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AUTHORIZE AFFORDABLE HOUSING AND SUSTAINABLE COMMUNITIES PROGRAM LOAN AND GRANT AGREEMENT WITH VISIONARY HOME BUILDERS OF CALIFORNIA, INC.
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Rescind Resolution No. 2016-07-12-1205 previously adopted on July 12, 2016.
2. Execute two separate State of California Standard Agreements with Visionary Home Builders of California, Inc. and the California Department of Housing and Community Development for loan funding for $8,228,370.00 and grant funding for $713,000.00, respectively, under the Affordable Housing and Sustainable Communities Program for the Hunter Street Apartments project.
3. Execute a joint Disbursement Agreement with Visionary Home Builders of California, Inc. and the State of California Department of Housing and Community Development, for the $713,000 in grant funding under the Affordable Housing and Sustainable Communities Program for the Hunter Street Apartments project.
4. Execute a Project Funding, Project Completion, and Indemnification Agreement with Visionary Home Builders of California, Inc. for loan and grant funding under the Affordable Housing and Sustainable Communities Program for the Hunter Street Apartments project.
It is also recommended that the City Manager be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
The Hunter Street Apartments project is a mixed-use infill development with 74 units of affordable housing and 3,000 square feet of social service office space. This project will repurpose an existing building located along the east side of Hunter Street between Poplar Street and Flora Street, with the goal of bringing affordable housing to an underutilized area of Downtown Stockton. The project will also improve sidewalks and transit stops and install trees to encourage active transportation.
On May 24 and July 12, 2016, Council adopted two resolutions authorizing the City Manager to submit a joint application with Visionary Home Builders of California, Inc. (Visionary) to acquire funding through the Affordable Housing and Sustainable Communities (AHSC) Program (Resolutions No. 2016-05-24-1205 and 2016-07-12-1205).
The State of California Department of Housing and Community Development (HCD) awarded $8,228,370 of AHSC Program loan funding and $713,000 of AHSC grant funding for an aggregate amount not to exceed $8,941,370 for the Hunter Street Apartments project. HCD requested that two separate State Agreements and a Disbursement Agreement be executed for the Hunter Street Apartments project funding. Visionary will be taking the lead in completing the entire Hunter Street Apartments project consisting of both the grant funded transportation component ($713,000) as well as the larger AHSC program loan component ($8,228,370). A Project Funding, Project Completion, and Indemnification Agreement has been prepared between the City and Visionary that will assist with transferring the risk associated with delivery of the Hunter Street Apartments project from the City to Visionary.
Staff recommends that Council rescind Resolution No. 2016-07-12-1205 previously adopted on July 12, 2016 and authorize the City Manager to execute the State of California Standard Agreements; Disbursement Agreement; and the Project Funding, Project Completion, and Indemnification Agreement.
DISCUSSION
Background
On September 2008, Senate Bill (SB) 732 (Chp. 729, Stats. 2008) was signed into law creating the Strategic Growth Council (SGC). The SGC is tasked with coordinating the activities of State agencies related to greenhouse gas reductions through improved planning activities. The SGC created the AHSC Program to further the purposes of Assembly Bill (AB) 32 (Chp. 488, Stats. 2006) and SB 375 (Chp. 728, Stats. 2008) by investing in projects that reduce greenhouse gas emissions by supporting more compact, infill development patterns, encouraging active transportation and transit usage, and protecting agricultural land from sprawl development. Funding for the AHSC Program is provided from the Greenhouse Gas Reduction Fund, an account established to receive Cap-and-Trade auction proceeds. The Cap-and-Trade Program, a key strategy for achieving the greenhouse gas emission reduction goals of AB 32, issues a limited number of greenhouse gas emissions (allowances) permits each year. A portion of these allowances can be purchased from the State at quarterly auctions, thereby generating auction proceeds. The HCD implements the transportation, housing, and infrastructure component of the AHSC Program.
On January 29, 2016, the SGC and HCD issued a Notice of Funding Availability for approximately $320,000,000 in funding from the AHSC Program for 2015-2016. The AHSC Program provides grants and/or loans to projects that will achieve greenhouse gas emission reductions and benefit disadvantage communities. The intent is that funded projects will increase accessibility of affordable housing, employment centers, and key destinations via low-carbon transportation, resulting in fewer vehicle miles traveled.
The Hunter Street Apartments project is a mixed-use infill development with 74 units of affordable housing and 3,000 square feet of social service office space (Attachment A- Vicinity Map). This project will repurpose an existing building located along the east side of Hunter Street between Poplar Street and Flora Street and bring affordable housing to an underutilized area of Downtown Stockton. The project will also include some sidewalk improvements and install trees to encourage active transportation, as well as transit stop amenities.
