September 13, 2005
SUBJECT: Funding Request for a Contribution to the Housing Trust of Santa Clara County and Budget Modification No. 5
REPORT IN BRIEF
Over the past few years, the City of Sunnyvale has made two contributions to the Housing Trust of Santa Clara County totaling $1,000,000. The Trust has requested a third contribution of $600,000 from the City of Sunnyvale to be expended over the next three years. The eligible uses of the funds are to create housing opportunities for homeless individuals and families, provide affordable rental housing and/or provide first-time homebuyers assistance programs. The funds are to assist low and very low-income households.
Staff recommends that Council approve a contribution for FY2005/2006 of $200,000 with the condition that funds be reserved for exclusive use within the city limits. Staff recommends that the City require additional restrictions by limiting beneficiaries to participants in the City’s first-time homebuyer programs and to employees supporting the 129th Air National Guard Reserve unit. Staff recommends this contribution be a one-year commitment. Funding for the next two years would be requested in March and approved by May for each subsequent year.
BACKGROUND
The Housing Trust Fund of Santa Clara County (HTSCC) was founded in 1997 by the Santa Clara County Board of Supervisors, Silicon Valley Manufacturing Group, Santa Clara County Collaborative on Housing and Homelessness and Community Foundation Silicon Valley. HTSCC has evolved into a broad-based working coalition of more than 70 public and private sector housing leaders, lenders, environmental organizations, and city and county officials who are either board members or HTSCC partners.
In February 2001, Sunnyvale contributed $500,000 in Housing Mitigation Fees to the Housing Trust’s Endowment Fund. This contribution was to be used exclusively for one or more projects in Sunnyvale that increase, improve or preserve affordable housing. The eligible uses of the funds are to create housing opportunities for homeless individuals and families, provide affordable rental housing and/or provide first-time homebuyers assistance programs. The funds are to assist low and very low-income households, for residents of Sunnyvale.
In August 2001 the HTSCC reached its initial goal of raising twenty million dollars. The funds were raised included contributions by public bodies and contributions from local corporations and charitable trusts. In two years the HTSCC had leveraged the funding to create affordable housing worth over $500 million.
The eligible uses of the Housing Trust funds are to create housing opportunities for homeless individuals and families, provide affordable rental housing and/or provide first-time homebuyers assistance programs. The funds are to assist low and very low-income households.
In July 2003 the Housing Trust of Santa Clara County (HTSCC) requested and was granted a second contribution of $500,000 in Housing Mitigation Fees to enable the Trust to obtain eligible matching funds from the State of California Housing and Emergency Shelter Trust Fund Act of 2002 (Proposition 46).
Both contributions were to be used exclusively for one or more projects in Sunnyvale that increase, improve or preserve affordable housing. Through July 2005, HTSCC has assisted with the purchase of forty-four first time homebuyer residences in Sunnyvale by providing a portion of the purchase price as a loan to the homeowners. The HTSCC has funded a $500,000 loan towards the construction of sixty-six affordable rental units at Moulton Plaza (Homestead Park). It has also committed a $500,000 loan for the acquisition of Plaza De Las Flores to prevent the conversion of this 101 unit affordable senior housing project to market rate rentals. These loans insure 167 affordable rental units in Sunnyvale remain affordable for the next forty years.
On April 1, 2005, HTSCC Chair Don Gage submitted a letter to Mayor Chu requesting from Sunnyvale a pledge of $200,000 per year for the next three years (See Attachment A). On April 5, 2005, HTSCC Board member Pat Vorreiter made a presentation to the City Council.
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
During the past four years, the HTSCC has become an integral partner in the complex world of the financial structuring of affordable rental properties and has directly assisted in expanding homeownership opportunities in Sunnyvale and throughout Santa Clara County.
The current request is for a three-year funding commitment of $600,000. The following table is a summary of countywide municipal contributions to the Trust in the first and second campaigns, together with the funds committed or anticipated (annotated figures) for this third round of funding. Funding from San Jose and Milpitas is for one year only; future funding will be requested in 2006 and 2007. Sunnyvale’s contribution is shown as a one year commitment (staff recommendation).
