HomeMy WebLinkAboutMINUTES - 02152005 - D2 TO: BOARD OF SUPERVISORS .;_��;:�: ,. . Contra
Costa
FROM: Dennis M. Barry, AICP
Community Development Director County�>,�--= -- " 2
co
DATE: February 15,2005
SUBJECT: HOME Investment Partnerships Act Assistance to Projects Affected by a Lack of Project-Based
Section 8 Vouchers
SPECIFIC REQUEST(S) OR RECOMMENDATIONS(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS
(1) AUTHORIZE the provision of supplemental FY 2005/06 HOME Investment Partnership Act (HOME)
allocations totaling up to $2.9 million for two multi-family projects for which aProject-Based Section 8 voucher
commitment has been rescinded;and AUTHORIZE the Deputy Director-Redevelopment to enter into required legal
documents for this purpose;(2)DIRECT the Executive Director of the Housing Authority of the County of Contra
Costa to report to the Board's Finance Committee on the rescission of the Project-Based Section 8 voucher program,
and suggestion alternatives for short-term and long-term approaches to address the issue;(3)ALLOCATE$130,000
in FY 2004/05 Housing Development Assistance Funds from the HOME Investment Partnership Act funds for the
Trinity Apartments,Walnut Creek,and TRANSFER up to$384,000 in FY 2003/04 HOME funds from the Satellite
Housing Casa Montego II project, Walnut Creek to the Trinity Avenue project; (4) AUTHORIZE the Deputy
Director-Redevelopment to suspend the current review of applications for HOME funds until alternative financing
has been found for projects affected by the rescission of the Project-Based Voucher program;and(5)AUTHORIZE
the Chair of the Board of Supervisors to execute letters to Contra Costa County's federal legislative representatives
in support of actions that would provide the Housing Authority with the capacity to enter into the Project-Based
Section 8 Voucher contracts.
CONTINUED ON ATTACHMENT: X YES SIGNATURE: �
6ZAluf or
COMMENDATION OF COUNTY ADMINISTRATOR MMENDA r
OF BOARD
COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION
OF BOARD ON JC4-k % ,2o PPROVED AS RECOMMENDED OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
UNANIMOUS (ABSENT TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED ON THE
ABSENT: ABSTAIN: MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
Contact: Kara Douglas, 335-1253 ATTESTED 6L� AQ
Orig: Community Development/CDBG JOHN SWEETEN, CLfK 7
cc: County Administrator OF THE BOARD OF SUPERVISORS
County Counsel AND COUNTY ADMINISTRATOR
Housing Authority
BY � Q ;DEPUTY
FISCAL IMPACT
No General Fund are involved. Funds for the recommended actions project will come from FY 2003/049 2004/05
and 2005/06 HOME funds. HOME funds are provided to the County on a formula allocation basis, through the
U.S. Department of Housing and Urban Development(HUD).
BACKGROUND
The County has allocated HOME Investment Partnerships Act(HOME)funds to five projects that were also selected
for participation in the Project-Based Section 8 vouchers (PBV) program by the Contra Costa County Housing
Authority. This selection allowed the project developers to leverage additional private debt based on the difference
between HOME rents and the PBV rent. Due to recent unforeseen and significant federal budget cuts,the Housing
Authority has implemented numerous actions to decrease the overall Section 8 voucher budget.One action designed
to mitigate impacts were revisions to the Section 8 Administrative Plan approved by the Housing Authority Board
on February 1,2005.An additional step taken by the Executive Director of the Housing Authority was to terminate
commitments to enter into PBV contracts.While this action may be needed in the short term to remedy the financial
problems precipitated by the federal cuts,this action has severe repercussions to already funded HOME projects.
The financing of five HOME funded projects has been jeopardized by the rescission of PBVs.Three projects require
immediate attention because they are already in construction or must start construction immediately. Two longer-
term projects will have to alter their plan of finance in response to the loss of PBV. Together the five projects
(summarized below)have been awarded$7 million in HOME funds.The financing gap created by the loss of PBV is
$6.5 million. The County has a HOME allocation of$3.2 million for FY 2005/06. If consideration of current
applications is suspended, and the County allocates most of its HOME funds to the three projects in the greatest
need,these projects will be able to proceed.The other two affected projects have less critical construction start dates
and have more time to find other financing to cover the PBV gap.
