The County of Santa Clara
California

Report
98418

Receive report from the Office of Supportive Housing relating to loans to construct apartments that are affordable to lower-income households and persons with intellectual and/or developmental disabilities.

Information

Department:Office of Supportive Housing (Office of the County Executive)Sponsors:
Category:Report

Body

FISCAL IMPLICATIONS

There are no fiscal implications associated with this report. However, as part of its agenda on October 8, 2019, the Board will consider financial support for three affordable housing developments that include housing for extremely low-income and very-low income persons with intellectual and/or developmental disabilities. If approved, the County’s capital investment of $10,000,000 for the three affordable housing developments would be drawn from funding previously approved by the Board on March 12, 2019 (Item No. 24).

REASONS FOR RECOMMENDATION

The County’s loans would support three new housing developments and a total of 214 new apartments. The County’s investment of $10,000,000 would contribute to the construction of: a) 60 apartments for individuals with intellectual and/or developmental disabilities and their families (“I/DD units”); b) 54 apartments for very-low income (VLI) households; c) 88 apartments for households earning up to 80% of Area Median Income (AMI); d) 9 apartments for households earning up to 100% of AMI; and, e) three units for resident managers. The County’s contribution towards the 60 I/DD units would be approximately $166,667 per unit.

Table 1 summarizes the three developments that are recommended for funding. Attachment A provides more information for each specific project including funding sources, other leveraged sources, unit mix and affordability levels.

Table 1:  Recommended Developments

Development

Total Units

Mgr. Units

Moderate Income Units

LI

Units

VLI Units

ELI Units

I/DD Units

Proposed County Funds

2330 Monroe Santa Clara

65

1

9

29

10

0

16

$3,200,000

Wilton Court – Palo Alto

59

1

0

37

0

0

21

$2,800,000

Block 15Sunnyvale

90

1

0

22

44

0

23

$4,000,000

Total

214

3

9

88

54

0

60

$10,000,000

 

Description of New Construction Developments

Below is a brief description of the three proposed developments. Attachment B includes a two-page summary for each of the three proposed developments.

2330 Monroe Street, Santa Clara: 2330 Monroe Street is a new 65-unit (including one manager’s unit) affordable housing development in the City of Santa Clara. If approved, the County’s investment of up to $3,200,000 would contribute to the construction of 16 units for adults with intellectual and/or developmental disabilities and their families, 10 units for households earning up to 50% AMI, 29 units for households earning up to 80% of AMI and 9 units for households earning up to 100% AMI. Freebird Development Company, the developer, has also secured a commitment of $5,000,000 from the City of Santa Clara.

Wilton Court Apartments, Palo Alto: Wilton Court Apartments is a new 59-unit (including one manager’s unit) affordable housing development in the City of Palo Alto. If approved, the County’s investment of up to $2,800,000 would contribute to the construction of 21 units for adults with intellectual and/or developmental disabilities and their families and 37 units for households earning up to 60% AMI.  Palo Alto Housing Corporation, the developer, has also secured a commitment of $12,350,000 from the City of Palo Alto. 

Block 15, Sunnyvale: Block 15 Apartments is a new 90-unit (including one manager’s unit) affordable housing development in the City of Sunnyvale. If approved, the County’s investment of up to $4,000,000 would contribute to the construction of 23 units for adults with intellectual and/or developmental disabilities and their families, 44 units for households earning up to 50% of AMI, 13 units for households earning up to 60% of AMI, 9 units for households earning up to 80% of AMI. Related Companies of California, the developer, has also secured a commitment of $12,500,000 from the City of Sunnyvale and has applied for a $1,000,000 grant through the San Andreas Regional Center (SARC)

Underwriting & Financial Feasibility

The County’s underwriting and financial feasibility analysis is completed at three stages during each project’s development phase: 1) at the time an application is submitted to the County for funding; 2) at construction finance closing; and 3) after the construction is complete and the project converts to permanent financing. Each developer is required to provide a pro forma and financial plan when they apply for housing development funds from the County. The financing plan explains the pro forma and assumptions that the developer is using to develop their financial projections. 

