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APPROVING A LOAN AMENDMENT ALLOCATING AN ADDITIONAL $900,000 TO THE HOUSING AUTHORITY OF THE COUNTY OF SAN JOAQUIN TO CONSTRUCT SIERRA VISTA APARTMENTS, PHASE II
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving a loan amendment allocating an additional $900,000 to the Housing Authority of San Joaquin of San Joaquin to pay for predevelopment and development costs associated with the Sierra Vista Apartments, Phase II project; and
2. Authorizing the City Manager, or his designee, to take all necessary and appropriate actions to carry out the purpose and intent of this resolution.
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Summary
On February 6, 2018, the City Council allocated $1,200,000 in HOME Investment Partnerships Program (HOME) and Low Moderate-Income Housing Fund (LMIHF) dollars to the Housing Authority of the County of San Joaquin (“HACSJ”), to construct Sierra Vista Apartments, Phase II (Attachment A - Vicinity Map, Attachment B - Aerial Map, and Attachment C - Resolution 2018-02-06-0505). This project will consist of 99 affordable rental units for low-income households, and one manager’s unit. The HACSJ requested from the City an additional $1,500,000 to fill a gap in funding due to an increase in construction cost.
Staff recommends approval of an additional $900,000 of HOME funding to partially fill the HACSJ funding gap. The City’s total investment in the Sierra Vista Apartments, Phase II will be $2,100,000 of HOME and LMIHF funds for predevelopment and development costs associated with this project to provide permanent housing for low-income households.
DISCUSSION
Background
On January 25, 2018, the HACSJ broke ground on Sierra Vista Phase I. This project consists of 115 affordable rental units that range in size from one to four bedrooms. Sierra Vista Homes is the City’s oldest multi-family public housing community located on over 53 acres in South Stockton, just south of Dr. Martin Luther King Jr. Boulevard (formerly Charter Way). Phase I was funded without local funds from the City and construction is expected to conclude in early 2019.
The City receives an annual allocation of HOME funds from the U.S. Department of Housing and Urban Development (HUD) which may be used to fund a wide range of activities including building, buying, and/or rehabilitating affordable housing for rent or homeownership or providing direct rental assistance to low-income people. HOME is the largest Federal block grant to state and local governments designed exclusively to create affordable housing for low-income households.
Through a Notice of Funding Availability (NOFA) that was released on October 23, 2017, the Affordable Housing Review Committee recommended $1,200,000 of HOME and LMIHF funds for the Sierra Vista Apartments, Phase II project. On February 6, 2018, Council approved Resolution 2018-02-06-0505, allocating the use of $1,200,000 of LMIHF and HOME funds towards permanent housing for low-to-moderate income households for the Sierra Vista Apartments, Phase II project.
Present Situation
The City is committed to funding and facilitating the development of affordable housing that will assist in addressing the issue of housing affordability. The Sierra Vista Apartments, Phase II project entails the demolition of 57 barrack-style units and building a total of 99 affordable housing units. This is a net gain of 42 affordable housing units for low- income households in Stockton. This project will be located between Phelps to Belleview/Arriba to Eleventh and Eleventh to Twelfth/Phelps to Viva Plaza on the Sierra Vista Public Housing site. HACSJ owns the property and expects to complete construction of the project by May 2020.
The HACSJ had requested an addition $1,500,000 to fill its funding gap; however, due to limited funding, staff recommends providing $900,000 of HOME funds to partially fill their gap. HACSJ is working with their investors to fill the remaining gap in funding. The $900,000 would be in addition to the $1,200,000 previously approved by Council. If approved, the loan terms for this project will be a 55-year, three percent interest, with payments of fifty percent of residual receipts. If the annual residual receipt payments do not pay off the loan, the remaining balance is due at the end of the 55-year term. The 2018 Affordable Housing NOFA issued in November 2018 was reduced by $900,000 as a result of HACSJ’s request for additional funding for the Sierra Vista II project.
Staff recommends approval of an additional $900,000 for this project for predevelopment and development costs associated with this project to provide permanent housing for low- income persons. The City’s total investment in the Sierra Vista Apartments, Phase II project will be $2,100,000 of HOME and LMIHF for predevelopment and development costs associated with this project to provide permanent housing for low-income households.
FINANCIAL SUMMARY
No General Funds dollars will be used for this project. HOME funds in the amount of $900,000 are currently available in account number 058-8530-640 which will partially fund the loan for the Sierra Vista Apartments, Phase II project.
Attachment A - Vicinity Map
Attachment B - Aerial Map
Attachment C - Resolution 2018-02-06-0505