DATE: OCTOBER 24, 2023
DEPARTMENT: COMMUNITY DEVELOPMENT DEPARTMENT
FROM: LISA BRINTON, DIRECTOR
THROUGH: ROD POWELL, ASSISTANT DIRECTOR
BY: MICHAEL GOMEZ, ECONOMIC DEVELOPMENT ANALYST
TITLE: PURCHASE AND SALE AGREEMENT FOR 414 CRESCENT WAY RECOMMENDED MOTION:
Adopt a resolution authorizing the Mayor to execute a purchase and sale agreement (PSA), and all other documents necessary to effectuate the property transfer to the City with private property owner for the purchase by the City of a single-family residence located at 414 Crescent Way in the City of Salinas, for a price of six hundred and fifty thousand dollars ($650,000).
EXECUTIVE SUMMARY:
On April 26, 2022, City Council approved a Resolution to allow the submission and acceptance of a grant to the California Interagency Council on Homelessness (Cal ICH) for the Family Homelessness Challenge (FHC) Grant in partnership with BACS. On June 24, 2022, the City of Salinas was awarded $2.6 million. The grant funded a program known as the Salinas Project Reclamation for Families was specifically developed to create affordable, permanent housing options for families experiencing homelessness by purchasing single-family homes, optimized through new ADUs, and integrated with the overall system of care. This model was derived from Bay Area Community Services (BACS) experience with similar scattered site models but tailored to the many hard-to-place families staying at the Salinas Housing Advancement Resources and Education (SHARE) Center.
City staff have been actively searching for homes utilizing the Multiple Listing Service (MLS) and other online real estate websites to find vacant properties for the purpose of permanent affordable housing. On October 10, 2023, City council approved staff’s interest in acquiring 414 Crescent Way (Assessor’s Parcel Number [APN] 003-366-001-000 the “Property”) for the purpose of permanent affordable housing.
BACKGROUND:
Family homelessness is a serious ongoing problem in the City of Salinas and throughout Monterey County. Aside from the most recent 2019 Homeless Point in Time Count that identified 1,182 persons as unhoused in the City of Salinas, data collected by local school districts in 2019 also found more than 40 percent of elementary school-aged children in Salinas may be homeless.
In mid-2021, the City and County of Monterey celebrated the opening of the SHARE Center, which provides 100 shelter beds and robust housing navigation and placement services. From its inception, the SHARE Center has diligently worked to serve and place families in permanent housing. Despite this work, the City’s stock of affordable housing remains extremely limited, making placement difficult. Currently the SHARE Center has a waiting list of over 300 families.
To address this challenge, the City applied for the Cal ICH Family Homelessness Challenge Grant, applying for $5.4 million of the total $15 million available. On June 24, 2022, the City was awarded $2.6 million for round 1, but will be eligible for another $2.6 million with successful implementation during round 2. The City’s primary partner in implementing this grant is BACS because of their 40 years’ experience in operating a scattered site housing approach with coordinated case management services. Grant funding also enabled the City to hire a limited term Community Development Analyst focused on working with homeless families.
DISCUSSION:
The original intention of the FHC grant was for the City to fund acquisition of properties for the management and operations of our partner BACS, however they are currently experiencing difficulties in meeting deadlines and the City has temporally decided to move forward independently to ensure compliance with grant regulations and avoid any negative consequences for future grant applications.
Staff contacted the agent representing the owner of 414 Crescent Way with a sale price of six hundred fifty thousand dollars ($650,000) and is being sold “as-is”. The Property a single-story single-family residence with a newer roof and kitchen upgrades. The residence consists of three-bedrooms one and a half bath with 1,122 square feet of living space on a 7,200 square foot lot that has potential for an ADU. The Property exterior and interior and are in good condition with updated double pain windows. is The City has is in the process of conducted initial due diligence work including reviewing the Preliminary Title Report and coordinating an appraisal report and a full property condition assessment report.
Staff personally viewed the property and determined that the property is in good condition requiring minimal rehabilitation. The City has negotiated a purchase price of the asking price of six hundred fifty thousand Dollars ($650,000) contingent on the appraised value at a minimum of purchase price with a Seller Credit of 2% to the City. The sellers Brokerage firm, Remax Property Experts, will receive 3% of the purchase price as compensation for the sale in escrow. Following the execution of the PSA, escrow will close approximately 7 days later.
CEQA CONSIDERATION:
The City of Salinas has determined that the proposed action, acquisition of an existing property, is not a project as defined by the California Environmental Quality Act (CEQA) (CEQA Guidelines Section 15378). In addition, CEQA Guidelines Section 15061 includes the general rule that CEQA applies only to activities which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Because the proposed action and this matter have no potential to cause any effect on the environment, or because it falls within a category of activities excluded as projects pursuant to CEQA Guidelines section 15378, this matter is not a project. Because the matter does not cause a direct or foreseeable indirect physical change on or in the environment, this matter is not a project. Any subsequent discretionary projects resulting from this action will be assessed for CEQA applicability.
STRATEGIC PLAN INITIATIVE:
The proposed action supports the City of Salinas Strategic Plan 2023-2025 goal of Housing/Affordable Housing by increasing local affordable housing stock and providing a stable, long-term housing opportunity for an unhoused family. Once the ADU is built, another unhoused family will be served.
DEPARTMENTAL COORDINATION:
CDD’s Economic Development Division continues to coordinate with both the Housing and Permit Services Divisions of the Department in identifying and vetting viable properties. Additional consultation in regard to the preparation of the draft PSA has also occurred with the City Attorney.
FISCAL AND SUSTAINABILITY IMPACT:
Costs to facilitate the land acquisition of $650,000 will be funded by the Family Homeless Challenge grant. As negotiations progress with the realtor and based on the appraisal and property’s condition, further reduction in the price is possible. Upon taking ownership, the City will assume responsibility for ongoing property maintenance costs, remediation and repair, and property taxes. Property taxes will initially be approximately $6,500 per year. Ongoing operating costs are subject to appropriation from the Affordable Housing Enterprise Fund.
ATTACHMENTS:
Resolution
PSA – 414 Crescent Way – Draft Legal Description, Grant Deed, and Certificate of Acceptance Aerial Photograph – 414 Crescent Way
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