REPORT TO THE CITY COUNCIL
FROM: JENNIFER CLARK, Director
Planning and Development Department
THROUGH: PHIL SKEI, Assistant Director
Planning and Development Department
BY: CORRINA NUNEZ, Project Manager
Housing and Community Development Division
SUBJECT
Title
Approve a $2.5 million State and Local Fiscal Recovery Funds (part of the American Rescue Plan) Agreement with Fresno 1101 Parkway, LP for the proposed Sun Lodge project, which consists of the rehabilitation of the former Days Inn Motel and the introduction of new construction at the site to create 64 affordable permanent housing units in west central Fresno (District 3)
Body
RECOMMENDATION
Staff recommends the City Council approve a $2.5 million State and Local Fiscal Recovery Funds (SLFRF) Agreement (Exhibit “A” SLFRF Agreement) with Fresno 1101 Parkway, LP, for the proposed Sun Lodge project which consists of the rehabilitation of the former Days Inn Motel and the introduction of new construction at the site to create 64 affordable permanent housing units in west central Fresno and authorize the City Manager to execute all implementing documents.
EXECUTIVE SUMMARY
Previous project financing closed escrow on June 6, 2022, with a $2.5 million placeholder in Housing Relinquished Fund Corporation funds approved by the Housing Authority of the City of Fresno (Housing Authority) contingent upon the City’s subsequent takeout financing of $2.5 million in SLFRF in accordance with the May 31, 2022, City Council Resolution 2022-130.
BACKGROUND
On May 31, 2022, Council approved a resolution supporting the Housing Authority’s development and construction of affordable housing at 1101 N. Parkway Drive and expressing the City’s intent to contribute to the project an amount not to exceed $2.5 million. Staff is recommending a $2.5 million-dollar SLFRF agreement to fulfill Council’s resolution.
As presented to the City Council’s ad hoc committee on CDBG on December 12, 2022, if approved as recommended, Fresno 1101 Parkway, LP will enter into a SLFRF Agreement with the City for a $2.5 million residual receipts loan at 3% interest with a 55-year maturity date. The Sun Lodge project cost is estimated at $36,122,804 with the following revenue sources identified:
Tax Credit Equity $19,290,597
State of California Homekey Program $5,858,779
Housing Authority $4,425,000
Impact Fee Waiver $248,428
Deferred Developer Fees $1,100,000
City of Fresno (HOME program funds) $2,700,000
City of Fresno (proposed SLFRF funds) $2,500,000
$36,122,804
The cost per square foot for the residential units is estimated at $374 ($ 23,332,415 / 62,257sq. ft.). The per square foot cost was derived from the total project cost less: the costs for specialized professional services, reserves as a condition financing, application fees, costs associated with submitting applications for funding, on- and off-site improvements, and similar soft costs.
This adapted reuse project consists of rehabilitation and the introduction of new construction at the existing 98-unit Days Inn Motel property. The existing motel rooms will be converted into 64 affordable permanent housing units (18 studios, 10 one-bed/one-bath, 20 two-bed/one-bath, and 16 three-bed/one-bath). Eleven 3-bed/1-bath units will be SLFRF-assisted floating units that carry a 55-year affordability covenant. Unit sizes will range in square footage from 375 for studios, 551 for one-bedrooms, 889 for two-bedrooms, and 1,315 for three-bedrooms. Unit rents will range from $366 to $1,087 per unit depending on bedroom size and location. Qualifying tenants’ income will range from 30% to 60% of area median income.
In addition, Sun Lodge will be rehabilitated/constructed of durable and environmentally friendly building materials, incorporate the City of Fresno Green building standards and Universal Design features, provide approximately 80 on-site parking spaces, drought tolerant landscaping, laundry room, playground, and a community center.
Over the past 60 years, 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 provides service rich social programs to its residents to help promote self-sufficiency. Some of the most recent projects include the Lowell Neighborhood Project, Renaissance at Santa Clara, Renaissance at Alta Monte, Renaissance at Trinity, Pacific Gardens, Granada Commons, Bridges at Florence, and the downtown City View at Van Ness.
The approximate completion date of the Sun Lodge project is October 2023. In the event an extension of time is needed, an amendment to the SLFRF Agreement will be brought before Council for approval. Once completed, Sun Lodge will assist the City of Fresno with its affordable housing goals and objectives as outlined in the Housing Element of the 2035 General Plan and 2020-2024 Consolidated Plan. The proposed conversion of the Days Inn Motel into the Sun Lodge Apartments also fulfills City and State goals to house unsheltered individuals and represents the first conversion of a motel shelter into permanent affordable housing that will help with the transformation of Motel Drive along Highway 99 and Olive Avenue.
ENVIRONMENTAL FINDINGS
On June 25, 2021, the City of Fresno adopted a finding that the proposed project is categorically exempt from the requirements of California Environmental Quality Act (CEQA) pursuant to Class 32/Section 15332 (Infill) of State CEQA Guidelines. None of the exceptions to the exemptions set forth in section 15300.2 have occurred. The project has not changed and as such no further assessment under CEQA is required at this time.
Additionally, pursuant to the National Environmental Policy Act (NEPA) guidelines, a review of the project activities resulted in a Finding of No Significant Impact. The Housing Authority of the City of Fresno received authorization to use grant funds from the U.S. Department of Housing and Urban Development under Part 58 on September 17, 2021.
FISCAL IMPACT
The State and Local Fiscal Recovery Funds for the proposed Sun Lodge Housing project were appropriated to the Planning and Development Department as part of its fiscal year 2023 Budget.
Attachments:
Exhibit A - SLFRF Agreement