REPORT TO THE CITY COUNCIL
FROM: JENNIFER K. CLARK, Director
Planning and Development Department
BY: PHIL SKEI, Assistant Director
Planning and Development Department
CORRINA NUNEZ, Project Manager
Community Development Division
SUBJECT
Title
Actions pertaining to the Davu Village project (also known as the Parkside Inn Motel), a 63-unit affordable rental housing project, consisting of the rehabilitation of the existing motel and new construction at the south end of the property located at 1075 N. Warren Avenue, Fresno 93728 (District 3):
1. Approve a HOME Investment Partnerships (HOME) Program Agreement with Fresno Davu Village, LP in the amount of $1,996,368; and
2. Approve a HOME American Rescue Plan (HOME-ARP) Program Agreement with Fresno Davu Village, LP in the amount of $1,861,632
Body
RECOMMENDATION
Staff recommends the Council approve a $1,996,368 HOME Program Agreement (Exhibit “A’ - HOME Agreement) and a $1,861,632 HOME-ARP Agreement (Exhibit “B” - HOME APR Agreement) with Fresno Davu Village, LP for the rehabilitation of the Parkside Inn Motel and new construction at the south end of the property, and authorize the City Manager to sign all implementing documents required by the U.S. Department of Housing and Urban Development (HUD), approved as to form by the City Attorney’s Office.
EXECUTIVE SUMMARY
If approved as recommended, Fresno Davu Village, LP will execute a HOME loan Agreement in the amount of $1,996,368 and HOME-ARP loan Agreement in the amount of $1,861,632 for the development of 62 affordable housing units and one manager unit for a total of 63 units. The estimated development cost for this project is $38,815,034. Eligible tenant household income will range from 30 percent to 50 percent of the area median income for Fresno County.
BACKGROUND
On May 19, 2023, the Community Development Division released a 2023-2024 Notice of Funding Availability (NOFA) for the creation of new affordable housing projects or substantial rehabilitation of existing housing. In response to the NOFA, the City received several applications, one of which was the proposed Davu Village project. After preliminary underwriting and technical assessment of the applications, it was determined that the Davu Village should be recommended for funding. The project fulfills both NOFA housing objectives for substantial rehabilitation and new construction and includes permanent housing for homeless individuals, making it a competitive project for both HOME and HOME-ARP funding for eligible construction costs. Once completed, Davu Village will assist the City of Fresno with meeting its affordable housing goals as outlined in the 2023-2031 Housing Element, 2025-2029 Consolidated Plan, and 2025-2026 Annual Action Plan. In addition, the project is expected to make a positive impact on the surrounding neighborhood by rehabilitating a dilapidated 1964 motel structure while introducing new, quality, durable affordable housing for individuals with disabilities.
On March 7, 2024, Council approved a $3 million Community Development Block Grant (CDBG) loan for acquisition of the Parkside Inn Motel structure and property. The CDBG Agreement with Silvercrest, Inc., provided acquisition funds in the form of a 2% interest, 4th position, residual receipts loan, with the balance of principal and interest due in full at the 55-year loan maturity date. The motel and property were acquired on March 27, 2024, as evidenced by a Grant Deed recorded as instrument number 2024-0028342. The ownership structure consists of Fresno Davu Village, LP, a California limited partnership; Silvercrest, Inc. (a nonprofit affiliate of the Housing Authority), Managing General Partner; Housing Authority of the City of Fresno, Administrative General Partner; and PNC Bank, Investor Limited Partner. At close of the construction loan to the project, Silvercrest and the Fresno Davu Village, LP will enter into an assignment and assumption agreement to transfer the CDBG funds for acquisition to the project LP.
If approved as recommended, the HOME loan will hold a 3rd position lien and the HOME-APR loan will hold a 5th position lien. Both loans will be residual receipts loans at 3% interest with the balance of principal and interest due in full at the 55-year loan maturity date.
The Davu Village project construction cost is estimated at $38,815,034: $21,332,013 Construction loan, $3,000,000 CDBG loan, $4,500,000 Housing Relinquished Funding Corporation Loan, $258,549 Credit Sale Loan, $2,031,727 deferred cost, $3,075,621 capital contribution, $1,861,632 HOME-ARP loan, $759,124 Housing Authority loan, and $1,996,368 HOME Loan (Exhibit “C” - Sources and Uses of Funds).
The Parkside Inn Motel is located on 1.90 acres at 1075 N. Warren Avenue (Exhibit “D” - Project Location Map) and will be renamed Dauv Village at completion. The project will include fifty studio units within the existing and newly rehabilitated two-story motel structure, and twelve studio units and an on-site manager in the newly constructed one-story structure at the south end of the property. The project will also include a 2,111 square-foot community room with management offices, multipurpose room, kitchen, and restrooms. In addition, both structures will have laundry facilities and incorporate durable and environmentally friendly building materials and accessibility features. The project will offer 54 on-site parking spaces with 10 reserved exclusively for individuals with disabilities. The City’s Community Development Division will inspect the completed property annually for housing quality standards and overall property management.
Qualifying tenants’ income will range from 30 percent (no more than $1,645 per month) to 50 percent (no more than $2,741 per month) of the area median income for Fresno County. Proposed rents will range from $417 to $746 per unit depending on size and location with the complex. There will be 11 HOME-assisted units and 11 HOME-ARP-assisted floating units within the project.
Over the past 60 years, the Housing Authority has constructed, rehabilitated, managed, and owned thousands of affordable housing units for lower income households. As part of its mission to create vibrant communities, the Housing Authority offers service-rich social programs to its residents to help promote self-sufficiency. Some of the Housing Authority’s more recent projects include the Monarch located at F Street and Mariposa Street, Avalon Commons Phase I located at Alluvial Avenue and Chestnut Avenue, The Arthur at Blackstone located at Blackstone Avenue and Simpson Avenue, and Promesa Commons located at Olive Avenue and Parkway Drive.
The approximate completion date of the Davu Village project is December 30, 2027. In the event the developer requests an extension of time for completion of the project, the agreements allow for an administrative extension of up to 180 days for unforeseen delays. Any extension of time beyond 180 days requires an amendment to the agreements which will be brought before the Council for approval.
The Better Business Act does not apply as the proposed funding was offered through a City-issued NOFA.
ENVIRONMENTAL FINDINGS
On June 7, 2023, the Planning and Development Department completed a California Environmental Quality Act (CEQA) assessment and determined the project to be Exempt under Section 15332/Class 32 of the CEQA guidelines.
In addition, and as required for the use of federal funding, the developer commissioned a National Environmental Policy Act assessment for the project on February 13, 2024, which resulted in a Finding of No Significant Impact. On March 1, 2024, the project received HUD authorization to use CDBG funds for acquisition of the project property. On April 1, 2025, the project received HUD authorization to use Office of Public Housing Project Based Vouchers for the project. On February 6, 2026, a Categorically Excluded Not Subject to Section 58.5 assessment was completed for the use of HOME and HOME-APR funding for the project.
LOCAL PREFERENCE
Local preference was not used based on conditions of federal funding.
FISCAL IMPACT
The HOME and HOME-ARP Program funds for the Davu Village Project were appropriated in the Planning and Development Department’s Fiscal Year 2026 Budget.
Attachments:
Exhibit A - HOME Agreement
Exhibit B - HOME-ARP Agreement
Exhibit C - Sources and Uses of Funds
Exhibit D - Project Location Map