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ADOPT A RESOLUTION DE-OBLIGATING PREVIOUSLY ALLOCATED AFFORDABLE HOUSING FUNDING AND APPROVING AFFORDABLE HOUSING LOAN AWARDS TO ELIGIBLE RESPONDENTS TO THE 2025 AFFORDABLE HOUSING NOTICE OF FUNDING AVAILABILITY (NOFA)
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve the de-obligation of $1,614,000 of Home Investment Partnerships Program (HOME) and Low-and Moderate-income Housing Fund (LMIHF), funding from the Sierra Vista, Phase III project, (Delta Community Developers Corporation (DCDC), developer);
2. Approve loans to the following three affordable housing developments in the amounts specified, provided that, as a condition of funding, the borrower demonstrates to the City Manager’s or designee’s satisfaction that each project meets the underwriting and general requirements of the 2025 Affordable Housing Notice of Funding Availability (NOFA) guidelines:
a. $5,000,000 to Visionary Home Builders for the development of either The View at Channel (132 units) or The Don Shalvey Apartment (108 units) projects, dependent on which project achieves full funding to construct first;
b. $2,800,000 to Mutual Housing for the development of the Fairview Terrace (76 units) project;
c. $4,179,838 to DCDC for the development of the Danny Drive (66 units) project;
Funding sources for the loans can include the use of any combination of HOME, HOME American Rescue Plan (HOME-ARP), LMIHF, Permanent Local Housing Allocation (PLHA), Neighborhood Stabilization Program (NSP), Community Development Block Grant (CDBG), and/or Homeless Housing Assistance and Prevention (HHAP), based on eligibility and timeliness of the funding source(s) at the time of full project funding commitments and construction schedule;
3. Approve the allocation of: up to 132-units of affordable housing units to Visionary Home Builders for The View at Channel or the Don Shalvey Apartment projects; up to 76 units to Mutual Housing for the Fairview Terrace project; and up to 66 units to DCDC for the Danny Drive project pursuant to Article XXXIV of the California Constitution.
4. Authorize the City Manager, or designee, to de-obligate and reallocate funding allocations awarded under this resolution if any project is unable to meet the underwriting and general requirements of the 2025 NOFA, including but not limited to ability to meet: securing of full funding stack deadlines; construction start deadlines; and/or inability to meet any other City requirements, including underwriting program guidelines. If defunded, the City Manager is authorized to reallocate the funding to eligible projects that have competed in a City of Stockton Housing NOFA that can meet the funding source agency timeliness and general City affordable housing program guidelines.
5. Authorize the City Manager, or designee, to take actions that are necessary and appropriate to carry out the purpose and intent of this resolution, including the execution of loan documents, subordination agreements, and the reallocation of funding sources.
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Summary
De-obligation Recommendation Summary
Prior to making recommendations for the new affordable housing loan awards (2025 Housing and Urban Development (HUD) entitlement funds), staff reviewed past funding allocations to ensure all funding was moving toward the construction of tangible affordable housing units by applicable funding expenditure deadlines. First, staff reviewed all past housing allocations that were at least three years old for improvement in funding and construction readiness. Second, staff examined whether the 3+ year old allocation projects could, or were likely to, move to construction within the next three years.
The Sierra Vista III project was identified as 1) having been allocated funding more than three years ago; 2) unlikely to commence construction in the next three years; and 3) the source of funding was on a “use it or lose it” basis. With the average construction completion timeline being 15 to 24 months, the identified project cannot meet construction completion and funding expenditure timelines, as confirmed by the developer. Based on this analysis, staff recommends that the following project and funding allocation be considered for de-obligation and the funding be added to available funds for the best projects as scored through the 2025 Affordable Housing NOFA. The project and funds recommended for de-obligation is as follows:
• $1,614,000 of HOME and LMIHF funding from the Sierra Vista, Phase III project, with Delta Community Developers Corporation (DCDC) as developer. Allocated by Resolution Numbers 2019-04-02-1119 (Attachment A) and 2020-01-28-1401 (Attachment B).
Funding Allocation Summary
On October 30, 2025, the City issued a Notice of Funding Availability (NOFA) making available funding from local, state, and/or federal sources to be awarded to qualified housing developers for eligible affordable rental housing project proposals.
The Housing NOFA application period closed on December 18, 2025 with a total of 8 project proposals received for a combined total request of $28.2 million.
The City’s Economic Development Department (EDD) scrutinized all proposals, first by confirming that all requirements of the application were submitted and then by reviewing content in detail and scoring each criteria category as required by the Council-approved NOFA process (Attachment C - Motion No. 2025-11-04-1601).
