REPORT TO THE CITY COUNCIL
FROM: JENNIFER CLARK, Director
Planning & Development Department
PHIL SKEI, Assistant Director
Planning & Development Department
BY: DYLAN MCCULLY, Senior Management Analyst
Homeless Services Division
SUBJECT
Title
Actions related to the acquisition of Travelodge Motel, located at 3876 North Blackstone Avenue (436-260-22) to facilitate the development of permanent affordable housing (District 4):
1. Adopt a finding of Categorical Exemption pursuant to Sections 15301/Class 1 and 15332/Class 32 of the California Environmental Quality Act (CEQA) Guidelines.
2. ***RESOLUTION - Authorizing use of Encampment Resolution Funds for the acquisition of Travelodge Motel in an amount not to exceed $4,401,709.00 (Subject to Mayor’s veto).
3. Approve a month-to-month lease agreement for up to 12 months with Shiv Investments, Inc., for the Travelodge located at 3876 North Blackstone Avenue (436-260-22) for $1,000 per month effective upon execution and authorize the City Manager or designee to execute all contract related documents on behalf of the City.
Body
RECOMMENDATION
Staff recommends City Council adopt a finding of Categorical Exemption pursuant to Sections 15301/Class 1 and 15332/Class 32 of the California Environmental Quality Act (CEQA) Guidelines, adopt a resolution committing up to $4,401,709.00 in City funds for acquisition of the Travelodge, approve a lease agreement with the Shiv Investments, Inc. to continue operating the Travelodge as a motel, and authorize the City Manager or designee to sign all necessary documents to execute the lease agreement on behalf of the City.
EXECUTIVE SUMMARY
Approval of the recommended actions will facilitate the acquisition of the 44-room Travelodge Motel for future conversion to permanent affordable housing.
BACKGROUND
On April 20, 2023, the Council adopted a resolution authorizing the department to submit a joint Homekey 3 application with Fresno Mission for redevelopment of the Travelodge into permanent affordable housing for households experiencing homelessness. On the same date, Council also approved a Purchase and Sale Agreement with the Prabhatbhai T. Patel and Sushilaben P. Patel as Trustees of The Prabhatbhai T. Patel and Sushilaben P. Patel Living Trust u/d/t dated September 12, 2019 (Trustees) for the acquisition of the Travelodge for $4,400,000 and adopted Resolution 2023-098 declaring a commitment for a future City contribution of funds for rehabilitation expenses in an amount not exceeding $5,000,000, contingent upon full award of the Homekey Round 3 funding for the Travelodge project. The joint Homekey 3 application with Fresno Mission was submitted to HCD on May 16, 2023.
In anticipation of a funding award from the Encampment Resolution Funding Round 2 (ERF-2R), the purchase of the Clarion Motel (Clarion) at 4061 North Blackstone Avenue was completed on April 24, 2023, in alignment with the City’s ERF-2R project timeline to provide emergency shelter for the encampment area and critical bridge housing beds for homeless across the city. The intention of the project was to use ERF-2R funds for the acquisition of the Clarion. However, due to significant delays in the announcement of the ERF-2R award, the standard agreement for ERF-2R funds was not executed by the State until August 8, 2023. Per the State’s updated guidance, ERF-2R funds cannot be used to reimburse costs incurred prior to the execution of the standard agreement, including the purchase of the Clarion. Those funds will instead be used to support the acquisition of Travelodge, a use the State has preliminarily approved.
On June 14, 2023, the City was awarded an allocation of $17,000,000 from the Encampment Resolution Funding Round 2 (ERF-2R) program to resolve the existing state encampment area in downtown Fresno. In addition to funding for homeless services, the grant included $5,319,674.29 for acquisition of the Clarion Motel at 4061 North Blackstone for use as interim shelter. Since the City was unable to utilize ERF-2R funds for the acquisition of the Clarion, and because the shelter objective was met using alternative means, those funds are now available to be used for the acquisition of the Travelodge.
Upon closing of the Travelodge sale on or about September 29th, 2023, the City will lease the property to the Shiv Investments, Inc. for $1,000 per month on a month-to-month basis to ensure the property remains secure, while allowing them to continue operating as a motel until the City receives a determination on the Homekey Round 3 award for the Fresno Mission Travelodge project. The City Attorney has reviewed and approved the Lease Agreement as to form. If awarded, rehabilitation of the facility into 33 permanent affordable housing units is anticipated to be completed within 12 months.
In the event the City does not receive a Homekey 3 award for the Travelodge project, the Department is also planning to request that City Council, at a future meeting, declare this property exempt from the Surplus Land Act and initiate a request for proposals (RFP) seeking qualified developers to submit proposals for rehabilitation of the Travelodge for use as permanent affordable housing.
ENVIRONMENTAL FINDINGS
Staff has performed a preliminary environmental assessment of this Project and has determined it falls within the Categorical Exemption set forth in CEQA Guidelines Sections 15301/Class 1 (existing facilities) and 15332/Class 32 (in-fill development) which exempt projects involving a negligible or no expansion of an existing facility or are located in an area considered in-fill development. These exemptions apply because this project involves the purchase of Travelodge without expansion of the facility, and it is located in an in-fill area and is less than five acres in size. Staff determined under the CEQA Guidelines this project fits within the definition of existing facilities in Section 15301/Class 1 and in-fill in Section 15332/Class 32, as Categorically Exempt from further CEQA review. Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2, apply to this project.
LOCAL PREFERENCE
Local preference does not apply because the City acquisition of real property does not involve a bid award of a construction or service contract.
FISCAL IMPACT
The ERF-2R funds for the acquisition were appropriated to the Planning and Development Department as part of its fiscal year 2024 Budget. The potential revenue generated by this lease will be no more than $12,000. All revenue will be used to support the development of future affordable housing.
Attachments:
Categorical Exemption (Travelodge)
Lease Agreement (Travelodge)
Resolution Declaring Funding Commitment