HomeMy WebLinkAboutCD 2021 Affordable Housing NOFA Funding Recommendation - Canal Alliance Alternative Site Acquisition____________________________________________________________________________________
FOR CITY CLERK ONLY
Council Meeting: February 6, 2023
Disposition: Resolution 15187
Agenda Item No: 4.d
Meeting Date: February 6, 2023
SAN RAFAEL CITY COUNCIL AGENDA REPORT
Department: Community Development
Prepared by: Alicia Giudice, Director
Alexis Captanian, Housing Analyst
City Manager Approval: ______________
TOPIC: 2021 AFFORDABLE HOUSING NOFA FUNDING RECOMMENDATION – CANAL
ALLIANCE ALTERNATIVE SITE ACQUISITION
SUBJECT: RESOLUTION AMENDING RESOLUTION 15041 BY AUTHORIZING THE
EXPENDITURE OF FUNDS FOR ACQUISITION OF AN ALTERNATIVE SITE AT 105
CANAL STREET, IN FULFILLMENT OF THE AFFORDABLE HOUSING TRUST FUND
2021 NOTICE OF FUNDING AVAILABILITY (NOFA)
EXECUTIVE SUMMARY: In response to the Notice of Funding Availability (NOFA) that the City issued
on November 12, 2021 for development or preservation of affordable housing, the City received a funding
request from Canal Alliance for the acquisition of a property on Belvedere Street. On March 7, 2022, the
City Council authorized a $400,000 loan from the Housing In-Lieu Fee Fund (#243) for the Canal Alliance
for acquisition of the property on Belvedere Street and provided a 24-month period in which the City
Council could award the funding to an alternative site at its sole discretion upon request from Canal
Alliance. Canal Alliance did not acquire the site identified in its original application and has identified an
alternative site within the 24-month timeframe. Staff has reviewed a revised application from Canal
Alliance using the evaluation criteria listed in the Guidelines for the Administration of the Affordable
Housing Trust Fund.
RECOMMENDATION:
Adopt a resolution amending Resolution 15041 by authorizing the expenditure of $400,000 in funds
from the Affordable Housing In-Lieu Fee Fund (Fund #243) and funds from the same account to
complete all documents associated with funding a loan for a 100% affordable housing project at 105
Canal Street in fulfillment of the Affordable Housing Trust Fund 2021 NOFA.
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.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 2
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 and invited qualified affordable housing sponsors to submit requests for funding for
construction or preservation of affordable housing, with an application deadline of December 23, 2021.
The City received four responses to the NOFA, including a funding request from Canal Alliance for the
acquisition of a property on Belvedere Street.
On March 7, 2022, the City Council adopted Resolution 15041, authorizing a $400,000 loan from the
Housing In-Lieu Fee Fund (#243) for the Canal Alliance for acquisition of the property on Belvedere
Street, and providing a 24-month period in which the City Council could award the funding to an
alternative site at its sole discretion upon request from Canal Alliance. Canal Alliance did not acquire the
site identified in its original application and has identified an alternative site at 105 Canal within the 24-
month timeframe. Canal Alliance has executed a purchase and sale agreement for the 105 Canal
property.
In January 2023, City staff reviewed and evaluated the revised NOFA application using the criteria and
guidelines provided in the NOFA and in Section 5 of City Council Resolution No. 14760, Guidelines for
the Administration of the Affordable Housing Trust Fund. Based on this review, staff is recommending
awarding the previously authorized funding to the alternative site at 105 Canal Street.
ANALYSIS:
The funding request is an opportunity to preserve affordable housing. The sponsor (Canal Alliance) has
requested $400,000 to purchase a multifamily property at 105 Canal Street in the Canal neighborhood.
Built in 1963, the existing three-story apartment complex has 12 units, none of which are currently income
restricted. A third of the units are three-bedroom apartments, providing housing for larger families.
