CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
4/25/2023
AGENDA ITEM
TO:
HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIR
AND MEMBERS OF THE HOUSING AUTHORITY
FROM:
CARLO TOMAINO
CITY MANAGER/EXECUTIVE DIRECTOR
SUBJECT:
NOTICE OF FUNDING AVAILABILITY (NOFA) FOR THE DEVELOPMENT OF THE
ORANGE BLUFF AND WALNUT BLUFF WORKFORCE HOUSING SITES AND
SOLICIT PROPOSALS FROM QUALIFIED AFFORDABLE HOUSING DEVELOPERS Summary:
Last year, the State Department of Housing and Community Development certified the City’s Housing Element, which included two sites specifically entitled for the development of workforce housing.
Known as Orange Bluff and Walnut Bluff, the properties are comprised of 8.6 and 2.0 acres of undeveloped property respectively; both sites are owned by Signal Hill Petroleum (SHP). Collectively, both sites are zoned and entitled to accommodate up to 380 units of workforce housing which help the City meet its Regional Housing Needs Assessment (RHNA) allocation for the current Housing Element cycle.
The City and the Housing Authority have accumulated funding for the development of affordable housing totaling approximately $10 million; notwithstanding this amount, an affordable housing developer would need to secure substantially more funding to design and construct both residential projects. The developer selected to work on the two sites will need to leverage the funding proposed as part of the NOFA and successfully receive funding from various sources including tax credits, grants, equity loans, and the Gateway Cities Affordable Housing Trust.
Staff recommends issuing the NOFA to solicit proposals from qualified developers that will partner with the City and the property owner (SHP) to successfully build out the two sites. Given the complexities associated with financing affordable housing projects, the NOFA includes specific qualifications criteria and requires the proposers to provide a conceptual proforma analysis and a development plan for consideration as part of the evaluation process. A panel comprised of City staff and a representative from SHP will evaluate the proposals and recommend a developer to the City CITY OF SIGNAL HILL Page 1 of 5 Printed on 4/20/2023
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Council.
Recommendation:
Direct staff to issue the NOFA for the Orange Bluff and Walnut Bluff workforce housing sites and solicit proposals from affordable housing developers.
Fiscal Impact:
The fiscal impact associated with the recommended action includes staff and consultant time necessary to release, circulate, and evaluate responses to the NOFA. The City and the Housing Authority have access to multiple potential sources of funding restricted for the development of affordable housing. As of July 1, 2023, the Housing Authority will have a projected fund balance of $6.4 million. Additionally, there is an estimated $2.8 million from a Successor Agency loan expected to be fully repaid in 2028. The City also has $745,419 in affordable housing in-lieu fees from a prior development agreement. Lastly, the City has access to $167,262 in Permanent Local Housing Allocation (PLHA) funding that could be used to offset the cost of site remediation.
Strategic Plan Objectives:
Goal No. 5: Ensure an enhanced quality of life for residents.
Goal No. 6: Promote a transparent and open government.
Background and Analysis:
Workforce Housing Sites
The City’s Certified Housing Element identified two sites owned by SHP for the future development of workforce housing. As part of the Housing Element update process, the City Council entitled both sites to collectively accommodate up to 380 units of workforce housing. The sites, along with two additional market-rate sites, achieve the City’s goals of meeting its RHNA allocation and create workforce housing opportunities. Once constructed, the two properties would fulfill the City’s broader housing goals by increasing the available inventory of housing for low- and moderate-income residents.
Similar to many other properties found throughout Signal Hill, the workforce housing sites have active and abandoned oil well sites and significant topography issues that need to be addressed as part of the site preparation process. The NOFA includes substantial discussion regarding the associated challenges so that prospective developers may account for these factors as part of their financial assessment of the sites. As the owner and development partner, SHP is dedicated to lending its technical expertise throughout the process.
For the City Council’s reference, the section below provides a description and conceptual site plan for both sites. The first site is known as “Orange Bluff” and comprises approximately 8.6 acres of property located on the south side of East 28th Street between Orange Avenue and Gundry Avenue.
The City entitled the site to accommodate up to 290 workforce units in a village cluster setting of six 3 - to 5-story structures around a common open space with internal private drives for circulation. The th
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property has two access points onto public streets, at East 28th Street and at Gundry Avenue.
Orange Bluff Conceptual Site Plan
The second site is known as “Walnut Bluff” and is a 2-acre property located at the northwest corner of East Willow Street and Walnut Avenue. The site is entitled to accommodate up to 90 workforce units in three 3- to 4-story structures clustered around an internal parking area and open space.
Walnut Bluff Conceptual Site Plan
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Funding Sources and Restrictions:
As noted, the City and the Housing Authority have access to multiple potential sources of funding (totaling over $10 million) that can only be utilized for the development of affordable housing. The Housing Authority has a fund balance of $6.4 million which is held in the Affordable Housing Trust Fund. Additionally, there is a projected $2.8 million balance due to the Housing Authority from a Successor Agency loan that is expected to be fully repaid in 2028. The City also has $745,419 in affordable housing in-lieu fees from a prior development agreement. Lastly, the City has access to $167,262 in PLHA funding that could be used to offset the cost of site remediation. The funds will require the units remain income-restricted pursuant to affordability covenants as required by State law for a minimum of 55 years.
Development Proposals:
As described in the NOFA, the City and Authority encourage interest from prospective developers with proven experience to act as a development partner to construct the two workforce housing sites identified in the City’s Certified Housing Element. The selected developer will be required to negotiate successfully with the property owner, SHP, to secure the sites and also acquire the funding necessary to design and build both projects. The NOFA is specific and clear that the City will only evaluate proposals from qualified developers with significant experience working on complex workforce housing projects. Developers are expected to evaluate the financial feasibility of developing both sites through a conceptual pro-forma analysis and present a plan to an evaluation committee that will review the proposals and interview qualified firms.
The developer will be responsible for securing the funding necessary to design, remediate, and construct both projects. Potential funding sources may include the Mixed Income Program, Low and Moderate Income Housing Tax Credits, the Gateway Cities Affordable Housing Trust, the California Housing Finance Authority programs, Federal Housing and Urban Development programs, private equity loans, and other sources. The NOFA requires that responders demonstrate their ability to secure and leverage multiple funding sources to maximize the value of the City and Housing Authority funds. The NOFA also provides the City and Authority with flexibility to move forward with one entity or multiple entities, depending on proposals that best meet the City’s housing goals.
Next Steps:
Subject to City Council and Authority Board approval of the NOFA, staff would distribute the NOFA to a list of affordable housing developers and publicize the document on the City’s website; proposals would be due no later than June 15, 2023. An evaluation committee comprised of staff and a representative from SHP will review the proposals in relation to the City’s housing goals and the expenditure parameters specific to the funding sources outlined in the NOFA. Following the evaluation process, staff anticipates returning to the City Council and Housing Authority Board in July to recommend next steps including consideration of a potential partnership with a qualified nonprofit and/or for-profit developer.
Reviewed:
_________________________
Sharon del Rosario
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Attachment:
A. Notice of Funding Availability
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