To: Honorable Mayor and Members of City Council
From: Steve Potter, City Manager
Prepared By: Molly Rattigan, Deputy City Manager
TITLE:
Title
Homekey+ Update and Authorizations for City Manager
LABEL
RECOMMENDED ACTION:
Recommendation
Receive a report on the Homekey+ Application and approve the following:
1. Authorize the City Manager to amend the Purchase and Sale Agreement for the purchase of 1415 Fourth Street in Napa for $3,770,000 releasing an additional deposit of $75,000 within seven days of the execution of the amendment and begin the closing process for the property immediately upon execution.
2. Authorize the City Manager to execute all necessary affordable housing agreements with Burbank Housing to own and operate 1415 Fourth Street as an affordable housing complex under the following conditions:
a. If Homekey+ Funds are awarded to the City of Napa, as Permanent Supportive Housing in accordance with the Homekey+ Guidelines
b. If Homekey+ Funds are not awarded to the City of Napa, as units deed restricted to households with income at or below 80% of Area Median Income.
3. Adopt a resolution authorizing the reservation of affordable housing impact fee funds in the amount of $700,000 for the acquisition of 1415 Fourth Street to be reimbursed if Homekey+ Funds are awarded to the City of Napa and determining that the actions authorized by this resolution are exempt from CEQA.
4. Authorize the City Manager to enter into an amended Purchase and Sale Agreement for the purchase of 1443 Division Street in Napa for $3,950,000, with the closing process to commence upon public announcement of a Homekey+ Award by the State of California.
Body
DISCUSSION:
On April 28, 2025, the City Council approved the submittal of a Homekey+ application for an amount up to $10 million for the acquisition and rehabilitation of 1415 Fourth Street and 1443 Division Street to offer 23 units of Permanent Supportive Housing for clients exiting homelessness that meet the Homekey+ criteria, and one on-site Manager’s unit.
The application was submitted in early May and the State has extended their review period with announcements of awards occurring monthly. Napa’s application is still in process of being reviewed and was not announced as part of the July 2025 awards. Homekey+ remains undersubscribed, and the City’s application has met all threshold and scoring requirements. Staff is hopeful that the City of Napa will be awarded in the August announcement cycle.
The current owner of the properties located at 1415 Fourth Street and 1443 Division Street entered into a Purchase and Sale Agreement with the City of Napa that contemplated closing by August 1, 2025, upon award of funds. Since this did not occur, an amendment is needed to the Purchase and Sale Agreement and to maintain the City’s position to not lose these properties if the seller were to put on the open market.
Staff is requesting authority to increase the use of Affordable Housing Impact Fund dollars in the amount of $700,000 to expedite the close of 1415 Fourth Street. If the City does not receive Homekey+ funds, the property will be fully deed restricted to households earning at or less than 80% of Area Median Income.
If the City is awarded Homekey+ funds, the Affordable Housing Impact Fund will be reimbursed the $700,000 for the purchase of the property. The property, along with 1443 Division Street, will be operated as Permanent Supportive Housing for low-income households that meet the Homekey+ criteria.
Regardless of how the property operates, City staff will partner with Burbank Housing for the ownership and operation of the units. When closing escrow on the purchase, the City will deed the ownership of the units to Burbank Housing in exchange for a standard Affordable Housing Loan Agreement and deed restriction.
FINANCIAL IMPACTS:
This item seeks an additional $700,000 from the Affordable Housing Impact Fee Fund for the acquisition of 1415 Fourth Street. The City Council has authorized $3.1 Million in funds for the Homekey+ application match which is contemplated to result in the ownership of 1415 Fourth Street and 1443 Division Street as 23 units of Permanent Supportive Housing, and one Manager’s unit under the Homekey+ guidelines.
If the City does not receive Homekey+ funding, the City will have purchased 1415 Fourth Street with Affordable Housing Impact Funds for $3,770,000. In this case, the property would be 100% deed restricted for low-income households but not as Permanent Supportive Housing.
CEQA:
The City Manager has determined that the actions authorized by this resolution are exempt from the requirements of CEQA pursuant to CEQA Guidelines Sections 15301 (minor alterations to existing structures involving negligible expansion of use).
DOCUMENTS ATTACHED:
ATCH 1- Resolution
ATCH 2- Budget Adjustment No. 158
NOTIFICATION:
None.