Based on the scores, the following housing projects are recommended for allocation:
a. The View at Channel (132 units) or The Don Shalvey Apartment (108 units) Award recommendation: $5,000,000 to Visionary Home Builders for the development of either project, dependent on which project achieves full funding to construct first;
b. Fairview Terrace (75 units) Award Recommendation: $2,800,000 to Mutual Housing for the development of the project. (Note: the current award has been requested as gap funding for the project, which already received funding through a past affordable housing NOFA process totaling $7,037,865 (Attachment D - Resolution No. 2024-11-19-1505);
c. Danny Drive (65 units) Award Recommendation: $4,179,838 to DCDC for the development of the project. (Note: the current award has been requested as additional project support towards a stronger application for the much-needed tax credit funding award. Previous City funding allocation is $1,300,000 (Attachment E - Resolution No. 2024-01-09-1501). This funding has been contracted and utilized (expended) for site acquisition.
The proposed projects are consistent with the City’s affordable housing goals and priorities identified in its Five-Year Consolidated Plan.
DISCUSSION
Background
On October 30, 2025, the Economic Development Department (EDD) released a Notice of Funding Availability (2025 Housing NOFA) to interested parties of the availability of funds for the development or preservation of affordable housing units in Stockton. The 2025 Housing NOFA information was sent to more than 300 community stakeholder contacts (including housing developers), shared via multiple social media platforms, posted on the City’s official website, and EDD issued a public media press release. The 2025 Housing NOFA made funds available to provide financing for property acquisition, housing construction, and property rehabilitation/conversion with the end goal of producing multi-family affordable rental housing projects.
In 2025, the Economic Development Department established rental housing program guidelines, as required by the City’s funding agencies (e.g., US Department of Housing and Urban Development (HUD) and the California Department of Housing and Community Development (HCD)) to ensure that the City’s HUD and HCD funds are invested prudently, efficiently, and in compliance with applicable state and federal requirements (Attachment F - Federal Checklist of Home Rental Housing Requirements). The core purpose of these guidelines was to provide a standardized framework for evaluating and approving HUD/HCD-assisted rental projects before funds are awarded to projects.
The 2025 Housing NOFA established project selection criteria (Attachment G) that would score project proposals based on the following:
• Developer Experience and Financial Capacity - up to 30 Points
• Strength of Proforma - up to 30 points
• Populations Served - up to 15 points
• Unique Project Design Features - up to 15 points
• Demonstrated Leverage of Other Sources - Up to 10 points
The 2025 Housing NOFA resulted in the submittal of eight (8) applications from developers, requesting approximately $28.2 million of City affordable housing funds.
EDD staff and TDA Consulting Inc. reviewed all proformas from the applications and conducted preliminary underwriting analysis of all project proposals received. The City of Stockton is held to stringent regulations by its state and federal funding agencies and as such, the City must conduct a risk assessment of each applicant and its proposal to ensure the selected applicant has the ability to comply with funding requirements. With this consideration and in conformance with the NOFA project evaluation criteria, EDD’s project recommendations are being made after considering several project proposal factors, including but not limited to:
• Available funding sources and respective allowable uses (Attachment H)
• Responsiveness to project details as outlined in the NOFA
• Overall project characteristics
• Number of units to be developed
• Assessment of developer & team capacity and experience including the ability to comply with stringent state and federal regulatory requirements
• Demonstrable experience developing and managing projects of a similar type and scope
• Project proforma consistency with metrics and proforma requirements outlined in the City’s Program Guidelines
• Project funding leverage (amount of non-City funding to be contributed)
After the ratings were compiled, averaging each of the three rater’s scores, the City enlisted the services of artificial intelligence (AI) programming to run a full analysis of the submitted applications and supporting documents as an additional measure to be factored along with the three human raters. While the AI-generated scores varied slightly, when factored as a fourth rater and averaged with the three human ratings, the ranking of the projects did not change. A full listing of all projects and their ratings is available as Attachment I.
