HomeMy WebLinkAboutCD 2021 Affordable Housing NOFA Funding Recommendations____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: March 7, 2022
Disposition: Resolution 15041
Agenda Item No: 7.a
Meeting Date: March 7, 2022
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Community Development
Prepared by: Alicia Giudice, Director
Alexis Captanian, Housing Analyst
Jacob Noonan, Housing Manager
City Manager Approval: ______________
TOPIC: 2021 AFFORDABLE HOUSING NOFA FUNDING RECOMMENDATION
SUBJECT: RESOLUTION AUTHORIZING THE EXPENDITURE OF FUNDS IN FULFILLMENT OF
THE AFFORDABLE HOUSING TRUST FUND 2021 NOTICE OF FUNDING
AVAILABILITY (NOFA), AND SUPPORTING THE AWARD OF FUNDING FROM THE
COUNTY OF MARIN FOR PERMANENT LOCAL HOUSING ALLOCATION (PHLA)
FUNDING TO PROJECTS RECEIVING CITY FUNDING.
EXECUTIVE SUMMARY: On November 12, 2021, the City issued a Notice of Funding Availability
(NOFA) for development or preservation of affordable housing. The application period ended at 5:00PM
on December 23, 2021, with four responses received. Staff reviewed the responses and confirmed all
four projects meet the requirements for consideration for funding. The four responses were reviewed by
a staff panel that assisted in the development of the funding recommendation provided in this report for
consideration by the City Council.
RECOMMENDATION:
Adopt a resolution authorizing:
1)The expenditure of $1,750,000 in funds from the Affordable Housing In-Lieu Fee Fund
(Fund #243) and $850,000 from the Low / Moderate Fund (Fund #495) and funds from each
account to complete all documents associated with funding the loans for four 100%
affordable housing projects in fulfillment of the Affordable Housing Trust Fund 2021 NOFA,
2)Supporting the award of funding from the County of Marin for Permanent Local Housing
Allocation (PLHA) Funds to the projects that receive funding from the City and have applied
for the County PLHA funds, and
3)Authorizing the City Manager to execute all documents incident to issuing the funds, in a
form approved by the City Attorney.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
BACKGROUND:
The City of San Rafael is committed to creating and maintaining housing that is affordable to the San
Rafael workforce, including lower and moderate-income individuals, as well as families and older adults,
and community members currently or formerly experiencing homelessness. To support the efforts of
affordable housing developers, the City maintains an Affordable Housing Trust Fund and periodically
issues a NOFA to receive responses and evaluate the needs of sponsors seeking funding from the City
for the development and preservation of affordable housing.
Affordable Housing Trust Fund
Presently, the City has two funds in the Affordable Housing Trust Fund, the Housing In-Lieu Fee Fund
(Fund #243), and the Low/Moderate Fund (Fund #495). Collectively these funds are the City’s Affordable
Housing Trust Fund. Each fund is summarized below.
• Housing In-Lieu Fee Fund. The Housing In-Lieu Fee Fund receives monies paid by developers of
market-rate housing in-lieu of including below market rate units in a residential project. This fund
also receives monies paid by developers of certain commercial projects to offset the new need for
affordable housing that the new commercial use is anticipated to create. The Housing In-Lieu Fee
Fund has a current balance of $4,388,147, which includes an $800,000 loan authorized on October
5, 2020, from the 2020 NOFA, for Eden Housing at 999 Third Street “Vivalon.” Therefore, the
unencumbered balance is currently $3,588,147.
