REPORT TO THE HOUSING AND COMMUNITY DEVELOPMENT COMMISSION
February 26, 2020
FROM: JENNIFER CLARK, Director
Planning and Development Department
THROUGH: THOMAS MORGAN, Housing and Community Development Manager
Housing and Community Development Division
SUBJECT
Title
Actions pertaining to the 2019-2020 Action Plan:
1. HEARING to obtain public comments regarding a Substantial Amendment to the 2019-2020 Annual Action Plan and submission of a $7.5 million Section 108 Loan Application to the United States Department of Housing and Urban Development (HUD) for the construction of the D4 Multi-generational Center in Large Park, located at 4424 N. Millbrook Avenue, Fresno, CA 93726.
2. Recommend City Council approve a Substantial Amendment to the 2019-2020 Annual Action Plan and authorize the submission of a $7.5 million Section 108 Loan Application to the United States Department of Housing and Urban Development (HUD) for the construction of the D4 Multi-generational Center in Large Park, located at 4424 N. Millbrook Avenue, Fresno, CA 93726.
Body
RECOMMENDATION
Staff recommends the Housing and Community Development Commission (HCDC) conduct a public hearing and thereafter recommend City Council approve Substantial Amendment 2019-1 to the 2019-2020 Action Plan and authorize submission of a $7.5 million Section 108 Loan Application.
EXECUTIVE SUMMARY
HUD Section 108 Loan proceeds have been identified as a key component in the financing plan for the proposed D4 Multi-generational Community Center. In order to secure this financing, HUD requires an approved Substantial Amendment to the 2019-2020 Annual Action Plan and an authorized submission of a Section 108 Loan application to HUD.
BACKGROUND
In the current Consolidated Plan, the City identified the provision of public facility improvements to strengthen neighborhood revitalization, and assistance to low-income and special needs households as two of its goals. These goals were driven by a strong demand for services and facilities to meet the needs of youth, seniors, and neighborhoods, with many expressing a desire to see multiple services integrated into one common space. In an effort to meet these goals, the City of Fresno is proposing to apply for a Section 108 Loan Guarantee to fund the construction of a new 10,000 S.F. multi-generational community center and improved park facilities that will increase the quality of life for the low and moderate income population in the surrounding neighborhoods. Specifically, the community center would improve the quality of life for constituents by providing youth with after school activities, senior enrichment activities, recreational space, meeting space, and improved green space with sports fields and a tot lot.
The approximately 6.34 acre project site is Large Park, located at 4424 N. Millbrook Avenue, Fresno 93726 (APN 428-071-02). Large Park is already owned by the City, and is bounded on the north by the Thomas Elementary School site (south of E. Gettysburg Avenue and east of N. Millbrook Avenue), on the east by N. 8th Street, on the south by E. Ashcroft Avenue, and on the west by N. Millbrook Avenue. The subject site is surrounded by low density residential to the east, south, and west and a public school to the north. Over 16 thousand (16,520) residents live within a half mile radius of the site. According to the latest income data, 9,805 or 59% of the residents within the radius are low or moderate income. The proposed site meets HUD National Objective requirements for a Low Mod Area in a primarily residential area (24 CFR 570.208(a)(1)).
The cost of the new facility will be based on a number of factors, including the conceptual plan. As part of the design development process, the City will conduct a citizen outreach campaign to identify the features and amenities that residents will want in the new facility. Potential features could include, but are not necessarily limited to:
• Multi-use concept meeting and recreation area with modular walls for small group activities
• Kitchen for warming meals
• Area to accommodate after-school activities and senior activities
• Office space and space for meetings
• Play area with playground and tot lot
• Expansion of existing on-site parking
• Two sports fields
Based on these and other various factors, the City estimate to construct the facility is $10.75 million.
HUD Section 108 Loan proceeds would form a key component of the financing for this proposal. The City will request Section 108 loan proceeds in the amount of $7,500,000.00. The remainder of funding would come from CDBG entitlement previously approved and a proposed General Fund repayment to the City’s CDBG letter of credit partially reprogrammed to this project. Please see Attachment B for a summary of funding sources.
