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REPORT <br />To the Honorable Mayor and City Council <br />From the City Manager <br /> <br />April 24, 2017 <br /> <br />SUBJECT <br />Funding Committment to Provide a Loan for Acquisition of 1512 Stafford Street - <br />Affordable Rental Housing <br /> <br />RECOMMENDATION <br />Approve by resolution a committment to provide a loan of $1,099,000 in Affordable <br />Housing Funds to HIP Housing Development Corporation (HHDC) for the acquisition of <br />1512 Stafford Street, contingent upon preparation and Council approval of loan <br />documents on or before June 1, 2017 based upon the terms as specified in the staff <br />report <br /> <br />BACKGROUND <br />On December 7, 2015, the City Council adopted the Affordable Housing Impact Fee <br />Ordinance (“Ordinance”) as a mechanism to increase the supply of and preserve <br />affordable housing pursuant to the City’s Housing Element. The Ordinance is generally <br />applicable to residential and nonresidential development projects deemed complete <br />after September 21, 2015. Based on applications that have been approved, there will be <br />a substantial amount (approximately $4 million) of funding available for affordable <br />housing causes available within the coming months. <br />The Ordinance requires that all fees collected be deposited into the City’s Affordable <br />Housing Fund to be used to increase and preserve the supply of housing affordable to <br />households of extremely low, very low, low and moderate income households. On <br />October 10, 2016, the Council Finance and Audit Committee held a meeting to discuss <br />the use of affordable housing funding. The Committee recommended to the full Council <br />and to City staff that existing apartment buildings be identified for preservation of <br />housing. This is typically done by partnering with non-profit housing providers, who <br />acquire, rehabilitate and make those units available for qualified low-income residents, <br />many of whom have lived in the apartment complex for years. This strategy has two key <br />positive aspects: 1) it preserves existing “naturally affordable” apartment complexes, <br />many of which in the region have been recently bought, rehabilitated and been subject <br />to substantial rent increases that existing residents cannot afford, and 2) it typically <br />creates deed restricted units at a much lower cost than the production of new units. <br />6.3.E. - Page 4