DATE: MARCH 8, 2022
DEPARTMENT: COMMUNITY DEVELOPMENT DEPARTMENT
FROM: MEGAN HUNTER, DIRECTOR
BY: ROD POWELL, PLANNING MANAGER
TITLE: CALIFORNIA DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT (HCD) APPLICATION FOR HOMEKEY PROGRAM ROUND 2 FOR SCATTERED SITE FAMILY HOUSING RECOMMENDED MOTION:
A motion to approve:
a Resolution authorizing the submittal of a Joint Application to the California Department of Housing and Community Development (“HCD”) for Homekey Round 2 for a scattered site family housing project including the following actions:
authorizing the City Manager or designee to finalize a Memorandum of Understanding with Bay Area Community Services Housing Corporation (BACS) to acquire ten (10) residential properties throughout the City to serve as immediate housing for families experiencing persistent homelessness. approving a local match contribution of up to $1.6 million including two hundred fifteen thousand dollars ($215,000) of HUD Home Investment Partnership American Rescue Plan (HOME ARP) funds, one million three hundred thousand dollars ($1,300,000) of HCD Permanent Local Housing Allocation funds, and eighty-five thousand ($85,000) dollars of City CIP 9021 Housing Production funds. 2) a HCD Authorizing Resolution authorizing the submission of a Joint Application to and Participation in the Homekey Program for the acquisition of ten (10) residential properties throughout the City to serve as immediate housing for chronically homeless families in the amount not to exceed $27.8 million dollars.
RECOMMENDATION:
It is recommended that City Council approve:
a Resolution authorizing the submittal of a Joint Application to the California Department of Housing and Community Development (“HCD”) for Homekey Round 2 for a scattered site family housing project including the following actions:
authorizing the City Manager or designee to finalize a Memorandum of Understanding with Bay Area Community Services Housing Corporation (BACS) to acquire ten (10) residential properties throughout the City to serve as immediate housing families experiencing chronic homelessness. approving a local match contribution of up to $1.6 million including two hundred fifteen thousand dollars ($215,000) of HUD Home Investment Partnership American Rescue Plan (HOME ARP) funds, one million three hundred thousand dollars ($1,300,000) of HCD Permanent Local Housing Allocation funds, and eighty-five thousand ($85,000) dollars of City CIP 9021 Housing Production funds. 2) a HCD Authorizing Resolution authorizing the submission of a Joint Application to and Participation in the Homekey Program for the acquisition of ten (10) residential properties throughout the City to serve as immediate housing for families experiencing chronic homelessness in the amount not to exceed $27.8 million dollars.
EXECUTIVE SUMMARY:
On September 9, 2021, HCD announced the availability of approximately $1.45 billion of Homekey Program Round 2 grant funding to build upon the success of its first round Homekey programs. This significant investment seeks to continue a statewide effort to rapidly expand affordable housing options for persons experiencing homelessness or at risk of homelessness, and who are impacted by or at increased risk for medical diseases or conditions due to the COVID-19 pandemic. Through the submission of a Homekey Program Round 2 application, the City will access available acquisition and operational funding for the rapid development and occupancy of ten (10) residential properties throughout the City that will create 10-15 units of much needed housing for chronically homeless families. This opportunity represents the most expedient and cost-effective way to increase the City’s stock of affordable housing for unsheltered families.
BACKGROUND:
On September 9, 2021, the HCD released a Homekey Program Round 2 NOFA for $1.45 billion. The City seeks to apply for Homekey Round 2 funding as soon as possible due to the first come, first served nature of the funding. The City has identified its existing, experienced shelter operator and experienced Homekey Round 1 awardee, BACS, as its application partners for this Homekey Program Round 2 application. BACS has over 50 years of extensive experience and expertise acquiring and managing traditional and non-traditional housing models including small-site, scattered properties throughout the greater Bay Area region. In 2020, BACS partnered with the City of Oakland on a unique proposal to the first round of State of California Project Homekey funding. This model utilizes BACS pioneering “Project Reclamation” model of single-family home acquisition and was one of the only applications that was supported through the inaugural Project Homekey program. The project type was so successful in allowing for rapid acquisition and occupancy that BACS and the City of Oakland are now scheduled to be honored with the Enterprise Community Partner award for innovation in Homekey projects.
DISCUSSION:
The City’s Homekey Program Round 2 application with BACS would seek to acquire ten (10) residential properties within the City’s jurisdiction to provide 10-15 new affordable housing units for families experiencing chronic homelessness. In this model, BACS will provide property acquisition and renovation on project residences as well as property management. Additional services including employment development and assistance, benefit access and mental health support, financial assistance and money management are also provided. This project model does not require any additional City match for supportive services as the model seeks to serve working families who are not otherwise able to afford current market-rate rents.
As the current local operator of the SHARE Center, BACS is intimately familiar with the City’s need to provide additional housing opportunities for families and is well positioned to facilitate and move some of the currently 114 wait-listed families for the SHARE Center into these new housing opportunities. It is estimated that occupancy of acquired residences will occur within thirty (30) days of the close of escrow. Initial and future residents will be referred to the project through the Coordinated Access and Referral System (CARS) administered by local service providers that are part of the Coalition for Homeless Services Providers (Coalition) and referral agencies with access to Monterey County Housing Authority set aside vouchers.
Currently, the City and BACS are actively engaging with HCD Homekey staff in a joint effort to explore and propose innovative options to resolve an unanticipated issue identified within current Homekey program regulations involving mandated applicant “site control” at the time of application submission. HCD has continued to voice strong support for this program model and all parties are confident that a resolution will be forthcoming.
