REPORT TO THE CITY COUNCIL
FROM: JENNIFER K. CLARK, Director
Planning and Development Department
THROUGH: PHIL SKEI, Assistant Director
Planning and Development Department
BY: CORRINA NUNEZ, Project Manager
Planning and Development Department
SUBJECT
Title
Actions pertaining to the development of the Dakota Apartments, a 113-unit affordable rental housing project, to be located at 3787 N. Blackstone Avenue (southwest corner of N. Blackstone Avenue and E. Dakota Avenue) in central Fresno (City Council District 7):
1. Adopt a finding of Categorical Exemption pursuant to Section 15332/Class 32 of the California Environmental Quality Act (CEQA) Guidelines. None of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to the project; and
2. Approve a $3,000,000 HOME Investment Partnerships (HOME) Program Agreement with Dakota Fresno, LP for the development of the Dakota Apartments of which 11 will be floating two- and three-bedroom HOME-assisted units.
Body
RECOMMENDATION
Staff recommend the City Council: 1) Adopt a finding of Categorical Exemption pursuant to Section 15332/Class 32 of the CEQA Guidelines. None of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to the project (Exhibit “A” - CEQA Determination), and 2) Approve a $3,000,000 HOME Program Agreement (Exhibit “B” - HOME Agreement) with Dakota Fresno, LP for the development of the Dakota Apartments, a 113-unit affordable multifamily housing project of which 11 will be floating two- and three-bedroom HOME-assisted units.
EXECUTIVE SUMMARY
The Dakota Apartments project will consist of 113 affordable rental housing units and one on-site property manager unit and will be located on 1.83 acres at 3787 N. Blackstone Avenue (southwest corner of N. Blackstone Avenue and E. Dakota Avenue) in central Fresno, APN: 435-020-11. The estimated project cost is $70,325,973 of which $3,000,000 is proposed to be funded with HOME Program funds, representing approximately 4% of the cost. Once completed, the Dakota Apartments will provide 113 newly constructed rental housing units of which 11 two- and three-bedroom units will be HOME-assisted and reserved as affordable for a period of 55-years through a declaration of restrictions recorded on the property.
BACKGROUND
On June 17, 2021, the Community Development Division (Division) released a public notice for 2021-2022 affordable housing funding through a Notice of Funding Availability (NOFA). In response to the NOFA, the Division received 11 applications, one of which was the proposed Dakota project. At the time of application submittal, the Dakota project was proposed as a senior community center and senior housing project. However, the City determined the best location for a senior center and senior housing project to be a different site on Blackstone Avenue just north of Dakota Avenue. As a result, the developer revised its proposal to an affordable multifamily housing project available to low-income households and veterans. After preliminary underwriting and technical assessment of the applications, the Dakota project as amended was determined to be one of the more viable projects and is therefore recommended for HOME funding in the amount of $3,000,000.
On March 30, 2023, the City Council approved a Memorandum of Understanding with UP Holdings LLC, the developer, to apply for two allocations of Affordable Housing Sustainable Community (AHSC) program grant funding from the State of California. The project was successful and allocated $33,184,957 to help finance a large portion of the project with approximately $15,000,000 set aside for transit-related amenities and sustainable transportation infrastructure, $10,000,000 for bike lanes and sidewalk improvements, $4,000,000 for CalVans vehicle purchases, $350,000 for onsite services, and $390,000 for internet and bus passes.
The Dakota Apartments project cost is estimated at $70,325,973: $33,184,957 State of California AHSC Program, $4,700,000 developer contribution, $1,500,000 deferred developer fee, $1,204,947 State of California Infill Infrastructure Grant Program, $4,504,099 permanent loan, $22,231,970 tax credit equity, and $3,000,000 HOME Program funds (Exhibit “C” - Sources and Uses of Funds). HOME Program funds will be provided as a residual receipt loan, at 3% interest, in no worse than 4th position, with principal and interest due and payable in full at the 55-year loan maturity.
