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ADOPT A RESOLUTION APPROVING A GRANT TO DELTA COMMUNITY DEVELOPERS CORP. FOR THE PROPERTY ACQUISITION AND DEVELOPMENT OF DANNY DRIVE SENIOR LIVING PROJECT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving a $1,300,000 Community Development Block Grant (CDBG) grant to Delta Community Developers Corp. (DCDC) for the purpose of acquiring property located at 6303 and 6304 Danny Drive for development of the Danny Drive Senior Living affordable housing project;
2. Approving the allocation of 110-units of affordable housing for seniors, through the Danny Drive Senior Living project pursuant to Article XXXIV of the California Constitution; and
3. Authorizing the City Manager, or designee, to execute all documents and take all necessary and appropriate actions to carry out the purpose and intent of the resolution.
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Summary
DCDC is proposing an affordable housing project for seniors in North Stockton. The project will be located at 6303 and 6304 Danny Drive (Attachment A - Vicinity Map and Attachment B - Aerial Map). The acquisition of this property will be for the purpose of constructing permanent affordable housing that will be occupied by low-income senior households.
In response to a City of Stockton Notice of Funding Availability, DCDC has requested a grant of $1,300,000 from the City to be used for property acquisition.
In addition, due to the proposed public financing, the development of the project must be approved pursuant to Article XXXIV (34) of the California Constitution, which requires a local election to approve affordable housing projects. In 2010, local voters gave the City Council the authority to approve up to 500 units per year. The proposed units are within this limit.
DISCUSSION
Background
The City receives annual allocations of Community Development Block Grant (CDBG) funds from the U.S. Department of Housing and Urban Development (HUD) for the purpose of providing assistance to low-income residents. CDBG funds are used for a wide variety of activities that benefit low-income residents, including but not limited to the provision of public services, property acquisition for affordable housing purposes, and economic development activities.
In October 2023, the City of Stockton Economic Development Department (EDD) released a Notice of Funding Availability (NOFA) announcing the availability of approximately $1,500,000 in funding from the CDBG for the purpose of property acquisition leading to the development of affordable housing.
EDD received three property acquisition proposals as follows: Danny Drive Senior Living from Delta Community Developers Corp. (DCDC), 322 N. California Street from Central Valley Low Income Housing Corporation and Housing Authority County of San Joaquin, and Orchard Pointe from Community Revitalization & Development Corporation.
In selection of the project, EDD considered several project proposal factors, including but not limited to timely response to the NOFA, responsiveness to project details as requested by EDD, project characteristics including project location, target population, and number of units to be developed as well as developer capacity, clear outline of financing plan, timely project completion, and consideration of certain CDBG limitations in relation to the project proposals. After careful review of the project proposals, EDD recommends supporting the Danny Drive Senior Living housing project proposed by Delta Community Developers Corp.
DCDC is the 501(c)(3) non-profit arm of the Housing Authority County of San Joaquin (HACSJ). They are governed by a seven-member Board of Commissioners and have a workforce of 75 employees and an operating budget that exceeds $80 million. The anticipated property acquisition closing date is March 31, 2024. Upon notification of an award of this funding, DCDC will be responsible for any environmental reviews as required by the City and funding source.
Nationwide, the number of seniors who are renters is expected to double between 2010 and 2030 from 25.8 million to 46 million. Census data reported in the 2021 American Community Survey for the City of Stockton reported 38,825 seniors aged 65 and older are living in Stockton. Of those, the average age is 72.6 years old, 40 percent are disabled, and 39 percent live alone. The City of Stockton Homeless Action Plan set a goal for increasing the rate of single people exiting homelessness and into permanent housing from 6 to 8 percent or an additional 58 adults in households without children.
Present Situation
The DCDC Danny Drive Senior Living housing project proposes to serve seniors aged 62 and over. The project will serve low- and very low-income seniors with incomes no higher than 50 percent of San Joaquin County median income. HACSJ can provide rental assistance for all residents through rental subsidy from the U.S. Department of Housing and Urban Development’s Housing Choice Project Based Voucher (PBV) program. A subset of these units will be allocated for seniors who are at risk of homelessness. DCDC envisions building up to 110 affordable housing units in two phases, with two buildings on the property.
The proposed property is located at 6303 and 6304 Danny Drive (APN 094-370-09 and 094-370-27). The property is 3.03 acres and zoned High Density Residential (HDR).
To assist with the project, DCDC is requesting a $1,300,000 grant from the City. If approved, City assistance will consist of a $1,300,000 grant of CDBG funds for property acquisition.
The DCDC financial plan is to seek out any and all eligible funding sources to fill the funding gap in financing and increase the projects competitiveness for 9% Tax Credits. Funding for consideration includes State of California Multifamily Housing Program (MHP), San Joaquin County Mental Health Services Act Funding, and Faircloth-to-RAD, among others. HACSJ will subsidize all of the affordable units with project-based vouchers to ensure that senior units remain affordable for the long term. This subsidy will also contribute to the competitiveness of applications for Low-Income Housing Tax Credits, which will be a necessary component of the capital stack required for this project. DCDC anticipates that the first 55-unit phase will cost approximately $29 million. Tax credit equity, permanent financing, and other grant/funding opportunities will create the necessary capital stack.
Based on a preliminary project timeline, the earliest construction can begin is March 2025. While property acquisition for the development of affordable housing is an eligible use of CDBG funds, HUD regulations require attainment of financing to supplement the City grant, and include having in place all funding sources sufficient to begin construction within 12 months of the date on the grant agreement and completing construction within 36 months of the date of the agreement. While there is some flexibility with these deadlines, the City will work with DCDC to do everything possible to ensure these deadlines are met.
Compliance with Article XXXIV
Article XXXIV of the California Constitution requires a local election to approve affordable housing projects when the majority of the units are financed in whole or in part by the local government. In November 2010, local voters gave the City Council the authority to approve the development of up to 500 publicly assisted low-income housing units each year for a ten-year period. The Council is being asked to allocate 110 of the authorized units to this project. The units being proposed by DCDC are within the limit approved by the voters.
FINANCIAL SUMMARY
The proposed resolution will have no financial impact on the General Fund or any other unrestricted fund. There is sufficient budget available in the CDBG fund to award the proposed grant.
Attachment A - Vicinity Map
Attachment B - Aerial Map
Attachment C - Conceptual Rendering
Attachment D - Conceptual Rendering
Attachment E - Conceptual Rendering
Attachment F - LOI