March 23, 2004

SUBJECT: Request Approval for the Transfer of Loans on Homestead Park for Construction of Moulton Plaza, 1601 Tenaka Place, By Mid-Peninsula Housing Coalition

REPORT IN BRIEF

Mid-Peninsula Housing Coalition is ready to begin the construction of 66 new units of affordable housing at Moulton Plaza, located on a portion of the Homestead Park complex.  The parcel has been subdivided into two sites. Homestead Park consisting of 211 units, and Moulton Plaza, the site of the new complex.  City loan funds were used to acquire the entire parcel in March 2001 and were secured against the parcel.  Mid-Peninsula Housing Coalition has requested that the City’s loans be recast to reflect the two separate and distinct sites.  A transfer of the existing loans, previously loaned on the entire site during the acquisition phase, need to be secured against each of the two  new subdivided parcels.

BACKGROUND

Homestead Park is a 222-unit affordable rental housing complex at 1601 Tenaka Place.  Council approved $2,815,500 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 a community building. The project will result in a net gain of 55 affordable rental units. It will consist of four buildings.

The proposed new apartment development is to be in four different 2 to 3-1/2 stories tall, located on a partially submerged parking garage. 

The Planning Commission approved the project on April 14, 2003.  On April 29, 2003,  Council approved $992,000 for the new construction at Moulton Plaza and $400,000 for exterior rehabilitation at Homestead Park apartment complex.

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.

DISCUSSION

The City’s loans of $2,815,500 to support the acquisition of Homestead Park were secured against the entire parcel of land containing 222 units and approximately 11 acres.  In order to accomplish the new construction of 66 units, 11 units will be demolished and 1.65 acres of the original parcel has been subdivided from the original site.  Mid-Peninsula Housing Coalition has requested that the City’s loans be recast to reflect the two separate and distinct sites.  This will include the transfer of a portion of the loans, previously loaned on the entire site during the acquisition phase, to be secured against the portion of the site to contain Moulton Plaza, the new subdivided parcel.   Although the proposed transfers were contemplated during the pre-acquisition phase, Council did not formally approve actions related to the transfer at that time.

The City’s prior loans and terms recorded on Homestead Park and the proposed recast of the loans is as follows:

The reconfiguration of the site creating two separate parcels of land necessitates the recasting of the City’s loans. Staff negotiated the proposed revised loan terms, without creating negative financial impacts to the projects, to insure the return of loan funds to the City at an earlier date when they can be reused to support other affordable housing units. 

FISCAL IMPACT

There are no financial impacts on the City’s General Fund. The City’s financial involvement will be through the direct CDBG, HOME and City Housing Fund loans Council has approved for the acquisition, rehabilitation and new construction of the property.

PUBLIC CONTACT

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.

ALTERNATIVES

1. Approve the transfer of $1,715,500 loan secured on the entire Homestead Park site, to the portion of the site now known as Moulton Plaza.  Approve the transfer of $1,100,000 loan to the reconfigured Homestead Park site.

2. Do not approve the transfer of existing loans secured on the site.

RECOMMENDATION

Staff recommends Alternative 1.

Prepared by:

Annabel  Yurutucu
Housing Officer

Reviewed by:

Robert Paternoster
Director, Community Development

Approved by:

Amy Chan
City Manager