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COMMUNITY DEVELOPMENT BLOCK GRANT LOAN TO DCDC HOUSING FIRST LLC IN THE AMOUNT OF $300,000 TO ACQUIRE SEVEN VACANT LOTS ON TURNPIKE ROAD TO DEVELOP AFFORDABLE HOUSING FOR THE HOMELESS
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RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving a Community Development Block Grant loan to DCDC Housing First LLC for the purpose of acquiring 445 W. Third Street, 1630 Turnpike Road, 1626 Turnpike Road, 1620 Turnpike Road, 1614 Turnpike Road, 1608 Turnpike Road, and 1602 Turnpike Road and to pay for predevelopment costs associated with an affordable housing project for the homeless; 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
In August 2017, the City Council allocated $300,000 in Community Development Block Grant (CDBG) funds to the Partnership in Housing for the Homeless to develop permanent housing for the homeless. The Partnership in Housing for the Homeless is comprised of the Stockton Shelter for the Homeless, Housing Authority of County of San Joaquin (HACSJ), Stocktonians Taking Action to Neutralize Drugs (STAND) and Central Valley Low Income Housing Corporation (CVLIHC). The partnership has formed a nonprofit to serve as a single purpose entity for this project known as DCDC Housing First LLC.
DCDC Housing First LLC negotiated an agreement for the purchase of seven vacant lots located on Turnpike Road, between Third Street and Lincoln Street (Attachment A - Vicinity Map). They have requested a $300,000 loan from the City for the acquisition of the property and predevelopment costs associated with the project. The project will consist of seven modular single-family buildings and three modular Accessory Dwelling Units (ADU) that will serve as permanent housing for homeless individuals and families.
Staff recommends approval of a 15-year, forgivable loan with zero percent interest in the amount of $300,000 for acquisition of the property and predevelopment cost associated with this project to provide permanent housing for the homeless.
DISCUSSION
Background
In previous years, the City allocated funds to affordable housing projects on a first-come, first-served basis. However, due to the limited funds available and the number of organizations requesting financial assistance, the City began using a Notice of Funding Availability (NOFA) process. Through this process, the City’s HOME Investment Partnership (HOME), Low Moderate-Income Housing Fund (LMIHF), and Community Development Block Grant (CDBG) funds are allocated to specific projects. In October 2017, the NOFA was issued for $300,000 of CDBG funds specifically for projects providing permanent housing for the homeless, and approximately $1.2 million for affordable housing projects. The City received one application for permanent housing for the homeless, which was from the Partnership in Housing for the Homeless.
On August 8, 2017, Council approved Motion 2017-08-08-1401, allocating the use of $300,000 of CDBG funds towards permanent housing for the homeless. On February 6, 2018, Council approved Resolution 2018-02-06-0505 authorizing the City Manager to provide CDBG funds to the Partnership in Housing for the Homeless in the amount of $300,000 to assist with funding the acquisition of a property to house the homeless (Attachment B - Resolution 2018-02-06-0505). At the time the Resolution was approved, the property had not been identified.
Present Situation
The Partnership in Housing for the Homeless is comprised of four organizations: Central Valley Low Income Housing Corporation (CVLIHC), Housing Authority of County of San Joaquin (HACSJ), Stocktonians Taking Action to Neutralize Drugs (S.T.A.N.D.), and Stockton Shelter for the Homeless (SSH). The partnership has formed a nonprofit, a single purpose entity for this project known as DCDC Housing First LLC.
The City’s CDBG funds will assist DCDC Housing First LLC with the acquisition of seven vacant lots and predevelopment costs associated with the project. The current design will consist of seven modular single-family buildings and three modular ADU. The structures will range in size from 420 square feet to 1,146 square feet. There will be (3) studio units, (2) one-bedroom units, (1) two-bedroom single-story, (3) two bedroom two-story, and (1) three-bedroom single story modular homes. Each home will contain a well-equipped kitchen with a range and a fully functional bathroom. Attached is a conceptual design of the proposed project (Attachment C - Draft Conceptual Turnpike Project).
The most recent land plan proposes using the modular product known as manufactured housing on permanent raised foundations with both wet and dry utilities connected to each unit. Manufactured housing is constructed to federal construction standards and regulatory procedures adopted by HUD.
The HACSJ has facilitated the creation of the legal entity, DCDC Housing First LLC, to acquire, hold and develop affordable homes at 445 W. Third Street, 1630 Turnpike Road, 1626 Turnpike Road, 1620 Turnpike Road, 1614 Turnpike Road, 1608 Turnpike Road, and 1602 Turnpike Road. HACSJ will provide legal, development, construction, insurance, finance and procurement services to the property.
HACSJ will provide Housing Choice Vouchers (HCV) or Veterans Affairs Supportive Housing (VASH) rental assistance at its discretion for up to half of developed units, and the remaining units will receive rental assistance from CVLIHC. Service coordination and referrals will be provided by both CVLIHC and Stockton Shelter. They will work with HACSJ Eligibility staff to maintain to the best housing outcomes and stability.
CVLIHC agrees to explore California Emergency Solutions and Housing (CESH) Program funding as a potential opportunity for replacement or service delivery reserves on behalf of the partnership.
STAND will provide property management services, coordinate needed repairs, perform site inspection and lease enforcement. STAND will receive a per unit management fee on the entire project. All repairs and maintenance will be paid from partnership funds.
The City is committed to funding and facilitating the development of housing that will assist in addressing the issue of homelessness. According to the March 2017 Point-in-Time Count, approximately 64.3% (365 homeless persons) unsheltered homeless in San Joaquin County were in the City of Stockton.
DCDC Housing First LLC was awarded $3,250,000 in funding from the Homeless Emergency Aid Program (HEAP) through the Continuum of Care (CoC) of San Joaquin County for this project. With the City’s CDBG funds, the partnership will develop new units of permanent supportive housing in Stockton for singles and families coming directly from a homeless shelter.
Staff recommends approval of a 15-year, forgivable loan with zero percent interest in the amount of $300,000 for acquisition of the property and predevelopment costs associated with this project to provide permanent housing for the homeless.
FINANCIAL SUMMARY
No General Funds dollars will be used for this project. CDBG Program funding in the amount of $300,000 is available in account number 054-8526-640, which will help fund the acquisition of 445 W. Third Street, 1630 Turnpike Road, 1626 Turnpike Road, 1620 Turnpike Road, 1614 Turnpike Road, 1608 Turnpike Road, and 1602 Turnpike Road Stockton, CA 95206 for the DCDC Housing First LLC project.
Attachment A - Vicinity Map
Attachment B - Resolution 2018-02-06-0505
Attachment C - Draft Conceptual Turnpike Road Project