The Dakota Apartment will be located at the former Smuggler’s Inn site at 3787 N. Blackstone Avenue in central Fresno (Exhibit “D” - Project Location Map). The vacant restaurant building will be demolished to make way for residential units which will be contained within a single four-story residential structure serviced by two full-sized elevators (Exhibit “E” - Site Plan and Elevations). In total, the project will have 114 units (54 one-bed/one-bath, 30 two-bed/one-bath, and 30 three-bed/two-bath), with a one-bedroom unit reserved for an on-site property manager. Unit sizes will range from 549 square feet for a one-bedroom, 775 square feet for the two-bedroom, and 958 square feet for the three-bedroom. Eleven two- and three-bedroom units will be HOME-assisted floating units and will be reserved as affordable for a period of 55-years through a declaration of restrictions recorded on the property.
Proposed project rents will range from $495 to $1,371 per unit depending on size and location. Units will be available to low-income households and veterans with qualifying incomes ranging from 30% to 60% of the Fresno area median income. Fifty units will be reserved for veterans with HUD-Veterans Affairs Supportive Housing vouchers and have been referred to by the Veterans Affairs office.
Project amenities include a 530 square foot community room with a kitchen, 400 square foot fitness room, 590 square foot computer room, 400 square foot library, 57-bike storage facility, 290 square foot outdoor community deck, and 160 on-grade covered and uncovered parking spaces, drought resistant landscaping, and on-site laundry. The community room will serve as a resource center and include management offices, multi-purpose room, kitchen, restroom facilities, and a recreation area. In addition, construction materials will be durable and environmentally friendly and incorporate the City of Fresno Green building standards and Universal Design features. The Division will inspect the property annually for housing quality standards and overall property management.
The developer is proposing to employ the Housing First model when engaging residents with special housing needs. The Housing First model highlights the importance of providing the at-risk population with permanent housing as soon as possible to stabilize their situation, then once housed, the focus shifts to comprehensive case management, thereafter, individuals are introduced to the wide range of supportive services available to them.
UP Holdings, the project developer, has developed a portfolio of housing over the past 15 years that includes 1,418 existing units, 344 units under construction, and 595 units in the pre-development stages. In addition, and in partnership with high-capacity local service providers, 1,062 units are maintained and reserved as permanent supportive housing. UP Holdings’ projects are located throughout five states and dozens of local jurisdictions. Projects are financed with a combination of Low-Income Housing Tax Credits, HOME funds, conventional first mortgage, and other local or State loans and grants.
Dakota Fresno LP is the project owner entity and a California limited partnership (100%). Partners of the LP consist of Housing on Merit XXVI LLC, Managing General Partner (.002%); UP Dakota LLC, Co-General Partner (.004%); and RHCB Dakota LLC, Co-General Partner (.004%), and To Be Determined, Limited Partner (99.99%).
Development advisors consist of Bocarsly Emden Cowan Esmail (attorney), Bowman & Company (Certified Public Accountant), Paul Halajian Architects (Architect), Partner Energy (Energy Consultant), Lauin Associates (Market Analyst), James G. Palmer (Appraiser), Veloce Partners (Development and Finance Consultant), California Municipal Finance Authority (Bond Issuer), GSF Properties, Inc. (Property Management), and Quiring General LLC (General Contractor).
The approximate completion date of the Dakota Apartments project is May 30, 2027. In the event an extension of time is needed, the HOME Agreement provides for an administrative extension of up to 180 days. An extension beyond 180 days will require an amendment to the HOME Agreement which shall be brought before the Council for approval. Once completed, the Dakota Apartments will assist the City of Fresno with its affordable housing goals and objectives as outlined in the Housing Element of the 2035 General Plan, Consolidated Plan, and the City’s One Fresno Housing Strategy.
ENVIRONMENTAL FINDINGS
On March 16, 2023, the Planning and Development Department determined that the project activities as described were exempt from CEQA under Section 15332/Class 32 of the CEQA Guidelines. None of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to the project.
On November 15, 2021, the developer completed an environmental review of the project activities pursuant to the National Environmental Policy Act guidelines that resulted in a Finding of No Significant Impact and received authorization to use grant funds from the U.S. Department of Housing and Urban Development on February 9, 2022.
LOCAL PREFERENCE
Local preference was not used based on conditions for federal funding.
FISCAL IMPACT
The HOME Program funds for the proposed Dakota Apartments Project were appropriated in the Planning and Development Department FY 2025 Budget.
Attachments:
Exhibit A - CEQA Determination
Exhibit B - HOME Agreement
Exhibit C - Sources and Uses of Funds
Exhibit D - Project Location Map
Exhibit E - Site Plan and Elevations