|
|
1st Campaign |
2nd Campaign |
3rd Campaign |
Total
Contributions |
% |
|
Campbell |
$ 500,000 |
|
$ 300,000 |
$ 800,000 |
6% |
|
Cupertino |
$ 250,000 |
|
$ 500,000* |
$ 750,000 |
5.8% |
|
Gilroy |
$ 15,000 |
$ 15,000 |
$ 75,000 |
$ 105,000 |
|
|
Los Altos |
$ 5,000 |
|
|
$ 5,000 |
|
|
Los Altos Hills |
$ 10,000 |
|
$ 15,000 |
$ 25,000 |
|
|
Los Gatos |
$ 250,000 |
|
$ 300,000 |
$ 550,000 |
4% |
|
Milpitas |
$ 500,000 |
|
$ 150,000 |
$ 650,000 |
5% |
|
Monte Serrano |
$ 15,000 |
|
$ 15,000 |
$ 30,000 |
|
|
Morgan Hill |
$ 200,000 |
|
$ 200,000 |
$ 400,000 |
3% |
|
Mountain View |
$ 500,000 |
$ 100,000 |
$ 450,000 |
$1,050,000 |
8% |
|
Palo Alto |
$ 500,000 |
$ 150,000 |
$ 50,000* |
$ 700,000 |
5% |
|
San Jose |
$1,000,000 |
|
$ 250,000* |
$1,250,000 |
9.7% |
|
Santa Clara |
$ 500,000 |
$ 250,000 |
$ 750,000 |
$1,500,000 |
11.7% |
|
Saratoga |
$ 25,000 |
|
|
$ 25,000 |
|
|
Santa Clara Cty. |
$2,500,000 |
$ 500,000 |
$ 750,000 |
$3,750,000 |
29% |
|
Sunnyvale |
$ 500,000 |
$ 500,000 |
$ 200,000* |
$1,200,000 |
9% |
|
Totals |
$7,270,000 |
$1,515,000 |
$4,005,000 |
$12,790,000 |
|
*Anticipated Commitment Level
Sunnyvale’s prior contributions of $1,000,000 to the Trust have been recycled into this community. However, the overall level of support by the city, at 9%, is higher than a contribution limited to a proportionate fair-share contribution based upon population. That would be equal to 4%, based upon 2005 countywide population statistics.
The additional contribution may be reserved for exclusive use within the city limits. The City may require additional restrictions, such as limiting the use of the funds to piggyback with homebuyer programs being administered by the City or providing affordable housing for staff who support the 129th Air National Guard Reserve unit. Representatives of the Reserve unit have indicated that the lack of nearby affordable housing for their staff is a major factor in their consideration to relocate from Moffet Field.
Funds for the contribution are available in the City’s Housing Mitigation Sub-Fund. The current fund balance is approximately $6.7 million.
FISCAL IMPACT
There are no financial impacts on the City’s General Fund. The City’s financial involvement will be through a direct Housing Fund contribution to the HTSCC.
|
Budget Modification No. 5
FY 2005/2006 |
|
Housing Fund/Housing Mitigation Sub-Fund
|
Current |
Increase
(Decrease) |
Revised |
|
|
Expenditures: |
|
|
|
|
|
New Project Housing Trust Fund of Santa Clara County |
$0 |
$200,000 |
$200,000 |
|
|
|
|
|
|
|
|
Reserves: |
|
|
|
|
|
Housing Mitigation Sub-fund |
$6,701,132 |
($200,000) |
$6,501,132 |
|
|
|
|
|
|
|
Conclusion
Prior contributions to the Housing Trust have been recycled effectively to benefit Sunnyvale residents. The use of the requested contribution may be limited to current Sunnyvale program applicants and leveraged with existing city homebuyer programs. This would focus the use of the funds and provide benefit to applicants who meet priority preference categories that Council established. A contribution of $200,000 for FY2005/2006 will not negatively impact future projects, as a considerable balance remains available for new projects.
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
- Approve Budget Modification No. 5 to appropriate funds from the Housing Mitigation Sub-fund for a contribution of $200,000 to the Housing Trust of Santa Clara County for FY2005/2006.
- Direct staff to include the following specific restrictions on the use of the contribution to be included in the agreement as follows; limited to properties located in Sunnyvale, to first time homebuyers being assisted by the City through its homebuyer programs, and employees supporting the 129th Air National Guard Reserve unit.
- Amend the amount and approve Budget Modification No. 5 to appropriate funds from Housing Mitigation Sub-fund for a contribution to the Housing Trust of Santa Clara County.
- Do not approve the contribution and Budget Modification No. 5.
RECOMMENDATION
Staff recommends Alternatives 1 and 2.
In the last four years the City’s contributions to the Trust have been used to assist in the development and preservation of 167 affordable housing in Sunnyvale. The Trust has funded 44 loans to first time homebuyers purchasing residences in Sunnyvale. During the next two years staff anticipates more than 200 below market rate homes will be sold to first time homebuyers in Sunnyvale. Funds contributed to the Trust could be leveraged with current housing programs to assist up to 30 low income homebuyers into home ownership in Sunnyvale. The use of funds to help provide affordable housing for employees of the 129th Air National Guard Reserve unit would support the City policy to try to retain the Reserve unit at Moffet Field. Although staff considers a $600,000 contribution over three years to be reasonable, it believes that the prudent approach to budgeting is to commit funding for one year at a time.
Reviewed by:
Robert Paternoster Director, Community Development
Prepared by: Annabel Yurutucu, Housing Officer
Reviewed by:
Mary Bradley Director, Department of Finance
Approved by:
Amy Chan
City Manager
Attachments
- April 1, 2005 letter from the Housing Trust of Santa Clara County to Mayor Dean Chu.
- May 31, 2005 letter from the Housing Trust of Santa Clara County to Housing Officer, Annabel Yurutucu.