City Council Report 915 I Street, 1 st Floor Sacramento, CA

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1 City Council Report 915 I Street, 1 st Floor Sacramento, CA File ID: January 9, 2018 Consent Item 13 Title: Affordable Housing and Sustainable Communities Grant Applications Location: River District and Railyards, District 3 Recommendation: 1) Pass a Resolution: a) approving the submission of the Twin Rivers Housing Project to the State of California for funding; and b) upon award of the grant, authorizing the City Manager or City Manager s designee to execute any necessary grant agreements and related grant documents; and 2) pass a Resolution supporting the application of the Railyards Mixed Income Housing Project to the State of California for Affordable Housing and Sustainable Communities (AHSC) funding. Contact: Lucinda Willcox, Program Manager, (916) , Department of Public Works; Rachel Hazlewood, Senior Development Project Manager, (916) , Office of the City Manager Presenter: None. Attachments: 1-Description/Analysis 2-Resolution Supporting Twin Rivers 3-Resolution Supporting Railyards Matthew Ruyak, Interim City Attorney Mindy Cuppy, City Clerk John Colville, City Treasurer Howard Chan, City Manager Page 1 of 9

2 File ID: Consent Item 13 Description/Analysis Issue Detail: On October 2, 2017, the State of California issued a Notice of Funding Availability (NOFA) for $255 million in funding statewide for the Strategic Growth Council's Affordable Housing and Sustainable Communities (AHSC) Program. The program provides grants and affordable housing loans for compact transit-oriented development and related infrastructure and programs that reduce greenhouse gas ("GHG") emissions. This is a competitive grant based on the extent to which developments realize the AHSC Program s objectives of reducing GHG emissions, benefitting Disadvantaged Communities and Low-Income Communities, providing affordable housing, demonstrating project readiness, and meeting other policy considerations. Typically, affordable housing developers are the primary applicants. A team of City staff has been meeting with potential applicants over the past 18 months to assist them in meeting project readiness. Two projects in the City are intending to submit for funding in this round. First, the Phase 2 housing development for the Twin Rivers project is proposed as a co-application between the developer, SHRA, and the City to include housing support and with associated pedestrian and urban greening improvements. Second, an application for the proposed Mixed Income Housing project in the Downtown Railyards with associated improvements will be submitted directly by the developer; the project meets the objectives of the Railyards Specific Plan and funding for the project and its elements is consistent with the City s development objectives. Policy Considerations: The proposed projects are consistent with the City s policy to promote resiliency with respect to issues such as air quality, food availability, renewable energy, sustainable land use, and the reduction of greenhouse gas emissions. The projects have been reviewed for consistency with the goals, policies, and targets of the 2035 General Plan. The projects will advance the goals, policies, and targets that will directly or indirectly conserve energy resources and reduce greenhouse gas emissions, as well as promoting affordable housing in transit areas. Economic Impacts: If funded through AHSC grants, the economic impacts of these projects will be assessed at the time of the award of the construction contract. Environmental Considerations: The application for and administration of grant funds are not considered projects under CEQA per CEQA Guidelines 15378, as this is a government administrative and fiscal activity. Both of the projects have been or are being analyzed under their own environmental documents. City of Sacramento January 9, 2018 powered by Legistar Page 2 of 9

3 File ID: Consent Item 13 Sustainability: The projects will advance the goals, policies, and targets that will directly or indirectly conserve energy resources and reduce greenhouse gas emissions, in part, from 2035 General Plan (Appendix B: Climate Action Plan). Commission/Committee Action: None. Rationale for Recommendation: Both projects will provide opportunities for needed affordable housing in the City in the context of reducing greenhouse gas emissions. Financial Considerations: If awarded, grant funding will be distributed directly to the affordable housing developers. For the active transportation and greening components of the Twin Rivers project that are to be constructed by the City; the City and State will enter into a subsequent grant agreement that will identify the reimbursement of these funds. Staff will return to appropriate the funding for the project or projects at that time. Local Business Enterprise (LBE): Not applicable. Background: AHSC Grant The Strategic Growth Council's Affordable Housing and Sustainable Communities (AHSC) Program provides grants and affordable housing loans for compact transit-oriented development and related infrastructure and programs that reduce greenhouse gas ("GHG") emissions. These projects increase the accessibility of housing, employment centers, and key destinations via low-carbon transportation options (walking, biking, transit) resulting in fewer vehicle miles traveled (VMT) and mode shift. Funds are allocated through a competitive process, based on the merits of applications submitted and the proposed use of funds within the identified Project Area. The threshold requirements and application selection criteria focus on the extent to which developments realize the AHSC Program s objectives of reducing GHG emissions, benefiting Disadvantaged Communities and Low-Income Communities, providing affordable housing, demonstrating project readiness, and meeting other policy considerations. The program has very specific grant requirements; all environmental approvals must be in place and all approvals needed for housing projects must be received, along with all funding obligations. City of Sacramento January 9, 2018 powered by Legistar Page 3 of 9