During the initial review, Office of Supportive Housing (OSH) would prepare a preliminary analysis to: 1) confirm the funding gap; 2) determine the maximum subsidy for the project; and 3) analyze the developer’s financial projections and funding sources. Each project is underwritten to the Board-approved underwriting standards, which includes but is not limited to loan terms, developer fee caps, payment of prevailing wages, replacement and operating reserve amounts, operating budget minimums, and cash flow distributions. A consultant would be used to peer review OSH’s analysis. OSH staff would also consult with staff from cities that have also received a funding request from the developer.

The second review is completed once the developer has secured all financing for the project.  At this stage, the construction lender, senior lender, and other soft lenders would underwrite the development based on the collective requirements of each funding source. If there are inconsistent policies or assumptions have changed, OSH would negotiate the County’s position to ensure the number of supportive housing units does not change, that costs remain reasonable, that the development remains affordable for at least 55 years, and, to the extent possible, that the County’s investment is repaid.

The final and third review would be completed post construction to certify that all costs were appropriate, and a final cost certificate is prepared by the developer.  OSH would review the final cost certificate and any cost savings are used to pay back a portion of the County’s loan.

Loan Terms

The final loan amount for each development will be contingent upon the final tax credit award and the developer’s ability to secure other local, state, and federal funding. In general, loans issued for new construction would be structured as 3% simple interest residual receipt loans, subject to final underwriting, and would be consistent with the updated Supportive Housing Development Program Guidelines approved by the Board on August 13, 2019 (Item No. 92).

Supportive Services

For each I/DD unit, the San Andreas Regional Center (SARC) would be responsible for making referrals, coordinating, and providing or funding ongoing onsite supportive services.  SARC’s responsibilities would be delineated through the following:

1.     A No-Cost Memorandum of Understanding (MOU) between SARC and the County describing SARC’s responsibilities related to the I/DD units and the organization’s partnership to assist homeless persons who have or may have an intellectual and/or developmental disability. The MOU between SARC and the County is currently being executed under authority delegated to the County Executive or designee (March 12, 2019 Board Meeting, Item No. 24).

2.     Each developer has submitted a commitment letter from SARC describing the services that would be offered or funded by SARC to help each future tenant live as independently as possible.

3.     Prior to the County funding each loan, SARC and each developer would enter into an MOU describing the responsibilities of SARC, the developer, the developer’s property management agent, and the developer’s resident services provider. These project-specific MOUs would be similar to MOUs between the County and the developer when a development includes supportive housing units for homeless and chronically homeless persons.

CHILD IMPACT

The recommended action would create 211 new affordable apartments.  The 60 I/DD units would be for I/DD adults and their families, which could include children. The remaining 151 apartments would be affordable and available to lower-income households, including those with children. 

SENIOR IMPACT

The recommended action would create 211 new affordable apartments. While the units would not be age restricted for seniors, the apartments would be affordable and available to lower-income households, which could include seniors.

SUSTAINABILITY IMPLICATIONS

The three proposed multifamily rental developments would increase housing opportunities for households in Santa Clara County with a range of affordability levels 

BACKGROUND

On August 13, 2019 (Item No. 92), the Board approved amended guidelines for the County’s Supportive Housing Development Program. The new guidelines incorporated specific requirements related to financing the development of affordable housing for ELI and VLI persons with I/DD. On August 15, 2019, the Office of Supportive Housing (OSH) issued a draft updated Notice of Funding Availability (NOFA) to assist developers with their formal submittal.  On September 9, 2019, the OSH issued the formal NOFA.

CONSEQUENCES OF NEGATIVE ACTION

The Board would not receive the report. 

STEPS FOLLOWING APPROVAL

Upon approval, the Clerk of the Board is requested to notify Ky Le, Consuelo Hernandez, Eloiza Murillo-Garcia, and Marie Walters in the Office of Supportive Housing.

