JOINT MEETING OF THE CITY COUNCIL, THE CITY OF FRESNO IN ITS CAPACITY AS HOUSING SUCCESSOR TO THE REDEVELOPMENT AGENCY OF THE CITY OF FRESNO, THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF FRESNO, AND FRESNO REVITALIZATION CORPORATION
FROM: MARLENE MURPHEY, Executive Director
SUBJECT
Title
Actions pertaining to the disposition of approximately 2.28 acres generally located at the southwest corner of Florence and Walnut and the northwest corner of Florence and Plumas Avenue for development of a 14-unit single-family affordable housing project:
1. HEARING to consider disposition of property located at the southwest corner of Florence and Walnut Avenue and northwest corner of Florence and Plumas Avenue
2. ***RESOLUTION - Finding Substantial Community Benefits resulting from the Amended and Restated Disposition and Development Agreement that justify a price less than fair market value pursuant to Fresno Municipal Code Section 4-204 relating the disposition of real property (Subject to Mayor’s veto)
3. Approve an Amended and Restated Disposition and Development Agreement between the City of Fresno in its capacity as Housing Successor and Self-Help Enterprises
Body
RECOMMENDATION
It is recommended the City conduct a hearing to consider disposition of the property located at the southwest corner of Florence and Walnut Avenue and northwest corner of Florence and Plumas Avenue, approve a Resolution Finding Substantial Community Benefits Resulting from the disposition of property to Self Help Enterprises for less than Fair Market Value, and approve the Amended and Restated Disposition and Development Agreement with Self Help Enterprises for development of a 14-unit single family affordable housing project.
EXECUTIVE SUMMARY
The Amended and Restated Disposition and Development Agreement (DDA) with Self Help Enterprises (Developer) provides for the development of 14 single-family affordable homes on two proximate sites along Florence Avenue between Walnut and Thorne Avenues. The Project includes four (4) three bedroom and 10 four-bedroom units targeted for family income levels at approximately 80% of Average Median Income (AMI) or below with 45-year affordability covenants. The Housing Successor Agency (HSA) will contribute the 2.28-acre site and $730,000 to the Project. Up to $410,000 will be distributed during construction for on and off site required improvements that include storm drain improvements along Walnut Avenue. The $4,260,000 project includes home buyer downpayment assistance of $1,120,000 from combined HSA and City HOME Program sources; secondary financing of $1,343,400 from Developer; and FHA or other conventional mortgage financing of $1,796,600. The close of escrow and beginning of construction for Phase 1 is scheduled for the end of this month. Phase II is scheduled to close escrow in October of this year. As required by FMC Section 4-204, the attached Resolution sets forth findings that substantial public benefits result from the contribution of land for the project.
BACKGROUND
PROJECT SITE AND STATUS
The Project area of 2.28-acres consists of 6 single-family lots in Phase I at the southwest corner of Florence and Walnut Avenues and 8 single family lots in Phase II at the northwest corner of Florence and Plumas. The HSA completed the split of 5 HSA owned parcels into 14 lots. The Developer has received zone clearance and site plan approval for both Phase I and II sites. Phase I and II Civil plans are under review and the Phase I on-site plan and grading permit have been approved. The Developer intends to begin Phase I on-site work at the end of February.
DEVELOPER REQUEST
The Amended and Restated Disposition and Development Agreement amends and supersedes the DDA approved October 22, 2020. During the plan approval process significant flood control issues emerged requiring additional evaluation and study. Approximately 24 acres of older pre-existing single-family development send surface storm water southward- via Florence and Walnut Avenues- toward storm drain infrastructure at Church. Several homes have been impacted by storm water along Walnut Ave. The unimproved, vacant Phase II lots and Florence Avenue alignment have held or absorbed a portion of storm water reducing impact to Walnut Avenue. Consequently, development of the vacant Phase II land is expected to increase storm water runoff. Requirements evolved to include raised dikes and a permanent storm inlet on Walnut at Belgravia Avenue for Phase I; and a potential ponding basin for Phase II.
The evolving information and requirements to address flood control issues and delays created by the Covid pandemic resulted in the Developer’s request for necessary amendments described in the following.
AMENDED AGREEMENT SUMMARY
SCOPE: The project site area and property to be conveyed to Developer is reduced from approximately 2.86 to 2.28 acres. The reduction results from three HSA -owned parcels being set aside for potential use as a ponding basin if necessary for Phase II development. The number of single-family units is reduced from 17 to 14. If not necessary for a basin, the Developer will have the first right of refusal to acquire the parcels subject to negotiating a future agreement.