Present Situation
De-obligation of Funding
Due to funding timeliness constraints, staff reviewed all previously allocated housing funding that has not yet gone to contract to ensure that reasonable paths to actual construction within the next three years remain viable. Staff identified one project that had allocations at least three years old that is highly unlikely to advance to construction within the next three years. After reviewing the findings with the City Manager, it was determined that it was in the City’s best interest to recommend to Council that the funding allocation be de-obligated. De-obligating funding of the following project that is stagnant in progression and/or dead will allow the funding to be re-allocated to projects submitted through the NOFA process that appear more viable to advance to construction in the next three years. The project and funding amount recommended for de-obligation is as follows:
Project Developer Amount
Sierra Vista III DCDC (Housing Auth. Of SJC) $1,614,000
Should Council approve the de-obligation recommendation, the total amount of $1,614,000 can be added to the new, 2025 entitlement HOME funding and other available housing sources, totaling $10,365,838; for a total available award amount of $11,979,838. This amount will cover the three recommended new affordable housing projects from the 2025 NOFA process.
However, if Council were to amend the recommended de-obligation in any way, commensurate adjustment must also be made to the recommended allocations, as the awarding amount of $11,979,838 is only available with approval of the recommended de-obligation.
Affordable Housing Awards
After careful review and analysis of each proposal, EDD recommends funding awards to the following projects:
The View at Channel and/or Don Shalvey Apartments
Applicant: Visionary Home Builders
Co-Applicant: N/A
Project Address: 31 E Channel Street
Funding Request: $ 5,000,000
Funding Recommendation: $ 5,000,000
Estimated Total Development Cost: $ 95,684,068 / $83,978,508
Estimated Number of Housing Units: 132 / 108
Estimated Cost Per Unit: $ 714,060 / 763,441
Council District: 5
Previous Award (if any): $0
Target Population Served: Families
Target AMI Level: 30% to 80% of the Area Median Income
Affordability Restrictions: Affordability covenants will be imposed on the property per funding source(s) requirements.
Fairview Terrace
Applicant: Mutual Housing California
Co-Applicant: N/A
Project Address: 2222 S Airport Way
Funding Request: $2,800,000 (Final gap funding)
Funding Recommendation: $ 2,800,000
Total Development Cost: $ 40,226,856
Estimated Number of Housing Units: 76
Estimated Cost Per Unit: $ 529,301
Council District: 6
Previous Award (if any): $ 7,037,865
Target Population Served: Senior Housing 55+
Target AMI Level: 30% to 60% of the Area Median Income
Danny Drive
Applicant: Delta Community Developers Corp. (DCDC)
Co-Applicant: N/A
Project Address: 6303 Danny Drive
Funding Request: $4,179,838
Funding Recommendation: $ 4,179,838
Estimated Total Development Cost: $ 39,744,335
Estimated Number of Housing Units: 66
Estimated Cost Per Unit: $ 602,187
Council District: 2
Previous Award (if any): $ 1,300,000 (Used for site acquisition)
Target Population Served: Senior Housing 62+
Target AMI Level: 30% to 60% of the Area Median Income
Based on staff review and the available funding sources, the projects being recommended are generally consistent with the City’s Five-Year Consolidated Plan, Homeless Strategic Plan, Housing Element, and the 2025 Housing NOFA criteria. Available at: <https://www.stocktonca.gov/business/economic_development/housing_index.php> and <https://www.stocktonca.gov/business/economic_development/homeless__initiatives.php>
The applications received represent a proposed 523 affordable housing units. In compliance with HUD/HCD underwriting requirements, the City will require projects to secure all other sources of funding prior to entering into a written agreement with the City resulting in legal funding commitment and ability to expend.
Consistent with the rental housing program guidelines the City financing will have a 55-year loan term (and affordability period) with simple interest accruing at 3%. A Loan Agreement, Promissory Note, Deed of Trust, and Regulatory Agreement will be executed to secure the City’s investment and affordability of the units. Upon all of the financing being obtained for these projects, as is typical for these types of projects, the City’s loans may require subordination to the other funding sources. Even in a subordinate position, upon completion of the projects, there will be sufficient value to secure the City’s loans.
FINANCIAL SUMMARY
There is no financial impact to the City’s General Fund or any other unrestricted fund as result of this action. Funding for these projects can come from a variety of available sources: HOME, HOME-ARP, PLHA, NSP, LMIHF, CDBG, and/or HHAP. Funding for these affordable housing projects will remain flexible to accommodate variations in project readiness, and alignment with applicable grant expenditure deadlines, as well as compliance with specific use requirements associated with each funding source.
Attachment A - Resolution 2019-04-02-1119
Attachment B - Resolution 2020-01-28-1401
Attachment C - Motion 2025-11-04-1601
Attachment D - Resolution 2024-11-19-1505
Attachment E - Resolution 2024-01-09-1501
Attachment F - Checklist of Home Rental Housing Requirements
Attachment G - Project Selection Criteria
Attachment H - Housing Source Funds Description 2026
Attachment I - Scoring Matrix