Title
Report regarding a resolution approving the First Amendments to the Loan Agreement and Affordable Housing Regulatory Agreement between the City of South San Francisco and BRIDGE Housing Corporation for the development of 158 affordable housing units at 1051 Mission Road and associated actions, including approving Budget Amendment Number 25.054, and a resolution affirming the City’s support for BRIDGE’s Affordable Housing Sustainable Communities (AHSC) Grant application and authorizing the City Manager to execute an AHSC Implementation and Cooperation Agreement and an AHSC Scope of Work for an Anti-Displacement Strategy. (Nell Selander, Economic & Community Development Director)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council adopt two resolutions:
1) Authorizing the City Manager to execute the First Amendment to the Loan Agreement between the City of South San Francisco and BRIDGE Housing Corporation for the development of 158 affordable housing units at 1051 Mission Road, increasing the total award from $2,000,000 to $4,725,000, as well as the following associated actions:
a. Authorizing the City Manager to execute the First Amendment to the Affordable Housing Regulatory Agreement,
b. Authorizing the City Manager to execute a Letter of Intent to allocate $2,362,500 in Local Housing Trust Fund grant funds to the 1051 Mission Road Project, and
c. Approving Budget Amendment Number 25.054 appropriating an additional $362,500 in Fund 823, the Commercial Linkage Fee Fund, to serve as the required local match for the LHTF funds.
2) Affirming the City’s support for BRIDGE’s Affordable Housing Sustainable Communities (AHSC) Grant application requesting up to $50 million in AHSC funds for affordable housing development and transportation infrastructure improvements, as well as the following associated actions:
a. Authorizing the City Manager to execute an AHSC Implementation and Cooperation Agreement with BRIDGE as required for reimbursement for the City’s Sustainable Transit Infrastructure projects; and
b. Authorizing the City Manager to execute an AHSC Commitment Letter as required for the application’s Anti-Displacement Strategy (AD), which will provide AHSC funding for an additional year of the City’s Emergency Rental Assistance Program.
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BACKGROUND
The 158 affordable housing units being developed by BRIDGE (referred to as 1051 Mission Affordable) as part of the PUC Project along Mission Road between Grand and Oak Avenues are anticipated to be under construction no later than October 2026 contingent upon receipt of an AHSC award in December 2025 and California Tax Credit Allocation Committee (TCAC) and California Debt Limit Allocation Committee (CDLAC) award in March 2026. Key to assembling the funds to build this much-needed affordable housing is securing two major State of California Housing and Community Development Department (HCD) grants: the Infill Infrastructure Grant (IIG) and AHSC. The City was awarded $28.8 million in IIG funds in February 2023 for the purposes of supporting BRIDGE’s 1051 Mission Affordable project and constructing substantial project-wide infrastructure. BRIDGE’s AHSC application is discussed in this staff report.
In addition to the State funding sources discussed above, BRIDGE previously secured $2 million in City funding and $9.5 million in County funding. The City’s $2 million loan was for predevelopment expenses associated with the project. Due to the extraordinary infrastructure associated with this development project, considerable predevelopment activities have occurred and continue to occur as the development team, including BRIDGE and L37 (the market rate developer), advance infrastructure design and engineering, as well as construction drawings in anticipation of a Building Permit application. Additional predevelopment funds have been requested by BRIDGE to accelerate their TCAC and CDLAC applications, and Building Permit plan set (see Attachment 1).
While the City has limited affordable housing funding, as described in detail in the Affordable Housing Financing Plan also presented to City Council on May 14, 2025, the City did secure a Local Housing Trust Fund (LHTF) grant from the State Housing & Community Development Department (HCD). The City previously awarded these funds to Eden Housing for the development of 201 Baden; however, that project will not be moving forward and so $2,362,500 in State funding is available to be reallocated provided it is matched dollar for dollar. These LHTF funds must be encumbered by August 2027 and fully spent by March 2031.
DISCUSSION
The City is currently supporting two new affordable housing developments - BRIDGE’s 1051 Mission Affordable and Rotary/Beacon’s Rotary Gardens projects on Linden Avenue - which could receive the City’s unallocated LHTF grant funding. Currently, BRIDGE’s project is substantially more advanced compared to Rotary/Beacon’s. It has its entitlements, it has advanced design to 75% meaning it is nearing Building Permit application readiness, and it has secured substantial funding (IIG and County funding totaling nearly $40 million) in addition to the City’s initial $2 million commitment. Rotary/Beacon is nearing completion of its entitlement process but has not yet secured additional funding beyond the City’s initial $1.6 million commitment. Because it is more likely that 1051 Mission Affordable will complete its financing and meet the LHTF deadlines, and because an award at this point will make the project more competitive in its final financing applications (AHSC, TCAC, and CDLAC), staff recommends allocating the LHTF award to BRIDGE.
Amending the BRIDGE Loan to Include LHTF Funding
Contemplated in the resolution associated with this staff report is an amendment to the City’s existing loan with BRIDGE for the 1051 Mission Affordable project. The First Amendment to the Loan Agreement, including the associated promissory notes and First Amendment to the Deed of Trust, accomplish two actions: 1) awarding the $2,362,500 in LHTF funds and 2) increasing the City’s award of Housing Trust Funds, held in Fund 823 (the Commercial Linkage Fee Fund), from $2,000,000 to $2,362,500 to provide a one-to-one match as required by the LHTF award. This brings the total City loan to $4,725,000 or $29,905 per unit. This per-unit City subsidy is still well below the City’s typical project subsidy of $50,000 to $75,000 per unit.
