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File #: ID 24-1074    Version: 1 Name:
Type: Action Item Status: Passed
File created: 8/6/2024 In control: City Council
On agenda: 9/26/2024 Final action: 9/26/2024
Title: Approve a Regulatory Agreement and Declaration of Restrictive Covenants between the City of Fresno and Fresno Mission Communities, Inc., and for the benefit as a third-party beneficiary the State of California Department of Housing and Community Development for the Homekey 3 City Studios project located at 3876 North Blackstone Avenue, Fresno, California (Council District 4)
Sponsors: Planning and Development Department
Attachments: 1. 24-1074 Regulatory Agreement and Declaration of Restrictive Covenants City Studios Project

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

Approve a Regulatory Agreement and Declaration of Restrictive Covenants between the City of Fresno and Fresno Mission Communities, Inc., and for the benefit as a third-party beneficiary the State of California Department of Housing and Community Development for the Homekey 3 City Studios project located at 3876 North Blackstone Avenue, Fresno, California (Council District 4)

 

Body

RECOMMENDATION

 

Staff recommends the City Council approve a Regulatory Agreement and Declaration of Restrictive Covenants between the City of Fresno and Fresno Mission Communities, Inc., and for the benefit as a third-party beneficiary the State of California Department of Housing and Community Development for the Homekey 3 City Studios project located at 3876 North Blackstone Avenue.

 

EXECUTIVE SUMMARY

 

The City Studios project will provide 34 units of permanent affordable housing in central Fresno (Project) and will be funded primarily through the State of California Department of Housing and Community Development (HCD) Homekey 3 program. On July 11, 2024, as a result of the Project receiving an award of Homekey 3 program funds from HCD, the City and Fresno Mission Communities, Inc. entered into a Standard Agreement with HCD in the amount of $9,598,131.00 for the Project. The Standard Agreement contains various performance milestones that require timely completion, including the execution and recordation of an Affordability Covenant against the Project real property.

 

Approving the Regulatory Agreement and Declaration of Restrictive Covenants (Affordability Covenant) between the City of Fresno and Fresno Mission Communities, Inc., and for the benefit as a third-party beneficiary HCD, provides for compliance with the Affordability Covenant performance milestone contained within the Standard Agreement.

 

BACKGROUND

 

In March 2023, HCD issued a Notice of Funding Availability (NOFA) for Round 3 of the Homekey program. On April 20, 2023, City Council adopted Resolution 2023-097 authorizing a Homekey 3 joint application with Fresno Mission Communities, Inc. for the City Studios Project.

In addition, on April 20, 2023, City Council adopted Resolution 2023-098 approving a contribution of City funds in the amount of $5,000,000.00 to the Project, subject to the full allocation of a Homekey 3 award. In May 2023, the City submitted the joint application for Homekey 3 program funds with Fresno Mission Communities, and on February 14, 2024, the City and Fresno Mission Communities were notified by HCD that program funds in the amount of $9,598,131.00 were awarded to the Project.

 

The Project consists of the acquisition, rehabilitation, and operation of the former Travelodge motel located at 3876 North Blackstone Avenue (Property), as 34 units of permanent affordable housing reserved for those experiencing or at risk of homelessness. Of the 34 total Homekey units, 23 units will be set aside for those At-Risk of Homelessness, 10 units will be set aside for Homeless Youth or Youth At-Risk of Homelessness, and 1 on-site manager’s unit.

 

On April 18, 2024, City Council authorized acceptance of Homekey 3 program funds from HCD in the amount of $9,598,131.00 for the Project, to be used for eligible costs and expenses. On that same date, City Council approved a Memorandum of Understanding with Fresno Mission Communities relating to the Project and the Homekey 3 program funds.

 

On July 11, 2024, City staff received a fully executed Standard Agreement from HCD for the Project. The Standard Agreement contains various performance milestones, including the recordation of an Affordability Covenant against the Project real property in accordance with Homekey Guidelines, the NOFA, and the Standard Agreement. The Affordability Covenant will impose use, operation, occupancy, and affordability restrictions on the real property and improvements; and incorporates the Homekey Program requirements. To meet HCD’s performance milestone, the Affordability Covenant must be recorded against the Project real property within 90 days from the execution of the Standard Agreement, on or before October 11, 2024.

 

The construction of the City Studios Project will be completed by February 14, 2025, and full occupancy by the target population will occur by May 15, 2025. The Project provides the City with a unique opportunity to promote the reuse of an existing property for the advancement of the community and economic development. Once completed, the Project will provide quality affordable permanent housing, increasing the City’s housing stock and bringing the City closer to achieving its affordable housing goals and objectives as outlined in the One Fresno Housing Strategy.

 

The City Attorney’s Office has reviewed and approved as to form the attached Regulatory Agreement and Declaration of Restrictive Covenants.

 

ENVIRONMENTAL FINDINGS

 

Staff has determined this Project falls within the Categorical Exemption set forth in CEQA Guidelines Section 15268 (Ministerial Projects) which exempts qualifying supportive housing projects pursuant to Assembly Bill (AB) 2162 (Gov. Code Sec. 65650 et seq.). Ministerial projects approved by public agencies are not subject to CEQA (Pub. Res. Code Sec. 21080(b)(1)).

 

LOCAL PREFERENCE

 

Local preference was not considered because the action today does not include a bid or an award of a construction or services contract.

 

FISCAL IMPACT

 

There is no impact to the City’s General Fund as a result of this action.

 

Attachment:

Regulatory Agreement and Declaration of Restrictive Covenants City Studios Project