4 File ID: Consent Item 13 Over the past year, a team of City staff has worked with affordable housing developers to identify any potential projects for this grant and assist them with meeting any grant requirements. City staff has had discussions with about a dozen potential applicants. Most of these have not received the necessary planning approvals and environmental clearance to meet eligibility for this grant round. Staff will continue to work with them to prepare for the next cycle of funding. Two projects within the City are seeking AHSC funding: The Twin Rivers Housing Project: The City of Sacramento and Sacramento Housing and Redevelopment Agency (SHRA) are co-grantees for the Choice Neighborhoods Initiative grant for the redevelopment of the Twin Rivers public housing complex, one of only five nationwide $30 million implementation grants awarded by the Department of Housing and Urban Development (HUD). In July 2017, the Sacramento Housing and Redevelopment Commission and City Planning and Design Commission approved the environmental impact report, relocation plan, demolition plan, and other actions needed to begin full implementation of the project. On December 12, 2017, the City entered into a Master Development Agreement with McCormick Baron Salazar Inc. (MBS) as master developer to construct a minimum of 487 new multi-family rental units and related infrastructure and amenities in multiple phases. Multiple sources of funds will be required for the various stages of development, including tax credit equity, public and private debt, and state grant funds. The project has a pending application for the Transformative Climate Community (TCC) grant program with the Strategic Growth Council. MBS proposes to use AHSC funding for support of Phase 2 of the housing development in partnership with SHRA and the City. Part of the project would directly fund $3 million toward pedestrian, bicycle, and urban greening improvements along N. 16 th Street and its connections. The Railyards Housing Project: Downtown Railyard Venture (DRV) is preparing an application for Affordable Housing and Sustainable Communities (AHSC) program funds in order to mitigate the cost of development and improve the feasibility of developing affordable housing within the Downtown Railyards. If awarded, these funds will assist with funding of public infrastructure required to support the development of the Railyards project, including the affordable housing. DRV has requested a Resolution of Support from the City of Sacramento, which will be included in the application to AHSC. The grant funds, which will not exceed $20,000,000, will be used to fund Housing Related Infrastructure (HRI), Sustainable Transportation Infrastructure (STI) and Transit Related Amenities (TRA) as defined in the AHSC Program Guidelines. City of Sacramento January 9, 2018 powered by Legistar Page 4 of 9

5 File ID: Consent Item 13 The grant funds to be requested will be essential to financing necessary infrastructure to serve a new 277-unit mixed-use apartment building, which is expected to complete Design Review with the City of Sacramento by Spring of This residential project is the first of many to come in the Railyards. The project is planned to be mixed-income, with 20% of the units set aside for residents earning 40-50% of Average Median Income (AMI). The grant funds from the AHSC program will help make the low-income units financially feasible to construct. Funds will be used for sustainable infrastructure projects that promote active transportation, transit ridership and urban greening features, all of which reduce greenhouse gas emissions in the region. Some examples include a buffered bike lane along 6th Street, a light rail station at 7th Street and various other bike lane and sidewalk improvements which will contribute to the connectivity between Downtown, the Railyards and North to the River District and improve access to public transit. City of Sacramento January 9, 2018 powered by Legistar Page 5 of 9

