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AUTHORIZE THE CITY OF STOCKTON AND VISIONARY HOME BUILDERS OF CA TO SUBMIT A JOINT APPLICATION FOR GRANT FUNDING UNDER PROJECT HOMEKEY FOR THE ACQUISITION, REHABILITATION AND MANAGEMENT OF THE FLORA PROJECT
recommended action
RECOMMENDATION
It is recommended that the City Council adopt a resolution to:
1. Approve and authorize the submission of a joint application, submitted by the City of Stockton, in collaboration with Visionary Home Builders of CA (Co-Applicant), to the California Department of Housing and Community Development (HCD), to apply for up to $3.713 million of Project Homekey grant funding for the acquisition, rehabilitation and operation of the Flora domestic violence project for homeless individuals and families located in Stockton.
2. Approve and authorize Applicant and Co-Applicant to enter, if application is approved, execute and deliver a Standard Agreement in a total amount not to exceed $-3.713 million with the State; and a Grant Agreement with the City in the amount up to $2 million; and all other documents required or deemed necessary or are appropriate to secure the Homekey funds from HCD and to participate in the Homekey Program plus all amendments thereto (collectively, the “Homekey Documents”).
3. Acknowledges and agrees that the City shall be subject to the terms and conditions specified in the HCD Standard Agreement, and that the NOFA and Application will be incorporated in the Standard Agreement by reference and made a part thereof. Any and all activities, expenditures, information, and timelines represented in the Application are enforceable through the Standard Agreement. Funds are to be used for the allowable expenditures and activities identified in the Standard Agreement.
4. Approve and authorize the City Manager or his designee to allocate $2 million of the City’s HHAP Round 2 funding and ARPA funding, for the required funding match as deemed appropriate to meet the Homekey program guidelines upon award from the State.
5. Approve and authorize the City Manager to execute the Application and all necessary Homekey Documents on behalf of Co-Applicant for participation in the Homekey Program.
6. Approve and authorize revenue and expenditure budget appropriations in the amount of the award from the State and match from the City if grant funds from the State are awarded.
It is further recommended that the City Manager or designee, be authorized to take appropriate and necessary actions to carry out the purpose and intent of this resolution.
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Summary
On September 9, 2021, HCD announced the availability of $1.45 billion for the Homekey Program (Homekey) grant funding through its Round 2 Notice of Funding Availability (NOFA). Program funds are made available to purchase and rehabilitate housing and convert them into interim, permanent, or long-term housing. The priority application deadline for Homekey funds is January 31, 2022. Applications received before the priority deadline will be entitled to an additional $10,000 in assistance per door.
The Co-Applicant is proposing to acquire a vacant 15-unit apartment complex called the Flora Development, a proposed supportive housing project. At full capacity, this project will house 14 households plus one resident manager. The project envisions a layered approach to delivering critical services that will keep individuals housed. To accomplish this, the Co-Applicant will partner with the Women’s Center Youth and Family Services agency (WCYFS) to provide case management services to the residents. WCYFS has a long history of providing a safe haven for healing for some of the most vulnerable populations in Stockton. The Co-Applicant will be responsible for providing property management of the site.
Staff recommends Council approve a joint application to meet the January 31, 2022, priority deadline.
DISCUSSION
Background
On September 9, 2021, HCD issued a NOFA for local public entities within California to purchase and rehabilitate housing, including hotels, motels, vacant apartment buildings and other buildings to convert them into interim or permanent, long-term housing. Of the $1.45 billion in Homekey grant funds, $1.2 billion is derived from the Coronavirus State Fiscal Recovery Fund (CSFRF) established by the federal American Rescue Plan Act of 2021 (ARPA) and $250 million in State General Funds. Applications will be accepted on a continuous, over-the-counter basis through May 2, 2022, or until available funds are exhausted. The priority application deadline is January 31, 2022, applications received by the priority deadline are entitled, if approved, to bonus funding of $10,000 per door.
