TO: HONORABLE MAYOR FROM: Erik L. Soliván
AND CITY COUNCIL Jim Shannon
SUBJECT: See Below DATE: April 21, 2025
Approved Date
5/1/2025
COUNCIL DISTRICT: 4
SUBJECT: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
RECOMMENDATION
(a) Adopt a resolution:
(1) Approving a Construction-Permanent Loan commitment of up to $9,898,877, in accordance with all applicable City of San José Gap Financing Program Regulations, in Low- and Moderate-Income Housing Asset Funds, to Affirmed Housing Group or an affiliated development entity for the Berryessa Station development located at 1565 Mabury Road, which is being developed to provide 193 affordable apartments, and two unrestricted manager’s homes; and (2) Authorizing the Housing Director, or his designee, to negotiate and execute loan documents and all other documents, including any amendments thereto, related to City financing for the Berryessa Station development.
(b) Adopt the following 2024-2025 Appropriation Ordinance amendments in the Low- and Moderate-Income Housing Asset Fund:
(1) Decrease the Housing Project Reserve appropriation by $9,898,877; and (2) Increase the Housing Loans and Grants appropriation to the Housing Department by $9,898,877.
SUMMARY AND OUTCOME
In response to the Housing Department’s rolling Request for Proposals released on April 14, 2025, Affirmed Housing Group (Affirmed) submitted a development proposal for an affordable housing development creating a total of 193 homes for extremely low-, very low-, and low-income individuals and families and two COUNCIL AGENDA: 5/13/25
FILE: 25-499
ITEM: 8.4
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
manager’s units.
Approval of the staff recommendation would enable Affirmed to assemble the financing for the Berryessa Station affordable housing development (Development).
City Council approval of the staff recommendation would also allow Affirmed to move forward with a joint application with the City of San José (City) as the issuer for tax- exempt bonds with the California Debt Limit Allocation Committee on May 20, 2025.
BACKGROUND
San José needs more affordable housing. Table 1 provides a detailed summary of the City’s proposed funding commitments to the Development and the overall cost of the Development. The City’s Gap Financing Program Regulations have been updated and apply to the Development.
Table 1 – Summary of City Funding and Cost for the Berryessa Station Development
Development
Name
City Loan
Request
City
Subsidy
Per Unit
Total
Units
Placed Based
Vouchers
Total
Development
Cost
Cost/Unit
Berryessa
Station $9,898,877 $50,763* 195 49 $159,407,070 $817,472 *The Affordable Housing and Sustainable Communities award received by the Development significantly lowers the City’s per-unit subsidy funding.
ANALYSIS
Development Description
The Santa Clara Valley Transportation Authority owns the approximately 3.3-acre site of this development and released a Request for Proposals to develop the first development within the Berryessa/North San José Transit Center Transit Oriented Development in 2021 and awarded Affirmed in 2022. Affirmed proposed to develop on a
0.79-acre portion of the Santa Clara Valley Transportation Authority-owned site. The Development will consist of a 10-story building with nine levels of residential units over one level of parking. The building will include amenities such as on-site resident services, an outdoor terrace, a planting area, a community room, and a computer lab. If the staff recommendation is approved, the City will place an affordability covenant on the site for a term of no shorter than 55 years, as part of the requirements of the City’s funding. The affordability restriction will not be subordinated to any deeds of trust or
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
instruments with a power of sale.
Affordability Unit Mix/Area Median Income (AMI) Levels
Table 2 provides details of the Berryessa Station Development’s unit mix and associated income and rent limits.
Table 2 – Berryessa Station Development’s Maximum Income and Rent Limit Unit Mix
UNIT
SIZE
30% AMI 50% AMI 60% AMI
MGR
UNIT TOTAL
Units
Max
Income
*
Rent
Limits Units
Max
Income
*
Rent
Limits Units Max
Income*
Rent
Limits
Studio 1 $38,730 $968 62 $64,550 $1,613 0 $77,460 $1,936 0 63 1-BD 25 $41,490 $1,037 0 $69,150 $1,728 0 $82,980 $2,074 0 25 2-BD 14 $49,770 $1,244 1 $82,950 $2,073 38 $99,540 $2,488 1 54 3-BD 10 $57,510 $1,437 29 $95,850 $2,396 13 $115,020 $2,875 1 53 Total 50 92 51 2 195
*Maximum rent and income limits are based on California Tax Credit Allocation Committee occupancy guidelines of 1.5 persons per bedroom.
Permanent Supportive Housing Units
Affirmed is in discussions with the Santa Clara County Housing Authority to secure 49 Project Based Vouchers to support the extremely low-income units earning less than 30% AMI. If approved, Affirmed would enter a Housing Assistance Payment Contract with the Santa Clara County Housing Authority that has an initial term of 20 years with a potential option to extend the term up to 20 additional years. Refer to Table 3 to view the details of the Development’s Project Based Voucher proposed supported unit mix.