On March 16, 2016, Visionary submitted a concept application to HCD, with the City as joint applicant, to acquire funding through the AHSC Program. Anticipating approval of this joint concept application, on May 24, 2016, Council authorized the City Manager to submit a joint formal application with Visionary for AHSC Program funding and enter into a Cooperative Agreement for the Hunter Street Apartments project. The cooperative agreement was created by the City to loosely set the areas of cooperation between the City and Visionary if the joint application was approved AHSC program funding (Resolution No. 2016-05-24-1205). The State subsequently requested a revised resolution to include the total application request amount, and sub-amounts for Affordable Housing, Sustainable Transportation Infrastructure, Transit-Related Amenities, and Program Activities. On July 12, 2016, Council adopted a new resolution (Resolution No. 2016-07-12-1205) with the additional requested details, which resulted in a rescission of Resolution No. 2016-05-24-1205 (Attachment B - Resolution No. 2016-07-12-1205).
Visionary is also using Neighborhood Stabilization Program (NSP) funds the City receives through Housing and Urban Development (HUD). The City receives NSP funds from HUD to help stabilize neighborhoods that were affected by foreclosures. The funds can only be spent on properties acquired through foreclosure. Council has approved NSP loans totaling $2,000,000 to Visionary to help fill the need for additional funding, and to make the project’s tax credit and AHSC applications more competitive. The Hunter Street Apartments project was eligible for NSP funds because the property was in foreclosure when it was purchased by Visionary.
Present Situation
The joint concept application was awarded AHSC Program loan funding in the amount not to exceed $8,228,370 and AHSC grant funding in the amount not to exceed $713,000 for an aggregate amount not to exceed $8,941,370 for the Hunter Street Apartments project.
The joint concept application was funded for the aggregate amount, and HCD requested a new authorizing resolution for the City and Visionary to enter into a State of California Standard Agreement for the loan and grant funding as part of the AHSC Program, and a Disbursement Agreement for $713,000 for Sustainable Transportation Infrastructure, Transportation Related Amenities, and related program costs. These agreements and the corresponding new resolution will supersede the previously adopted Resolution No. 2016-07-12-1205 which covered the application submittal phase.
Visionary will take the lead in completing the entire Hunter Street Apartments project consisting of both the grant funded transportation component ($713,000) as well as the larger AHSC program loan component ($8,228,370). To minimize the risk to the City associated with completing the grant and loan funded components, a Project Funding, Project Completion, and Indemnification Agreement has been prepared to assist with transferring the risk associated with the Hunter Street Apartments project from the City to Visionary. This agreement also terminates the Cooperative Agreement approved by Council on May 24, 2016. The state agreements together with the Project Funding, Project Completion, and Indemnification Agreement will take the place of the previous cooperative agreement executed by the City and Visionary now that more specific funding requirements are known.
The HCD requested a new resolution which will Rescind Resolution No. 2016-07-12-1205 previously adopted on July 12, 2016, and a new resolution that will authorize the City to execute the State of California Standard Agreement and Disbursement Agreements.
Staff recommends Council adopt the new resolution rescinding Resolution No. 2016-07-12-1205 and authorizing the City Manager to execute a State of California Standard Agreement(s) for the AHSC loan in an amount not to exceed $8,228,370 and the AHSC grant in the amount not to exceed $713,000. The resolution will also authorize the City Manager to execute a Disbursement Agreement for the AHSC grant in the amount not to exceed $713,000, and the Project Funding, Project Completion, and Indemnification Agreement for the Hunter Street Apartments project.
In addition to these recommended actions, reallocation of federal HOME Community Housing Development Organization (CHDO) funds previously committed to VCOR, LP (a partnership between Visionary Home Builders and Ten Space) for the Grand View Village project in the amount of $849,000 to the Hunter Street Apartments project is also recommended. This action is the subject of a separate item on the agenda.
FINANCIAL SUMMARY
The funds awarded to the City and Visionary in the form of the loan for the Affordable Housing Development and the grant for the Transportation Infrastructure do not require matching funds from the City. There are no appropriations required by taking this action. The City is a partner with Visionary. Visionary will deliver all aspects of the project and will obtain an encroachment permit from the City to complete the improvements within the City right of way.
There is no impact to the City’s General Fund or to any other unrestricted fund as a result of taking the recommended action.
Attachment A - Vicinity Map
Attachment B - Resolution No. 2016-07-12-1205