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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. Authorize the execution of a Cooperative Agreement to submit with the Affordable Housing and Sustainable Communities Program application, and if awarded, authorize execution of 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 up to $9,500,000 for Affordable Housing Development (AHD); and grant funding for up to $7,750,000 Sustainable Transportation Infrastructure (STI), up to $925,000 for Transportation-Related Amenities (TRA) Improvements, and up to $700,000 for Housing Related Infrastructure (HRI) Improvements under the Affordable Housing and Sustainable Communities Program (AHSC) for the Grand View Village project;
2. Authorize the execution of a joint Disbursement Agreement with Visionary Home Builders of California, Inc. and the State of California Department of Housing and Community Development, for grant funding under the Affordable Housing and Sustainable Communities Program for the Grand View Village project;
3. Authorize the execution of 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 Grand View Village project; and
4. Authorize the City Manager, or his designee, to take actions that are necessary and appropriate to carry out the purpose and intent of the resolution.
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Summary
The Grand View Village project is an affordable housing and office/retail space project called Grand View Village (Attachment A - Vicinity Map). This project will repurpose an existing building located along the east side of Miner Avenue between Hunter and San Joaquin 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 January 9, 2018 the City Council adopted a resolution 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 (Attachment B - Resolutions No. 2018-01-09-1104), which did not receive funding by the State.
On November 1, 2018, The Strategic Growth Council (SGC) and California Department of Housing and Community Development (HCD) announced the availability of approximately $395 million in funding for Round 4 of the AHSC Program. The AHSC Program is administered by SGC and implemented by the California Department of Housing and Community Development. The California Air Resources Board (CARB) provides the quantification methodology for determining the greenhouse gas (GHG) emissions reductions for the AHSC Program. All applications for the funding are due February 11, 2019. Visionary is hopeful their application will be more successful this round because they have formed a partnership with San Joaquin Regional Transit District (RTD).
In order to apply for the grant, a Cooperative Agreement between Visionary and the City of Stockton is required to be submitted with the application. If the application is approved, HCD will request that two separate State Agreements and a Disbursement Agreement be executed for the Grand View Village project funding.
The City will take the lead on construction related projects with up to $7,750,000 of STI, up to $925,000 of the TRA; and up to $700,000 in HRI with AHSC grant funds. Visionary will be taking the lead in completing the entire affordable housing component with the AHSC loan funds, up to $9,500,000. 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 Grand View Village project from the City to Visionary. Visionary is solely responsible for repayment of the loan.
Staff recommends that Council authorize the City Manager to execute the Cooperative Agreement (Exhibit 1 - AHSC Implementation and Cooperation Agreement), State of California Standard Agreements, Disbursement Agreement; and the Project Funding, Project Completion, and Indemnification Agreements.
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 November 1, 2018, the SGC and HCD issued a Notice of Funding Availability for approximately $395,000,000 in funding from the AHSC Program. 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.
Grand View Village is a proposed mixed-use affordable housing project to be located on a portion of the block bordered by Miner Avenue, Hunter Street, San Joaquin Street, and Channel Street. The project will include approximately 19,000 square feet of commercial space on the ground floor and 106 housing units on the upper floors. The total project development cost is estimated to be $41 million. Visionary is proposing to use multiple funding sources to finance the project, including $2 million in City Bond funds, $330,000 in CDBG funds, AHSC, Four and Nine Percent Low Income Housing Tax Credits, and private financing.
For the Grand View Village Project, Visionary proposes to construct an affordable housing and office/retail space project along the south side of Miner Avenue between Hunter Street and San Joaquin Street. On February 11, 2019, Visionary will apply for partial project funding through the AHSC Program. As part of the approximately $395 million AHSC project grant application, Visionary will request up to $7,750,000 of STI, up to $925,000 of the TRA improvements. These improvements will generally include: 1) bicycle facilities along designated downtown streets; 2) raised medians, landscaping, parklets, and other pedestrian improvements along Miner Avenue between Center Street and Sutter Street; 3) sidewalk Improvements and targeted tree planting along Channel Street between Hunter Street and Aurora Street, and; 4) pedestrian crosswalk safety improvements at Hunter Street and Channel Street. The project will also include some sidewalk improvements and install trees to encourage active transportation, as well as transit stop amenities.
Within the commercial space, Visionary is planning to provide some basic uses needed downtown, including a grocery store. In addition, through the AHSC program, Visionary is requesting funding to construct the Miner Avenue Streetscape improvements on one block of Miner Avenue between Hunter Street and San Joaquin Street. The improvements include widening the sidewalk and installing landscaping, a bicycle lane, and a landscaped median (Attachment C - Miner Avenue Streetscape).
In 2006, the Strong Neighborhoods Initiative Redevelopment Revenue Bond program provided $116 million in gap financing for numerous City projects within, or which benefited, the Redevelopment project areas. These bond proceeds included funds for the development of affordable housing projects. On April 21, 2015, the transfer of remaining bond proceeds from the Successor Agency to the City of Stockton was approved (Attachment D - Resolution 2015-04-21-1501-01). This included approximately $3.2 million of housing proceeds which are now available to assist affordable housing projects citywide. Visionary received $2,000,000 of City Bond funds for acquisition and development cost, and $330,000 CDBG loan was approved in December 2014 to assist with the acquisition of 228 and 240 North Hunter Street. This project also has $275,094 in HOME Entitlements funds.
In 2018, the U.S. Department of Housing and Urban Development (HUD) informed the City that federal funds must be de-obligated from the Grand View Village project (the project) due to statutory timeliness requirements related to the use of HOME funds. VCOR, LP plans to keep the project moving forward. In a companion item on this same agenda, they are requesting to use the remaining $1,021,500 of Bonds funds to pay down the debt on the properties.
Present Situation
Visionary will submit the application to the California Department of Housing and Community Development and the SGC for the AHSC Program to secure funding for the Grand View Village project.
As part of the application, and to receive funding if awarded, HCD needs an 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 the Sustainable Transportation Infrastructure, Transportation-Related Amenities, and related program costs. The scope of work will be altered contingent on the funding award amount. Visionary will indemnify the City by entering into agreements for any improvements other than the transit obligations of the award. Visionary is solely responsible for repayment of the loan proceeds.
Visionary will take the overall responsibility in completing the entire Grand View Village project consisting of both the grant-funded transportation component as well as the larger AHSC program loan component. City is responsible for building out the Transit Obligations using AHSC grant proceeds. If approved, the State agreements together with the Project Funding, Project Completion, Indemnification Agreement, Cooperative Agreement will be executed by the City and Visionary.
FINANCIAL SUMMARY
If awarded, Visionary will receive up to $9,500,000 in the form of a loan for the Affordable Housing Development, and grant funds will be used by both the City and Visionary for construction related projects up to $7,750,000 of STI, up to $925,000 of the TRA; and up to $700,000 in HRI. The AHSC grant funds do not require matching funds from the City. There are no appropriations required by taking this action. If funds are awarded, Council will be asked to approve appropriations at a future meeting.
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. 2018-01-09-1104
Attachment C - Miner Avenue Streetscape
Attachment D - Resolution 2015-04-21-1501-01