DATE: MARCH 21, 2023
DEPARTMENT: COMMUNITY DEVELOPMENT
FROM: MEGAN HUNTER, DIRECTOR
THROUGH ROD POWELL, PLANNING MANAGER
PREPARED BY: LUIS OCHOA, SR. COMMUNITY DEVELOPMENT ANALYST TITLE: EXECUTION OF AN AMERICAN RESCUE PLAN ACT (ARPA) GRANT FUNDING AGREEMENT WITH EDEN HOUSING, INC. FOR A PROPOSED 100% AFFORDABLE MULTIFAMILY RENTAL HOUSING PROJECT AT 855 EAST LAUREL DRIVE RECOMMENDED MOTION:
A motion to approve a Resolution authorizing:
the City Manager or designee to execute an ARPA Grant Agreement with Eden Housing, Inc. in the amount of $500,000 for pre-development costs of the 100% Affordable Multifamily Rental Housing Project at 855 E. Laurel Drive; and the City Manager or designee to approve any future revisions, amendments and/or modifications to the ARPA Grant Funding Agreement provided Eden Housing, Inc. is, at all times throughout the term thereof, in compliance with the terms and conditions of the ARPA Grant Funding Agreement; and a one-time deviation from the City of Salinas Zoning Code to allow the County of Monterey to process entitlements for the Eden Housing, Inc. 100% affordable multifamily housing project at 855 E. Laurel Drive in coordination with the City and under the determination that this project is proper, in the public interest, and shall not be subject to additional land use approvals, permits, or entitlements.
EXECUTIVE SUMMARY:
On June 22, 2021, the City and County amended an existing Memorandum of Understanding (MOU) outlining roles and responsibilities regarding the development and operation of a shelter and navigation center (SHARE) at 845 E. Laurel and affordable housing project on vacant county property at 855 E. Laurel Drive. After releasing a Request for Qualifications (RFQ) seeking a developer for the development of a 100% Affordable Multifamily Rental Housing Project (Project) at 855 E. Laurel Drive, the City of Salinas (City) and the County of Monterey jointly selected Eden Housing, Inc. (Developer). On February 7, 2023, the Monterey County Board of Supervisors approved the execution of an Exclusive Negotiating Agreement (ENA) between the County and the Developer to allow for the Project to be developed on the County-owned parcel.
Consistent with the MOU, the City and County agreed to work together to raise funds for the housing project and staff had identified the potential use of the $7 million in American Rescue Plan Act (“ARPA”) funds for predevelopment, acquisition, construction, plans, and studies in the RFP. In response to the RFP, Eden requested $500,000 in financial support for the initial pre-development phase of the Project, which is being recommended for funding.
The MOU also identified the County as the lead for environmental review. To simplify the entitlement and permitting process, Eden requested the County take lead. Normally, private development on County land would be processed through the City, but because of the existing MOU and close coordination, it is recommended that City Council authorize a one-time deviation to allow the County to process the entitlements and permits.
BACKGROUND:
In 2017, the City and County commenced informal discussions to jointly plan for the future construction and operation of a permanent Homeless Shelter and a permanent supportive and transitional housing project at 1220 Natividad Road. These discussions became more formalized on March 20, 2018, when the City Council (Council) and Board of Supervisors (BOS) jointly directed staff to proceed with the execution of a formal agreement to establish and allocate various responsibilities between the two jurisdictions. This agreement was formally executed on September 25, 2018, and subsequently resulted in the construction and jointly funded operations of the Salinas Housing Advancement Resources and Education Center (SHARE Center) at 845 E. Laurel Drive.
Based upon the positive partnership, experience and perspective gained through the development of the SHARE Center, the City and County agreed that a vacant County-owned parcel adjacent to 845 E. Laurel Drive would be a better development opportunity site than the original 1220 Natividad Road location. The address for this new Project location is 855 E. Laurel Drive. On June 22, 2021, the City and County entered into a Memorandum of Understanding (MOU), to formally established and coordinate roles and responsibilities related to the ongoing operations of the SHARE Center and the future development of a 100% affordable multifamily rental housing project at 855 E. Laurel Drive.
On May 6, 2022, as outlined in the MOU, the City and County took an initial step forward on development of the proposed project with the release of a joint-RFQ seeking a highly qualified developer. Following an extensive rating and interview process, the City and County jointly announced the selection of Eden Housing, Inc. as the selected Project Developer on October 4, 2022.
DISCUSSION:
Following the selection of the Developer for the Project, the City, County and Developer commenced active discussions and negotiations regarding project scope, entitlement processing and potential supportive funding for the pre-development phase of the Project. On February 7, 2023, the Monterey County Board of Supervisors approved the execution of an Exclusive Negotiating Agreement (ENA) between the County and the Developer regarding the use and development of the Project at 855 E. Laurel Drive.
Consistent with the MOU, the City and County agreed to work together to raise funds for the housing project and staff had identified the potential use of the $7 million in American Rescue Plan Act (“ARPA”) funds for predevelopment, acquisition, construction, plans, and studies in the RFP to select a developer for the 845 E. Laurel site. Eden’s response to this RFP included a request for $500,000 in financial support for the initial pre-development phase of the Project. Utilizing ARPA funds for the pre-development costs related to the Project at 855 East Laurel is an appropriate use of these funds and consistent with the City Council’s strategic goal in expanding affordable housing opportunities. It is recommended that Council authorize the execution of a reimbursement-based ARPA Grant Funding Agreement with the Developer in an amount of $500,000 to support costs associated with pre-development phase of the Project.
The Monterey County expressed the desire to process entitlements for the proposed Project since it is located on County-owned property and is willing to follow City zoning as closely as feasible for the Project. Salinas Zoning Code Section 37-10.080 normally requires land owned by Monterey County “to be subject to the regulations contained in this Zoning Code, unless otherwise provided by law.” In support of the County’s ENA and the proposed City’s ARPA Grant Funding Agreement, and to facilitate and expedite the Project’s entitlement process, the City Council through Zoning Code Section 37-10.180 has the authority to deviate from “development standards contained in this Zoning Code if it can be established that the deviation is necessary in the interest of public health and safety or is required as part of environmental mitigation.” The 100% Affordable Housing Rental Project at 855 E. Laurel Drive is proper and in the public interest and shall not be subject to additional land use approvals, permits, or entitlements from the City. In the approval of this deviation, the County would assume a primary role in the Project’s entitlement and permitting processes with the continued collaboration, review, and commentary from the City.
CEQA CONSIDERATION:
Not a Project. The City of Salinas has determined that the proposed action is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378).
STRATEGIC PLAN INITIATIVE:
The coordination with the County on this effort and the execution of an ARPA Grant Funding Agreement with the Developer supports the City of Salinas Strategic Plan 2022-2025 Goals and Strategies of Housing/Affordable Housing.
DEPARTMENT COORDINATION:
This agenda item originates from the City’s Community Development Department (CDD), Housing and Community Development Division under significant, formal collaboration with the County of Monterey and consultation with the City Attorney.
FISCAL AND SUSTAINABILITY IMPACT:
Funding to support the execution of the proposed $500,000 ARPA Grant Funding Agreement is appropriated and available in the American Rescue Plan Act (ARPA) fund.
ATTACHMENTS:
Resolution
Draft ARPA Grant Funding Agreement
City/County MOU (Dated June 22, 2021)
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