A. PROJECTS REQUIRING IMMEDIATE ATTENTION
1. Lakeside Apartments/Concord: Resources for Community Development(RCD)is the developer of the
Lakeside Apartments project. This project involves the acquisition and rehabilitation of a 124-unit
apartment complex for families in Concord.The County has awarded$2.5 million in HOME funds,and
$350,000 in Housing Opportunities for Persons with AIDS(HOPWA)funds.The County has also issued
$11.8 million in tax-exempt bonds for this project. The project was awarded 31 PBV. RCD owns the
site,and rehabilitation work on the units was to begin in December.The project has already received its
construction financing, and is paying interest on loans. Many of the tenants have been relocated to
prepare for construction,and the carrying costs on the nearly vacant development are taking a toll on the
financial health of RCD.
2. Sycamore Senior Apartments/Hercules: Eden Housing, Inc. is the developer of the project, which
involves the new construction of 51 units for seniors on a 1.87 acre site in the Civic Center area of
Hercules.The project received$1.3 million in HOME funds,and was able to secure an allocation of $6
million in highly competitive Low Income Housing Tax Credits(LIHTC).Due to the LIHTC allocation,
the project had to begin construction by November 15,2004,or they would have been required to forfeit
the funds. The County closed a loan on $1.1 million in November, and site preparation work began
shortly thereafter.Eden Housing was unable to begin actual unit construction without a contract from the
Housing Authority for the 50 PBV that the project was awarded. Due to the unavailability of the
vouchers, the project has encountered an additional funding gap. The project must be completed by
January 2006 or Eden will lose their LIHTC allocation. It is crucial for this project to begin unit
construction in order to meet this timeline.Any failure to meet tax credit deadlines will disqualify Eden
from the tax credit program for the next ten years, which is a severe blow to a very active non-profit
housing developer.
3. Trinity Avenue Apartments,Walnut Creek:Satellite Housing,Inc.is the developer of the Trinity Avenue
Apartments project,which involves the new construction of 17 units for families on a half-acre site on
Trinity Avenue in Walnut Creek.The project received$600,000 in FY 2004/05 HOME funds,and was
able to secure an allocation of $3.6 million in highly competitive Low Income Housing Tax Credits
(LIHTC). Due to the LIHTC allocation,the project must begin construction by March 4,2005, or they
will have to forfeit the funds. Since the original allocation of HOME funds, the cost of this project
increased by$1.4 million due to an industry rise in construction costs and materials, as well as unusual
site characteristics. Satellite has requested additional HOME funds to bridge the gap. The Affordable
Housing Finance Committee has made a recommendation of$115,000 in FY 2004/05 HOME HDAF
funds. Satellite was able to value engineer and secure additional funds from the City of Walnut Creek to
offset the difference.An additional$15,000 in FY 2004/05 HOME HDAF ftmds will be allocated to pay
for the legal costs associated with the project.
The Trinity Avenue Apartments project was expected to receive four PBVs. Due to the loss of these
vouchers, the project has encountered an additional funding gap. Satellite Housing supports a staff
recommendation to transfer up to $384,000 from Casa Montego 11, an FY 2003/04 HOME funded
Satellite development that is still in the planning stages,to the Trinity Avenue project. Satellite intends
to reapply for additional funds for the Casa Montego project at a later date.
B. PROJECTS REQUIRING SIGNIFICANT ALTERATIONS TO FINANCIAL PLAN
1. Giant Road/San Pablo:East Bay Asian Local Development Corporation(EBALDC)is the developer of
the Giant Road project,which involves the new construction of 86 units of family housing on a 3.14 acre
site in San Pablo. The project was awarded $600,000 in HOME finds and $600,000 in Community
Development Block Grant(CDBG)funds. EBALDC has drawn down the CDBG funds to acquire the
site. The County, on behalf of EBALDC, has filed an application with the State Treasurer's Office for
the necessary authority to issue multi-family bonds for the project. Assuming the plan of finance can be
modified to address the lack of PBVs the project could start construction in July 2005.
2. Villa Amador/Brentwood: Mercy Housing California is the developer of the Villa Amador project,
which involves the new construction of 98 units of family housing on an 8-acre site in Brentwood.This
project has secured a complex layering of funding including commitments for tax-exempt bonds,
LIHTC,farm worker housing grant funds,State Multifamily Housing Program finds,local finds,and$2
million in County HOME program funds.Project-based Section 8 vouchers have leveraged$1.8 million
in tax-exempt debt, the loss of which would make the project infeasible. Several of the financing
commitments for this development will expire this spring.
