REPORT TO THE CITY COUNCIL
FROM: JENNIFER CLARK, Director
Planning and Development Department
PHILIP SKEI, Assistant Director
Planning and Development Department
BY: JENNIFER DAVIS, Senior Management Analyst
Housing Finance Division
SUBJECT
Title
Actions pertaining to the City Studios affordable housing development located at 3876 North Blackstone Avenue (436-260-22) (District 4):
1. ***RESOLUTION - Finding good cause and clear and convincing benefit to the public pursuant to Fresno Municipal Code Section 4-204 for the disposition of surplus real property (APN 436-260-22) for an affordable housing development (Requires 5 Affirmative Votes) (Subject to Mayor’s Veto)
2. Approve the Agreement for Purchase and Sale of Real Property and Escrow Instructions to sell City-owned real property (APN 436-260-22) to Fresno Mission Communities, Inc., a California nonprofit public benefit corporation, and authorize the City Manager or designee to execute the Purchase and Sale Agreement and associated Grant Deed
3. Approve the First Amendment to the Repair Services Agreement between the City of Fresno and RHCB Development, LP, a Limited Partnership to increase the compensation amount by $14,826.00 for a total agreement amount of $8,386,656.00 to incorporate the payment of certain City of Fresno permit fees
Body
RECOMMENDATIONS
Staff recommends the City Council: 1) Adopt the Resolution finding good cause and clear and convincing benefit to the public pursuant to Fresno Municipal Code 4-204 for the disposition of the property for an affordable housing development; 2) Approve the Agreement for Purchase and Sale of Real Property and Escrow Instructions between the City of Fresno and Fresno Mission Communities, Inc.; and 3) Approve the First Amendment to Repair Services Agreement between the City of Fresno and RHCB Development, LP, to increase the compensation amount.
EXECUTIVE SUMMARY
On April 20, 2023, the City Council authorized a joint application with Fresno Mission Communities, Inc. to the California Department of Housing and Community Development (HCD) for the Homekey Round 3 Program. The purpose of the Homekey 3 application was to acquire, rehabilitate, and operate the City Studios Project located at 3876 North Blackstone Avenue (APN 436-260-22), converting a 44-room motel into 34 permanent affordable housing units for individuals and youth experiencing or at risk of homelessness. Upon construction completion, Fresno Mission Communities will act as the owner, operator, and service provider for the Project.
Adopting the Resolution will allow the City to bypass the competitive Request for Proposals (RFP) process per Fresno Municipal Code Section 4-204 and proceed with the affordable housing development, in compliance with the 12-month construction deadline of the Homekey Project. Approving the Agreement for Purchase and Sale of Real Property and Escrow Instructions will transfer ownership of the Property to Fresno Mission Communities, Inc., who will act as the owner, operator, and service provider to the Project. Approving the First Amendment to the Repair Services Agreement with RHCB Development, LP will modify the scope of services and the construction budget to include adjustments to increase the compensation amount by $14,826.00 for permit fees paid by the developer as part of the course of rehabilitation of the Property.
BACKGROUND
On March 29, 2023, HCD announced a Notice of Funding Availability (NOFA) for approximately $736 million in Homekey Round 3 Program funds. On April 20, 2023, the City Council adopted Resolution 2023-097 authorizing a joint application with Fresno Mission Communities, Inc. (Fresno Mission) for Homekey Round 3 Program Funds up to $15,000,000 to acquire, rehabilitate, and operate the property located at 3876 North Blackstone Avenue (APN 436-260-22) (Property), for the City Studios Project. The Project aims to convert the existing 44-room motel into 34 permanent affordable housing units for qualified individuals and youth at risk or experiencing homelessness (Project).
Also on April 20, 2023, City Council adopted Resolution 2023-098 committing City funds in an amount up to $5,000,000 for the Project, contingent upon the full allocation of Homekey Round 3 Award Funds. Additionally, City Council voted to enter into a purchase and sale agreement for the Property for future conversion into permanent affordable housing, including the rehabilitation of the existing Travelodge Motel located at the Property. The Property consists of a 0.91-acre parcel situated just east of Blackstone Avenue along the south side of East Saginaw Way and consists of a two-story L-shaped motel building, a first-floor office and second-floor on-site manager’s unit, and a separate laundry room.