• City of San Rafael Successor Agency Low/Moderate Fund. On February 1, 2012, the State
Legislature enacted AB 26, which dissolved all California Redevelopment Agencies and provided for
Successor Agencies to assume the rights, powers, and duties of the former redevelopment
agencies. The City of San Rafael is the Successor Agency to the former San Rafael Redevelopment
Agency, and the City Council acts as the governing board of the Successor Agency. Pursuant to
AB 26, the San Rafael Oversight Board is responsible for overseeing the operation of the San Rafael
Successor Agency as it administers the former Redevelopment Agency’s closing operations and
obligations. The Low/Moderate fund is available for the development of housing affordable to and
occupied by households earning 80 percent or less of the area median income, with at least 30
percent of these remaining funds expended for the development of rental housing affordable to and
occupied by households earning 30 percent or less of the area median income and no more than 20
percent of these remaining funds expended for the development of housing affordable to and
occupied by households earning between 60 percent and 80 percent of the area median income.
Currently the Low/Moderate fund has a balance of $861,169.
Other Local Funding (PLHA)
The Marin County Permanent Local Housing Allocation (PLHA) Fund is managed by the County of Marin
and not by the City. A project that is awarded funds from the City’s Affordable Housing Trust Fund is
eligible to apply for PLHA funding, when funds are available. Senate Bill 2 (SB2), adopted in 2017,
established a permanent source of funding intended to increase the affordable housing stock in
California, a permanent local housing allocation (PLHA). Marin County is eligible for non-competitive,
entitlement funds. The five-year plan for these funds allocates funds to match local housing trust funds
for acquisition, predevelopment, development, and preservation of multi-family projects, with an
emphasis on projects for households that are at or under 60 percent Area Median Income (AMI). PLHA
funding awards are made on the same timeline and following the same process as CDBG and HOME
funds, with the City Council forwarding its recommendation to the County Board of Supervisors for
consideration. The fund has a current balance of approximately $1.2 million and applications submitted
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
by February 17, 2022, will be considered for a PLHA match. The Marin County Community Development
Agency will present the PLHA recommendations for the San Rafael City Council consideration on March
21, 2022.
2021 NOFA – Affordable Housing
On November 12, 2021, the Community Development Department issued a Notice of Funding Availability
(NOFA) for the acquisition/rehabilitation or new development of 100% affordable rental or ownership
housing projects in the amount of two and a half million dollars ($2,500,000) and invited qualified
affordable housing sponsors to submit requests for funding for construction or preservation of affordable
rental housing for seniors, families, and individuals and families with special needs including individuals
and families who formerly experienced homelessness. The NOFA allows the City Council to authorize
additional funding above the published $2,500,000 amount at its discretion. The application deadline for
this NOFA was December 23, 2021, by 5:00pm.
Considerations for Funding. The NOFA provided the following considerations for awarding funding:
• The project meets all requirements provided in the Guidelines.
• Developer team demonstrates site control or ability to achieve site control, including but not limited
to a purchase and sale agreement, executed deed, or letter from a public agency or other entity
agreeing to convey property and including the terms and conditions of such a transfer.
• Budget demonstrates capacity to provide the greatest return on the City’s investment by
maximizing number of affordable units created through the creative use of design, materials,
construction techniques, and financing.
• Financing plan includes reasonable per unit City subsidy coupled with other funding sources
based on target population, project type and cost effectiveness (cost per person, externalities,
reserves, leveraging).
• Ability of the project to contribute toward meeting the City’s goals for new housing development
and the Regional Housing Needs Allocation (RHNA).
Additional Funding Considerations. In addition to the stated considerations for funding, the NOFA
included two further considerations:
• Project readiness in the form of approved entitlements and building permits and awarded state
and federal funding.
• Projects located within a quarter mile of transit, or that provide units for larger families, or serve
very-low- and/or extremely-low-income households or include 20% or more permanent supportive
housing.
