To:   HONORABLE MAYOR AND                   From:   Leslye Corsiglia

                        CITY COUNCIL

                                                                                                            Larry D. Lisenbee

 

   Subject:   SEE BELOW                                               Date:   May 7, 2003

 

COUNCIL DISTRICT: 2

SNI Area: Edenvale/Great Oaks

 

SUBJECT:    APPROVAL OF A CONDITIONAL GRANT TO EDEN HOUSING, INC., OR ITS DESIGNATED AFFILIATE, FOR THE   ACQUISITION AND PREDEVELOPMENT OF THE EDEN PALMS SPECIAL NEEDS APARTMENTS, A 15-UNIT RENTAL HOUSING DEVELOPMENT, LOCATED AT 5350 MONTEREY ROAD, AND APPROVAL OF AN APPROPRIATION ORDINANCE AND FUNDING RESOLUTION AMENDMENTS IN THE HOME FUND IN THE AMOUNT OF $1,275,000.

RECOMMENDATION

It is recommended that the City Council adopt a resolution:

 

1.                  Approving a conditional grant of up to $1,275,000 to Eden Housing, Inc., or its designated affiliate, for the development of the Eden Palms Special Needs Apartments, a 15-unit rental development affordable to extremely low-income individuals with developmental disabilities, located at 5350 Monterey Road.

 

2.                  Amending the Funding Source Resolution and Appropriation Ordinance in the HOME Investment Partnership Program Fund (Fund 445) to:

 

a.       Increase the HOME Loans and Grants appropriation to the Housing Department by $1,275,000.

 

b.      Increase Grant Revenue by $1,275,000.

 

BACKGROUND

 

On December 19, 2002, Eden Housing, Inc. (Eden), submitted a loan application to the Housing Department for the acquisition and predevelopment financing of the Eden Palms Special Needs Apartments, located on a 0.45-acre site at 5350 Monterey Road.  The development consists of 11 one-bedroom units, 3 two-bedroom units and one unrestricted manager’s unit.  The sponsor is requesting $1,275,000 in City financing for acquisition and predevelopment expenses.

 

The sponsor is seeking City financing to purchase the site and finance predevelopment expenses.  A commitment of funds at this time is necessary to purchase the site prior to the May 30th, 2003 expiration date of the purchase agreement between the sponsor and the seller. 

 

 

ANALYSIS

 

The sponsor intends to fund the project through a combination of HUD Section 811 funds, Multi-family Housing Program (MHP) funds, developer equity and City financing, as well as other funding sources available for special needs housing.

 

The current proposal includes 14 units affordable to extremely low-income households paying not more than 30% of their income, with the rest of the rental amount being subsidized by the Project Rental Assistance Contract (PRAC) from HUD.  The project includes one unrestricted manager’s unit.  The total cost to acquire the property and to construct the improvements is currently estimated to be $4,400,342. 

 

The City conditional grant for $1,275,000 will be utilized for the acquisition of the land and predevelopment expenses.  On April 21, 2003, the Housing Department provided a $100,000 predevelopment loan to the borrower.  The predevelopment loan is being paid off with proceeds from the new Acquisition/Predevelopment grant.  As part of the City conditional grant, Affordability Restrictions with a 55-year term will be recorded against the property.  Such Affordability Restrictions may be subordinated as permitted by State Law.

 

The affordability mix of the development and estimated rents will be:

 

                                                1BR                               2BR                           Total               

ELI (30% AMI)                  11 @ $504                    3 @ $594                        14

Unrestricted Units                                                      1  Mgr’s Unit                      1

Total Units                           11                                   4                                      15

 

Pursuant to the Delegation of Authority approved by the City Council on June 25, 2002, the City Manager will approve the specific business terms of the loans and the conditional grant.

COST IMPLICATIONS

 

Funds for the project are available from the City’s HOME Federal funding allocations for Fiscal Year 2001-02.  This funding is consistent with the Council approved Budget Strategy Memo, adopted on February 4, 2003 and the priorities for available housing funding approved by the City Council at it March 25, 2003 meeting.

 

PUBLIC OUTREACH

The Sponsor attended a meeting of the Edenvale/Great Oaks Strong Neighborhood Initiative (SNI) on December 4, 2002 at the Stipe Elementary School Cafeteria and presented and discussed the development.  The developer also convened a neighborhood meeting on January 27, 2003 at the Eden Palms Apartments to review the proposed project.  Additionally, the PD rezoning process includes published notices of public hearings before the Planning Commission and City Council that neighboring residents may attend and provide testimony.

 

COORDINATION

 

This report has been coordinated with the Office of the City Attorney, the Budget Office, and the Department of Planning, Building and Code Enforcement.

 

 

CEQA

 

Under the HOME federal funding requirements and the National Environmental Policy Act (NEPA), an Environmental Assessment (EA) report was completed and a public notice of Finding of No Significant Impact (FONSI) and Notice of Intent to Request Release of Funds (RROF) was published on April 25, 2003.  The 30-day citizen participation process, which allowed the public to review and comment on the EA, will be completed on or about May 25, 2003.

 

Mitigated Negative Declaration (PDC03-002)

 

 

 

 

 

LESLYE CORSIGLIA                                                LARRY D. LISENBEE

            Director of Housing                                                      Budget Director

 

 

 

 

I hereby certify that there will be funds available for appropriation in the HOME Investment Partnership Program Fund (Fund 445) in the fiscal year 2002-03 monies in excess of those heretofore appropriated therefrom, said excess being at least $1,275,000.

 

 

LARRY D. LESENBEE

Director, Budget Office