On May 16, 2023, the City submitted a joint application in response to the NOFA for Homekey 3 Program Funds. On September 28, 2023, City Council voted to proceed with the purchase of the Property and adopt a finding of Categorical Exemption based on the findings of the CEQA analysis performed. This analysis confirmed that the Property is a suitable site for the development of permanent affordable housing. On September 29, 2023, the City funded the acquisition of the Property using Encampment Resolution Funding Program Round 2 (ERF-2) Funds in the amount of $4,401,709, for the exclusive purpose of developing permanent affordable housing. On November 6, 2023, HCD confirmed that the Property qualifies as “exempt surplus land” under Government Code section 54221, subdivision (f)(1)(A).
The Property was declared “exempt surplus land” on December 7, 2023, by Resolution No. 2023-308, and proper noticing to HCD was completed in compliance with the Surplus Land Act. Fresno Municipal Code (FMC) Section 4-204 outlines the steps that may be required to dispose of real property and conduct a Request for Proposals (RFP) process. However, an exception to FMC 4-204 may be granted if there is good cause and clear and convincing benefit to the public to vary from the provisions contained in FMC 4-204, making an exception to the RFP process. Developing the Property into permanent affordable housing for individuals and youth at risk of or experiencing homelessness will deliver substantial benefit to the public by providing housing to those that are disproportionately impacted by and at risk for medical diseases or conditions due to the COVID-19 pandemic and other communicable diseases. Additionally, the reuse of the Property will contribute to resolving the City’s homelessness and housing crisis.
On February 14, 2024, the City and Fresno Mission were awarded $9,598,131 in Homekey Round 3 Program Funds for the Project. This funding will provide 34 units of permanent affordable housing, including 21 studio apartments, 9 one-bedroom units, 2 two-bedroom units, and 2 three-bedroom units. Of these, 23 units will be reserved for individuals at-risk of homelessness, 10 units for homeless youth or youth at risk of homelessness, and one unit for an on-site manager. On April 18, 2024, City Council authorized the acceptance of $9,598,131 in Homekey Round 3 Program Funds from HCD for the Project, to be used for eligible costs and expenses.
Also on April 18, 2024, City Council approved a Repair Services Agreement with RHCB Development, Inc., dated April 8, 2024, which established the terms, conditions, and compensation for the rehabilitation of the Property, as well as eligible development costs. The original Repair Services Agreement reflects total compensation to RHCB Development, Inc. in the amount of $8,371,830. The First Amendment to the Repair Services Agreement will adjust the scope of services and total compensation to include the payment of City of Fresno plan check fees in the amount of $14,826 under Permit No. B24-09220, increasing the total construction budget to $8,386,656. These permit fees were originally planned to be paid by the City but were paid by the Developer and are now due to the Developer. The modification to the scope of services and total compensation is permitted under the original Agreement.
Once construction is completed and occupancy is achieved, Fresno Mission will provide comprehensive supportive services to all residents, including high quality and individualized case management with a housing focused approach. These services will include linkage to substance abuse treatment services, school services, vocational services, mental health services, entitlement program assistance, health and disease education, 24/7 peer support, housing retention skills, legal assistance, and medical services. Upon completion of construction, the City will transfer ownership of the Property to Fresno Mission, which will serve as both the owner and direct service provider of the Project.
In partnership with Fresno Mission, the City Studios Project offers a unique opportunity to repurpose an existing property for the advancement of community and economic development. The project will provide affordable quality housing, thereby increasing the City’s housing stock and assisting to meet its affordable housing goals as outlined in the One Fresno Housing Strategy, 2020-2024 Consolidated Plan, and the Housing Element of the 2035 General Plan. Fresno Mission is a highly respected organization with a proven track record of successful partnership with the City’s efforts to reduce homelessness and increase housing availability. This adaptive reuse Project will foster neighborhood revitalization, promote sustainable and equitable development, and improve the overall well-being of the community.
ENVIRONMENTAL FINDINGS
On September 28, 2023, the City Council adopted a finding of Categorical Exemption pursuant to Sections 15301/Class 1 (Existing Facilities) and 15332/Class 32 (In-fill Development) of the California Environmental Quality Act (CEQA) Guidelines. Staff have reviewed the project and determined that none of the exceptions to Categorical Exemptions set forth in Section 15300.2 of the CEQA Guidelines apply.
LOCAL PREFERENCE
Local preference was not considered because the action today does not include a bid or award of a construction or services contract.
FISCAL IMPACT
This project is located in Council District 4 and will not have an impact on the General Fund. The source of funding in this action was appropriated from the California Department of Housing and Community Development Homekey Round 3 Program Award.
Attachments:
Resolution regarding FMC 4-204
Agreement for Purchase and Sale of Real Property and Escrow Instructions
First Amendment to Repair Services Agreement with greement with RHCB Development, LP