The City received four (4) responses to the NOFA totaling just under four million dollars. The four
responses are summarized in the chart on the following page.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
2021 Affordable Housing NOFA – Responses Received
Request Address Project Type Units Applicant Estimated
Project Cost
Prior
Award
2021 NOFA
Request
Acquisition Belvedere St Acquisition/
Rehabilitation TBD Canal
Alliance $6,708,000 -- $800,000
Gap 999 Third St New
Construction 67 Eden
Housing $47,266,587 $800,000 $1,000,000
Gap 3301 Kerner Blvd Adaptive
Reuse 40 Eden
Housing $30,000,000 $1,251,663 $1,843,315
Gap 190 Mill St New
Construction 32 Homeward
Bound $10,872,000 $750,000 $350,000
Totals 139 1 $2,801,663 $3,993,315
Three of the projects previously received funding from the City. These included 999 Third Street (Vivalon),
3301 Kerner Boulevard, and 190 Mill Street. In the case of 3301 Kerner, the City had awarded a grant to
the County of Marin, which leveraged the City’s funding to obtain HomeKey funds which the County used
to acquire the site. The funding recommendation would result in the completion or rehabilitation and
preservation of more than 139 deed-restricted affordable housing units1.
In January 2022, the Community Development Department assembled a panel of City staff to review
and evaluate the responses using the criteria listed in Section 5 of City Council Resolution No. 14760,
Guidelines for the Administration of the Affordable Housing Trust Fund. The panel included the City’s
Community Development Director, Chief Building Official, Finance Director, and Economic
Development Director. The panel met on January 24 and evaluated each response and formed a
preliminary recommendation. The panel also identified needs for additional information. Community
Development staff then held follow-up meetings with the respondents in early February to gather the
additional information. A final preliminary evaluation was circulated to the panel prior to presenting the
recommendation to the City Manager. The City Council ad hoc subcommittee on Homelessness, which
consists of the Mayor and Council Member Kertz, received the preliminary recommendation and
provided comments to staff on February 23, 2022.
Funding Recommendation
The funding recommendation for the 2021 Affordable Housing NOFA is provided in the following two
charts. Funding is recommended from both the Low/Moderate Fund (#495) and the Affordable Housing
In-Lieu Fee fund (#243). The recommendation includes adding to the loan principal the City’s legal costs
associated with processing each of the loans, which are estimated to be approximately $5,000 per loan,
however legal costs could be greater than this depending on the complexity of the project.
The funding recommended from the Low/Moderate Fund is as follows.
Recommended Funding - Low/Moderate Fund (#495)
Address Type Sponsor Total Cost 2021
Request
Prior
Award Recommendation Total City Funding
(Per Unit)
3301
Kerner Blvd
Gap
Funding
Eden
Housing $30,000,000 $1,843,315 $1,251,663 $850,000 $2,101,663
($52,542)
Total $850,000
1 The sponsor for the Belvedere St. acquisition, Canal Alliance, is negotiating for site control and units for this project are
not yet included in the total count. Canal Alliance anticipates the Belvedere St. site will have between 25 and 35 units for a
grand total of between 164 and 174 units.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 5
The funding recommended from the Affordable Housing In-Lieu Fee Fund is as follows:
Recommended Funding - Affordable Housing In-Lieu Fee Fund (#243)
Address
(Project Type) Request Sponsor Total Cost 2021
Request
Prior
Award Recommendation Total City Funding
(Per Unit)
Belvedere St
(Acq/Rehab) Acquis Canal
Alliance $6,708,000 $800,000 -- $400,000 2 $400,000
($TBD)
999 Third St
(New Const)
Gap
Funding
Eden
Housing $47,266,587 1,000,000 $800,000
($12,000) $1,000,000 1,800,000
(26,866)
190 Mill Street
(New Const)
Gap
Funding
Homeward
Bound $10,872,000 $350,000 $750,000
($23,500) $350,000 $1,100,000
($34,375)
Total 1,750,000
The funding recommendation for Belvedere also includes support for the Canal Alliance application to
the County of Marin PLHA fund in an amount matching the City funding award. If awarded by the County
Board of Supervisors, the full funding request will be met with half of the funding ($400,000) awarded
from the City and an in-kind match of funds awarded ($400,000) from the County PLHA fund.
ANALYSIS:
Each request for funding received was evaluated using the criteria and guidelines provided in the NOFA
and the City’s affordable housing guidelines document. Summaries for each project and justification for
each funding award is provided below.
