To: Honorable Mayor and Members of City Council
From: Steve Potter, City Manager
Prepared By: Stephanie Gaul, Housing Manager
TITLE:
Title
Affordable Housing and Sustainable Communities Grant and 1% TOT for Affordable and Workforce Housing Loan Reservation Extension for The Crescent
LABEL
RECOMMENDED ACTION:
Recommendation
1) Adopt a resolution authorizing the City Manager or their designee to submit an Affordable Housing and Sustainable Communities (AHSC) grant application to the State of California as co-applicant with Heritage Housing Partners for The Crescent project located at 2344 Old Sonoma Road in an amount not to exceed $30 million for the development of at least 39 low-income and 38 moderate-income deed restricted for-sale units and related sustainable transportation infrastructure and determining that the actions authorized by this resolution were adequately analyzed by a previous CEQA action.
2) Adopt a resolution authorizing an extension of the reservation of 1% Transient Occupancy Tax for Affordable and Workforce Housing funds in the amount of $3,761,224 for The Crescent, an affordable housing project which includes new construction ownership units, located at 2344 Old Sonoma Road and determining that the actions authorized by this resolution were adequately analyzed by a previous CEQA action.
Body
DISCUSSION:
The non-profit housing developer Heritage Housing Partners has been working on a redevelopment project for the former County of Napa Housing and Human Services Campus located at 2344 Old Sonoma Road. Heritage Housing Partners currently owns the property and has been working on development plans and securing funding to complete the project, named The Crescent, which will include 77 deed restricted for-sale housing units.
The City has previously provided a number of commitments to the project. On October 19, 2021, in response to a Notice of Funding Availability (NOFA) application, the City approved a loan reservation in the amount of $1,766,224 from the City’s 1% Transient Occupancy Tax for Workforce and Affordable Housing (“1% TOT”) funding. On October 4, 2022 an additional $1,995,000 in 1% TOT funding was provided to The Cresent, bringing the total loan reservation to $3,761,224. The 1% TOT loan will support sixteen deed restricted moderate-income units. In addition, on March 30, 2023 and March 5, 2024, City Council authorized submittal of Affordable Housing and Sustainable Communities (AHSC) grant applications to the State of California with the City as co-applicant with Heritage Housing Partners. The AHSC grant will allow the project to provide additional deed restricted units beyond what will be supported with 1% TOT funding.
The AHSC program is designed to reduce greenhouse gas (GHG) emissions through affordable housing development projects that implement land-use, housing, transportation, and agricultural land preservation practices to support infill and compact development that support related and coordinated public policy objectives including: reducing air pollution, improving conditions in disadvantaged communities, supporting and improving public health benefits, improving connectivity and accessibility to jobs and services, and increasing options for mobility and transit ridership.
While the AHSC applications in 2023 and 2024 were not funded, scoring on each application has been just below the competitive funding level. Heritage Housing Partners has been working to refine the project to prepare for the next round of AHSC funding. Heritage Housing Partners recently applied for funding under a CalHome NOFA and desires to apply to the current AHSC NOFA. Awards are expected to be announced in July and December, respectively. If The Crescent receives both funding awards, the project can expect to begin construction in mid-2026. The City’s 1% TOT loan reservation will expire on October 4, 2025 and Heritage Housing Partners has requested an extension in order to secure final funding on the project.
AHSC funds of up to $30 million will support the development of at least 39 low-income and 38 moderate-income deed restricted for-sale units and related sustainable infrastructure improvements. AHSC funds will also be used for the design and construction of bicycle and pedestrian improvements along various streets within a one-mile radius of The Crescent. The bicycle improvements will include installation of Class III Bicycle Boulevard and Class II bicycle facilities and associated work including, but not limited to signage, striping, pavement overlay, and traffic calming measures. The pedestrian improvements include but are not limited to curb, gutter, sidewalk, curb ramps, signage, striping, and rectangular rapid flashing beacons (RRFBs). Funds will also be used for bus stop improvements, the purchase of vans for a car sharing program to be managed by Napa Valley Transportation Authority, and other programs to support the deed restricted units.
If Council approves the loan reservation extension, staff will return at a future City Council meeting for formal loan approvals. This will not occur until the Project’s formal loan underwriting has been completed. If the project does not have a formal loan approval by October 4, 2026, the loan reservation shall expire. As a condition of the City’s loan, the moderate-income homeowner units in The Crescent would be subject to a 45-year affordability restriction. The City does not have current underwriting guidelines for the 1% TOT fund, but the NOFA indicated that the City will generally use similar guidelines as the City’s 2020 Affordable Housing Trust Fund Underwriting Guidelines.
If the project is awarded AHSC funding, the construction funding would either go directly the Heritage House Partners from the State or from the State to the City, in which case the City would then provide a construction loan to Heritage Housing Partners. In either case, staff would return to Council prior to acceptance of the award, and if the AHSC construction funding would be provided through the City, staff would also seek approval at that time of the terms of the loan to Heritage House Partners and to the future homebuyers.
FINANCIAL IMPACTS:
This item has no impact to the General Fund. The loan reservation has previously been budgeted in City’s 1% TOT for Workforce and Affordable Housing Fund. Submittal of the AHSC grant application does not have a fiscal impact. If the AHSC grant is awarded, staff will return to the City Council with the necessary documents to accept the award and enter into the necessary agreements.
CEQA:
Pursuant to State California Environmental Quality Act (“CEQA”) Guidelines Section 15162 , staff has reviewed the the Napa General Plan Update Final EIR (SCH #2021010255) certified by the City Council on September 20, 2022 (the “2040 General Plan EIR”) and determined that a subsequent EIR or a Negative Declaration is not required for this Project because its impacts have been already been sufficiently analyzed and fully considered in the 2040 General Plan EIR. Further, the Project does not propose substantial changes to the 2040 General Plan nor will the Project involve new significant environmental impacts or a substantial increase in the severity of previously identified significant effects, the circumstances under which the 2040 General Plan EIR was adopted have not changed, and no new information of substantial importance which was not known and could not have been known with the exercise of reasonable diligence has arisen since the certification of the 2040 General Plan EIR. Therefore, no further environmental review is required under CEQA.
Additionally, the Project is consistent with the growth and environmental impacts that have already been anticipated and considered by the 2040 General Plan and the associated 2040 General Plan EIR. The Project does not present any environmental impacts which are peculiar to the parcel or to the Project which were not addressed in the 2040 General Plan EIR. Further, there is no substantial information that indicates the possibility of more significant environmental impacts than described in the 2040 General Plan EIR. Therefore, the Project is consistent with State CEQA Guidelines Sections 15162 - 15164, 15168, and 15183 and Public Resources Code section 21083.3(b) and no further environmental review is required under CEQA.
DOCUMENTS ATTACHED:
ATCH 1 - Resolution (Grant Application)
ATCH 2 - Resolution (Affordable & Workforce Housing Funds)
NOTIFICATION:
Napa Valley Transportation Authority (NVTA) was notified of this agenda item.