Meeting History

Oct 8, 2019 9:30 AM Video Board of Supervisors Regular Meeting

Taken out of order after Item No. 19.

Considered concurrently with Item Nos. 25-27.

Nine individuals addressed the Board.

At the request of President Simitian, the Board directed Administration to reallocate funds to the Wilton Court (Palo Alto) project in the event that funds are not fully drawn for the 2330 Monroe (Santa Clara) and Block 15 (Sunnyvale) projects; and, further directed Administration to identify in the current budget process funding sources for the second tranche of funding to occur in Fiscal Year 2020-2021.

Vice President Chavez requested that Administration send the San Andreas Regional Center (SARC) a written request to meet relating to availability of services for residents with intellectual and/or developmental disabilities who do not currently receive SARC services.

Vice President Chavez further requested that Administration report to the Board 12 months after a determination of infeasibility is made, if any, relating to the Wilton Court (Palo Alto), 2230 Monroe (Santa Clara), and Block 15 (Sunnyvale) projects.

President Simitian recessed the meeting at 12:36 p.m.

RESULT:APPROVED [UNANIMOUS]
MOVER:S. Joseph Simitian, President
SECONDER:Cindy Chavez, Vice President
AYES:Mike Wasserman, Cindy Chavez, Dave Cortese, Susan Ellenberg, S. Joseph Simitian

Transcript

Oct 8, 2019 9:30 AMBoard of SupervisorsRegular Meeting

 

