REPORT TO THE CITY COUNCIL
October 10, 2019
FROM: JENNIFER K. CLARK, Director
Planning and Development Department
BY: THOMAS MORGAN, Manager
Housing and Community Development Division
SUBJECT
Title
Approve a $397,118 HOME Investment Partnerships Program Agreement with Doragon @ Chinatown, LP for the construction of 57 affordable rental units to be located at 1101 F Street in the Chinatown area
Body
RECOMMENDATION
Staff recommends the City Council: 1) Approve a $397,118 HOME Investment Partnerships (HOME) Program Agreement (Exhibit “A” - HOME Agreement) with Doragon @ Chinatown, LP, for the construction of 57 affordable rental units to be located at 1101 F Street in the Chinatown area of Fresno (Exhibit “B” - Project Location Map); and 2) Authorize the City Manager to sign all implementing documents required by the United Stated Department of Housing and Urban Development (HUD), approved as to form by the City Attorney’s Office.
EXECUTIVE SUMMARY
On May 6, 2019, the Housing Authority of the City of Fresno (Housing Authority) was selected through a 2019 Notice of Funding Availability (NOFA) to receive $397,118 in 2019-2020 HOME Program funds for its proposed Chinatown Housing Project, a 57-unit affordable rental housing project located in Downtown Fresno. The project cost is estimated at $32,239,714 of which $397,118 is proposed to be funded with HOME Program funds which represents approximately 1% of the total project costs. The HOME Program funds will be disbursed to the project ownership entity, Doragon @ Chinatown, LP; a California limited partnership, in which Housing Authority has ownership interest. Once completed, the project will provide 57 newly constructed units, of which eleven units will be HOME-assisted units with an affordability period of 55 years.
BACKGROUND
On January 17, 2019, the Housing and Community Development Division released a NOFA for 2019-2020 HOME funding. In response to the NOFA, the City received five applications one of which was Housing Authority’s proposed Chinatown Housing Project (Project). After preliminary underwriting and technical assessment of the applications, the Project was determined to be one of the most “shovel ready” and was therefore recommended for funding in the amount of $397,118 as a residual receipts loan with a fourth position lien, at 2% interest, with the balance due and payable in full at a 55-year maturity date.
Total project cost is estimated at $32,239,714 of which $397,118 is proposed to be funded with HOME Program funds, $2,137,000 in conventional permanent loan funds, $1,160,000 in State of California Infill Infrastructure grant funds, $977,902 in Sustainable Transportation Infrastructure loan funds, $10,807,319 in City of Fresno Transformative Climate Communities (TCC) loan funds, $1,120,000 in CalHFA Loan funds, $850,876 in GP Capital Loan (Solar/ERPI) funds, $1,685,829 in GP Capital Contribution $213,841 in accrued/deferred interest, $500,000 in Deferred Developer Fee, $690,065 in Housing Authority funds, and $11,699,764 in tax credit equity (Exhibit “C” - Project Sources and Uses of Funds). The cost per square foot for the residential units is estimated at $222 ($11,926,085 / 53,597sq. ft.). The residential cost per square foot was derived from the total cost less the costs for specialized professional services, required reserves as a condition financing, application fees, costs associated with submitting applications for funding, on and offsite improvements, etc.
Since Housing Authority has secured a majority, but not all, of the financing needed to complete the Project, other sources of funds, including the HOME Program funds, will be contingent upon an award of tax credits to the project. The tax credit equity is expected to finance approximately 36% of the project and TCC funds are expected to fund an estimated 37% of the project costs. The HOME Program funds to the project represent approximately 1% of the total project costs.
Construction of the 4-story apartment building will be situated on .60 acres and consist of 57 units (15 studios, 16 one-bedroom/one-bath, 23 two-bedrooms/one-bath, and 3 three-bedroom/one-bath), energy-efficient appliances, City of Fresno Green building standards, Universal Design features, on grade parking, a 4,700 square foot community room, and a 14,000 square foot parking garage. Unit sizes will range in square footage from 457 for the studios, 648 for the one-bedrooms, 910 for the two-bedrooms, and 1,237 for the three-bedrooms. Eleven of the units will be HOME-assisted floating units (three studios and eight two-bedrooms) and carry 55-year affordability covenants. The community building will serve as a resource center and include a management office, multi-purpose room, kitchen, laundry room, restroom facilities, and a recreation area (Exhibit “D” - Site Plan and Elevations). The City’s Housing and Community Development Division will annually inspect the Property for housing quality standards and overall property management.
Qualifying tenants’ income will range from 30% to 60% of area median income. Proposed project rents will range from $268 to $1,010 per unit depending on bedroom size and location.
The ownership structure will consist of the Doragon @ Chinatown, LP, a California limited partnership; U.S. Bancorp Community Development Corporation as tax credit investor and limited partner; Silvercrest, Inc. (a nonprofit affiliate of Housing Authority), Managing General Partner, and Doragon @ Chinatown AGP, LLC, a California limited liability corporation that will act as the Administrative General Partner, in which Housing Authority is the sole member.
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, 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 redevelopment project.
Once completed, the Project will assist the City of Fresno with its affordable housing goals and objectives of the Housing Element of the 2035 General Plan and five-year Consolidated Plan.
This item was been presented to the Housing and Community Development Commission for recommendation to Council.
ENVIRONMENTAL FINDINGS
The project is statutorily exempt from CEQA pursuant to Article 18, Statutory Exemptions, Section 15268 of the State CEQA Guidelines [Public Resources Code 21080(b)(1)], ministerial projects are exempt from the requirements of CEQA. Per Article 49, Planning Authorities, Section 15-4907, Summary of Primary Planning Permits and Actions, of the Fresno Municipal Code (FMC), development of one-single family home, duplex, or qualifying Downtown housing which complies with all provisions of the Fresno Development Code requires a Zone Clearance, which is considered a ministerial permit in the City of Fresno. Article 51, Zone Clearance, Section 15-5102(D), Downtown Housing, of the FMC establishes criteria for qualifying Downtown housing which shall require a Zone Clearance. This project met all criterion to qualify as Downtown housing.
Also, on January 12, 2018, a National Environmental Policy Act for the project activities resulted in Finding of No Significant Impact.
LOCAL PREFERENCE
Local preference was not used based on conditions of federal funding.
FISCAL IMPACT
The HOME Program funds for the proposed Chinatown Housing Project were appropriated to the Planning and Development Department as part of its fiscal year 2020 Budget.
ATTACHMENTS:
Exhibit A - HOME Agreement
Exhibit B - Project Location Map
Exhibit C - Sources and Uses of Funds
Exhibit D - Site Plan and Elevations