Upon resolution, the City and BACS are prepared and well positioned to apply prior to the end of the Round 2 application period on May 2, 2022 and are poised to move quickly upon an award of Homekey funds. BACS’ Housing Corporation has over 50 years of expertise in acquiring and managing traditional and non-traditional properties. Currently, it owns more than 300 units of affordable, single-family homes across the greater Bay Area region – 129 of which were acquired as part of the inaugural 2020 Project Homekey awards. BACS’ Real Estate Development Team has strong quality control procedures around building design and quality. A long-established relationship with banking partner, West America, has resulted in a special loan product which allows the non-profit to quickly and competitively secure move-in ready properties under all cash, 30-day close offers.
BACS is responsible for completing required due diligence including an Appraisal, Property Needs Assessment, and any required Environmental Reports. The City will facilitate the consideration and resolution of any necessary land-use or zoning changes to include outreach to adjacent property owners to provide notification about the proposal and to incorporate features to minimize impacts. The City and BACS have coordinated with the Coalition to formalize the selection process of Homekey residents and the use of local Emergency Housing Vouchers and will also consider the submission of an application to the Housing Authority of Monterey County for future Project Based Vouchers.
HCD anticipates providing award announcements to applicants within 45 days of submission with the issuance of Standard Agreements to follow shortly after.
Project Timeline
February 22, 2022 - Housing & Land Use Committee
March 8, 2022 – Council Approval to submit Homekey Round 2 Application March 15 – May 2, 2022 – Submit Homekey Round 2 Application to HCD May 1 – July 15, 2022 – Anticipated HCD award notification June 1 – August 1, 2022 – Estimated start of acquisition of properties July 1 – September 1, 2022 – Estimated start of occupancy The anticipated total amount requested in this Homekey Round 2 Application to HCD for this project is $13.9 million including $12.3 million for acquisition and $1.6 million for operating subsidy. However, HCD recommends that jurisdictions request double the anticipated grant award resulting in a total request of $27.8 million for the project. In this case, the attached HCD Resolution includes a respective total amount not to exceed $27.8 million for the project.
CEQA CONSIDERATION:
The City of Salinas has determined that the proposed action is exempt from CEQA. Pursuant to AB 140, the following CEQA statutory exemption has been added to Health and Safety Code section 50675.1.4: (a) Notwithstanding any other law, the California Environmental Quality Act (Division 13 (commencing with section 21000) of the Public Resources Code) shall not apply to any project, including a phased project, funded pursuant to section 50675.1.3 if all of the following requirements, if applicable, are satisfied: (1) No units were acquired by eminent domain. (2) The units will be in decent, safe, and sanitary condition at the time of their occupancy. (3) The project proponent shall require all contractors and subcontractors performing work on the project to pay prevailing wages for any proposed rehabilitation, construction, or major alterations in accordance with Chapter 1 (commencing with Section 1720) of Part 7 of Division 2 of the Labor Code. (4) The project proponent obtains an enforceable commitment that all contractors and subcontractors performing work on the project will use a skilled and trained workforce for any proposed rehabilitation, construction, or major alterations in accordance with Chapter 2.9 (commencing with Section 2600) of Part 1 of Division 2 of the Public Contract Code. (5) The project proponent submits to the lead agency a letter of support from a county, city, or other local public entity for any proposed rehabilitation, construction, or major alteration work. (6) Any acquisition is paid for, in whole or part, with public funds. (7) The project provides housing units for individuals and families who are experiencing homelessness or who are at risk of homelessness. (8) Long-term covenants and restrictions require the units to be restricted to persons experiencing homelessness or who are at risk of homelessness, which may include lower income and very low-income households, as defined by Section 50079.5, for no fewer than 55 years. (9) The project does not result in an increase in the existing onsite development footprint of structure, structures, or improvements by more than 10 percent. The Project qualifies for the exemption because it would meet all of these requirements.
STRATEGIC PLAN INITIATIVE:
The Project will help advance the following City Council strategic goals: 1) Investment Strategies/ Risk Management, 2) New Revenue, and 3) Public Safety by securing a grant to provide much needed housing and wrap around services to those families experiencing chronic homelessness.
DEPARTMENTAL COORDINATION:
The grant will be administered by the City’s Community Development Department (CDD). CDD will continue to work with the City Attorney and City Manager on finalizing the application and Memorandum of Understanding and any necessary actions to complete the acquisition and development process.
FISCAL AND SUSTAINABILITY IMPACT:
To maximize HCD funding, jurisdictions must agree to a local match of four (4) years of operational subsidy to secure three years from the state. The local match can include emergency housing vouchers (EHVs). The amount for four years of operational rental subsidy for ten (10) units assuming no EHVs is approximately $1,600,000. It is recommended that the City provide $1.6 million as a local match that would cover four years of rental subsidy for ten (10) units. If a household living in these projects has a housing voucher, the total amount of rental subsidy provided by the City would be reduced. The City will also seek additional funding from the County and Continuum of Care to help subsidize these projects and reduce the City’s commitment.
Funding of the required local match would come from the following sources:
$215,000 – HOME ARP
$1,3000,000 – HCD Permanent Local Housing Allocation
$85,000 – CIP 9021 Housing Production
HOME ARP funds are not related to the City ARPA funds (approximately $52 million). These funds are HUD entitlement funds through the American Rescue Plan specifically designed to address homelessness and homeless prevention created by the pandemic.
If this project receives a Homekey grant award, it may be necessary to return to City Council to formerly appropriate the local match as required by the funding source. At that time, City Council may revisit the breakdown of funding if other funding sources are secured or identified.
ATTACHMENTS:
City Resolution Authorizing Homekey Application Submittal, $1.6 million Local Match, and Authorizing the Execution of a MOU with Bay Area Community Services Housing Corporation HCD Authorizing Resolution for Joint Application to and Participation in the Homekey Program Draft MOU with Bay Area Community Services Housing Corporation Page | 2
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