To: Sonoma County Board of Supervisors and Board of Commissioners of the Sonoma County Community Development Commission
Department or Agency Name(s): Sonoma County Community Development Commission
Staff Name and Phone Number: Michelle Whitman, (707) 565-7504
Vote Requirement: Majority
Supervisorial District(s): Countywide
Title:
Title
Permanent Local Housing Allocation Loan Awards
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Recommended Action:
Recommended action
Approve Permanent Local Housing Allocation awards in the aggregate amount of $1,415,130 and authorize the Executive Director of the Sonoma County Community Development Commission, or designee, to execute funding agreements and related loan documents, and subsequent amendments, subordinations, and other modifications to agreements and loan documents in connection to the Permanent Local Housing Allocation awards, consistent with the Sonoma County Community Development Commission’s Loan Policies.
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Executive Summary:
This agenda item will provide $1,415,130 in loans from the Permanent Local Housing Allocation (PLHA) Program administered by the Sonoma County Community Development Commission (Commission). Approval of the 4 loans will assist the development of a total of 159 new housing units, 156 of them affordable. These new affordable housing units include (1) 21 units of permanent supportive housing in Guerneville for very low-income and formerly homeless individuals; (2) 42 units in Windsor for very low- and low-income households including large families; (3) 63 units in downtown Santa Rosa with 30 units reserved for extremely low-income homeless households and the balance for very low- and low-income households; and (4) 30 units in north Santa Rosa for very low- and low-income senior households. Three units are designated for Managers and are not considered affordable housing.
Every year, the Commission releases a Notice of Funding Availability (NOFA) to solicit housing development proposals to increase the development of affordable housing. The purpose of PLHA is to develop, preserve, and accelerate the pace of development of below market-rate housing for low-, very low-, and extremely low-income households. PLHA resources provide loans to qualified developers, public entities, groups, and individuals to undertake activities that create, maintain, or expand the County’s affordable housing stock.
Discussion:
The Building Homes and Jobs Trust Fund and PLHA programs were created through California Health and Safety Code (HSC) §50470. The principal goal of this program is to make funding available to eligible local governments in California for housing-related projects and programs that assist in addressing the unmet housing needs of their local communities. Twenty percent of the funding in the Building Homes and Jobs Trust Fund is required to be expended for affordable owner-occupied workforce housing, and the program prioritizes investments that increase the supply of housing to households that are at or below 60% of the Area Median Income (AMI), adjusted for household size. To be considered for PLHA funding, a jurisdiction must prepare a 5-year plan specifying how the funding will be used.
The Commission prepared a 5-Year Plan for the use of PLHA funding that was approved by the Board of Supervisors acting as the Board of Commissioners on August 14, 2020, and subsequently approved by the State of California Department of Housing and Community Development (HCD). The Commission’s plan identifies the activities the PLHA funding will be used to assist and specifies allocating its annual awards to the following categories: 75% of funding to affordable multi-family rental housing for units available to persons at or below 50% AMI, 20% of funding to affordable owner-occupied workforce housing with units available to persons at or below 120% AMI, and 5% allocated to administrative costs associated with implementing the PLHA Program.
The Commission was allocated up to $5,396,358 in HCD PLHA funds for a 5-year period spanning Fiscal Years 2021-22 through 2025-26. PLHA funds are awarded by HCD each year drawing from the remaining allocated amount. For Fiscal Year (FY) 2023-24, the Commission was awarded $1,538,385 with a carryover of $481,787 of unspent funds from the 2022-23 FY funding cycle for a total of $2,020,172 available in FY 2023-24 NOFA funding to support the development and/or preservation of multi-family and single-family housing for low-, very low-, and extremely low-income households through predevelopment, development, acquisition, rehabilitation, and preservation. Funds are made available in the form of deferred payment loans to qualified developers, public entities, groups, and individuals to undertake activities that create, maintain, or expand the County’s affordable housing stock. Program income (generated through any surplus cash repayment, loan repayment, etc.) will be reused for eligible activities specified in the 5-Year PLHA Plan and PLHA Program Guidelines.
On March 15, 2023, the Commission issued a NOFA for $2,020,172 available in FY 2023-24 from the PLHA Program. Funding available through the NOFA is $1,415,130 prioritized for affordable rental housing for households earning up to 50% AMI, with $605,042 prioritized for affordable owner-occupied workforce housing. Five applications for affordable rental housing projects were received in response to the NOFA. The total funding requested in the applications exceeded $4.3 million.
No applications for the $605,042 in affordable owner-occupied workforce housing were received. Pursuant to the FY 2023-24 NOFA, this set-aside funding will remain available until exhausted as an ongoing “over-the-counter" funding opportunity, available for qualified developers, public entities, groups, and individuals until the funding is exhausted or included in a future NOFA.
Over-the-counter applications will follow the same process as applications submitted during the initial application period outlined in the NOFA, with all applications reviewed and evaluated by Commission staff. Staff evaluations will then go to the Community Development (CD) Committee for review and recommendation, and then Commission staff will bring those recommendations to the Board of Commissioners for final approval to award funding.
The 5 projects were reviewed and evaluated by staff to determine if they met the PLHA Guiding Principles and Funding Priorities. Staff’s analysis was based on a comprehensive assessment of the evaluation, funding, and NOFA criteria that are part of the Funding Policies and 5-Year Plan that govern the use of funds.
