COUNCIL
DISTRICT: 6
Adoption of a resolution:
1. Approving business terms for an acquisition and permanent loan in an amount not to exceed $651,300 and a conditional grant of up to $308,700 to Combined Addicts and Professionals Services, Inc. (CAPS) for the acquisition and permanent financing of two adjacent properties located at 1072 & 1082 Vermont Street for group-home transitional housing for up to 30 individuals with extremely low- and very low incomes.
2. Finding that the use of 20% Housing Funds for the project is of benefit to the Redevelopment Project Areas in San José.
BACKGROUND
On July 20, 2001, CAPS applied for a loan to acquire two adjacent properties at 1072 & 1082 Vermont Street. CAPS presently leases and occupies the properties for a residential facility for up to 28 adults recovering from substance abuse and two resident managers. However, CAPS was informed in August 2000 that the owner was intending to sell the properties.
Created in 1975, Combined Addicts and Professionals Services, Inc., a California nonprofit corporation (CAPS) provides residential housing and treatment services for recovering adult substance abusers. Services are also provided to individuals living with HIV and AIDS. Housing, support services, utilities and food are provided to residents at below-market prices or at no cost. The Santa Clara County Department of Alcohol and Drug Services underwrites a portion of the service costs.
The sponsor has entered into a purchase agreement with the owner of the property. The contract agreement expires on September 30, 2001. The purchase price for the property was negotiated at $1,600,000 and supported by an appraisal performed by Gillis Appraisal Service on June 30, 2001. CAPS received approval from the City Community Development Block Grant program for a loan in the amount of $320,000, as well as a loan from the Santa Clara County Housing and Community Development HOME program in the amount of $320,000. With the other sources of funds, the City financing in the form of a loan of up to $651,300 and a conditional grant of up to $308,700, for a total amount of $960,000, is required at this time to complete the acquisition.
There are no relocation issues associated with this Council action.
The sponsor hosted two community meetings. The first one was held at Bellarmine College Preparatory High School on February 18, 1998, and the second one at the Rose Garden Library on April 28, 1998. Additionally, in connection with the August 4, 1998 approval of the Conditional Use Permit for this facility, public hearings were held on July 21, 1998 and July 28, 1998.
Conditional Use Permit for the facility was approved by the City Council on August 4, 1998.
CEQA: ND
30-year affordability restriction restricting the occupancy of the project to extremely low- and low-income persons will be recorded on the properties.
The preparation of this report has been coordinated with the Office of the City Attorney and the Department of Planning, Building and Code Enforcement.
Funds for the proposed loan are available in the Housing Department’s Fiscal Year 2001-2002 budget. Funds for the proposed grant are available in the Redevelopment Agency’s Extremely Low-Income Housing Reserve Fund for Fiscal Year 2001-2002.
REDEVELOPMENT PROJECT AREA
FINDINGS
The proposed project is not located within a Redevelopment Project Area. Thus it is required that the City make a finding, on behalf of the Redevelopment Agency, that any project which utilizes redevelopment funds is a benefit to redevelopment areas. Since rental housing for extremely low- and very low-income households is identified as vital to support the City’s economic growth, much of which is planned to occur in Downtown and industrial redevelopment project areas, staff recommends that the City Council find that the use of any redevelopment funds for the Vermont House acquisition to be a benefit to these redevelopment project areas.
LESLYE CORSIGLIA
Acting Director of Housing
Attachment
Vermont House
Fact Sheet
Sponsor: Combined Addicts and Professionals Services, Inc. (CAPS)
Architect: N/A
Property Manager: CAPS
Project Characteristics
Project Location: 1072 & 1082 Vermont Street
Council District: 6
Project Type: Service-enriched shared transitional housing
Group Served: Extremely low- and Very low-income individuals
Number of units: Up to 30 residents (per CUP conditions)
Monthly Rent: 28 @ $275 and 2 manager’s rooms
Estimated Project Cost: $1,605,925
Cost per Bed: $53,531
City Subsidy (Loan): $651,300
City Subsidy per Bed (Loan): $34,279
City Subsidy (Grant): $308,700
City Subsidy per Bed (Grant): $34,300
Leverage per Bed: 0.67 to 1
Appraised Value: $1,692,000 (Gilles Appraisal Service, June 30, 2001)
Loan Amount: $651,300
Term: 30 years
Rate: 6%, simple
Security: Recorded First Deed of Trust
Repayment: Principal and Interest Annual Payments beginning in
Year 1
Loan to Value Less than 100%
Recourse: City’s Acquisition/Permanent Loan will be non-recourse
Subordination: As allowed by State law
Affordability Restrictions: 30-year Affordability Restrictions for both properties to be recorded at the time of acquisition and may be subordinated as permitted by State law
Conditional Grant Terms:
Grant Amount: $308,700
Condition: 9 units to remain affordable to extremely low-income households for a minimum of 30 years.
Planning Issues
CUP: Approved on August 4, 1998
Building Permit: N/A
Title XXXIV Status: Authority from Measure D (1994) is available
Toxics: N/A