3301 Kerner Boulevard ($850,000, Fund #495)
On January 21, 2020, the City Council adopted resolution No. 14760 approving up to $1,540,000 grant
from fund #243 to support the purchase of the property. The City ultimately provided a grant in the
amount of $1,251,663 to the County. The County used the grant to receive $5,940,000 in Homekey
funds in order to purchase the property.
The project sponsor (Eden Housing) is preparing to apply for State Tax Credits this year. The additional
funding provided by the City in the project will improve the project’s competitiveness for tax credits and
bonds, which tend to be highly competitive and often receive more requests than the funding available.
The City’s funding support is therefore especially important since the project site is located in what is
considered a “Low Resource” area for tax credit and bond funding purposes. The California Tax Credit
Allocation Committee (CTCAC) and California Debt Limit Allocation Committee (CDLAC) allocate state
and federal funding in part based on location, with locations in low resource areas scoring lower than
moderate, high, and highest resources areas.
The recommendation to use #495 Low/Moderate funds in this project aligns with the uses for the funds
and supports the sponsor’s application for additional funding. AB 2224 which amended Section 34176
of the Health and Safety Code provides that Low/Moderate funds be used to address homelessness
and affordable housing. $250,000 can be spent on homeless prevention and the rest on affordable
housing projects that meet specific criteria. (For the development of housing affordable to and occupied
2 The staff recommendation includes a recommendation that the City Council support a matching award of $400,000
Permanent Local Housing Allocation (PLHA) funding for the Belvedere St. project. If awarded, the full funding request of
$800,000 will be met.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 6
by households earning 80 percent or less of the area median income, with at least 30 percent of these
remaining funds expended for the development of rental housing affordable to and occupied by
households earning 30 percent or less of the area median income and no more than 20 percent of
these remaining funds expended for the development of housing affordable to and occupied by
households earning between 60 percent and 80 percent of the area median income.)
3301 Kerner Boulevard will create 40 studio and 1-bedroom units of permanent supportive housing. This
project aligns with the City’s goals to create additional supportive housing for the City’s most vulnerable
population. The site’s proximity to services including the Marin Health & Wellness Campus further
increases the project’s capacity to best meet the needs of the community.
3301 Kerner Blvd Permanent Supportive Housing
– Sources of Funding Status Amount
San Rafael/Marin County Land & Building Donation Committed $7,250,000
No Place Like Home (NPLH) Funds Committed $4,981,492
City of San Rafael Gap Loan (2021 NOFA) Pending $850,000
Limited Partner Capital Pending $14,841,133
Projected Funding Gap $1,120,665
Total Sources $29,043,290
The Low/Moderate Fund (#495) balance as of the date of this report is $861,169. Funding this request
will result in a remaining balance of $11,169.
Belvedere St. ($400,000, Fund #243, and $400,000 County PLHA Funds)
This request is an opportunity to preserve affordable housing. The sponsor (Canal Alliance) has
requested $800,000 to purchase an existing apartment complex. The sponsor is currently in negotiations
on a multi-family site which was first completed in the mid-1960’s and includes multiple buildings and
between 25 and 30 units. The City affordable housing trust fund would be used to leverage additional
capital to purchase the property. Any gap in the funds needed for acquisition could be covered with a
loan from Canal Alliance. Once the property is acquired, additional funding will be obtained to complete
any rehabilitation needed and to potentially add up to four additional units.
The project would ultimately be restricted to an average building AMI of at or below 60% of Marin County
Area Median Income set by the United States Department of Housing and Urban Development (HUD
AMI) as published by the Marin Housing Authority. The average affordability, however, would be achieved
over time as households move. At acquisition the building would qualify for the loan if the in-place tenant
household income average is at or below an average of up to 80% AMI. Upon vacancy, units would be
income restricted to households earning at or below 60% AMI. In this way, the project would prevent
displacement while preserving the affordability of an existing building in an area experiencing rising rents.
