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April 29, 2003
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SUBJECT: |
Funding Request For Construction at Moulton Plaza, 1601 Tenaka Place By Mid-Peninsula Housing Coalition and Budget Modification No. 40 |
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A. |
Sunnyvale Housing funds for the construction of 66 units of affordable rental housing. |
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B. |
CDBG funds for exterior rehabilitation of 112 units at Homestead Park, 1601 Tenaka Place, an affordable rental housing complex. |
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C. |
Budget Modification No. 40 to allocate $992,000 in Housing Funds. |
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REPORT IN BRIEF |
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Mid-Peninsula Housing Coalition (MPHC), a non-profit housing developer, has requested $992,000 of Sunnyvale Housing Funds for construction of an additional 66 units of new affordable rental housing and $400,000 of Community Development Block Grant (CDBG) for exterior rehabilitation of 1601 Tenaka Place, Sunnyvale, a 222-unit rental housing complex. The project will provide permanent affordable rental housing for the next fifty-five years. The apartments will be affordable to very low-income families whose annual gross incomes range from 30% to 60% of median income for Santa Clara County. The total cost of the project is approximately $15,000,000. Mid-Peninsula has requested a $400,000 loan of CDBG funds for the rehabilitation that will be deferred for the first 13 years and repaid over the next 15 years at 3% simple interest. It has also requested $992,000 from the Housing Sub-fund (Housing Mitigation Fees) for the new construction; this is a deferred payment loan for the first 10 years, to be repaid over the next 25 years at 3% simple interest. Funding for this project is currently available in the CDBG Housing Rehabilitation activity, and Housing Mitigation Reserves in the Housing Fund. |
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BACKGROUND |
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Homestead Park is a 222-unit affordable rental housing complex at 1601 Tenaka Place. Council approved $2,815,000 for the acquisition of the complex by Mid-Peninsula Housing Coalition (MPHC) in November 2000. MPHC completed the purchase of Homestead Park from its limited partner in March 2001. The total project cost was $23,936,426. This included $19,170,000 for acquisition and approximately $2,000,000 for rehabilitation. The acquisition prevented conversion of the units to market rate rentals and preserved the affordability of the units for 55 years. The second phase of the project was the completion of exterior and interior rehabilitation utilizing funds from the sale of tax credits. Homestead Park was constructed at lower density than is currently typical for apartment developments, thereby providing an opportunity to add new units at the existing site following the acquisition. MPHC requested $800,000 of HOME funds from the City of Sunnyvale in FY 2002/03 to fund construction of new affordable rental housing at 1601 Tenaka Place. Council approved the commitment of funds as part of the FY 2002/03 Project budget. The new development is named Moulton Plaza. Moulton Plaza will consist of 66 one-, two-, and three-bedroom units and associated community facilities. The project is located within the existing Homestead Park apartment complex development of 222 units in 27 buildings on 10.16 acres. The project will be developed on a 1.65-acre portion of the current site. The project will intensify the development of the site by replacing three existing buildings, which include 11 rental units and the existing community building. The project net gain will be 55 affordable rental units. The proposed new apartment development is to be in four different 2 and 3-1/2 story tall buildings, located on a partially submerged parking garage. The proposed apartment units are studios and one, two, and three bedrooms. On March 10, 2003, the Planning Commission continued Special Development Permit #2003-0055 to allow the construction of 66 rental units, a community facility and a maintenance building at 1601 Tenaka Place (Moulton Plaza). The item was continued in order to address project issues, which include building height, neighborhood compatibility and on-site facilities. The applicant has worked closely with staff and made modifications to the project addressing the concerns of the Planning Commission. The modified project was presented at the March 24, 2003 Planning Commission study session. The Planning Commission approved the project on April 14, 2003. |
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EXISTING POLICY The Consolidated Plan places a priority on maintaining and increasing the inventory of affordable rental housing for families. The City’s Housing and Community Revitalization Sub-Element contains a number of goals and policies related to affordable housing in the community. Goal E: Maintain and increase housing units affordable to households of all income levels and ages. E.2.d Participate with the County to encourage the use of Mortgage Revenue Bonds to develop new low-income rental units and to preserve low-income units through refinancing. E.2.g Acquire land and assist in development/redevelopment of housing through partnerships with regional agencies, nonprofit housing developers and private sector developers. Goal F: Improve Housing conditions for people with special needs. F.1.c Assist the development of new housing for families graduating from transitional housing programs . |
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DISCUSSION Moulton Plaza will help reduce the critical shortfall of housing affordable to very-low income households in Sunnyvale. All apartments at Moulton Plaza will be affordable to low- and very low-income families earning less than 60 percent of the Area Median Income (AMI); and the lowest rents will be affordable to households at 30% AMI. Affordable rents are calculated based on a maximum of 30% of the household gross income allocated for housing expense. Projected rents and qualifying incomes are as follows: |
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Gross Rents |
1 Bed |
2 Bed |
3 Bed |
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30% AMI |
