REPORT TO THE CITY COUNCIL
FROM: JENNIFER CLARK, Director
Planning and Development Department
PHILIP SKEI, Assistant Director
Planning and Development Department
BY: JENNIFER DAVIS, Sr. Management Analyst
Housing Finance Division
SUBJECT
Title
Actions pertaining to the Heritage Estates homeownership development project located at East Florence Avenue and South Plumas Street in Southwest Fresno (District 3):
1. Approve a Permanent Local Housing Allocation (PLHA) Agreement with the Housing Authority of the City of Fresno in the amount of $3,062,689 for the pre-development and construction of the Heritage Estates homeownership development project.
2. Authorize the utilization of up to $1,400,000 in accumulated CalHome Program Income for first-time homebuyer mortgage assistance.
Body
RECOMMENDATIONS
Staff recommends the City Council approve a $3,062,689 PLHA Agreement with the Housing Authority of the City of Fresno for the pre-development and construction of the Heritage Estates homeownership development project; and authorize the utilization of up to $1,400,000 in accumulated CalHome Program Income for first-time homebuyer mortgage assistance.
EXECUTIVE SUMMARY
The Heritage Estates homeownership development project (Project) is a proposed subdivision consisting of 33 single-family homes on approximately 7.71 acres of vacant land located on the south side of the intersection of East Florence Avenue and South Plumas Street, and further identified as Assessor Parcel Number 477-060-04T (Property). The Project was selected through a Notice of Funding Availability (NOFA) that included PLHA funds for the construction of new affordable housing. Of the 33 housing units, 25 will be PLHA-assisted and preserved as very low- and low-income housing to those earning 50% to 80% of area median income (AMI). The funds from accumulated CalHome Program Income will be provided as mortgage assistance up to $50,000 per household, to first-time homebuyers purchasing a single-family home in the Heritage Estates subdivision.
Approving the PLHA Agreement with Housing Authority of the City of Fresno (Housing Authority) in the amount of $3,062,689 will facilitate the pre-development and construction of the Heritage Estates project. Authorizing the utilization of up to $1,400,000 in accumulated CalHome Program Income for first-time homebuyer mortgage assistance will provide financial assistance to very low- and low-income households to assist with the purchase of their first home.
The total cost of the proposed development is estimated at $11,550,000, and the projected construction completion date is September 2026.
BACKGROUND
The Property consists of 7.71 acres of undeveloped land that was purchased by the Housing Successor Agency to the City of Fresno Redevelopment Agency (Housing Successor Agency) for affordable housing development and is listed in the 2020-2024 Consolidated Plan to HUD as adopted by City Council on May 21, 2021. In addition, the site is listed as a site available for development of affordable housing in the City’s 2015-2023 Housing Element of the Fresno General Plan, adopted by Council on April 13, 2017. In accordance with the Consolidated Plan and the Housing Element, the site is for the exclusive use of affordable housing purposes in an effort to assist the City in expanding its affordable housing stock.
On June 18, 2021, the Housing and Community Development Division (Housing Division) released the 2021-2022 Affordable Housing Development NOFA for available state and federal funding, including HOME Investment (HOME) and Permanent Local Housing Allocation (PLHA) program funds. In response to the NOFA, the Housing Division received 11 applications, one of which was the Heritage Estates project. After preliminary underwriting and technical assessment of the applications, the Heritage Estates project was one of four projects initially selected for recommendation to receive HOME and/or PLHA Program funds. The accumulated CalHome Program Income is also being recommended for this single-family development as mortgage assistance to the proposed eligible homebuyers purchasing their first house. In addition to the CalHome mortgage assistance, the PLHA funds will convert to mortgage assistance once the houses are completed and conveyed to an eligible homebuyer.
On September 29, 2022, City Council adopted Resolution No. 2022-214 declaring the Property exempt surplus land pursuant to California Government Code section 55221(f)(1)(A) as the property will be transferred for the development of affordable housing pursuant to Government Code section 37364. Further, pursuant to Government Code section 37364(b)(c)(d) the land will be transferred with restrictions and is subject to the State of California Surplus Land Act requirements for providing housing units at certain income levels as follows: not less than 14 of the 33 housing units be affordable to households whose incomes are equal to, or less than, 75% of the maximum income of lower income households (80% AMI), and at least seven of the 33 units be affordable to very low-income households (50% AMI). In addition, the Housing Successor Agency will prepare a Disposition and Development Agreement for transfer of the site to the Housing Authority for the proposed Heritage Homes subdivision.
On November 15, 2023, the City of Fresno, acting as the Lead Agency, approved the Final Tract Map, Civil Plans, and the environmental findings and assessment prepared for the project.
