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
Community Development Division
SUBJECT
Title
Actions pertaining to the substantial rehabilitation of the former Parkside Inn Motel site, located at 1075 N. Warren Avenue, into a 63-unit affordable multifamily housing project (District 3):
1. Approve a First Amendment to the Community Development Block Grant (CDBG) Agreement - Exhibit B: II Project Schedule, with Silvercrest, Inc. (Silvercrest), to extend the Commencement of Construction, Completion of Construction, and Lease Up Schedule dates; and
2. ***RESOLUTION - To support Silvercrest, Inc. Non-Profit Public Benefit Corporation’s Low-Income Housing Tax Credit (LIHTC) application and/or Homekey+ application for the substantial rehabilitation of the Parkside Inn Motel site; and provide a conditional commitment of available housing loan funding to the project in an amount not to exceed $3,858,000 for eligible rehabilitation costs (Subject to Mayor’s Veto).
Body
RECOMMENDATIONS
Staff recommend Council approve 1) a First Amendment to the CDBG Agreement - Exhibit B: II Project Schedule (Exhibit “A”- First Amendment to CDBG Agreement) to extend the project schedule and allow Silvercrest more time to obtain additional financing for the project, and 2) adopt a Resolution (Exhibit “B” - Housing Funding Resolution) to provide support of the project and a conditional commitment of available housing funding in an amount not to exceed $3,858,000 for eligible rehabilitation costs.
EXECUTIVE SUMMARY
If approved as recommended, the First Amendment to the CDBG Agreement with Silvercrest extends the project milestone dates as outlined in the Agreement - Exhibit B: II Project Schedule and allows Silvercrest more time to obtain additional project financing. The Resolution provides for the support of Silvercrest’s 2025 second round tax credit application and/or Homekey+ application to obtain sufficient funding to fully fund the project and commence construction within the 2025 calendar year and a conditional commitment of available housing loan funding in an amount not to exceed $3,858,000 for eligible rehabilitation costs.
BACKGROUND
On May 19, 2023, the Community Development Division released a 2023-2024 Notice of Funding Availability (NOFA) for the creation of new affordable housing projects or substantial rehabilitation of existing housing. In response to the NOFA, the City received several applications, one of which was the substantial rehabilitation of the Parkside Inn Motel site. In accordance with the City of Fresno Better Business Act (Act), the proposed funding was offered through a NOFA and is therefore not subject to the Act process.
On March 7, 2024, the Council approved a $3 million CDBG Agreement with Silvercrest for acquisition of the motel site (Item ID24-248). On March 27, 2024, Silvercrest purchased the site and recorded a Grant Deed as Instrument No. 2024-0028339 in the official records of the Fresno County Recorder’s office. Also, as part of Item ID 24-248, the Council adopted HOME-ARP Resolution No. 2024-054 in the amount of $858,000, which subsequently expired on July 30, 2024.
In 2024, Silvercrest applied for the first and second round of 9% tax credits; however, both applications did not score high enough to achieve a funding award. There were seven LIHTC applications for the Central Valley Region in each round with scores in the low seventy to eighty percent range. Silvercrest’s applications scored in the sixty percent range. Silvercrest is now preparing to apply for 2025 second round 9% tax credits and/or the 2024 Homekey+ application requiring updates to the existing agreement and expired resolution.
The First Amendment to the CDBG Agreement - Exhibit B: II Project Schedule extends the project schedule as follows: Commencement of Construction from December 15, 2024, to April 15, 2026; Completion of Construction to October 30, 2027; and Rent Up Completion from July 15, 2026, to December 30, 2027.
The Housing Funding Resolution, in an amount not to exceed $3,858,000, provides for the support of Silvercrest’s 2025 second round 9% tax credit application and/or 2024 Homekey+ application for funding in an effort to secure sufficient funds to commence construction by December 31, 2025, at which time the Resolution will expire. Upon evidence of sufficient funding to fully fund the project, staff will return to Council for approval of a regulatory agreement in an amount not to exceed $3,858,000.
After substantial rehabilitation, the 2.6-acre site will consist of 63 affordable rental units, including studio, one-bedroom, and two-bedroom apartments, with one unit reserved for an on-site property manager. Unit sizes will range from approximately 356 square feet for a studio, 712 square feet for a one-bedroom, and 1,069 square feet for a two-bedroom. Of the 63 units, 27 units will be rehabilitated within the existing two-story motel structure and 36 units will be newly constructed within three buildings at the south end of the property.
Onsite amenities will include a 2,300 square foot community room with management offices, a multi-purpose room, kitchen, restroom facilities, onsite laundry, and a recreation area. The site currently offers 52 on-site parking spaces, eight accessible parking spaces, and short- and long-term storage with bike racks. In addition, the site is centrally located and situated near Highway 99, public transportation, schools, grocery stores, a medical clinic, parks, and other shopping venues.
On June 7, 2023, the Planning and Development Department Director approved Development Permit Application No. P22-04444 proposing a lodging to dwelling conversion for the Parkside Inn Motel, consistent with all project features described above.
Approval of the First Amendment to the CDBG Agreement extends the project schedule to allow Silvercrest the time necessary to apply for the funding needed to commence construction. Approval of the Resolution provides support of the project and a conditional commitment of available housing loan funding in an amount not to exceed $3,858,000 for eligible rehabilitation costs.
ENVIRONMENTAL FINDINGS
The City determined that the Parkside Inn project is exempt from California Environmental Quality Act (CEQA) pursuant to a Class 32/15332 Categorical Exemption. A notice of exemption was filed on June 8, 2023. No further assessment pursuant to CEQA is required at this time.
In addition, and as required for the use of federal funding, a National Environmental Policy Act assessment for the project activities was completed on January 18, 2024, and resulted in a Finding of No Significant Impact. On March 1, 2024, the project received U.S. Department of Housing and Urban Development authorization to use grant funds for the proposed substantial rehabilitation/new construction project.
LOCAL PREFERENCE
Local preference is not applicable due to the use of federal funding.
FISCAL IMPACT
The CDBG funds were appropriated and expended in 2024. The available housing funding to support the Resolution is appropriated in the 2025 Planning & Development Department Budget.
Attachments:
Exhibit A - First Amendment to CDBG Agreement
Exhibit B - Housing Funding Resolution