Future plans could include converting the apartments to affordable ownership, at which time the City’s
loan would be repaid and the units would be restricted as affordable in perpetuity through the Below
Market Rate (BMR) housing program.
The recommendation is to provide $400,000 in funds from the Affordable Housing In-Lieu Fund and to
support an award of matching PLHA funds from the County of Marin. These funds would be used to
leverage additional funding to buy the property. Next year, the sponsor intends to apply for a Community
Development Block Grant (CDBG) to complete envisioned rehabilitation. Canal Alliance will have 24
months to use the funds to purchase the site. During this time period and upon request from Canal
Alliance the City Council may award the funding to an alternative site at its sole discretion. If the funding
is not used in this time period, the funds will be returned to the trust fund.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 7
Belvedere Street
– Sources of Funding Status Amount
City of San Rafael (2021 NOFA) Pending $400,000
Permanent Local Housing Allocation Fund (PLHA) Pending $400,000
Other funding sources (Being determined) Pending $5,908,000
Total Sources $6,708,000
190 Mill Street ($350,000, Fund #243)
In 2020, the project sponsor (Homeward Bound) initially requested $750,000 to help close a $2 million
funding gap for the project. Since this initial request, the sponsor has brought in additional funding and
has narrowed the gap to a remaining $350,000. Awarding the funding to close the remaining gap assures
the project is completed and placed in service on schedule. When completed, 190 Mill Street (“the Mill
Street Center”) will include 32 single-room occupancy (SRO) units of supportive housing.
The recommendation is to fully fund the request at $350,000 which aligns with the City goal to create
additional housing for people experiencing homelessness supported with wraparound services.
Mill Street Center Permanent Supportive Housing
– Sources of Funding Status Amount
Partnership HealthPlan Awarded $1,567,065
No Place Like Home Technical Assistance Awarded $100,000
No Place Like Home (Non-competitive) Awarded $1,551,535
No Place Like Home (Competitive) Awarded $2,903,585
Homeless Emergency Aid Program Awarded $564,620
Marin Community Foundation Awarded $1,000,000
Nancy H. and James Kelso Fund Awarded $666,667
Anonymous Individual Gift Deposited $1,320,000
City of San Rafael (2020 NOFA – grant) Deposited $750,000
City of San Rafael – Development Impact Fee Waiver Awarded $132,000
City of San Rafael Gap Funding Request - grant Pending $350,000
Individual Gifts - Capital Campaign Deposited $495,000
Tamalpais Pacific - Challenge Grant Awarded $100,000
Tamalpais Pacific - Predevelopment Funds Awarded $25,000
Hellman Foundation Awarded $50,000
Remick Family Foundation Awarded $25,000
County of Marin Affordable Housing Trust with
Permanent Local Housing Allocation Match Awarded $459,528
Total Sources $10,872,000
999 Third Street ($1,000,000, Fund #243)
The Vivalon Healthy Aging Campus will include 66 one-bedroom and studio units for older adults and
one manager’s unit. Approximately 20% of the units will be supportive housing. The sponsor has secured
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 8
project-based vouchers from the Marin Housing Authority for all 66 affordable units. When completed,
the project will help meet the housing needs for older adults and formerly homeless older adults. The
Healthy Aging Campus, which will be operated by Vivalon, will provide services and support for older
adults living in the building and in the greater area.
In 2020, the project sponsor (Eden Housing) initially requested a $1 million loan to close a $4.8 million
gap in project funding. The City Council awarded $800,000 to the project. Since this initial request the
sponsor has brought in $4 million in additional funding from the Housing Trust of Silicon Valley. This
award would have closed the gap; however, costs have increased since 2020. Also, an additional
$450,000 cost was incurred for a vapor intrusion mitigation system (VIMS) required by the Department
of Toxic Substances Control. Although the initial City award and the Housing Trust Silicon Valley award
have narrowed the funding gap, there remains an additional $1 million need. The additional funding award
would close the gap assuring the project is completed in an expeditious manner.