Canal Alliance Alternative Site for Acquisition
Address
(Project Type) Request Sponsor Total Cost Units Total City
Funding
City
Funding Per
Unit
105 Canal St
(Acquisition) Acquisition Canal
Alliance $3,448,600 12 $400,000 $33,333
Affordability Level
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.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 3
Funding and Site Control
Staff recommends providing $400,000 in funds from the Affordable Housing In-Lieu Fee Fund for the
alternative site and adding to the loan principal the City’s legal costs associated with processing the loan,
which are estimated to be approximately $5,000.
The sponsor has executed a purchase and sale agreement for the site, and would use City funds in
collaboration with funds from Canal Alliance, several other grants, and loan sources to execute the
acquisition. Funding sources for the acquisition are summarized in the chart below.
Sources of Funding Status Amount
Loan from City of San Rafael (2021 NOFA)
Authorized,
Pending
Alternative Site
Approval
$400,000
Canal Alliance Confirmed $88,600
Grant Capital from La Raza Development Fund Confirmed $250,000
Grant from Marin Community Foundation Confirmed $500,000
Grant from TamPacific Pending $130,000
RE Loan (Marin Community Foundation) Pending $2,080,000
Total Sources $3,448,600
FISCAL IMPACT:
Approval of the recommendation will result in a fiscal impact to the Affordable Housing In-Lieu Fee Fund,
Fund #243, of $400,000. Presently there is $1,440,663 available in the Affordable Housing In-Lieu Fee
Fund. If the recommendation is funded in full, this will leave $1,040,663 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.
The funding approved by the City Council will be issued through a residual receipt loan at between
1.5% to 3.0% simple interest, depending on the financing needs of the project, for a minimum
affordability term of 55 years. Repayment of the loan and accrued interest will depend on the amount of
net proceeds remaining each year after allowable projects costs. The total life of the loan will be 55
years. The 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 funds remain once the project is
completed that those funds be used to pay down the City’s loan. The City may waive its right upon
request from the sponsor to use the funds to pay down other debt in the project.
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.
SAN RAFAEL CITY COUNCIL AGENDA REPORT / Page: 4
RECOMMENDED ACTION:
Adopt the resolution.
ATTACHMENTS:
1. Resolution
Page 1 of 2
RESOLUTION NO. 15187
RESOLUTION AMENDING RESOLUTION 15041 BY AUTHORIZING THE EXPENDITURE OF
FUNDS FOR ACQUISITION OF AN ALTERNATIVE SITE AT 105 CANAL STREET, IN
FULFILLMENT OF THE AFFORDABLE HOUSING TRUST FUND 2021 NOTICE OF FUNDING
AVAILABILITY (NOFA)
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 12, 2021, the City issued a Notice of Funding Availability (NOFA) for
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 City received four responses to the NOFA, including a funding request from
Canal Alliance for the acquisition of a property on Belvedere St.; and
WHEREAS, on March 7, 2022, the City Council adopted Resolution 15041, authorizing a
$400,000 loan from the Housing In-Lieu Fee Fund (#243) for the Canal Alliance for acquisition of the
property on Belvedere St., and providing a 24-month period in which the City Council could award the
funding to an alternative site at its sole discretion upon request from Canal Alliance; and
WHEREAS, Canal Alliance did not acquire the site identified in its original application and has
identified the property at 105 Canal Street as an alternative site within the 24-month timeframe; and
WHEREAS, a revised application has been 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; and
WHEREAS, the City has sufficient funds in the Housing In-Lieu Fee Fund #243 to issue the loan
included in the recommendation and the funding request included in the funding recommendation meets
the criteria for use of the funds.
NOW, THEREFORE, BE IT RESOLVED, that the City Council of the City of San Rafael
hereby amends the entirety of Paragraph i of Resolution 15041, Section 1 as follows:
i. $400,000 loan from the Housing In-Lieu Fee Fund (#243) for the Canal Alliance for
acquisition of the 12-unit apartment building at 105 Canal 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.
Resolution 15041 remains otherwise unchanged.
Page 2 of 2
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 6th day of February 2023, 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