The Program’s primary objective is to provide housing for individuals and families experiencing homelessness or at risk of experiencing homelessness and who are impacted by the COVID-19 pandemic. Capital funds must be expended within eight months of the award date and operating funds expended no later than June 30, 2026.
Present Situation
The Co-Applicant has executed a Purchase and Sales Agreement for the acquisition of a 15-unit multifamily apartment complex known as Flora, which will operate as a supportive housing project targeting homeless individuals and families that are victims of domestic violence and/or sex traffickers. In compliance with state confidentiality laws, the address of the Flora domestic violence project will remain private to help ensure the victims’ safety.
The site has thirteen (13) one-bedroom units and two (2) two-bedroom units. At full capacity, the project will house 14 households with one unit reserved for an onsite property manager. The building’s square footage totals approximately 9,950 square feet. Individual unit is 650 sq. ft. for the one-bedroom and 750 sq. ft. for the two-bedroom. There is an on-site parking garage with 13 parking spaces, and additional on-street parking available along the adjacent streets.
Total development costs are projected at $390,887 per unit, amounting to a total development cost of $5.8 million, of which $247,553 per unit is anticipated from Project Homekey; and the program required match from the City of $2 million or $133,333 per unit that may be used for acquisition, rehabilitation costs and operating subsidies. Additionally, the Co-Applicant has secured a $150,000 grant from Wells Fargo Bank that will offset operating expenses costs.
At full capacity, the project will house 14 households with one unit reserved for an onsite property manager. The Women’s Center Youth & Family Services (WCYFS) will deliver critical services to keep individuals housed. Services that will be provided include case management, parenting classes, individual peer counseling, support groups for battered women and linkages of residents to specialized services such as health care, mental health care, substance abuse support and others. The Co-Applicant will be responsible for providing property management to ensure proper functioning of the property. The per-unit cost of the 15-unit Flora project, at $390,887, is competitive for Homekey funding.
Developer: Visionary Home Builders - Flora Apartments
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Council District: 5 |
Address: Stockton/undisclosed location |
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Sources of FundingAmount |
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Homekey Capital Funds/Op. Subsidy |
$3,713,302 |
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City Capital/Op. Subsidy Request |
$2,000,000 |
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Wells Fargo Bank Operating Subsidy |
$150,000 |
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Total Capital and Operating Expense |
$5,863,302 |
Target AMI 30%
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Studio |
1 BR |
2 BR |
3 BR |
4 BR |
Total Units |
|
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13 |
2 |
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15 |
The Flora project will bring much-needed supportive housing to our homeless population, tying directly to our strategic plans.
As part of the joint application, the Co-Applicant is requesting approximately $3.713 million of Homekey funds for the acquisition, development and ongoing services necessary to manage the Flora affordable housing project.
Upon Council approval, the City, with its partner, will submit its Homekey application to HCD for the Flora project. If awarded, Homekey funding and per the Standard Agreement, Homekey capital funds are required to be expended within eight months of the award date, and all rehabilitation activities completed within 12 months of the award date, and tenants housed within 90 days of construction completion. The combined Homekey and grant funds of $5.86 million will be disbursed to the Co-Applicant for the acquisition, development and operating subsidy for the Flora project through progress billings.
The Co-Applicant will assume responsibility in completing the Flora project acquisition rehabilitation using Homekey and City grant funds and will take full ownership of the asset purchased, including the ongoing operational responsibility. Affordability covenants will be recorded on the property.
FINANCIAL SUMMARY
If HCD awards funds to the City and the Co-Applicant, the City will administer funds to the Co-Applicant in the form of a grant. The joint application requires matching funds from the City of $2 million, identified as a combination of HHAP 2 and ARPA Reserve Funds. Match funds from the City will only be provided to the Co-Applicant upon successful award by HCD. The match funds will cover the additional per unit acquisition, capital rehabilitation and operating costs. Additional operating costs or support for the project beyond this original allocation would need to be applied for through the City’s competitive process for loan or grant funds.
There is no impact to the City’s General Fund or any other unrestricted fund as a result of taking the recommended action.