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Report regarding a resolution authorizing the City of South San Francisco’s application for $2,362,500 from California’s Local Housing Trust Fund (“LHTF”) Program and approving a City Letter of Funding Commitment to Eden Housing providing matching funds for an 82-unit affordable rental housing project at 201 Baden Avenue (Julie Barnard, Economic Development Coordinator)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council adopt a resolution authorizing application for and receipt of Local Housing Trust Fund Program Funds, and approving and authorizing City staff to issue a Letter of Funding Commitment to Eden Housing to provide funding for an affordable rental housing project at 201 Baden Avenue.
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BACKGROUND/DISCUSSION
The Local Housing Trust Fund (LHTF) is a newly established State funding source to finance new affordable housing construction. The program is administered by the State of California’s Department of Housing and Community Development (HCD) and is funded by the Veterans and Affordable Housing Bond Act (Proposition 1), a $4 billion bond approved by voters in 2018.
The State has committed a total of $57 million dollars to the LHTF program. Program funds awarded must be designated to provide construction loans and/or permanent financing loans to pay for construction or rehabilitation of affordable rental housing projects, emergency shelters, permanent supportive housing, transitional housing and affordable homeowner projects. Program funds may also be used to assist income-eligible first-time homebuyers to purchase homes and to rehabilitate houses owned by income-eligible occupants. Accessory Dwelling Units (ADUs) or Junior Accessory Dwelling Units (JADUs) construction and conversion programs are also eligible.
The City is eligible to apply for funds between $1 million and $5 million with a one-to-one matching funds requirement. Applications will be scored on several criteria including the source of matching funds (prioritizing sources that do not come from residential projects like an affordable housing in lieu or impact fee), existing local funding commitments, project readiness, and affordability.
The City can apply for LHTF funds to support the affordable housing component of the proposed 201 Baden Avenue affordable housing development, which will be built by Eden Housing. Eden Housing is requesting over $4 million in funding from the City to assist with financing the development and the LHTF will assist with alleviating this burden, as shown on Attachment 1.
The funding commitments have been calculated in order to maximize the points awarded per the grant application while minimizing the City’s financial contribution. Therefore, staff recommend a total first phase financing proposal of $5,692,500 (which includes a 5% administrative cost) and is comprised of the following sources:
LHTF Request: $2,362,500
City land donation: $1,440,000
City Housing Trust Funds: $1,890,000
Staff have prepared a draft Letter of Funding Commitment to Eden Housing, attached as Exhibit B to the accompanying resolution, committing $1,890,000 for development contingent upon the LHTF being secured. The $1,890,000 financing commitment includes a 5% administrative cost recovery match which is funding the City already uses for staff and City Attorney costs. Further, land donations can be considered a financial match and have been worked into the equation. Therefore, the City’s commitment of Housing Trust Funds financing is less than the request made in the LHTF application but a greater contribution after the land donation is taken into consideration.
FISCAL IMPACT
The City intends to apply for $2,362,500 from the State’s competitive LHTF program. This includes 5% in administrative costs, to offset staff and City Attorney costs for this development. The City is required to provide matching funds for the application. This is money the City would provide without this grant. If successful, the LHTF will substantially reduce the City’s financial commitment to this development.
RELATIONSHIP TO STRATEGIC PLAN
Approving the City’s LHTF application is a Strategic Plan Priority Project, advancing our goal to create affordable housing and housing support service for our community.
CONCLUSION
Staff recommends that the City Council adopt a resolution authorizing application for and receipt of Local Housing Trust Fund Program Funds, and approving and authorizing City staff to issue a Letter of Funding Commitment to Eden Housing to provide funding for an affordable rental housing project at 201 Baden Avenue.
Attachments:
1. Eden Housing - Letter of Intent