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
Table 3 – Berryessa Station Development’s Project Based Voucher Supported Unit Mix
UNIT SIZE
Permanent Supportive
Housing: No Place Like
Home Project Based
Vouchers
Permanent Supportive
Housing Project Based
Vouchers Total
30% AMI
Studio 0 0 0
1-BD 25 0 25
2-BD 4 10 14
3-BD 0 10 10
Total 29 20 49
Construction-Permanent Financing
The Development’s funding sources and uses are outlined in Table 4.
Table 4 – Berryessa Station Development’s Funding Sources and Uses Construction Period Sources Construction Period
Amounts
Tax Exempt Construction Loan 81,103,146
Taxable Construction Loan 12,135,556
City of San José 9,898,877
County of Santa Clara Measure A 11,115,000
Housing Accelerator Fund 15,951,926
Federal Tax Credit Equity 22,016,278
Total $152,220,783
Permanent Sources Permanent Amounts
Tax-Exempt Permanent Loan 40,001,761
California Department of Housing and
Community Development’s Affordable
Housing and Sustainable Communities
29,000,000
City of San José 9,898,877
County of Santa Clara Measure A 11,115,000
Housing Accelerator Fund 15,951,926
Federal Tax Credit Equity 48,925,063
Total $154,892,627
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
Additionally, as a Transit-Oriented Development, the Development will provide safe and direct access to the nearby Berryessa Transit Station via dedicated bicycle and pedestrian pathways to create a transit-oriented community.
The Development was awarded a total of $38,479,951 in State of California Affordable Housing and Sustainable Communities funds to better serve the multi-modal transportation needs of the community. Of the total Affordable Housing and Sustainable Communities awarded amount, $29,000,000 of the funds are set aside specifically for the construction of the Development. The remaining $9,479,951 is set aside for transportation and infrastructure improvements in the form of a grant. The Development will directly contribute to these improvements by providing transit passes for all residents, creating ample bicycle storage, and facilitating seamless connections to various forms of sustainable transportation.
Next Steps
If the allocation is received when the California Debt Limit Allocation Committee announces awards on July 29, 2025, the City will facilitate a construction financing closing by January 2026. If Affirmed is unable to obtain an allocation from the California Debt Limit Allocation Committee to close all funding gaps, it will seek an allocation in a future round at a to-be-announced date.
The Development’s construction phase is estimated to be initiated by February 2026 and conclude approximately 24 months later.
If the staff recommendation is approved, the Housing Director, or his designee, would negotiate additional terms and execute documents for this development’s loan in accordance with the City Council’s approval using the authority delegated under Section
5.06.335 of the San José Municipal Code1.
EVALUATION AND FOLLOW-UP
The Housing Department produces periodic information memoranda regarding the use of the Housing Director’s delegation of authority under the San José Municipal Code; therefore, final loan business terms will be summarized in those memoranda. In addition, the Housing Department posts periodic reports on the status of its affordable properties undergoing rehabilitation or construction on its website
2. If the recommended
actions in this memorandum are approved and the Development successfully closes construction financing, it will be included in these periodic reports.
1 Section 5.06.335 of the San José Municipal Code is the authority to negotiate and execute council- approved loans, grants, and programs.
2 Housing Department affordable properties webpage, Web Link: https://www.sanjoseca.gov/your- government/departments-offices/housing/homelessness-program-dashboard
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
COST SUMMARY/IMPLICATIONS
The recommendations in this memorandum would provide a construction-permanent loan commitment of $9,898,877 to Affirmed Housing Group or an affiliated development entity for the Berryessa Station development located at 1565 Mabury Road, which is being developed to provide 193 affordable apartments and two unrestricted manager’s homes. The loan will be funded by the Housing Loans and Grants appropriation in the Low and Moderate Income Housing Asset Fund.
BUDGET REFERENCE
The table below identifies the fund and appropriations to fund the loan recommended as part of this memorandum.
Fund
#
Appn
#
Appn.
Name
Total
Appn
Recom.
Budget
Action
Amount for
Loan
2024-
2025
Adopted
Operating
Budget
Page
Last Budget
Action
(Date, Ord.
No.)
346 8437
Housing
Project
Reserve
$21,221,550 ($9,898,877) N/A 981 2/11/2025
31176
346 0070
Housing
Loans
and
Grants
$28,526,891 $9,898,877 $9,898,877 980 2/11/2025
31176
COORDINATION
This memorandum has been coordinated with the City Attorney's Office.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for the May 13, 2025 City Council meeting.
In addition, outreach initiatives were conducted for the Development in collaboration with the Santa Clara Valley Transportation Authority. Affirmed also conducted three community meetings for community members between 2022 and 2023.
HONORABLE MAYOR AND CITY COUNCIL
April 21, 2025
Subject: Actions Related to a Loan Commitment for a New Affordable Rental Housing Development – Berryessa Station at 1565 Mabury Road
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Exempt per Public Resources Code Section 21080(b)(1) and CEQA Guidelines Section 15369, Ministerial Project pursuant to Government Code Section 65913.4, File No.
ER20-109.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
/s/
ERIK L. SOLIVÁN JIM SHANNON
Housing Director Budget Director
The principal authors of this memorandum are Michael Jun, Senior Development Officer, and Lucy Ma, Development Officer. For questions, please contact Banu San, Deputy Director, Housing Department, at [email protected].