In order to access Section 108 financing, the City proposes to pledge a portion of its future CDBG grants (Program Years 2020 - 2039) as collateral for repayment. The City proposes to use the maximum repayment period allowable, twenty years, in order to minimize the impact of the repayment obligation on any given year. In the event that the Federal government terminates the CDBG program or reduces the City’s entitlement amount to a level below the annual debt service prior to loan payoff, the City will pledge the subject land and improvements as collateral.
Annual loan payments are currently forecasted at $565,125 ($375,000/principal, $190,125/interest) in Year 1 and decreasing to $386,288 ($375,000/principal, $11,288/interest) in Year 20. No loan pre-payments can be made during the first 10 years following loan settlement. The total amount of loan repayments over the full twenty years is currently forecasted at $8,429,025.
The City will request Section 108 loan proceeds in the amount of $7,500,000. The remainder of funding would come from previously approved CDBG entitlement and the proposed use of a portion of the General Fund repayment to the CDBG letter of credit. The reprogramming of the $2.5 million portion of the General Fund repayment to the CDBG letter of credit will be presented in a separate substantial amendment within the next few weeks.
SUBSTANTIAL AMENDMENT PROCESS: In order to reprogram funds, HUD requires a Substantial Amendment. The amendment process involves conducting a public hearing on the Draft Substantial Amendment and providing recommendations to the City Council. The table below summarizes the citizen participation component of the process. It is important to note the City provided notices in English in the Fresno Bee and Spanish in Vida en el Valle. Additionally, notices were distributed electronically to the e-mail distribution list of over 500 addresses used by the Planning and Development Department. The City also made the Substantial Amendment available on the City’s Website, at the City Clerk’s Office, the Fresno County Library system, and City Neighborhood and Community Centers, and at administrative office of the Planning and Development Department, Fresno City Hall, Third Floor, Room 3065 outer reception area.
Citizen Participation
• January 27, 2020 - Public Notice Published in Fresno Bee
• January 27, 2020 - Public Notice Distributed via Social Media and Email
• February 5, 2020 - Public Notice Published in Vida en el Valle
• February 21, 2020 - Draft Substantial Amendment Published - Minimum 30-day public review period commences
• February 26, 2020 - HCDC Public Hearing and consideration of Draft Substantial Amendment for recommendation to City Council
• March 23, 2020 - Public Review Period closes
• April 9, 2020 - City Council Public Hearing and consideration of the Substantial Amendment
ENVIRONMENTAL FINDINGS
Staff has conducted a preliminary review of the project and has determined that it is exempt from CEQA pursuant to California Environmental Quality Act (CEQA) Guidelines Section 15061(b)(3) under the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Because the proposed action is for Council to approve a loan application and does not commit the City to any one particular option set forth in the document, it can be seen with certainty that there is no possibility that the proposed Council action may have a significant effect on the environment. Therefore, this action is exempt from CEQA pursuant to CEQA Guidelines Section 15061(b)(3).
The HUD NEPA environmental assessment is in the process of being prepared. The proposed action is for Council to approve a loan application and does not commit the City to a choice limiting action.
LOCAL PREFERENCE
Local preference is not applicable.
FISCAL IMPACT
The use of General Funds will not be the primary source of the loan repayments. Rather, future entitlement funding under the City’s CDBG program will be pledged as collateral. However, HUD will require the City to identify other standby collateral in the event that its CDBG program is terminated prior to the full satisfaction of the amounts owed or when entitlement funding is reduced to levels less than the amount of the annual debt service payment. The City is proposing that the standby collateral be the land and buildings associated with the subject project. The City may find at a future date that it is in its best interest to repay HUD from other funds at its disposal, which might include General Funds.
ATTACHMENTS
Exhibit A - Substantial Amendment and Draft Section 108 Application - Multigenerational Center
Exhibit B - Summary of Funding Sources - Multigenerational Center