12:23 PMIf you'd like to make such a motion, supervisor cortese has done so. Seconded. All five members vote, that's been done. Display the results. The motion carries 5-pez. Thanks very much. While we don't want to stifle anybody's speech, we tried to limit outbursts here in the chambers. Thank you. That takes us then to items 24-27 and colleagues.
Just wanted to thank you them all for coming, president simidian. Thank you for coming down to testify and for your prior work today.
24 through 27, would you like to provide some incident drugry comments, sir?
12:24 PMGood afternoon, in March 2019, the board approved $10 million for the developmental of affordable housing for people with intellectual or developmental disabilities. Today would allocate $10 million for three projects, one each in the cities of palo alto, santa clara and sunny veil. They would produce 214 new amounts, 60 of which are set aside for persons with intellectual or developmental disabilities. If everything moves forward as planned, all of the developments would be completed and fully leased up by the end of 2022. Thank you.
Thank you. the total number of apartments of how many again, please?
214 total apartments, 60 set aside for persons with intellectual or developmental disabilities.
Got it. thank you. I have cards from jan stokely, cheryl cline, scott fall cone, david grady, jeff darling and francisco venezuela and we'll ask you all to limit yourselves to a minute.
12:25 PMThank you for your support and I hope you'll vote to fund the three projects in un view veil, santa clara and palo alto. The projects have been the result of several years are otherwising and and advocacy by adults with disabilities and each cities with significant city support and eveloper commitment. The count funding is what it's going to take to move he projects ahead to apply for state and federal funding. I'd like to ask you to also signal your support for the next $10 million installment on the promised $40 million. Affordable housing projects require self years lead time and it would be very helpful for our advocacy efforts on behalf of people with developmental disabilities, if you would signal your support or that next installment. Thank you.
12:26 PMThank you very much. next speaker, please, come on up. Good afternoon, my name is david grady with the county on developmental spots for the central coast region. I just would like to share a quick personal story. Yesterday I was t a meeting of self advocates, men and women with developmental disabilities and they were talking about all the good work we are doing in the you the community. Group goes to a local community college nd talks to students about eliminating the r. Word. Another group was working with the municipal department of a city to repair sidewalks so that people in wheelchairs could make it to their program without risking safety. Finally a group talks the volunteer work they do at parks to clean up the mess left on weekends. These are good community efforts our folks are doing but the most important story was erika, who gave a quick announcement that she had moved from her family's home. She's a middle aged woman, from her family home into her own apartment. She has hree roommates and she has her own room. I encourage you to support these three projects, as well as the $10 million for next go around. Thank you very much.
12:27 PMThat you can. next speaker, please. Sheryl cline.
I'm the board chair of palo alto housing and involved in the development of wilton court. Thank you for your leadership and decision to set aside $40 million to help build affordable housing for adults with intellectual and developmental disabilities. Measure a has and will continue to help our most vulnerable residents. Putting together an affordable housing development is a puzzle. So many pieces that need to fit together, all of the projects before you today have challenges, finding land, getting community buy-in, moving through he be titlements and securing funding. One of our challenges at wilton court is the size of our land. Our half acre parcel will be densely built to maximize our impact. On just 20,000 square feet, e will give 59 households stability to thrive. We are building underground parking so that we can maximize community space and the number of apartments. All of this drives up the cost so your support today means that much more and brings us closers to solving the wilton court puzzle. Thank you.
12:28 PMJeff darling, an andriese regional center, got director of community services. Here to ask for your support and thank you for your leadership in making this funding available. We will certainly be there with the usual services and supports people need to be successful in the housing as is always the case on sites such as these and I look forward to showing the 57 other ounties and the 20 other regional centers how we did it here.
Thank you very much. next speaker, please, come on up.
12:29 PMHi, scott falco, affordable housing development consultant working on wilton court. I want to thank you the county for your support for this project. I'm in cho of jan's request about moving the next funding up soon so we can use that for other projects, as well. Thank you.
Thank you. next speaker.
Hi there, thank you, supervisors for this opportunity to speak. Everybody already said what needs to be said, thank you. I'm not sure of the plan but the one thing I hope is included is the outreach to the community on the inclusion and sensitivity to people with developmental disabilities. We're experiencing right now some issues with certain residents in areas that we're developing residential homes and what's happening is there's residents who because they don't know our opulation are against someone moving into their community. The best quality of life that these individuals have is the opportunity to be in the community, to be included and accepted, but when you come up against residents and against neighbors who really don't want you there, it makes it harder for someone to transition and especially for the parent, for their loved one to transition into a neighborhood. I hope that the project includes a inclusion plan to educate the other residents who are going to be living there. Individuals with developmental disabilities have behaviors that some people don't understand and hopefully that will happen.
12:30 PMThank you very much. I believe our final speaker today.
Thanks to all of you, I appreciate being here. I want to thank you for the $2. 8 million that hope you will vote for. I think you all know how difficult it is to do affordable housing, especially difficult from palo alto at the oment. I realize that our reputation May suffer from that lack thereof. I realize that I am the last speaker between you and lunch, and that is always a 10ous place to be. Let me say thanks. This particular population is so grateful to have housing. We frequently have seen people at the mic about needing housing especially for this particular group that we're addressing today. Thank you for this. I realize this was a special set aside. We recognize that, and want to thank you all. Have a great lunch.