The Heritage Estates Project
The Heritage Estates homeownership development project is a proposed subdivision consisting of 33 single-family homes located on approximately 7.71 acres of vacant land at the south side of the intersection of East Florence Avenue and South Plumas Street, between South Walnut and South Fruit Avenues, and further identified as Assessor Parcel Number 477-060-04T. The Project site is surrounded by primarily residential neighborhoods, with multi-family to the north, single-family to the east, and rural residences and undeveloped land to the south and west of the Site. The Project complies with the General Plan designation with a density of 4.3 dwelling units per acre.
The parcel is zoned RS-3 and will be developed as 100% affordable housing with a density bonus to achieve 33 lots.
A pocket park, street trees, and City trail along the Project frontage are also included in the development. An open space area of approximately 11,657 square feet at the intersection of East Belgravia and South Modoc Avenues will serve as a neighborhood park. Due to the limited number of proposed lots, no on-site open space is required; however, the developer has proposed this pocket park which meets the minimum open space requirements of Fresno Municipal Code (FMC) Section 12-4.705 for residential subdivisions of 50 lots or less and will also pay the required in-lieu fees for open space/park facility purposes. In addition, a bicycle and pedestrian trail is to be constructed along the rear lots with frontage adjacent to East Florence Avenue. The proposed trail will have a six-foot high masonry wall constructed along the rear lot lines. Street trees on all public street frontages are required per FMC Section 15-4108-N and shall be planted at the minimum rate of one tree for each 60’ of street frontage or one tree per home (whichever is greater). The developer will also provide the required irrigation for all street trees included in the Project.
The Project will provide sanitary sewer and water services to the site subject to the implementation of the Fresno General Plan policies, and the construction and installation of public facilities and infrastructure in accordance with the standards, specifications, and policies of the Public Works Department. This will include the construction and extension of sanitary sewer mains within the interior of the proposed subdivision; and the installation of water mains to provide adequate, reliable, and sustainable water supply for urban domestic and public safety consumptive purposes. The Housing Authority is working collaboratively with the property owner to the west of the site to obtain an easement for the installation of drainage infrastructure that would benefit this project and three future development sites in the immediate area.
The Project is consistent with the goals and objectives of the Fresno General Plan relating to land use and urban development. It will provide affordable housing, job opportunities, recreation, and open space, which will appeal to a broad range of residents. It will increase the diverse housing stock and support balanced urban growth. It will develop a complete neighborhood designed to be healthy, attractive, and near schools, parks, and services. It will promote a city of healthy communities and improve quality of life in established neighborhoods. These objectives contribute to the city-wide land use strategy to meet economic development goals, achieve efficient and equitable use of resources, and create an appealing environment for the neighborhood and surrounding community.
SCOPE
The Project consists of the construction of 33 (3 Bd/2 Bath or 4 Bd/2 Bath, with a 2 Bd/2 Bath option) single-family units, ranging from 1,550 to 1,650 square feet, and related on-site and off-site improvements. Houses will be grouped along the perimeter of the site with the main street running north to south with two cul-de-sacs placed on the west portion of the property (see attached Tract Map). The Housing Authority will incorporate the City’s Universal Design elements into each house and install energy efficient appliances. Each home will have a front yard with drought tolerant landscaping, fencing, and two parking spaces. The anticipated sales price of each home is $350,000.
The Project will be constructed in phases (each, a Phase of the Project), allowing for construction of a new Phase of the Project after occupancy certificates have been issued for the previously constructed Phase of the Project. Once the houses are constructed, the Housing Authority will transfer ownership of each parcel through escrow to an eligible first-time homebuyer.
SOURCES AND USES
The Heritage Estates Project total cost is estimated at $11,550,000 and the source of funds is comprised of $1,200,000 in RDA funds, $3,062,689 in PLHA funds, up to $1,400,000 in CalHome Program Income, $5,757,601 in first mortgages and homebuyer down payments, and $150,000 in other developer funding sources.
Project funding will be allocated as follows: $524,925 to off-site infrastructure, $1,586,694 to on-site infrastructure, $8,155,743 to unit hard costs, $800,000 to soft costs, $359,358 to sale closing costs, and $123,280 to loan interest.
PERFORMANCE SCHEDULE
A. Approval of Final Tract Map and Civil Plans: November 15, 2023
B. Financial Closing: March 30, 2024
C. Start of Construction: April 15, 2024
D. Completion of Construction/Sale Phase of the Project:
|
Infrastructure Complete |
December 15, 2024 |
|
Homes #1-5 |
March 15, 2025 |
|
Homes #6-10 |
June 15, 2025 |
|
Homes #11-15 |
September 15, 2025 |
|
Homes #16-20 |
December 15, 2025 |
|
Homes #21-25 |
March 15, 2026 |
|
Homes #26-30 |
June 15, 2026 |
|
Homes #31-33 |
September 15, 2026 |
In the event an extension of time is needed beyond the 180 days as outlined in the attached PLHA Agreement an amendment to the Agreement will be brought before Council for approval.