999 Third Street
– Sources of Funding Status Amount
Predevelopment Loan (Eden Housing Line of Credit) Committed $3,144,6213
First Mortgage – Tranche A Committed $7,664,000
First Mortgage – Tranche B Committed $5,478,000
Housing Trust Silicon Valley – Apple Loan Awarded $4,000,000
Marin County – HOME & CDBG Awarded $896,371
City of San Rafael (2020 NOFA) Awarded $800,000
City of San Rafael gap funding request (2021 NOFA) Pending $1,000,000
Sponsor Loan (Marin Community Foundation Grant) Awarded $450,000
Commercial Loan (Vivalon Construction Loan) Committed $6,579,504
Limited Partner @ 99.99% Committed $20,348,067
Total Sources $47,215,942
Affordable Housing In-Lieu Fee Fund Balance
The following chart provides a history of revenues and expenditures from the Affordable Housing In-Lieu
Fee fund for the last two years. During this time period the fund received two payments of $1,843,200
each from the Village at Loch Lomond Marina townhome project along with other smaller in-lieu fee
payments. The funding recommendation will result in the completion or rehabilitation and preservation of
more than 139 deed-restricted affordable housing units 4.
Affordable Housing In-Lieu Fee Fund (#243)
NOFA
(Date) Address Transaction Entity Amount Fund Balance
$1,730,760
(9-10-2020) Revenue Pymt 1 MVA – Loch L $1,843,200
$3,573,960
$1.6M
(10-5-2020)
999 3rd St Loan ($800,000) } ($1,550,000) 190 Mill St Grant Homeward Bound ($750,000)
3 The Eden Housing line of credit is not included in total project cost. The line of credit represents projects costs that will be
included in the permanent financing on the project, and the line of credit will be paid off.
4 The Belvedere St. project is anticipated to yield between 25 and 35 additional units for a total of 164 to 174 units.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 9
NOFA
(Date) Address Transaction Entity Amount Fund Balance
$2,023,960
(11-2-2020) 3301 Kerner Grant Marin Cy ($1,251,663)
$772,297
(4-12-2021) Revenue Pymt 2 MVA – Loch L $1,843,200
$2,615,497
Revenue Misc Pymts Rev’d $972,650
$3,588,147
$2.5M
(3-21-2022)
150 Belvedere Loan Canal Alliance ($400,000) } ($1,750,000) 190 Mill St Homeward Bound ($350,000)
999 3rd St Loan Eden Housing ($1,000,000)
Remaining Balance After Awarding the Funding Recommendation $1,838,147
COMMUNITY OUTREACH:
The NOFA was announced on the City’s website and notices were provided to local and regional
affordable housing owners and developers.
FISCAL IMPACT:
Approval of the recommendation will result in a fiscal impact to the Affordable Housing In-Lieu Fee Fund,
Fund #243, of $1,750,000. Presently there is $3,588,147 available in the Affordable Housing In-Lieu Fee
Fund. If the recommendation is funded in full, this will leave $1,838,147 unencumbered in the fund. The
fund receives revenues in the form of payments made in-lieu of including affordable housing in new
residential projects subject to the City’s affordable housing requirements. The fund also receives
affordable housing linkage fee payments from certain commercial projects based on the projected
affordable housing need created by the new commercial project.
Approval of the recommendation will result in a fiscal impact to the Low/Moderate Fund, Fund #495, of
$850,000. Presently there is $861,169 available in the Low/Moderate Fund. If the recommendation is
funded in full, this will leave $11,169 in the fund.