C. RECOMMENDED FINANCING STRATEGY
The need to take immediate action is, paramount. The recommendation is to provide staff with the necessary
authority to allocate up to$2.9 million in FY 2005/06 HOME Investment Partnership Funds to cure the financing
shortfall in the Lakeside Apartments,Concord and the Sycamore Senior Apartments,Hercules projects. A separate
recommendation related to FY 2003/04 and 2004/05 Home Investment Partnership Funds is recommended for the
Trinity Apartments, Walnut Creek.
Every effort will be made to minimize the amount of additional HOME funds required.Therefore,in addition to the
recommended allocation of additional County HOME funds all prof ect sponsors will be required to pursue
additional funding from other sources, including the host city for the project. Developers will also be required to
contribute additional developer fee as a permanent source of financing for the project.The developers and staff will
continue discussions with the County Housing Authority to determine if PBVs may be available to their projects
sometime in the future, which may allow some of the additional HOME funds to be returned. Additionally, the
project sponsors have begun discussions with Congressional onal members local staff to seek a legislative solution to this
crisis. Staff is recommending that the Board affirmatively support and participate in these prospective legislative
solutions.
D. CURRENT REVIEW OF HOME APPLICATIONS
A Notice of Funding Availability was issued in October for FY 2005/06 HOME and CDBG funds. Six HOME
applications were received,requesting a total amount of$5,727,488, almost twice the $2.9 million available. The
recommendation is to suspend the current review of applications for HOME funds until a workout of the affected
projects has been concluded.Applicants with critical start dates on or before June 30,2005,may be considered for
FY 2005/06 funding in order to prevent further cancellation of projects. Specifically,California Autism Foundation
(CAF) has requested an additional HOME allocation of $184,000 for its 9-unit apartment complex for
developmentally disabled adults in El Sobrante.CAF was awarded$300,000 in HOME finds in FY 2003/04 for this
development. It has since secured a HUD Section 811 housing for disabled persons grant, and State Multifamily
Housing/Supportive Housing allocation. While this project does not have PBV, it too has requirements to begin
construction. A delay in consideration of the request for additional funds could leave this project infeasible due to
missed deadlines.
ADDENDUM TMJ ITEM D.2
February 15, 2005
On this day the Board considered taking recommended actions regarding the allocation of
$2.9 million in FY 2005/06 HOME Investment Partnership Act(HOME) funds, $130,000
in FY 2004/05 HOME Housing Development Assistance Funds, and the reallocation of
up to $384,000 in FY 2003/04 HOME funds; directing the Housing Authority Executive
Director to report to the Finance Committee on the rescission of the Project-Based
Section 8 voucher program and suggest alternatives for short-term and long-term
approaches to address the issue; and taking related actions.
Jim Kennedy,Deputy Director,Redevelopment Agency,Bob McEwan,Director, Contra
Costa Housing Authority, and Kara Douglas,Affordable Housing Program Manager,
Community Development Department C.B.D.G. presented the report and staff
recommendations.
Chair Uilkema asked Ms. Douglas whether there was a relationship with the agenda item
and the Housing Trust Fund. Ms. Douglas clarified this was a separate issue. She noted a
report is being drafted to come back to the Board of Supervisors on the specific status of
Housing Trust Fund accomplishments.
Supervisor Gioia commented that the goal was to identify local or state sources to close
gaps.
The public was invited to address the Board. The following persons provided testimony:
1. Linda Mandolini, 409 Jackson Street, (Eden Housing),Hayward;
2. Roland Katz, 5034 Blum Road(P.E.U. Local No.1),Martinez;
The Board of Supervisors took the following action by unanimous decision:
ACCEPTED recommendations as presented; MODIFIED Item No. 2 from the
Board Order to "DIRECTED the Executive Director of the Housing Authority of
the County of Contra Costa to report to the Board's Finance Committee on March
7, 2005,on the rescission of the Project-Based Section 8 voucher program, and
suggest alternatives for short-term and long-term approaches to address the issue
in April Finance Committee meeting"and REQUESTED Community
Development return to the Board with a report on the status of the Housing Trust
Fund,
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