To: Honorable Mayor and Members of City Council
From: Steve Potter, City Manager
Prepared By: Molly Rattigan, Deputy City Manager and Stephanie Gaul, Housing Manager
TITLE:
Title
Application for Homekey+ Funds
LABEL
RECOMMENDED ACTION:
Recommendation
1. Approve and authorize the City Manager to negotiate and execute Purchase and Sale Agreements for the purchase of 12 one-bedroom housing units at 1415 Fourth Street and 12 one-bedroom housing units at 1443 Division Street, with closing pending the award of Homekey+ Funds from the State of California;
2. Approve and authorize the City Manager or Deputy City Manager to take the actions necessary to submit an application seeking grant funds from the State of California under the Homekey+ program to acquire 1415 Fourth Street and 1443 Division Street to deepen the affordability and convert to permanent supportive housing; and
3. Adopt a resolution authorizing a reservation of Affordable Housing Impact Fee Funds in the amount of $2,500,000 for the Acquisition of 1415 Fourth Street and 1443 Division Street in Napa; and determining that the actions authorized in this resolution are exempt from CEQA.
Body
DISCUSSION:
The current property owner of 1415 Fourth Street and 1443 Division Street approached City staff a few months ago seeking the City’s interest in purchasing the 12 one-bedroom units at each property. At the time, the City was not able to identify a funding source and has since kept in touch with the property owner, looking for opportunities to acquire these units. The current property owner has been a longtime partner of the Section 8 and homeless services programs, often taking referrals from these programs to fill vacant units. Given that the majority of the tenants currently at these units are or were clients of a City affiliated program, City staff had an interest in preserving housing for existing tenants.
The State of California has released a $2.2 Billion Notice of Available Funding under the Homekey+ program. Homekey+ is funded by Proposition 1 dollars and is intended to create Permanent Supportive Housing opportunities for individuals exiting homelessness that are either diagnosed with or are suspected to have behavioral health some form of a behavioral health disorder.
The timing of Homekey+ allows for the opportunity to apply for funds to purchase these two properties. The properties are currently subject to use permits that require three units at each of the properties to be rented to low-income households and the remaining units to be restricted to moderate income households. All units are restricted to households that are either disabled or over the age of 62. The restriction of the existing use permits and the current owner’s willingness to work with the City of Napa have also made it unlikely that current tenants would need to relocate if Homekey+ funds are awarded. This would allow the City to preserve the existing units, deepen the affordability for at least 55 years, and add supportive services in addition to housing stability in the form of restricted rents.
Today’s requested action is to authorize the City Manager to negotiate and enter into the Purchase and Sale Agreements necessary to submit a Homekey+ application. The City has ordered property appraisals, and the purchase and sale agreement would be based on the appraisal with a floor of $3.6 million and a ceiling of $4 million per property, consistent with the Homekey+ guidelines. The close of the sale will be contingent upon clearance of inspections and the successful award of Homekey funds.
Staff is also requesting approval to prepare and submit a Homekey+ application. In preparation for this application, the City has released a Request for Qualifications to identify an operating partner that would become the eventual owner/operator of the property and coordinate the provision of leases and services. City staff are also working on completing the necessary assessments to submit as part of this application.
Finally, staff requests authorization of a resolution reserving $2.5 million in Affordable Housing Impact Funds to serve as a match for the Homekey+ application. The Homekey+ program is written so that the availability of State funds is dependent on the amount of local funds made available. With a $2.5 million match, the City will have the opportunity to apply for approximately $10 million in funding to support acquisition, minor improvements, and supportive services. County staff are also involved in discussions on ways to support this acquisition and grant application.
Homekey+ applications are accepted on a first-come, first reviewed basis. The approval of today’s requested actions will allow staff flexibility to submit an application as soon as the required documents and reports are finalized and the State Department of Housing and Community Development authorizes the City of Napa to submit an application.
FINANCIAL IMPACTS:
Today’s action seeks a commitment of $2.5 million in Affordable Housing Impact Fee Funds to support this acquisition. Funds will be budgeted and expended only if the City is successful in obtaining a Homekey+ award.
CEQA:
The City Manager has determined that the actions authorized by this action are exempt from the requirements of CEQA pursuant to CEQA Guidelines Sections 15378 (government fiscal activities without any commitment to any specific project) and 15301 (minor alterations to existing structures involving negligible expansion of use). Both would apply on a separate and independent basis with 15378 applicable because this is a City financial activity with a plan to spend the funds to purchase the properties and 15301 is applicable to the extent that the funds are used to purchase and improve the properties with minor alterations.
DOCUMENTS ATTACHED:
ATCH 1- Resolution
NOTIFICATION:
None.