The funding approved by the City Council will be issued through residual receipt loans at 3.0% simple
interest during construction or rehabilitation, and between 1.5% to 3.0% simple interest, depending on
the financing needs of the project, for a minimum affordability term of 55 years following. Repayment of
each loan and accrued interest will depend on the amount of net proceeds remaining each year after
allowable projects costs. The total life of each loan will up to 57 years, including up to a two-year
construction/rehabilitation period followed by a 55-year affordability term. Each loan will be due in full
along with any interest accrued at the end of the affordability term. The City’s loan documents will
include a clause that if excess fund remain once the project is completed that those funds be used to
pay down the City’s loan. The City may waive it’s right upon request from the sponsor to use the funds
to pay down other debt in the project.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 10
OPTIONS:
The City Council has the following options to consider on this matter:
1. Staff’s recommended action, which is to adopt the resolution.
2. Adopt a modified resolution
3. Direct staff to provide additional information
4. Take no action
RECOMMENDED ACTION:
Adopt the resolution
ATTACHMENTS:
1. Resolution
Page 1 of 3
RESOLUTION NO. 15041
RESOLUTION AUTHORIZING THE EXPENDITURE OF $1,750,000 IN FUNDS FROM THE
AFFORDABLE HOUSING IN-LIEU FEE FUND (FUND #243) AND EXPENDITURE OF $850,000
FROM THE LOW/MODERATE FUND (FUND #495) ALONG WITH FUNDS FROM EACH SOURCE
FOR THE ATTORNEY FEES INCURRED BY THE CITY TO COMPLETE ALL DOCUMENTS
ASSOCIATED WITH THE FUNDING FOR FOUR 100% AFFORDABLE HOUSING PROJECTS IN
FULFILLMENT OF THE AFFORDABLE HOUSING TRUST FUND 2021 NOFA, SUPPORTING THE
AWARD OF FUNDING FROM THE COUNTY OF MARIN FOR PERMANENT LOCAL HOUSING
ALLOCATION (PHLA) FUNDS TO THE PROJECTS RECEIVING CITY FUNDING, AND
AUTHORIZING THE CITY MANAGER TO EXECUTE ALL DOCUMENTS INCIDENT TO THE
FUNDING IN A FORM APPROVED BY THE CITY ATTORNEY
WHEREAS, on January 21, 2020, the City Council adopted Resolution No. 14760, establishing
Guidelines for the Administration of the Affordable Housing Trust Fund; and
WHEREAS, on November 11, 2021, the City issued a Notice of Funding Availability (NOFA) for
two million five-hundred thousand dollars ($2,500,000) of funding from the Housing In-Lieu Fee Fund
to support affordable housing, with an application deadline of December 23, 2021 by 5:00pm; and
WHEREAS, the NOFA allows the City Council to issue loans in excess of the published available
funding amount; and
WHEREAS, the City received four responses to the NOFA totaling $4 million in funding requests;
and
WHEREAS, applications were reviewed using the evaluation criteria listed in Section 5 of the
Guidelines for the Administration of the Affordable Housing Trust Fund; and
WHEREAS, based upon this evaluation criteria and the needs for local support for the
development of affordable housing, a funding recommendation has been developed that exceeds the
amount of funds published in the NOFA using funds from the Low / Moderate Fund, which is a separate
fund established for affordable housing; and
WHEREAS, the City has sufficient funds in the Housing In-Lieu Fee Fund #243 to issue the
loans included in the recommendation and the funding requests included in the funding
recommendation meet the criteria for use of the funds; and
WHEREAS, the County of Marin maintains the Permanent Local Housing Allocation (PLHA)
Fund and issues loans from the fund to support affordable housing following the program rules and
guidelines provided by the State of California Housing and Community Development Department in
coordination with the Cities of San Rafael and Novato through the Priority Setting Committee.
WHEREAS, the Priority Setting Committee, which consists of elected members of Marin County
and the Cities of San Rafael and Novato, convenes to make recommendations for expending CDBG,
HOME, and PLHA funds, and the Committee recommendation is considered the approval of such
funding requests.
