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 $3.5 million State and Local Fiscal Recovery Funds (part of the American Rescue Plan) Agreement with Fresno Step Up at 99, LP for the proposed rehabilitation of 1240 and 1280 Crystal Avenue (the former Motel 99) and the introduction of new construction to create 62 affordable permanent housing units in west central Fresno. (Council District 3)
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RECOMMENDATION
Staff recommends the City Council approve a $3.5 million State and Local Fiscal Recovery Funds (SLFRF) Agreement (Exhibit “E” - SLFRF Agreement) with Step Up at 99, LP for the proposed rehabilitation of the former Motel 99 and the introduction of new construction to create 62 affordable permanent housing units in west central Fresno and authorize the City Manager to execute all implementing documents.
EXECUTIVE SUMMARY
The City of Fresno (City) is proposing to enter into a State and Local Fiscal Recovery Funds (SLFRF) Agreement with Step Up at 99, LP, to rehabilitate the former Motel 99 and include new construction, to develop 63 units of affordable permanent housing units in order to advance the supply of affordable rental housing 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 February 17, 2022, the City Council adopted Resolution 2022-046 supporting this project in an amount up to $3.5 million.
On June 8, 2022, the Housing and Community Development Division released a 2022-2023 Notice of Funding Availability (NOFA) for the development of affordable housing. In response to the NOFA, the City received several applications that have been recommended for funding, one of which is the Step Up on 99 Project. The Step Up on 99 Project 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, Step Up at 99, LP will enter into a SLFRF Agreement with the City for a $3.5 million residual receipts loan at 3% interest with a 55-year maturity date. The Step Up at 99 project cost is estimated at $38,746,137: $29,120,273 in tax credit equity, $546,000 in conventional loan, $5,259,125 in HomeKey funds, $320,739 in accrued deferred Interest, and $3.5 million in City of Fresno SLFRF funds (Exhibit B - Project Sources and Uses). The cost per square foot for the residential units is estimated at $561 ($23,235,000 / 41,448 sq. ft.). The square foot cost was derived from the total project cost less: the costs for specialized professional services, reserves as a condition financing, application fees, costs associated with submitting applications for funding, on and offsite improvements, and similar soft costs.
This adaptive reuse project consists of rehabilitation and the introduction of new construction at the existing Motel 99 property located at 1240 and 1280 Crystal Avenue, Fresno 93728 (APN: 449-232-01 and 449-232-02) (Exhibit C - Project Location Map). As part of the rehabilitation phase, upgrades will include, but not be limited to, new flooring, windows, carpeting, cabinetry, doors, lighting, bathroom and kitchen fixtures, dishwashers, heating/cooling, roofing, and repair/replacement of inadequate mechanical, electrical, and plumbing systems. The new construction phase will also include the same amenities. In addition, Step Up at 99 will be rehabilitated and constructed with a durable and environmentally friendly building materials, incorporate the City of Fresno Green building standards and Universal Design features, provide approximately 73 on-site parking spaces, drought tolerant landscaping, laundry room, playground, and a community center.
The existing motel rooms (Exhibit D - Photos and Floor Plans) will be converted into 62 affordable permanent housing unit (10 studios, 20 one-bed/one-bath, 16 two-bed/one-bath, and 16 three-bed/one-bath). One additional two-bedroom unit will be reserved for an on-site manager for a total of 63 housing units. Ten one-bed/one-bath units will be SLFRF-assisted floating units that carry a 55-year affordability covenant. Unit sizes will range in square footage from 264 S.F. for studios, 435 S.F. to 485 S.F. for one-bedrooms, 770 S.F. to 784 S.F. for two-bedrooms, and 1,131 S.F. to 1,143 S.F. for three-bedrooms. The unit rents will range from $273 to $1,215 per unit depending on bedroom sizes and the location. Qualifying tenants’ income will range from 20% to 60% of the Fresno area median income.
The motel, currently operating as a family shelter, has a small number of occupants who will continue to receive housing placement assistance prior to construction commencing. Any occupants who are unable to find permanent housing will be relocated to another shelter or bridge housing location where they will continue to receive housing placement assistance. The detailed relocation process is fully articulated in the developer’s relocation plan.
Over the past 60 years, Housing Authority has constructed, rehabilitated, managed, and owned many 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 Monarch, Alegre Commons, and Villages @ Broadway.
The approximate completion date of the Step Up at 99 project is January 1, 2025. In the event an extension of time is needed, an amendment to the SLFRF Agreement will be brought before Council for approval. Once completed, the Step Up at 99 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 rehabilitation and new construction at the former Motel 99 site into the Step Up at 99 Apartments will also fulfill the City and State goals to create permanent affordable housing.
ENVIRONMENTAL FINDINGS
California State Assembly Bill 83 added Health and Safety Code Section 50675.1.2 exempting certain projects funded pursuant to Section 50675.1.1 from the requirements of the California Environmental Quality Act (CEQA). . Staff determined that the project is exempt because it is being funded by Project Homekey funds, all applicable statutory requirements have been met, and the Zone Clearance Application was submitted on April 27, 2021, prior to the statutory deadline of April 30, 2021. This application was approved by the Planning & Development Director on June 25, 2021 (prior to the repeal of Assembly Bill 83 on July 1, 2021), at which time the project was determined to be exempt from CEQA. There is no further environmental assessment required at this time.
Additionally, pursuant to the National Environmental Policy Act (NEPA) guidelines, a review of the project activities resulted in a Finding of No Significant Impact. The Housing Authority of the City of Fresno received authorization to use grant funds from the U.S. Department of Housing and Urban Development under Part 58 on September 17, 2021.
FISCAL IMPACT
The State and Local Fiscal Recovery Funds for the proposed Step Up at 99 Housing project were appropriated to the Planning and Development Department as part of its fiscal year 2023 Budget.
Attachments:
Exhibit A - Project Sources and Uses
Exhibit B - Project Location Map
Exhibit C - Photos and Floor plans
Exhibit D - SLFRF Agreement