REPORT TO THE CITY COUNCIL
DATE: May 17, 2018
FROM: MARLENE MURPHEY, Executive Director
SUBJECT
Title
Actions pertaining to approx. 0.17 acres of property located at 329 N. College Avenue (APNs 459-141-09T):
1. Adopt a finding of Categorical Exemption pursuant to Article 19, Section 15332 (Class 32 - Infill) of the California Environmental Quality Act (CEQA).
2. Approve a Purchase, Sale and Development Covenant Agreement with Self-Help Enterprises, a California Corporation for property located at 329 N. College Avenue
Body
RECOMMENDATION
It is recommended that the City of Fresno in its capacity as the Housing Successor to the Redevelopment Agency (FHS) approve an agreement with Self-Help Enterprises for the sale of property and financial assistance for development of an affordable single family home in the Lowell neighborhood.
EXECUTIVE SUMMARY
The FHS is recommending approval of a Purchase, Sale and Development Covenant Agreement with Self-Help Enterprises (SHE) that will provide for infill development of an affordable single family home on a vacant FHS-owned lot, and the opportunity for a lower income working family to own a home. SHE proposes to construct a new single-family home in the Lowell neighborhood with 45-year affordable housing covenants that will help fulfill FHS affordable housing requirements as well as community goals for revitalization and homeownership.
BACKGROUND
The former Redevelopment Agency used Housing Set Aside (HSA) funds for the purchase of property to develop affordable housing. In conjunction with the dissolution of redevelopment agency assets, Fresno successfully prevailed in Sacramento Superior Court to retain the properties purchased with HSA funds for affordable housing development. Subsequently, SB 341 set deadlines to initiate and perform affordable housing development on HSA property; and, set more restrictive eligibility requirements that limit qualifying household income to a maximum of 80 percent of average median income (AMI). SHE has proposed a project on FHS-owned land at 329 N. College Avenue that meets the goals and requirements of SB341; and, furthers the neighborhood and community goals for attractive, affordable single family home ownership.
Site
The site is located in the Lowell neighborhood on the west side of College Avenue south of Highway 180 and north of Divisadero Avenue. The FHS purchased the approximate 0.17 acre property located at 329 N College to remove blight and build affordable housing. The property contained a long-vacant fourplex structure that was a magnet for illegal activity including drug use, gang activity, graffiti and illegal dumping. With the support of the Fulton Lowell Specific Plan Committee, the structure was demolished to make way for construction of a single family home in furtherance of plan policies to promote lower density, single-family owner-occupied dwellings in the Lowell neighborhood. The property was independently appraised in December 2015 for a value of $31,500.00
Proposal
Self-Help Enterprises is a private, non-profit, 501(c)(3) tax exempt corporation specializing in the creation of new affordable housing opportunities in the San Joaquin Valley. SHE is an experienced affordable housing developer and HUD-certified counseling agency that places emphasis on sustainable homeownership through education and affordable mortgage.
SHE proposes to construct a four bedroom, two bath, two car garage home of approximately 1450 square feet that will be marketed to lower-income households at or below 80% AMI. A 45-year affordability covenant will be recorded on the property.
Funding
Due to challenges involving to financial feasibility presented by both infill housing development in older neighborhoods and the SB 341 requirement that limits assistance to lower income households at or below 80% of AMI, a land write down and cash contribution for this project is required.
SHE is estimating a total project cost of $221,000 including all construction costs, permits, utility connections, construction management, school fees, selling costs, title, escrow and contingency. SHE will provide the unsecured construction financing and purchase the land from FHS through a seller carry back forgivable loan to be secured by a no lower that second position deed of trust on the property. The sales price of the home is estimated at $195,000 resulting in a gap of $26,000. Based upon the 80% AMI income limits per SB 341, the maximum permanent loan that can be obtained by the income qualified buyer is $160,000.00 leaving a down payment assistance requirement of $35,000.00. The FHS proposes to bridge the gap through a contribution of $61,000.00 consisting of up to a $26,000 forgivable development loan to SHE and a 45-year zero percent interest loan of $35,000.00 which will be repaid by the home buyer to the FHS.
Summary
The total project cost for the proposed single family home favorably competes with recent multi-family projects that typically cost well above $250,000 per apartment unit. The developer is self- funding the construction cost thus removing the need for FHS to commit to cash-flow. FHS’s contribution of $61,000 yields multiple benefits. The assistance cost-effectively offers single family home ownership to a lower income household; triggers private long term investment; helps revitalize the Lowell community while leveraging existing infrastructure and public investment; meets neighborhood goals for owner-occupied low density infill; helps fill the need for affordable housing; and, meets the expenditure requirements of SB 341
ENVIRONMENTAL FINDINGS
City staff has performed an environmental assessment of this project and determined it qualifies for Class 32 Categorical Exemption pursuant to Article 19, Section 15332 (infill) of the California Environmental Quality Act because the project is consistent with applicable general plan and zoning designations, occurs within city limits on a site of less than five acres and is surrounded by urban uses, has no value as a habitat for endangered or threatened species, can be adequately served by all required public utilities and services, and approval of the project would not result in any significant effects relating to traffic, noise, air quality or water quality. Furthermore, Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to this project.
LOCAL PREFERENCE
Local preference does not apply because the sale of this property does not include a bid or award of a construction or services contract.
FISCAL IMPACT
The FHS adopted FY 17/18 budget provides funds for the development of affordable housing for this single family development.
Attachments: Self-Help Enterprises Development Proposal
Purchase and Sale Agreement
Development Covenant
Location Map