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 $2.7 million HOME Investment Partnerships Program 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 to the site, to create a 64-unit affordable housing project in west central Fresno (District 3).
Body
RECOMMENDATION
Staff recommends the City Council approve a $2.7 million HOME Investment Partnerships (HOME) Program Agreement (Exhibit “A” - HOME 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 to the site, to create a 64-unit affordable housing project in west central Fresno (Exhibit “B” - Project Location Maps), of which 11 units will be HOME-funded, and authorize the City Manager to execute all implementing documents.
EXECUTIVE SUMMARY
Fresno Housing Authority applied to the City’s 2021-2022 Notice of Funding Availability (NOFA) for the development of affordable housing for its Sun Lodge project. Upon its receipt of an allocation of 2021 tax credits the Sun Lodge Project was selected for HOME funding. The project cost is estimated at $30,900,171, of which $2.7 million is proposed to be funded with HOME Program funds which will represent approximately 8% of the total cost. Once completed, The Sun Lodge project will provide 64 converted motel units into affordable housing units, of which 11 units will be HOME-funded units with an affordability period of 55 years.
BACKGROUND
On June 18, 2021, the Housing and Community Development Division released a 2021-2022 NOFA for HOME, CHDO, and PLHA funding for the development of affordable housing. In response to the NOFA, the City received 11 applications, of which five were initially selected for recommendation to receive HOME or PLHA Program funds. One of the recommended projects selected for funding was the Fresno Housing Authority’s Sun Lodge project which received an allocation of 2021 tax credits.
If approved as recommended, Fresno 1101 Parkway, LP (an LP of which Fresno Housing Authority is a sole member) will enter into a HOME Agreement with the City for the $2,700,000 at 2% interest for the proposed Sun Lodge rehabilitation / new construction project. The Sun Lodge project cost is estimated at $30,900,171: $19,973,111 in tax credit equity, $4,790,000 in State of California HomeKey Program funds, $1,068,779 in HomeKey soft cost, $2,000,000 in Fresno Housing Authority funds, $368,281 in accrued interest, and $2,700,000 in HOME Program funds. The cost per square foot for the residential units is estimated at $389 ($ 24,268,000 / 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 offsite improvements, and similar soft costs.
This adaptive reuse project consists of the rehabilitation of the existing 98 units at the Days Inn Motel into a 64-unit (18 studios, 10 one-bed/one-bath, 20 two-bed/one-bath, and 16 three-bed/one-bath) affordable housing project. In addition, the Sun Lodge project will have durable and environmentally friendly building materials, will incorporate the City of Fresno’s Fresno Green building standards and Universal Design features, at least 80 on-site parking spaces, landscaping, laundry, playground, and community room. 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 (Exhibit “C” - Site Plan and Elevations). 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. Eleven 3-bed/1-bath units will be HOME-assisted floating units and carry a 55-year affordability covenant.
The former Days Inn Motel has been most recently operated by Fresno Housing Authority as a shelter for unhoused individuals who require temporary relocation as rehabilitation begins. On June 8, 2021, the City of Fresno Housing and Community Development Division provided the Housing Authority with an approval letter of its proposed Temporary and Permanent Relocation Plan for submittal with its tax credit application to the California Tax Credit Allocation Committee. Relocation has already commenced and will be completed in time for the rehabilitation of the property to begin.
Over the past 60 years, Fresno 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 Fresno 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 @ 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 HOME 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 represents the first conversion of a motel shelter into permanent affordable housing - a critical step toward delivering on commitments to the Jane Addams neighborhood as well as achieving priorities of the One Fresno Housing Strategy.
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 HOME Program funds for the proposed Sun Lodge Housing project were appropriated to the Planning and Development Department as part of its fiscal year 2022 Budget.
Attachments:
Exhibit A - HOME Agreement
Exhibit B - Project Location Maps
Exhibit C - Site Plan and Elevations