the Rodeway Inn project through a grant agreement with the Sacramento Housing and Redevelopment Agency (Resolution No. 2023-0018), leaving $1,349,254 to support permanent housing. With the allocation of $300,000 to the Project, $1,049,254 would remain available for other permanent housing projects.
Policy Considerations: With Sacramento seeing some of the highest increases in rent in recent years, home prices continuing to rise, and the supply continuing to not meet demand, housing continues to be a priority of the City. The provision of this funding to the Project will aid in the development of additional housing in the Central City, which is supported by the City’s General Plan, specifically Policy H-36 in the City of Sacramento Housing Element that speaks to assistance in the development of affordable housing by providing gap financing.
In addition, the financing of permanent housing projects is consistent with the Sacramento Regionally Coordinated Homelessness Action Plan (RCHAP), adopted in March 2024. The Project supports Solution 6 - Permanent Supportive Housing, which seeks to expand housing opportunities and capacity dedicated to meet the housing needs of persons experiencing homelessness.
Sacramento City Code Section 3.04.010(B) requires City Council approval for all agreements involving income or expenditure of $250,000 or more.
Sacramento City Code Section 4.04.020(C) and Council Rules of Procedure (Chapter 7, Section E.2.d) mandate that unless waived by a 2/3 vote of the City Council, all agreements greater than $1,000,000 shall be made available to the public at least ten (10) days prior to Council action. This item was published for 10-day review on January 23, 2025, in compliance with the City Code.
File ID: 2024-02015 2/4/2025 Consent Item 7.
Economic Impacts: Development of the Project’s 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: The Department of General Services of the State of California, as the lead agency for the Project, has determined that the Project is exempt from the provisions of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines section 15332 (Class 32 - In-Fill Development Project).
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 the Project as it will assist in timely development of transit-oriented development.
Financial Considerations: On October 25, 2022, the City Council approved the allocation of $3 million in ARPA Reinvestment funds to the 805 R Street Monarch Project and this funding has since been set-aside in the FY23 Affordable Housing MYOP (Project I02189050, Fund 1003), where sufficient funding remains for the $3 million grant to CADA per the attached Grant Agreement.
Execution of the attached Grant Agreement would also involve expenditure of $300,000 of the City’s HHAP-4 Permanent Supportive Housing set-aside and sufficient funding exists in the HHAP-4 Operating Grant (Project G02000980, Fund 2702) for such expenditure under the Grant Agreement.
Local Business Enterprise (LBE): Not applicable.