REPORT TO COUNCIL
SUBJECT
Title
Action on Authorizing the City Manager to Negotiate and Execute two Lender Consent and Subordination Agreements for an Access Easement Agreement and Stormwater Easement Agreement for HomeSafe San Jose
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing, and Transportation Development
BACKGROUND
For almost 20 years Charities Housing Development Corporation (“Charities Housing”) has been operating two housing facilities for survivors of domestic violence and their children, one located in Santa Clara (HomeSafe Santa Clara) and one located in San Jose (HomeSafe San Jose). The City of Santa Clara assisted with the funding for both properties. In November of 2002, the City Council appropriated $250,000 in Home Investment Partnership Act (HOME) funds to assist in the development of Homesafe San Jose, including architectural and engineering expenses and construction costs. A HOME Capital Loan Agreement was executed on November 19, 2002 with a loan period of 55 years set to mature in July 2058. Homesafe San Jose also received two loans from the City of San Jose which totaled $6,750,000 and a HOME loan from the County of Santa Clara in the amount of $217,800 for acquisition and rehabilitation. The City of Santa Clara maintains a financial interest in HomeSafe San Jose which requires the City to agree to proposed changes to that property.
Homesafe San Jose (the “Property” or “Homesafe San Jose”) provides 24 co-housing (shared) living spaces for residents and one two-bedroom staff apartment on a 1.08-acre lot in San Jose. The Property consists of four two-story buildings: three residential and one containing a daycare space, management/service offices and a community room. All of the units are restricted at 30% Area Median Income (AMI). The Property includes 25 residential parking spaces and two for the daycare space on a surface parking lot off the cul-de-sac of Kentucky Place.
Charities Housing restructured the ownership of the site so that Charities became the new Limited Partner (LP), the Charities Housing affiliate, Homesafe Charities LLC, will be the managing General Partner and Lifemoves will be the co-General Partner. Charities Housing intends to continue to own and operate the Property. In 2018, Charities Housing requested that the City consent to the restructuring of the partnership to allow the current LP to leave the partnership and for Charities and Lifemoves to step in. Charities Housing made the same request to the other lenders, including the City of San Jose, County of Santa Clara, HUD (McKinney) and Tax Credit Allocation Committee (“TCAC”). The City reviewed the request and provided written consent on May 22, 2019.
Charities Housing has also acquired the adjacent parcel, 1860 Alum Rock, with the intention of developing it as an affordable housing site.
DISCUSSION
Charities Housing is requesting that the City of Santa Clara consent and subordinate its interest to two easements on the HomeSafe San Jose site to facilitate the development of a 100% affordable housing project on the adjacent property, also owned by Charities Housing. The affordable housing project on the adjacent property would consist of 59 affordable units and one unrestricted staff unit. Because of the configuration and topography of the two adjacent properties, Charities Housing is proposing an easement to utilize the parking lot of the HomeSafe San Jose site to provide access and drainage for the adjacent property. Because of the City of Santa Clara’s financial interest in the property, City consent is required before this easement can be created.
The entrance to the parking garage for the proposed 1860 Alum Rock project is from the HomeSafe San Jose parking lot drive aisle. As such, 1860 Alum Rock requires shared access easements with HomeSafe San Jose through the parking lot drive aisle. These shared access easements include, but are not necessarily limited to: Vehicular Access, Pedestrian Access, Emergency Access, Ladder Pads Access, Project Landscaping Access, Signage, Solid Waste Receptacle Access, Temporary Construction Access, and Stormwater Drainage. One major benefit of this arrangement is access to 1860 Alum Rock is transferred from Alum Rock Ave, a very busy traffic corridor, to the back of the site through the cul-de-sac at Kentucky Place. Seven parking spots on the HomeSafe San Jose site would be lost for the easement but would be made up for with seven parking spaces on 1860 Alum Rock accessible to the HomeSafe San Jose site.
It is possible that Catholic Charities will redevelop the HomeSafe San Jose site in the relatively near future as the HomeSafe San Jose site reaches the end of its allocated operational funding. In the case of the redevelopment of the HomeSafe San Jose site, the two sites would share community spaces, property management and service spaces, and other resources seamlessly. HomeSafe San Jose includes a parking lot and drive aisle that naturally divides the two sites and provides access to the rear of 1860 Alum Rock. As the two communities are intended to be intertwined, shared access easements in this zone will be needed for the two developments to function together.
Consenting to the requested easement will facilitate the near-term development of a 100% affordable housing project on the property at 1860 Alum Rock in San Jose. The project will target large families and 50% of the units will be reserved for Rapid Rehousing households. All Rapid Rehousing households will be referred through the County of Santa Clara Office of Supportive Housing office (OSH). The units will be restricted to households in the 30%-50% AMI bracket with a weighted affordability average of 40%.
While this property is not within Santa Clara, it will provide much needed affordable housing for lower income residents, consistent with the City’s values, and comparable to what would be supported by the goals and policies in the City’s General Plan. Consenting to the easement will not impede the current operation of HomeSafe San Jose or in any way be detrimental to the City’s financial interest in that property. Staff therefore recommends that the City Council grant authority to the City Manager to allow the establishment of the easement to facilitate the development of affordable housing.
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project" within the meaning of the California Environmental Quality Act ("CEQA") pursuant to CEQA Guidelines section 15378(b)(5) in that it is an administrative activity that will not result in direct or indirect physical changes to the environment.
FISCAL IMPACT
There is no fiscal impact, the City as a lender needs to approve easements on the property.
COORDINATION
This memorandum has been coordinated with the Housing Department and City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Authorize the City Manager to negotiate and execute two Consent and Subordination Agreement for an Access Easement Agreement and Stormwater Easement Agreement for HomeSafe San Jose
Staff
Reviewed by: Andrew Crabtree, Director, Community Development
Approved by: Rajeev Batra, City Manager
ATTACHMENTS
1. Access Easement Agreement w/ Consent and Subordination Agreement
2. Stormwater Easement Agreement w/ Consent and Subordination Agreement