REPORT TO COUNCIL
SUBJECT
Title
Action on Agreement to Fund up to $843,000 for Modernization and Rehabilitation of Eight Affordable Rental Units, Update Two Units to be ADA Accessible, and Replace Approximately 100 Windows in the Sobrato Family Living Center Located at 1509/1503 Agnew Road in Santa Clara, Authority to Extend the Affordability Housing Covenants for an additional ten years, and Approval of Related Budget Amendment
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
BACKGROUND
The City of Santa Clara maintains a Consolidated Plan in conformance with requirements of the United States Department of Housing and Urban Development (HUD), which directs the City’s use of funds allocated to the City by HUD. On April 19, 2022, the Housing and Community Services Division released a capital project Notice of Funding Availability (NOFA) for HUD Community Development Block Grant (CDBG) funds to address the City’s Consolidated Plan goals of Public Facility Improvements and Affordable Housing. Up to $843,000 was made available for Capital Improvement Projects - Affordable Housing.
Capital Improvement Projects for low/moderate income housing include, but are not limited to, improvements to multi-family affordable housing and single-family housing owned by non-profits that serve a special needs population. Non-housing Capital Improvement Projects for public facilities include, but are not limited to, improvements to non-profit facilities that serve low/moderate income residents and city infrastructure improvements. Low/moderate income as applied to CDBG programs is generally defined as households with an income below 80% of Area Median Income as adjusted by HUD for household size.
DISCUSSION
The City received responses to the NOFA which were prioritized according to cost/benefit, project size and the significance of the need. Staff is proposing to proceed with the rehabilitation of the Sobrato Family Living Center (SFLC) to ensure the apartments remain safe, ADA accessible, and livable over the coming years.
The SFLC includes a total of 51 affordable two to four-bedroom affordable rental units spread across 11 buildings. These units are restricted to households earning very low income or below 50% of Area Median Income. Of these units, 18 were built as part of the non-historical Agnews Hospital Complex and 33 were built in 1999.
The proposed rehabilitation project will include the renovation of kitchens with modern appliances, new flooring, light fixtures, sinks, cabinets, countertops, and the renovation of bathrooms in eight apartments. The scope also includes updating two bathrooms so they are ADA accessible. These accessibility improvements will include appliances with special handles and bathrooms with grab bars and roll-in showers.
The second segment of the project is to replace approximately 100 windows to address leaks and prevent mold and mildew issues and to increase energy efficiency and reduce heating and cooling costs.
The contractor bid process is scheduled to begin in late August and construction would begin in late fall. The construction process will take approximately one year.
It is important to note that the Sobrato Family Living Center was flagged as an at-risk property in the City’s Housing Element because the affordability period will end in 2030. In April 1999, the City entered into an Affordable Housing Grant Agreement for this property that requires the owner to restrict its units to be affordable for 30 years in the affordable housing covenant. (Attachments 2 and 3) As a condition for granting CDBG funding to this renovation project, the City will require HomeFirst to extend the affordability term of this project by ten years from 2030 to 2040. This action implements Action 5A in the Housing Element workplan and demonstrates the City’s ongoing commitment to the preservation of housing affordability.
Please reference Attachment 1 to see a draft agreement for this project.
ENVIRONMENTAL REVIEW
The action being considered qualifies as a Categorical Exemption per the California Environmental Quality Act (CEQA) section 15301 (e)(1), Existing Facilities in that the project is limited to the replacement of windows in existing residential buildings, as well as interior residential unit improvements.
FISCAL IMPACT
This capital project will be funded using federal HUD Community Development Block Grant entitlement funds, which will be received by the City on a reimbursement basis. As part of the FY 2023/24 budget, funding for this item was appropriated in the Rehabilitation - Affordable Rental Housing project, supported by CDBG revenue, in the Housing and Urban Development Fund. The budget amendment below carries over the FY 2023/24 CDBG revenue that has not yet been received, and the FY 2023/24 unspent funds for this project to appropriate in the current fiscal year.
Budget Amendment
FY 2024/25
|
|
Current |
Increase/ (Decrease) |
Revised |
|
Housing and Urban Development Fund |
|
Revenue |
|
|
|
|
Grant Funding |
$1,741,322 |
$843,000 |
$2,584,322 |
|
|
|
|
|
|
Expenditure |
|
|
|
|
Rehabilitation - Affordable Rental Housing |
$100,000 |
$843,000 |
$943,000 |
COORDINATION
This report has been coordinated with the Finance Department, City Attorney’s Office, and City Manager’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
1. Authorize the City Manager to execute an agreement, promissory note, and deed of trust with HomeFirst to fund and secure up to $843,000 for the modernization and rehabilitation of eight affordable rental units, update two units so they are ADA accessible, and replace approximately 100 windows in the Sobrato Family Living Center located at 1509/1503 Agnew Road in Santa Clara, in a final form approved by the City Attorney’s Office.
2. Authorize the City Manager to amend the Affordable Housing Covenants to extend the existing Use Restriction by ten years commencing on October 19, 2030 and terminating on October 19, 2040, in a final form approved by the City Attorney’s Office.
3. Approve the FY 2024/25 budget amendment in the Housing and Urban Development Fund, increasing the grant revenue estimate in the amount of $843,000 and increasing the Rehabilitation - Affordable Rental Housing project in the amount of $843,000 (five affirmative Council votes required to appropriate additional revenue).
Staff
Reviewed by: Reena Brilliot, Acting Director, Community Development
Approved by: Jovan D. Grogan, City Manager
ATTACHMENTS
1. HomeFirst Sobrato Family Living CIP Agreement - DRAFT
2. Agreement Containing Affordable Housing Covenants May 1999
3. Affordable Housing Grant Agreement February 2000