Funding criteria include the following:
1. Proposals must meet the following priorities:
• Projects that demonstrate the creation or preservation of the greatest number of affordable housing units affordable to the lowest-income populations
• Projects that demonstrate Commission funds will be leveraged against total development costs at least 7:1Projects demonstrating advanced readiness via (a) entitlements; (b) financing commitments; (c) permitting
• Project developers who can demonstrate previous success in the development of affordable housing within the last 7 years
2. Projects must be eligible and meet one or more of the following conditions:
• Projects that create units for households with incomes up to 50% AMI
• Projects that preserve existing affordable housing units through acquisition or rehabilitation
• Rental housing projects
• Properties providing permanent supportive housing
• Below-market-rate workforce homeownership projects
• Housing for special needs populations
3. Projects must meet Threshold Criteria:
• Consistency with the jurisdiction’s General Plan
• Applicant must possess site control
4. Housing Element Goals and County Strategic Priorities:
• Cost effectiveness and feasibility of the project
• Projects taking advantage of maximum density permitted
• Projects demonstrating existing support from other jurisdictions
5. Extent to which CDC funds have been invested in prior years and need additional funding to move forward to completion
A summary and staff analysis of each project is shown in the FY 2023-24 Project Summary and Staff Analysis Reports (Attachment 1).
The CD Committee (comprised of five appointed representatives of the supervisorial districts, two tenant representatives of the Sonoma County Housing Authority, and a staff appointee from the Department of Human Services) review and make recommendations on matters concerning housing development and affordable housing programs, including PLHA funding allocations. These recommendations then come before your Board for review and approval.
The CD Committee held a public hearing on June 21, 2023, to review the funding requests and staff’s analysis of each project’s adherence to the funding criteria listed above. At the conclusion of the hearing, the CD Committee recommended approval of the PLHA awards in the aggregate amount of $1,415,130 to fund 4 of the projects as shown in the following table:
PLHA Funds Available for Creation/Preservation of Affordable Rental Housing: $1,415,130
|
Project Sponsor |
Project Name |
Funds Requested |
Recommended Award |
Total Units |
|
Burbank Housing Development Corporation |
Caritas II (Santa Rosa) |
$750,000 |
$333,727 |
64 units: 30 extremely low-income units for homeless households and 33 for very low- and low-income households, 1 manager unit |
|
Burbank Housing Development Corporation |
BRJE III (Santa Rosa) |
$600,000 |
$158,918 |
30 very low- and low-income units for seniors |
|
West County Community Services |
George’s Hideaway (Guerneville) |
$700,000 |
$700,000 |
22 units: 21 permanent supportive housing units, 1 manager unit |
|
MP Verano Associates, LP (MidPen) |
Summer Oaks (Unincorporated Sonoma) |
$1,415,130 |
$0 |
72 units: 71 very low- and low-income units, 1 manager unit |
|
Spectrum Affordable Housing Corporation |
Redwood Glen Apartments (Windsor) |
$850,000 |
$222,485 |
43 units: 42 very low- and low-income units, 1 manager unit |
|
Total Funding |
|
$4,315,130 |
$1,415,130 |
|
The CD Committee did not recommend funding for the proposal from MP Verano Associates, LP primarily because the project has already been awarded approximately $2.5 million from other Commission grant funding sources.
Upon your Board’s approval of the PLHA loan awards, Commission staff will work with the borrowers to comply with all applicable requirements of the Commission Loan Policies prior to executing funding agreements and related loan documents. Your Board’s approval will permit the Executive Director of the Commission, or designee, in consultation with County Counsel, to execute funding agreements and related documents including promissory notes, deeds of trust, and other related loan documents, and subsequent amendments, subordinations, and other modifications to said agreements and loan documents in connection to the PLHA awards in the aggregate amount of $1,415,130.
Strategic Plan:
This item directly supports the County’s Five-Year Strategic Plan and is aligned with the following pillar, goal, and objective.
Pillar: Healthy and Safe Communities
Goal: Goal 3: In collaboration with cities, increase affordable housing development near public transportation and easy access to services.
Objective: Objective 2: Identify and leverage grant funding sources for permanent supportive and affordable housing development.
Racial Equity:
Was this item identified as an opportunity to apply the Racial Equity Toolkit?
No
Prior Board Actions:
08/18/2020: Resolution #20-0302 authorized and adopted the Commission’s 5-Year Plan for use of PLHA funds
Fiscal Summary
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Expenditures |
FY 23-24 Adopted |
FY 24-25 Projected |
FY 25-26 Projected |
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Budgeted Expenses |
$1,415,130 |
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Additional Appropriation Requested |
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Total Expenditures |
$1,415,130 |
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Funding Sources |
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General Fund/WA GF |
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State/Federal |
$1,415,130 |
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Fees/Other |
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Use of Fund Balance |
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Contingencies |
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Total Sources |
$1,415,130 |
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Narrative Explanation of Fiscal Impacts:
Expense and Revenue appropriations of $1,415,130 are included in the FY 2023-24 Budget.
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Staffing Impacts: |
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Position Title (Payroll Classification) |
Monthly Salary Range (A-I Step) |
Additions (Number) |
Deletions (Number) |
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Narrative Explanation of Staffing Impacts (If Required):
No staffing impacts will be realized as a result of this work.
Attachments:
Attachment 1 - FY 2023-24 Project Summary and Staff Analysis Reports
Related Items “On File” with the Clerk of the Board:
None