PLHA and CalHome Funding
The PLHA Loan consists of the Loan of PLHA Funds, in the amount of $3,062,689, which includes the aggregate PLHA-1, PLHA-2, and a portion of PLHA-3, cap (28.5%) for the construction of single-family housing, as outlined in the Council-approved PLHA Five Year Plan and amended on April 21, 2022. This recommendation provides for approval of PLHA-1, PLHA-2, and a portion of PLHA-3 funds. Of the 33 subdivision units, 25 units will be PLHA-assisted and preserved as very low- and low-income housing to households earning 50% to 80% AMI. The 25 PLHA-assisted units will consist of 22 units sold to first-time homebuyers earning up to 80% AMI, with 3 units set aside to be sold to first-time homebuyers earning 50% AMI or less.
If approved as recommended, the PLHA funding will be provided for predevelopment, construction costs that convert to mortgage assistance. The PLHA Loan will carry 3% interest during construction. Once construction of the houses has been completed, the Housing Authority will transfer ownership of each parcel through escrow to an eligible first-time homebuyer. Upon the transfer, the PLHA Loan funds will be conveyed to the eligible homebuyer(s) as a second mortgage at zero percent interest with a 30-year balloon due at loan maturity. Also, upon transfer of the properties through escrow, the Housing Authority will be released from any further obligation under the PLHA Promissory Notes. Qualifying homebuyers occupying the PLHA-assisted houses will have an annual income of up to 80% AMI for the Fresno area, as determined by HUD annually.
An estimated $1,400,000 in CalHome Program Income funds will also be available to proposed eligible homebuyers as mortgage assistance. The CalHome Program supports homeownership programs aimed at low- and very low-income households through grants to local public agencies and non-profit organizations for direct first-time homeowner assistance. Eligible use of CalHome funds includes mortgage assistance and the CalHome program will be administered by the Housing Finance Division. As required by the CalHome Program, homebuyers purchasing a house in the Heritage Estates subdivision will use Program Income as mortgage assistance of up to $50,000.00 as a second mortgage loan at zero percent interest, secured with a Deed of Trust recorded on the property, and subordinated to the homebuyer’s primary mortgage loan. The maximum sales price and/or home value in the Heritage Homes subdivision will not exceed 95% of the current median sales price of a single-family house in Fresno County as published by the Federal Housing Administration annually. All proposed homebuyers will attend a City-approved homebuyer counseling class and will receive homeownership training in the areas of finance, maintenance, and consumer awareness. This training will ensure that the homebuying process is successful and that homeownership is sustainable.
The Heritage Estates Project is an opportunity to provide new, affordable in-fill housing on underutilized vacant land in southwest Fresno. The Project’s 33 single-family homes will increase the City’s housing stock, bringing the City closer to meeting its affordable housing goals and objectives as outlined in the One Fresno Housing Strategy, 2020-2024 Consolidated Plan, and Housing Element of the 2035 General Plan. Further, the proposed subdivision will make a positive impact on the neighborhood and surrounding area by increasing homeownership, encouraging neighborhood revitalization, promoting sustainable and equitable development, and improving the overall well-being of the city.
The City Attorney’s Office has reviewed and approved as to form the attached Permanent Local Housing Allocation (PLHA) Agreement.
ENVIRONMENTAL FINDINGS
An Initial Study has been prepared pursuant to CEQA Guidelines § 15152, and a PEIR has been incorporated by reference pursuant to CEQA Guidelines § 15150. Based upon this analysis the following determinations have been made regarding the project:
1) The project will not have a significant impact on the environment. 2) A Mitigated Negative Declaration was prepared for this project pursuant to the provisions of CEQA. 3) Mitigation measures were made a condition of the approval of the project. 4) A statement of Overriding Considerations was not adopted for this project. 5) Findings were made pursuant to the provisions of CEQA.
Based upon these findings, it is determined that the proposed project will not result in any adverse effects which fall within the Mandatory Findings of Significance contained in § 15065 of the State CEQA Guidelines. Additionally, a determination is made that there is no substantial evidence that the project will have a significant effect on the environment. (Pub. Res. Code § 21064.5; Guidelines § 15070(b) (2).)
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 3 and will not impact the General Fund. The PLHA Program funds for the proposed Heritage Estates Project are appropriated in the 2024 Planning and Development Department fiscal year Budget. The CalHome Program Income for first-time homebuyer mortgage assistance will be paid from sufficient prior Program Income derived from loans made utilizing previous CalHome awards.
Attachments:
PLHA Agreement
Tract Map
Location Map