12:31 PMThank you, and colleagues, just a little background on these items, if you can bear with me before we go to recent, and work with volunteers down stairs. Let me turn to key lee again. My understanding is that the wilton court project is the one project that we were not fully able to fund the gap. Is that essentially where we are.
That is correct. colleagues, so you know, that is in palo alto in my district. I've heard from people who expressed concern about that and a desire to see if we couldn't do more somehow. I've indicated that that wasn't possible, because with $10 million, it really is a zero sum game and that would mean going to one of the other projects and ssentially shorting them on the recommended funding, so i'm supporting the staff recommendation today. However, I did appreciate and want to call out the fact that on item number 27, page three of the report, packet page 2758, that the staff indicates that they will -- that while the definitely on thatters request for that project and this is a different project, the sun view veil block 15 from this for county funding is a maximum of $4 million, the developer would strife to reduce the county loan amount by applying for additional financing opportunities as they become available. That's under leverage. The reason i'm highlighting that is because there is the potential, however minimal it May be, that the cquisition of additional funds would then free up some funding that might be reallocated. Am I getting that right?
12:33 PMThat is correct. what i'd like to do is ask the correct to please display the voting panel and I will move the staff recommendation, but with two and thank you supervisor chavez for the second but with two addenda, staff recommendation plus a direction to staff if additional funds are fort coming because the other 22 projects do not fully draw down the funds that have been allocated, that they be reallocated to wilton court so that we aren't going through this again, the project that is the one of the three that came up short. The econd direction would be that we direct staff to identify potential sources of funding in the next budget for the second trunch that we fund. Unless we adopt a budget with those funds in it, the money's not real. What I did here today however was a equest to express our continued support for the program. We have previously said $40 million, we have previously said let's try and do $10 million a year so that as projects come up and the process there's funding available, so i'm trying to do two things here, three things, move the staff recommendation, indicate the use for undrawn funds if they end up existing, which they May or May not and also to direct the staff to specifically address the second trunch of funding in the process. I see supervisor cortese is waiting. He wants me to stop talking. Thank you. Before we display the votes, supervisor chavez do you ever anything.
12:35 PMI just wanted to guess I support all three of those. I want to add, I mean both of those. I want to add two additional considerations. One is I wanted to ask staff if we could do a formal meeting with sark to better understand how we get other idd clients that are part of -- that May not be part of sark becoming patients or having a sark relationship and i'd like those discussions to be formal, a formal letter saying we'd like to talk to you about how e deal with the other 10% of the folks that we have on our lists to determine whether or not services could be available to them, so that's one request. Then the other is that I appreciate very much the point that supervisor simidian raised about moneys that May become available. I'm interested in if any of the projects don't fully get their funding, at what period of time do those funds get reconsidered for distribution. For example, is it two years, is it three years? I don't know if we have a timeline already set for that.
12:36 PMUsually, it's about 24 months.
Ok.
After served with the commitment. It can vary depending on the project but usually if a project were deemed in feasible 24 months after the board allocated funding, we'll sort of bring back recommendation.
So one request I would like to make is if you could do a 12 month check-in so we don't get to the 24th month and surprise a supervisor that something's not being built in their district I think would be ideal. Thank you.
12:37 PMThank you. all right. All five members have voted. We'll ask the clerk to display the results. And the motion carries 5-0. Thank you all to those of you who came and who have been part of this effort for years and years and years. Colleagues, that means that it is 12:36, so without objection, we will recess, and reminder to all that we will head down to the basement to express our thanks to the volunteers who are having lunch even as we speak. We're going to basically barge in on lunch, and then we'll be back in these chambers at 1:30. Thank you again.
1:31 PMWe are at 1:30, our recess is over. We are back in session. We have one item that is a not to be heard before item and that is of course the stanford gupp item, number 12. There are a couple of items it might make sense to take up if board members are agreeable particularly as I indicated this morning and I want to reference it again, we do have one colleague who needs to leave at 4:00 hard stop today, supervisor ellenburg for recognition of the holiday. So session will go forward if we have nresolved issues, but we'd like to take care of as many issues as we can prior to that time obviously and we think that we have a few that we can manage relatively expeditiously. Colleagues without objection, i'd like to suggest we take up supervisor ellenburgs referral, item 18. Then item 22, department of corrections monitoring eport and provide direction to staff there. I think that can be done relatively expeditiously. I'm informed that the issues raised in connection with item number 79 May have been addressed in the intervening hours so that one might be a possibility to simply take objection on expeditiously, as well and they be head into the stanford gupp issue at that time.
1:32 PMThank you very much. second half vest of silicon valley estimate that is one unin three children in santa clara county are food insecure. We know that many kids and families rely on free and reduced priced school meals during the academic year but only 13 percent of those children also take advantage of the summer meal program to receive federally funded meals. One arrier to expanding the reach of the summer program has been the lack of resources to provide meals for he adult caregivers that bring children to sites such as libraries or park to say receive those meals. This past summer, through an inventory item funded by our board, more than 6,000 caregiver meals were provided to more than 20 -- in support of more than 27,000 children's meals.