6 RESOLUTION NO Adopted by the Sacramento City Council AUTHORIZING APPLICATION FOR THE AFFORDABLE HOUSING AND SUSTAINABLE COMMUNITIES PROGRAM BACKGROUND A. The State of California, the Strategic Growth Council (SGC) and the Department of Housing and Community Development (Department) has issued a Notice of Funding Availability dated October 2, 2017 (NOFA), under the Affordable Housing and Sustainable Communities (AHSC) Program established under Division 44, Part 1 of the Public Resources Code commencing with Section B. McCormack Baron Salazar, Inc. (MBS) in partnership with the City of Sacramento and the Sacramento Housing and Redevelopment Agency, desires to apply for AHSC Program funds and submit the Application Package released by the Department for the AHSC Program. C. The SGC is authorized to approve funding allocations for the AHSC Program, subject to the terms and conditions of the NOFA, Program Guidelines, Application Package, and Standard Agreement. The Department is authorized to administer the approved funding allocations of the AHSC Program. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. Section 2. Section 3. The Twin Rivers project will result in greenhouse gas emission reductions, development of affordable housing, and opportunities for active transportation and transit, consistent with the objectives of the AHSC grant. The City Council of the City of Sacramento supports the application by MSB and funding for an AHSC grant to support the Twin Rivers Project and associated infrastructure and transportation improvements. The City Manager or the City Manager s designee is authorized and directed to apply for and submit to the Department the AHSC Program Application in partnership with McCormack Baron Salazar, Inc. and SHRA, as detailed in the NOFA dated October 2, The City s direct implementation share of the grant will include an amount not-to-exceed $3 million for Sustainable Transportation Infrastructure as defined the AHSC Program Guidelines adopted by SGC on July 17, 2017 errata August 14, If the application is approved, the City Manager or City Manager s designee is hereby authorized and directed to enter into, execute, and Page 6 of 9

7 deliver a State of California Standard Agreement (Standard Agreement) in a total amount not to exceed $3 million for the Sustainable Transportation Infrastructure and any and all other documents required or deemed necessary or appropriate to secure the AHSC Program funds from the Department, and all amendments thereto (collectively, the AHSC Documents. Section 4. Section 5. The City shall be subject to the terms and conditions as specified in the Standard Agreement. Funds are to be used for allowable capital asset project expenditures for the sustainable transportation infrastructure in support of the MCB s overall project description to be identified in Exhibit A of the Standard Agreement. The application in full is incorporated as part of the Standard Agreement. Any and all activities funded, information provided, and timelines represented in the application are enforceable through the Standard Agreement to the responsible party. The City agrees to use the funds for eligible capital asset(s) in the manner presented in the application as approved by the Department and in accordance with the NOFA and Program Guidelines and Application Package. In partnership with SHRA and MBS, the City Manager or the City Manager s designee is authorized to execute in the name of Applicant the AHSC Program Application Package and the AHSC Program Documents as required by the Department for participation in the AHSC Program. Page 7 of 9

8 BACKGROUND RESOLUTION NO Adopted by the Sacramento City Council On date of RAILYARDS HOUSING PROJECT: SUPPORT OF APPLICATION FOR FUNDING FROM STATE AFFORDABLE HOUSING AND SUSTAINABLE COMMUNITIES PROGRAM A. On October 2, 2017, the California Strategic Growth Council and the Department of Housing and Community Development issued a Notice of Funding Availability (NOFA) and application for the State Affordable Housing and Sustainable Communities (AHSC) program. B. The AHSC program is intended to invest in projects that reduce greenhouse gas emissions by supporting more compact, infill development patterns, encouraging active transportation and transit usage, and promoting affordable housing. Concept proposals must be submitted to the State by January 16, C. The Sacramento Railyards Project is one of the largest urban infill projects in the nation, with approximately 240 acres of land for redevelopment, directly north of the City s downtown core. D. The scale and development requirements for the Sacramento Railyards makes the project a public private partnership of significant scope and importance to the community. As the home of the region s intermodal transportation facility and 8 th busiest passenger train station in the nation, the City and private ownership have partnered to fund and build backbone infrastructure to implement the plan high density housing, employment, and community-serving facilities. E. In December 2007, the City approved the Sacramento Railyards Specific Plan, including a commitment to continue to work in partnership to address the many hurdles to redevelopment of a former brownfield site to meet mutual goals to achieve high quality mixed use, transit-oriented development, as a means to accommodate future growth while reducing greenhouse gas emissions and air pollutants. F. In October 2016, the City Council approved planning entitlements for the development for the Downtown Railyards. G. Downtown Railyards Venture (DRV) will be submitting an application for the AHSC program to assist with the funding of public infrastructure required to 16 Page 8 of 9

9 support the development of a 277-unit mixed-use, mixed-income apartment building, including housing related infrastructure, sustainable transportation infrastructure, and transit-related amenities. BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS: Section 1. Section 2. Development in the Railyards will result in greenhouse gas emission reductions, development of affordable housing, and opportunities for active transportation and transit, consistent with the objectives of the AHSC grant. The City Council of the City of Sacramento supports the application by DRV and funding for an AHSC grant to support the Railyards Housing Project and associated infrastructure and transportation improvements. 17 Page 9 of 9