In addition to amending the loan, the City’s Affordable Housing Regulatory Agreement with BRIDGE is also proposed to be amended to refer to the City’s newly adopted Live/Work Preference Ordinance, the amount of extremely low income housing required by the LHTF grant, and other minor amendments identified by staff that will help monitor and manage the project in the long term - such as the timing related to when a property manager is selected.
Affordable Housing Sustainable Communities Application
As noted above, increasing the City’s financial commitment to BRIDGE’s 1051 Mission Affordable will improve its competitiveness in this year’s AHSC application round. The AHSC grant program is a highly competitive combined affordable housing and sustainable transportation infrastructure funding program that aims to support affordable housing units that connect with greenhouse gas-reducing transportation options for residents. The AHSC program uses state Cap-and-Trade funding from greenhouse gas-generating uses throughout the state to fund these pollution-reducing projects. Applications for Round 9 of the AHSC program are due on May 28, 2025, with an award announcement anticipated in December 2025. Through this application, the City can receive funding to complete transportation improvements within a mile of the project site.
AHSC-Funded City Transportation Improvements
The City’s Planning and Engineering Divisions have been working with BRIDGE and their technical consultant to identify sustainable transportation infrastructure improvements for which to request AHSC funding. Such improvements must be within one mile of the project site, and to maximize competitiveness, should improve the safety and convenience of bicyclists and transit riders in the City and support the community’s existing plans for multi-modal improvements. After careful analysis of existing unfunded projects and in accordance with the AHSC criteria, City staff identified the following Sustainable Transportation Infrastructure (STI) projects for inclusion in BRIDGE’s application for AHSC funding (see Attachment 2 for a map of the identified improvements):
STI #1: $1,792,700. Install 1.85 miles of Class II and III bike lane along either side of Arroyo Drive between El Camino Real and Junipero Serra Boulevard and 0.18 miles of new Class IV bike lane along either side of Camaritas Avenue between Arroyo Drive and Westborough Boulevard.
STI #2: $2,949,000. Install Transit Signal Priority (TSP) for the 29 signal intersections along SamTrans Route 130 within City limits and install six bus bulbs including:
• Two bus bulbs, one on either side of Grand Avenue, for Eastbound and Westbound service at the intersection of Grand Avenue and Willow Avenue.
• Two bus bulbs, one on either side of Grand Avenue, for Eastbound and Westbound service at the intersection of Grand Avenue and Chestnut Avenue.
• Two bus bulbs, one on either side of Grand Avenue, for Eastbound and Westbound service at the intersection of Grand Avenue and Magnolia Avenue.
STI #3: $2,855,000. Purchase four new zero-emission shuttle buses to replace the existing fleet of Free South City Shuttles. Funds will also cover the purchase of electric chargers and support operations of the shuttle program for up to 10 years.
AHSC-Funded Anti-Displacement Strategy
In addition to the transportation improvements discussed above, if AHSC is awarded, the City will also receive $150,000 to fund the City’s existing rental assistance program. The Commitment Letter required from the City for the AHSC application summarizes the City’s program structure and states that funds will be used as direct rental assistance payments. The Commitment Letter is included as Exhibit B to the associated resolution.
AHSC Implementation and Cooperation Agreement
The AHSC Implementation and Cooperation Agreement (Agreement) provides for the event in which BRIDGE is awarded the grant and the City can receive funds for the identified STI projects and the anti-displacement work. The Agreement stipulates that the City will receive up to $7,596,700 for three STI projects described above, as well as $150,000 for the anti-displacement programming. Additionally, cost overruns for the identified projects are to be borne by the City. Staff has identified and cost-estimated these projects conservatively to limit the risk that there are cost overruns. The Agreement is included as Exhibit A to the associated resolution.
FISCAL IMPACT
Adopting the resolution approving the First Amendment to the Loan Agreement with BRIDGE will not have an impact on the General Fund, but it will reduce Fund 823 by $362,500 and commit the City’s $2,362,500 LHTF grant to the 1051 Mission Affordable project.
Should BRIDGE be awarded the AHSC grant, up to $7,596,700 would pass through BRIDGE to the City for the transportation projects identified in this report, as well as $150,000 for the City’s emergency rental assistance program. While staff do not anticipate cost overruns on the transportation improvements, any that could not be mitigated could be borne by other grants (if awarded), or the City’s legacy Bike and Pedestrian Impact Fee or new Citywide Transportation Impact Fee.
CONCLUSION
Staff recommends that the City Council adopt two resolutions:
1) Authorizing the City Manager to execute the First Amendment to the Loan Agreement between the City of South San Francisco and BRIDGE Housing Corporation for the development of 158 affordable housing units at 1051 Mission Road, increasing the total award from $2,000,000 to $4,725,000; authorizing the City Manager to execute the First Amendment to the Affordable Housing Regulatory Agreement; authorizing the City Manager to execute a Letter of Intent to allocate $2,362,500 in Local Housing Trust Fund grant funds to the 1051 Mission Road Project, and approving Budget Amendment Number 25.054 appropriating an additional $362,500 in Fund 823, the Commercial Linkage Fee Fund, to serve as the required local match for the LHTF funds.
2) Affirming the City’s support for BRIDGE’s Affordable Housing Sustainable Communities (AHSC) Grant application requesting up to $50 million in AHSC funds for affordable housing development and transportation infrastructure improvements; authorizing the City Manager to execute an AHSC Implementation and Cooperation Agreement with BRIDGE as required for reimbursement for the City’s Sustainable Transit Infrastructure projects; and authorizing the City Manager to execute an AHSC Commitment Letter as required for the application’s Anti-Displacement Strategy (AD), which will provide AHSC funding for an additional year of the City’s Emergency Rental Assistance Program.
Attachments:
1. BRIDGE Funding Request Letter
2. Map of City Improvements