AgdaPkt 2003-12-15 - Laserfiche WebLink

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I � c- _ REPORT To the City Council and Redevelopment Agency Board From the Executive Director and City Manager December 15, 2003 Subject Hallmark Apartments Acquisition /Rehabilitation Project Recommendation 1. That the Redevelopment Agency Board and City Council Approve the attached resolutions "Authorizing the Expenditure of Housing Setaside Funds for the Hallmark Apartments Project Located Outside the Redevelopment Plan Area ". 2. That the Redevelopment Agency Board and City Council Authorize City Manager and Redevelopment Manager to execute an Owner Participation Agreement (OPA) with KDF Communities in substantially the form attached, allocating $500,000 of 2002 -03 and 2003 -04 HOME funds and $150,000 in Redevelopment Housing Funds to Hallmark Apartments for the acquisition of 72 units to be made affordable to low and very low income persons. 3. That the Redevelopment Agency Board and City Council Authorize City Manager and Redevelopment Manager to execute a subordination agreement presented by Fannie Mae as a participating lender in this acquisition. Background On June 24, 2003, representatives from KDF Communities (KDF) made a presentation to the Housing and Human Concerns Committee (HHCC). KDF reported that they had made an offer to acquire 72 rental housing units at 531 Woodside Road, and that they were in the process of applying for tax credits so that they could convert the project from market rate to affordable rents. Tax Credit rules require 90% of the units to have rents affordable to households at 60% of Area Median Income and 10% of the units to have rents affordable to 50% of Area Median Income. KDF has developed affordable housing projects in Freemont and San Jose. This will be their first project in San Mateo County. The project requires substantial rehabilitation and energy efficiency improvements to reduce operating costs and prolong the life of the property. These improvements will cost approximately $800,000. Tax Credit financing requires the units to remain affordable for 55 years. KDF told the Committee that if the City assisted in the acquisition of the units, they would provide 30% of the units affordable to households earning 50% of the Area Median Income and 70% of the units affordable to Households at 60% of Area Median Income. The HHCC recommended that $650,000 be allocated to the project towards acquisition /rehabilitation costs. Approximately 59 of the units are currently occupied. Upon completion of rehabilitation of the units, 13 vacant units will meet the HOME income criteria specified in the OPA. As vacancies occur, the new tenants will meet the income criteria specified in the OPA. In 2002 -03, Council allocated $258,974 in HOME funds to MidPeninsula Housing Coalition which were returned to the City because Section 8 Project Based rents from HUD provided more revenue than rents set for the HOME program and would have caused the project to lose over $400,000 in revenue over 30 years. The City is required to immediately commit these funds to another eligible housing project. HOME funds in the amount of $241,026 are available from the 2003 -04 program year to make up the total $500,000. Expenditure of HOME funds require 25% matching funds. Staff proposes that the remaining $150,000 be