REPORT TO THE CITY COUNCIL
FROM: JENNIFER K. CLARK, Director
Planning and Development Department
BY: PHIL SKEI, Assistant Director
Planning and Development Department
CORRINA NUNEZ, Project Manager
Community Development Division
SUBJECT
Title
Approve a $3,000,000 HOME Investment Partnerships Program Agreement with FCTC Family II, LP for development of the Sarah’s Court II Apartments, a 120-unit affordable rental housing project with 11 HOME-assisted two- and three-bedroom units located at 200 N. Salma Avenue (City Council District 5).
Body
RECOMMENDATION
Staff recommend the City Council approve a $3,000,000 HOME Investment Partnerships (HOME) Program Agreement (Exhibit “A” - HOME Agreement) with FCTC Family II, LP for development of the Sarah’s Court II Apartments, a 120-unit affordable rental housing project at the Fancher Creek Master Plan Development in southeast Fresno (Exhibit “B” - Project Location Map); and authorize the City Manager to sign all implementing documents required by the U.S. Department of Housing and Urban Development (HUD), approved as to form by the City Attorney’s Office.
EXECUTIVE SUMMARY
If approved as recommended, FCTC Family II, LP will enter into a HOME Agreement with the City for a $3,000,000 residual receipts loan for development of the Sarah’s Court II Apartments which will be located at 200 N. Salma Avenue, adjacent to the completed Sarah’s Court I Apartments. The estimated project cost is $37,310,555. Eleven HOME-assisted units within the project will be income restricted through a 55-year affordability covenant recorded on the property.
BACKGROUND
On May 19, 2023, the Community Development Division (Division) released a 2022-2023 Affordable Housing Development Notice of Funding Availability (NOFA) through Planet Bids for Community Development Block Grant (CDBG), HOME, Community Housing Development Organization (CHDO), HOME- American Rescue Plan (HOME-ARP), and Permanent Local Housing Allocation (PLHA) funding. In response to the NOFA, the Division received 12 applications, one of which was the proposed Sarah’s Court II Apartments. After preliminary underwriting and technical assessment of the applications, the Sarah’s Court II Apartments project was determined to provide the largest communal impact and is recommended for HOME funding in the amount of $3,000,000. HOME Program funds for the project will be in the form of a residual receipts loan at 3% interest, in 3rd position, with principal and interest due and payable in full at the 55-year loan maturity. In accordance with the City of Fresno Better Business Act, the proposed funding was issued though a City of Fresno NOFA and is therefore not subject to the Act process.
On February 1, 2024, the City Council approved a $2,400,000 CDBG loan for acquisition of the Phase II site which sits immediately adjacent to the completed Phase I. A Grant Deed for the Phase II property was recorded on February 20, 2024, as instrument number 2024-0014798, in the Official Records of Fresno County.
As with Phase I, the Sarah’s Court II Apartments will be located at 200 N. Salma Avenue in the Fancher Creek Master Plan Development in southeast Fresno. The Sarah’s Court II Apartments will sit on approximately 1.91 acres with the apartment units contained in four three-story buildings (Exhibit “C” - Site Plan and Elevations).
Total construction is estimated at $37,310,555: $2,400,000 CDBG loan, $23,123,206 commercial loan, $6,418,382 tax credit equity, $2,368,965 deferred developer fee, and $3,000,000 in proposed HOME Program funds (Exhibit “D” - Sources and Uses of Funds). The construction per square foot cost for the residential units is estimated at $244 ($23,577,225 divided by 96,440 square feet) which was derived from the construction line-item budget. The developer will use construction materials that are durable and environmentally friendly and incorporate the City’s Green building standards and Universal Design features.
The apartments will be a mix of 120 units ranging in size from 610 square feet for a 1bed/1bath, 875 square feet for 2bed/2bath, and 1,140 square feet for a 3bed/2bath. Qualifying tenant household income will range from 30 percent to 60 percent of the area median income for Fresno County. A 1bed/1bath unit will be reserved for an on-stie property manager. Units will be equipped with window mini blinds, heating ventilation and air conditioning, refrigerator, range, garbage disposal, dishwasher, microwave, and in-unit washer and dryer. Proposed rents will range from $375 to $1,165 depending on bedrooms per unit. Property amenities (swimming pool, community room, fitness center, lounge area, business center, mail room, conference room, park, and podium parking) were completed in Phase I and will be shared with Phase II tenants. Social Services will be provided to the tenants at no charge by Life Skills Training and Educational Program, Inc. (“LifeSTEPS”). LifeSTEPS will be under a 15-year contract to provide instructor-led adult education classes as well as individualized health and wellness services for tenants. The Division will inspect the Sarah’s Court II Apartments annually for housing quality standards and overall property management.
The development team is creator of the River Park Shopping Center; Campus Pointe, a mixed-use development in northeast Fresno; Park View Plaza, a four-story office building; Palm Crossing, a commercial property in north Fresno; and Fancher Creek Town Center, a master plan development in southeast Fresno.
Approximate completion date is June 1, 2028; however, 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 Sarah’s Court II Apartments will assist the City of Fresno with its affordable housing goals and objectives as identified in the Housing Element of the 2035 General Plan, 2025-20209 Consolidated Plan, One Fresno Housing Strategy, and HOME Program priorities for new housing development. As with Sarah’s Court I, Sarah’s Court II is expected to make a positive impact to the neighborhood by offering new, quality, durable affordable housing. Once the Fancher Creek Master Plan Development is complete, the entire plan area will consist of housing, retail, commercial, and more, and is already home to Brand Haven Apartments, Sarah’s Court I Apartments, Target Department Store, Sprouts Grocery Store, and In-N-Out Burger.
ENVIRONMENTAL FINDINGS
An Environmental Impact Report prepared for the Fancher Creek Project (EIR No. 10133), was certified by the Council on May 17, 2005, by Resolution No. 2005-183, which evaluated the construction of over 2,300 residential units in the entire 475-acre area of the Fancher Creek Master Plan, including 240 residential unit in a mixed-use portion of the Town Cener. On March 25, 2010, the Council adopted an Addendum to EIR No. 10133, dated June 29, 2009, which addressed a total of 740 residential units in the Town Center, an increase of 500 units. After adoption of the Addendum to EIR No. 10133, the Council approved a Development Agreement with Fancher Creek Properties LLC which set forth the rights and responsibilities for development of the Fancher Creek Town Center, including the residential units. This approval was for a portion of the development of the Town Center as contemplated by the Development Agreement, EIR No. 10133, and the Addendum to the EIR. An analysis was performed pursuant to California Environmental Quality Act (CEQA) Guidelines section 15162 to determine whether subsequent environmental review was required for the approval. Based upon the analysis, no subsequent environmental review was required.
Additionally, an environmental review of the Sarah’s Court Apartments II project activities was reviewed pursuant to the National Environmental Policy Act (NEPA) guidelines on February 7, 2022, and resulted in a Finding of No Significant Impact. On March 17, 2022, the City received authorization to use grant funds from HUD.
LOCAL PREFERENCE
Local preference was not used based on conditions for federal funding.
FISCAL IMPACT
The HOME Program funds for the proposed Sarah’s Court II Apartments were appropriated in the FY 2026 Planning and Development Department Budget.
Attachments:
Exhibit A - HOME Agreement
Exhibit B - Project Location Map
Exhibit C - Site Plan and Elevations
Exhibit D - Sources and Uses of Funds