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 $1.9 million State and Local Fiscal Recovery Funds (Part of the American Rescue Plan Act) Agreement with Better Opportunities Builder, Inc., an affiliate of the Housing Authority of the City of Fresno, for the conversion and rehabilitation of the former Econo Inn Motel into a 25-unit affordable multi-family affordable housing and workforce housing project.
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RECOMMENDATION
Staff recommends the City Council approve a $1.9 million State and Local Fiscal Recovery Funds (SLFRF) Agreement with Better Opportunities Builder, Inc. (Exhibit “A” - SLFRF Agreement), an affiliate of the Housing Authority of the City of Fresno, for its proposed Econo North Project that consists of the conversion and rehabilitation of the former Econo Inn Motel located at 1840 Broadway Street, into a 25-unit affordable multi-family workforce housing project.
EXECUTIVE SUMMARY
The City of Fresno (City) is proposing to enter into a State and Local Fiscal Recovery Funds (SLFRF) Agreement with Better Opportunities Builder, Inc., to convert and rehabilitate the former Econo Inn Motel into 25 units of affordable and workforce housing in order to advance the supply of affordable rental housing and workforce housing for the “missing middle” within the City.
BACKGROUND
On December 9, 2021, the City Council elected to use a portion of the City’s SLFRF allocation to support the COVID-19 Public Health and Economic Response by addressing the impact on lower income households by using funds to help increase the supply of affordable housing and the creation of affordable housing, which is an eligible use of funds under the Act. Also, on March 24, 2022, the City Council adopted Resolution 2022-072 supporting the Housing Authority’s Econo North Project and expressing an intent to contribute up to $3 million in SLFRF for the project.
On June 18, 2021, the Housing and Community Development Division released a 2021-2022 Notice of Funding Availability (NOFA) for the development of affordable housing. In response to the NOFA, the City received several applications that are being recommended for funding, one of which is the Econo North Project. The Econo North application for funding is not subject to the Better Business Act as the Housing and Community Development Division received the SLFRF request through a formal application for funding process. In addition, this project is not considered a “private sector” project.
If approved as recommended, Better Opportunities Builder will enter into a SLFRF Agreement with the City for the $1.9 million at 3% interest for the proposed Econo North conversion and rehabilitation project. The Econo North project cost is estimated at $5,542,312: $1,900,000 in SLFRF, $965,000 conventional construction loan, $712,019 in deferred developer fee and $1,965,293 in owner equity. The cost per square foot for the residential units is estimated at $277 ($2,603,717 / 9,410 sq. ft.).
This adapted reuse project consists of the conversion and rehabilitation of the former Econo Inn Motel into the Econo North Apartments (Exhibit “B” - Project Location Map). The Econo North Apartments will consist of 24-units and 1 on-site manager unit with a mix of 18 studios, 6 one-bed/one-bath, and 1 two-bed/one-bath (Exhibit “C” - Photos and Site Plan). In addition, the construction of the project will consist of durable and environmentally friendly building materials, incorporate the City of Fresno Green building standards, Universal Design features, provide at least one on-site parking spaces, drought tolerant landscaping, a laundry room, and a play area. Unit sizes will range from 276 to 335 square feet for a studio, 497-564 square feet for a one-bedroom, and 831 square feet for a two-bedroom. Unit rents will range up to $850 per unit depending on bedroom size and location. Qualifying tenants’ income will range from 60% to 120% of area median income. Twelve units will be SLFRF-assisted floating units and carry a 55-year affordability covenant.
Over the past 60 years, 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 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 apartments.
The approximate completion date of the Econo North project is January 2024. In the event an extension of time is needed, an amendment to the SFLRF Agreement will be brought before Council for approval. Once completed, the Econo North will assist the City of Fresno with its affordable housing goals and objectives as outlined in the Housing Element of the 2035 General Plan, 2020-2024 Consolidated Plan, and One Fresno Housing Strategy. The proposed conversion of the former Econo Inn Motel into the Econo North Apartments also fulfills City goal to transform existing vacant buildings into affordable housing for the City’s residents.
ENVIRONMENTAL FINDINGS
The City Council previously adopted a finding on March 18, 2022 that the proposed project is categorically exempt from the requirements of CEQA pursuant to Sections 15301/Class 1 (existing facilities) and 15302/Class 2 (reconstruction of existing structure) of State CEQA Guidelines. This exemption applies because this project involves the purchase and rehabilitation of existing multi-family housing units without expansion of the facilities. Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to this project. In addition, Pursuant to the Coronavirus State and Local Fiscal Recovery Funds Final Rule: Frequently Asked Questions published on July 27, 2022, NEPA does not apply to Treasury's administration of the funds.
FISCAL IMPACT
The SLFRF Program funds for the proposed Econo North Housing project were appropriated to the Planning and Development Department as part of its fiscal year 2023 Budget.
Attachments:
Exhibit A - SLFRF Agreement
Exhibit B - Project Location Map
Exhibit C - Photos and Site Plan