SOURCES AND USES BUDGET: An increase of $50,000 is added to the infrastructure loan for storm drain improvements along Walnut Ave in Phase I. The total infrastructure loan of $410,000 (from $360,000) consists of $204,285,00 for Phase I and, $205,715 for Phase II. Funds will be disbursed on a cost reimbursement basis for infrastructure required for the Project. The loan will be forgiven on an incremental basis as each home is sold and will not pass on to the homebuyer in order to achieve affordability.
PERFORMANCE SCHEDULE: The Performance schedule for Phase I extends close of escrow and start of construction 10.5 months from April 14, 2022, to February 28, 2023; home construction estimated at 12 months would begin October 1, 2023. The Phase II close of escrow and start of construction is extended 25 months from August 25, 2021, to October 1, 2023; home construction estimated at 12 months would begin April 1, 2024. The length of extension for Phase II recognizes the time to identify and address storm drain issues; and potential ponding basin development or in the alternative, potential acquisition of an easement to extend storm drain infrastructure to the Church Avenue main line.
FINDINGS RELATED TO THE DISPOSITION OF REAL PROPERTY
The approximate 2.28-acre site will be contributed to the Project. A Broker Opinion of Market Value dated January 23, 2023, placed the value of the land as $591,145. The contribution of land is necessary for the Project’s economic feasibility. The Project provides substantial community benefit because it creates affordable single-family home ownership opportunities long sought by the community, public infrastructure improvements, and replaces long-time vacant land with an attractive, desired land use.
DISPOSITION OF FORMER REDEVELOPMENT AGENCY HOUSING PROPERTY FOR HOUSING PURPOSE
The real property is being disposed of by the City in its capacity as Housing Successor to the former Redevelopment Agency. Because these properties are held by the Housing Successor and being disposed of for housing purposes, the City has determined that the Surplus Land Act (SLA) (Government Code 54220 et seq.) does not apply to this disposition of real property for reasons set forth below. Alternatively, the properties will be disposed of pursuant to the procedures and requirements specified in redevelopment agency disposition statues. (Health & Safety Code 33433)
The former Redevelopment Agency acquired certain parcels of real property using funds from the low- and moderate-income Housing Fund (Housing Fund). The Former Agency could only use the Housing Fund for the purposes of increasing, improving and preserving the community’s supply of low and moderate-income housing available at affordable housing costs (Health & Safety Code 33433.2 (a)) and therefore any asset acquired with the Housing Fund can only be used to increase, improve and preserve the communities supply of affordable housing. When accepting the assets of the former Agency, the City in its capacity as Housing Successor agreed to be bound by the same restrictions that governed the former agency’s use of assets acquired or assisted with funds from the Housing Fund (Health & Safety Code 33418, 333430, 33430, 34176.1)
The SLA states that “(n)o provision of this article shall be applied when it conflicts with any other provision of statutory law” (Government Code 54226) Real property disposition procedures under the Health and Safety Code which govern disposition of properties owned by former redevelopment agencies are different from those in the SLA. While the SLA specifies its application to certain former agency property (properties in the Long-Range Property Management Plan identified for sale or future development by the successor agencies former redevelopment agencies), it does not identify former agency housing assets as included in the definition of surplus land (Government Code 54221(b)(2).) Additionally, housing successor properties are held and must be disposed of for “agency use” which includes land that is sold or rented to support agency work or operations (Government Code 54221 (c).)
SUMMARY REPORT
A Summary Report prepared pursuant to HSC Section 33433 (Report) sets forth certain details of the Amended and Restated DDA. The Report calculates costs to the FHS, estimates the value of interest to be conveyed determined at the highest and best use permitted under the redevelopment plan, estimates reuse value to be conveyed, and compares the consideration to be received with the established value. The Report finds that the contribution of land and financial assistance are warranted by the Project. Further, the Report determines the DDA will assist in eliminating blighting conditions and meets goals of AB 1290 Implementation plan including the goal to expand and improve the City’s housing supply including opportunities for low and moderate income families and households.
As required by HSC Section 33433, a notice of public hearing was published in the newspaper once per week for two successive weeks on February 8, 2023, and February 15, 2023. The Report and the DDA was made available to the public in the City Clerk’s office starting on February 8, 2023. The Report remains available in the City Clerk’s office.
ENVIRONMENTAL FINDINGS
On October 22, 2020, the project was determined to be categorically exempt pursuant to CEQA Guidelines Section 15332 as Infill Development. Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, section 15300.2 apply to this project.
FISCAL IMPACT
Funds are available in the Fresno Housing Successor’s LMIHA fund budget.
Attachments:
Resolution
Amended and Restated Development Agree