Page 2 of 3
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Rafael as
follows:
Section 1. The City Council authorizes the following affordable housing expenditures from the
Housing In-Lieu Fee Fund, subject to City requirements for issuing loans for affordable housing:
i. $400,000 loan from the Housing In-Lieu Fee Fund (#243) for the Canal Alliance for acquisition
of Belvedere St. The project will be restricted at an average of at or below 60% of Marin
County Area Median Income set by the United States Department of Housing and Urban
Development (HUD AMI) as published by the Marin Housing Authority. The average
affordability in the project, however, will be achieved over time through attrition as households
move. At acquisition, the building shall qualify for the loan if the in-place tenant household
income average is at or below an average of up to 80% AMI. Upon vacancy, units shall be
income restricted to individuals and households earning at or below 60% AMI. Canal Alliance
will have 24 months to use the funds to purchase the site. During this time period and upon
request from Canal Alliance the City Council may award the funding to an alternative site at its
sole discretion. If the funding is not used in this time period, the funds shall be returned to the
Fund.
ii. $350,000 grant from the Housing In-Lieu Fee Fund (#243) for the Homeward Bound of Marin
project at 190 Mill Street for 32 units of permanent supportive housing for people who are
homeless, chronically homeless, or at risk of chronic homelessness, at rents affordable to
households earning 30% of Area Median Income or less. The funds will be issued as a grant.
iii. $1,000,000 loan from the Housing In-Lieu Fee Fund (#243) for the Eden Housing project at
999 Third Street for 67 units of low- and very low-income housing for older adults.
iv. $850,000 loan from the Low/Moderate Fund (#495) for the Eden Housing adaptive reuse
project at 3301 Kerner Boulevard for 40 units of permanent supportive housing for homeless
or formerly homeless households with mental illness, at rents affordable to very low-income
households.
Section 2. The City Council authorizes the funding to be issued in the form of residual receipts loans
at a simple interest rate of three percent (3%, simple) during pre-development, and construction or
rehabilitation for new construction, adaptive reuse or acquisition/rehabilitation projects. The loan or
grant principal shall be used to cover the City’s legal costs associated with processing all documents
incident to the agreements, which are estimated to be approximately $5,000 per loan. The
predevelopment and construction phases may last up to 24 months and can be extended with prior
authorization in writing from the City. When construction or rehabilitation is completed the interest rate
for loans shall convert to between simple one-and-one-half percent (1.5%, simple) and simple three
percent (3.0%, simple) depending on the needs of the financing structure in the project for the
duration of the affordability term. Interest accrued during the pre-development and construction
phases shall be rolled into the principal loan balance at conversion to permanent financing. The
conversion date for new construction and adaptive/reuse projects is the date the project receives a
temporary or final certificate of occupancy. The conversion date for acquisition/rehabilitation projects
is the date when all completed rehabilitation work has been approved by the City. The affordability
term shall last for 55 years following the date of conversion. If excess funds remain at project
completion those funds shall be used to pay down the City loan. The City may waive it’s right upon
request from the sponsor to use the funds to pay down other debt in the project.
Page 3 of 3
Section 3. The City Council recommends that the Priority Setting Committee recommend and that the
Marin County Board of Supervisors approve any request for PLHA funding submitted for the projects
receiving funding through this resolution. If a project receives PLHA funding based on the match of
the City’s Housing In-Lieu Fee Funds and the award results in the funding request being overfunded,
the amount of Housing In-Lieu Fee Funds shall be reduced to match the sponsor request.
Section 4. The City Council authorizes the City Manager to execute all documents and related
documents required and including the additional requirements associated with expending the funds,
and to execute all other documents required in connection with the agreements, in a form to be
approved by the City Attorney.
I, LINDSAY LARA, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly
and regularly introduced and adopted at a regular meeting of the City Council of said City held on
Monday the 7th day of March 2022, by the following vote, to wit:
AYES: COUNCILMEMBERS: Bushey, Hill, Kertz, Llorens Gulati & Mayor Kate
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: None
LINDSAY LARA, City Clerk
