SUBJECT: Request from Charities Housing Development Corporation (CHDC) for additional support in the amount of $525,000 in Community Development Block Grant funds for the development of special needs housing for adults with disabilities and Budget Modification No. 25.

Charities Housing Development Corporation (CHDC), a non-profit housing development arm of Catholic Charities, has been working with a group called Housing Choices to provide independent living for adults with disabilities, focusing on people with developmental disabilities. A site has been acquired on Mathilda Avenue and California Avenue. CHDC has City approval of its plans to develop 23 rental units on this site. At its April meeting Council approved funding for this project in the amount of $1,200,000 (Report to Council No. 98-151).

Charities Housing was successful in securing competitive HUD 811 financing for this project. HUD 811 funding provides both capital and operating subsidies to allow the housing to be affordable for very low-income people. The funding was approved by HUD in the amount of $2,275,900.

Although CHDC was approved for HUD 811 funding, funding cannot be released until HUD conducts an extensive review. Bids for construction could not be solicited until the HUD review was completed. This delayed the project by a year, which has meant much higher construction costs. In November of 1999 the general contractor advertised and solicited bids, which came back significantly higher than CHDC had budgeted at the start of the application process. The current request to the Council is to enable CHDC to bridge the gap in funding.

Each year the City receives Community Development Block Grant (CDBG) funds from the federal government for the purpose of increasing the affordable housing stock as well as to provide housing for special needs groups. The City’s CDBG funds have time constraints as to when they must be committed or the City may have its future grants reduced.

Staff is recommending approval to provide additional financial support in the amount of $525,000 for the project from CDBG funds. Currently there are sufficient CDBG funds to support the project. The City has had very high program income over the past few years which has increased the CDBG reserves. In addition, the City has HOME funds and Housing Mitigation funds to support affordable housing in the City.

According to the 1990 census, approximately 1,430 persons in Sunnyvale have a disability which affects mobility or self-care. For persons with physical or developmental disabilities, accessible housing and housing in combination with supportive services is critical to their ability to live independently. In 1995 the San Andreas Regional Center identified 815 of their clients who would benefit from an independent living situation. Recently a development in Belmont for developmentally disabled persons received over three times as many applications as it could accommodate and an even newer project in Palo Alto had a similar surplus of applications.

With the current shortage of rental housing, disabled adults with Section 8 certificates are at risk of losing their housing. Many landlords are not renewing their Section 8 contracts because of the high market demand for rental housing. The Housing Authority is finding that for every ten certificates it issues, six are returned because the household has not been able to find a unit within the required time period. This situation has put an even greater number of disabled adults at risk.

HOPE Rehabilitation, a service provider to the developmentally disabled, has found that since 1990 30% of its clients have left the work-training center because they were unable to find housing in the area. This has meant they have had to leave family, friends, employment and other support networks in Sunnyvale. Over the past few years the State has adopted a policy of closing institutions which have provided specialized housing for individuals with disabilities in the hope of increasing community based housing opportunities. However, with the extremely high rent levels and low vacancy rate in the area, there are also no opportunities for people to find housing and the goal of community based housing becomes impossible to achieve. This situation has not slowed the State in carrying out closure of many institutions which has resulted in an almost crisis situation for people with disabilities. It is forcing individuals to find housing as far away as Sacramento which removes them from their family support network.

The Housing and Community Revitalization Sub-Element contains the following goals, policies and objectives:

The City’s Consolidated Plan has identified the need for housing for individuals with special needs as a crucial component of the Consolidated Plan’s Strategy and Action Plan. The Consolidated Plan has documented the need for affordable, independent living opportunities for adults with disabilities in Sunnyvale.

CHDC has developed a number of projects in Santa Clara County, both acquisition and new construction housing. Despite the agency’s housing development experience, when the budget for the Stoney Pine construction was first created, CHDC did not predict the length of time the HUD Section 811 review would take. This is a review at the national HUD level and CHDC had little control over the process. In the period of time since HUD began its review, the rising costs of construction have been unprecedented in Silicon Valley. After receiving bids in December of 1999, CHDC met with the architect and general contractor to identify all possible savings without sacrificing the quality of the project. The City’s Use Permit is very specific about the quality of the appearance of the project, as it is to be constructed at a main thoroughfare. CHDC, keeping this in mind, has been able to work out a budget that requires $525,000 to fill the gap.

HUD has granted an extension of CHDC’s Capital Advance Reservation until March 31^st of 2000. Therefore it is necessary for CHDC to find resources to fill the final funding gap before the HUD funding of $2,275,900 is lost.

The approved project is a 23 unit family apartment complex, including one resident manager unit, designed to serve very low and low-income disabled individuals and their families. The site, consisting of 0.84 acres is located on the northeast corner of Mathilda Avenue and California Avenue. The site is zoned R-4, multi-family residential and has a General Plan designation of high density residential (28-45 du/ac). Under the R-4 zoning the project could support 35 units. However, understanding Council’s direction to reduce the number of high density sites in the City, CHDC has designed a development that would be compatible with an R-3 zoning. The surrounding uses are primarily multi-family residential. The existing site is improved with three small residential buildings built in the 1930s. All the existing buildings will be either relocated or demolished.

The complex will be comprised of 12 one-bedroom units, 8 two-bedroom units, and 3 three-bedroom units. The units will be located on two levels. An elevator will serve both levels. Project amenities will include a community room with kitchen, a central laundry room and an office. A landscaped courtyard will provide open space for the residents. The project will contain sufficient parking space for residents and visitors. In addition to the amenities and accessible housing, a local service provider will provide a variety of specialized services to the residents. The completed project will provide housing for approximately 40 people who are very low and low-income disabled individuals. Rents are anticipated to be as low as $180 for the one-bedroom units and $205 for the two bedroom units, depending on household income.

Total costs are now budgeted at $4,940,990 (Attachment A) as opposed to the $3,879,062 budget in the 1998 Report to Council. Since 1998 there have been budget revisions, including increased architectural costs to meet Use Permit requirements. CHDC has been successful in fundraising to cover these, as can be shown in the Sources of Funding in Attachment B. CHDC’s fundraising had included an increased construction budget as well, but the agency did not anticipate the full extent of the increase.

The City’s CDBG, HOME and Housing Mitigation funds can all be used for projects of this type. Staff is proposing CDBG funds for this request because these funds are at this time the most likely of the three sources to be reduced if not committed in a timely manner.

Staff recommends approval to provide additional financial support in the amount of $525,000 for the project from CDBG funds.

A budget modification in the amount of $525,000 in CDBG funds is requested to provide funding for the implementation of this project in Fiscal Year 1999-2000.

The Planning Commission approved the Use Permit and Variance at its meeting on April 13, 1998 subject to modifications to the architecture. Property owners within 300 feet of that site were notified of both the Planning Commission and City Council Hearings on the development applications. The Housing and Human Services Commission recommended approval of the funding application at its meeting on April 22, 1998. HHSC received the request for additional funding at its February 23, 2000 meeting.

Staff recommends Alternative #1.

Prepared by:

Dyane Matas
Housing and Neighborhood
Preservation Officer

Reviewed by:

David S. Boesch
Director, Community Development

Reviewed by:

Mary J. Bradley
Director, Finance

Approved by:

Robert S. LaSala
City Manager

A. Stoney Pine Apartments Budget
B. Stoney Pine Apartments Sources of Funding