To: Honorable Mayor and Members of City Council
From: Molly Rattigan, Community Resources and Development Director
Prepared By: Molly Rattigan, Community Resources and Development Director
TITLE:
Title
Loan to Le Petit Elephant for Construction of Sidewalks
LABEL
RECOMMENDED ACTION:
Recommendation
(1) Approve and authorize the City Manager to execute a loan agreement with Le Petit Elephant in the amount of $250,000 at no interest, for a term of five years from loans issuance for the construction of sidewalks on Montecito Boulevard related to the relocation of 128 childcare slots and the creation of a minimum of 70 child care slots in the City of Napa; and
(2) Approve the budget actions necessary to appropriate $250,000 from the Non-Recurring General Fund Contingency to Non-Recurring Community Resources and Development Administration to fund a loan in an equal amount with Le Petit Elephant.
(3) Approve the AB 562 Economic Development Report for this action.
Body
DISCUSSION:
On May 21, 2024, the Napa City Council denied an appeal and upheld a decision by the Planning Commission to grant a Use Permit to Le Petit Elephant for up to 250 childcare slots at 15 Chapel Hill Drive in Napa.
Due to a variety of reasons, the project has incurred approximately $500,000 to $650,000 in unanticipated costs and recently submitted a request for a minor amendment to the Use Permit to extend the timeframe to complete the required construction of the sidewalks on Montecito Blvd, connecting to existing sidewalks by Alta Heights Elementary School. The minor amendment was approved by the Community Resources and Development Director and appealed by the Alta Heights Neighborhood Coalition. Staff have worked with both parties to resolve the issue of preparing to open the childcare center, construct the sidewalks within a reasonable timeframe, support the small local business that has encountered unexpected costs, and provide safety upgrades to the neighbors of the project.
The County of Napa has invested $1,200,000 to this project as part of an initiative funded by the American Rescue Plan Act and added $150,000 in additional loan funds from the Tobacco Master Settlement program to assist with the cost of unanticipated expenses. Additionally, on June 17, 2025, the City Council approved a no interest, three-year loan in the amount of $175,000 to assist with the building permit and impact fees costs. Losing approximately 128 childcare slots when Le Petit Elephant’s current lease expires in June 2026 (originally December 2025) would be devastating to working parents and the local economy. If this item is approved, in total, since the project was originally approved, the City and County will have loaned $575,000 in additional funding to support childcare expansion in the community. The Napa Valley Community Foundation also provided a grant of $50,000 to Community Resources for Children that supported this project, bringing the total to support unanticipated expenses to $625,000.
Under the terms of the proposed loan, $250,000 would be transferred to an escrow account for Le Petit Elephant to draw upon for costs related to constructing the sidewalks. Funds may only be used for the design, permit and loan fees, and construction of the sidewalks or related traffic calming measures. Le Petit Elephant’s obligation to pay the City back would be deferred for up to five years, at zero interest. A loan of $250,000 would be issued within the Non-Recurring General Fund. These funds would only be provided to Le Petit Elephant upon demonstration of sidewalk construction expenses. Le Petit Elephant would in turn agree to secure the loan with the property located at 15 Chapel Hill Drive, though the City would be in a lien position behind other loans including the Small Business Administration loan for the construction of the childcare facilities at the site. The proposed loan process is like the loan process the City uses for affordable housing projects and like what was already authorized for the building and impact fee loan.
The Alta Heights Neighborhood Coalition has agreed to extend the sidewalk construction to be complete by September 1, 2027. Upon approval of this agenda item, the Community Resources and Development Director will issue an updated Minor Amendment decision to reflect this date.
The loan of $250,000 must be paid back under the terms presented and is therefore not a gift of public funds.
FINANCIAL IMPACTS:
A loan in the amount of $250,000 would be placed on the Non-Recurring Community Resources and Development Administration budget. This appropriation will be funded by Non-Recurring General Fund Contingency. An escrow account will be set up to ensure funds are spent on sidewalk and other traffic calming expenses only. Once the loan is repaid, this funding will return to the Non-Recurring General Fund’s fund balance.
CEQA:
The Interim Community Development Director has determined that the loan agreement is not subject to review under CEQA pursuant to CEQA Guidelines Section 15060(c)(3), because it is not a “project” as defined by CEQA Guidelines Section 15378 and is more akin to a governmental fiscal activity. The project was also subject to CEQA review when the use permit was considered and approved.
DOCUMENTS ATTACHED:
ATCH 1- Loan Terms
ATCH 2- AB 562 Economic Development Report
NOTIFICATION:
Le Petit Elephant
Alta Heights Neighborhood Coalition
County of Napa