540 |
648 |
749 |
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40% AMI |
720 |
864 |
998 |
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50% AMI |
900 |
1,080 |
1,248 |
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60% AMI |
1,080 |
1,296 |
1,497 |
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Income Ranges |
30% AMI |
40% AMI |
50% AMI |
60% AMI |
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One Person |
22,170 |
29,560 |
36,950 |
44,340 |
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Two Person |
25,320 |
33,760 |
42,200 |
50,640 |
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Three Person |
28,500 |
38,000 |
47,500 |
57,000 |
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Four Person |
36,650 |
42,200 |
52,750 |
63,300 |
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Five Person |
34,170 |
45,560 |
56,950 |
68,340 |
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Six Person |
36,720 |
48,960 |
61,200 |
73,440 |
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Unit Mix |
1 Bed |
2 Bed |
3 Bed |
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12% @ 30% |
4 |
3 |
1 |
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30% @ 40% |
10 |
8 |
2 |
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39% @ 50% |
12 |
9 |
5 |
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19% @ 60% |
4 |
6 |
2 |
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Moulton Plaza is intended to compliment the existing Homestead Park complex. Mid-Peninsula’s experience at Homestead Park has demonstrated that there are specific needs that are currently underserved in Sunnyvale. The proposed development and the types of units proposed for Moulton Plaza specifically address the underserved community needs. Demand for apartments at Homestead, while great for all types of units, is especially acute for two-bedroom apartments. Homestead presently includes 40 studio and one-bedroom apartments, which are most suitable for seniors. However, half of these units are second-story units accessible only via stairs. Moulton Plaza will add 30 one-bedroom units all easily accessible. The City’s prior and proposed commitment of funds to support Homestead Park is as follows: |
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Program Year |
Funding |
Source |
Purpose |
Cost per unit |
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00/01 |
$2,815,000 |
CDBG/HOME |
Preservation of 222 affordable housing units. |
$12,680 |
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02/03 |
$800,000 |
HOME |
Construct 66 new units |
$12,121 |
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Proposed |
$992,000 |
Housing Sub Fund (Mitigation Fees) |
Additional funding for 66 new units |
$15,030 |
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Proposed |
$400,000 |
CDBG/Rehab Fund |
External Rehabilitation of 112 existing units |
$3,571 |
The proposed $992,000 loan from the Housing Sub-Fund to support the new construction will have payments deferred for the first 10 years, and then be fully amortized and repaid during the next 25 years at 3% simple interest. The proposed $400,000 loan from CDBG for rehabilitation will have payments deferred for the first 13 years, and then be fully amortized and repaid during the next 15 years at 3% simple interest.
The total funds requested from the City for the construction of the 66 new affordable units is $1,792,000, or $27,151 per unit. This is generally in accord with the $25,000 average cost per unit suggested in the Community Development Strategy.
The loan terms meet all of the underwriting guidelines; however the loan term has been extended to 35 years at CalHFA’s (the primary lender) request. Priority has been assigned to this project because it meets the criteria described in the Community Development Strategy, is consistent with Consolidated Plan and General Plan goals of serving a high-need group, provides affordability restrictions over a long term, leverages City funds with funding commitments from many other sources, meets the readiness criteria and has a strong development/management team to assure timely performance.
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FISCAL IMPACT There are no financial impacts on the City’s General Fund. The City’s financial involvement will be through the direct CDBG, and City Housing Fund loans for the rehabilitation and new construction of the property. |
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Budget Modification No. 40 |
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Housing Fund |
Current |
Increase |
Revised |
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Expenditures: |
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New Project - Moulton Plaza- 1601 Tenaka Place |
$0 |
$992,000 |
$992,000 |
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Reserves: |
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Housing Fund |
$9,562,029 |
($992,000) |
$8,570,029 |
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PUBLIC CONTACT The application and proposal requesting HOME funds for new construction was reviewed and approved by the Housing and Human Services Commission (HHSC) at its meetings on February 27, and March 27, 2002. Mid-Peninsula Housing Coalition presented a report with an initial request for funds from the City Housing Fund to the HHSC at its meeting on February 26, 2003. Staff presented the final request to the Commission at the April 23, 2003 meeting which was unanimously approved by the Housing and Human Services Commission. Public contact was made through posting of the Council agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page, and the availability of the report in the Library and the City Clerk’s Office. |
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ALTERNATIVES |
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RECOMMENDATION |
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Staff recommends Alternatives 1 and 2. |
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Prepared by: |
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Reviewed by:
Mary J. Bradley |
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Approved by: Robert S. LaSala City Manager |
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Attachments |
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