Agenda

Return

C. 59

To:	Board of Supervisors
From:	John Kopchik, Director, Conservation & Development Department
Date:	July 12, 2022

Contra

Costa

County

Subject:

Approval of $2,000,000 HOME Loan and $200,000 HOPWA Loan and Related Legal Documents for Galindo Terrace, an Affordable Multifamily Housing Project

APPROVE	OTHER
RECOMMENDATION OF CNTY ADMINISTRATOR	RECOMMENDATION OF BOARD COMMITTEE

Action of Board On: 07/12/2022

APPROVED AS RECOMMENDED

OTHER

Clerks Notes:

VOTE OF SUPERVISORS

AYE:

John Gioia, District I Supervisor
Candace Andersen, District II Supervisor
Diane Burgis, District III Supervisor
Karen Mitchoff, District IV Supervisor
Federal D. Glover, District V Supervisor

Contact:

Kristin Sherk, (925) 655-2889

I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown.
ATTESTED: July 12, 2022
Monica Nino, County Administrator

BY:	, Deputy

RECOMMENDATION(S):

In the matter of making a loan of $2,000,000 in HOME Investment Partnership Program (HOME) and $200,000 in Housing Opportunities for Persons with AIDS (HOPWA) funds to Galindo, L.P., a California limited partnership, for Galindo Terrace, a 62-unit affordable rental housing development in Concord:

FIND, as the responsible agency, that on the basis of the whole record before the County including the California Environmental Quality Act (CEQA) review prepared by the City of Concord, as the lead agency, that the development is exempt under Section 15183.3 of CEQA.

RECOMMENDATION(S): (CONT'D)

DIRECT the Conservation and Development Director, or designee, to file a Notice of Exemption for Galindo Terrace with the County Clerk, and pay any required fee for the filing.

APPROVE and AUTHORIZE the Conservation and Development Director, or designee, to execute legal documents, to effect the HOME and HOPWA loans.

FISCAL IMPACT:

No General Fund Impact. HOME funds are provided to the County on a formula allocation basis through the U.S. Department of Housing and Urban Development (HUD). HOME CFDA #14.256.
HOPWA funds are provided to the County on a formula allocation basis through the City of Oakland, as HOPWA Grantee. HOPWA CFDA #14.241.

BACKGROUND:

On June 11, 2019, the Board of Supervisors (Board) allocated $200,000 of HOPWA funds and on May 12, 2020, allocated $2,000,000 of HOME funds to Resources for Community Development (RCD) for the Galindo Terrace development located at 1313 and 1321 Galindo Street in the City of Concord. RCD has formed a limited partnership, Galindo L.P., to develop and own this project.

The purpose of the Galindo Terrace development is to increase the supply of multi-family rental housing affordable to and occupied by lower income households, including households with special needs. The new construction project will have 39 one-bedroom units, 19 two-bedroom units (including one manager's unit), and 4 three-bedroom units. Thirteen of the units will be designated as County-assisted, one of which will be reserved for persons with HIV/AIDS. Eight of the units will be affordable to households at or below 60% of the Area Median Income (AMI), 40 of the units will be affordable to households at or below 50% AMI, 13 of the units will be affordable to households at or below 30% AMI. Twelve of the units are proposed to be reserved for homeless veterans and one unit will be a HOPWA unit.

Additional financing for the development includes the State Housing and Community Development (HCD) Accelerator, a new program funded through the State to reduce the backlog of projects "stuck" in the funding pipeline to accelerate the development of housing for those most in need. The Accelerator funds are used to fill funding gaps in shovel-ready projects that have received funding under other State HCD programs and have been unable to access low-income housing tax credits. The other confirmed financing includes City of Concord, State HCD Affordable Housing and Sustainable Communities, State HCD Infrastructure and Infill Grant and a permanent private loan. Lastly, the development will utilize a State HCD No Place Like Home (NPLH) grant through a partnership with the County Health Services Department (HSD).

On December 17, 2019, the Board adopted Resolution No. 2019/660, which authorized the Health Services Director to and apply for and accept loan funds for the NPLH competitive round two. Additionally, the Board authorized the Health Services Director to (i) execute the State of California Standard Agreement as a co-applicant with an affordable housing developer in the event an award should be made to Contra Costa County, and (ii) any and all documents required, necessary or appropriate pertaining to the NPLH funds. NPLH funds will be loaned directly to RCD and secured by a deed of trust. Mental health supportive services will be covered by existing Mental Health Services Act fund allocated to the Behavioral Health Division of the Health Services Department.

The HOME and HOPWA funds will be provided in the form of a 55-year residual receipts loan. The HOME loan will have a three percent simple interest rate while the HOPWA loan will have a zero percent interest rate. There may be some payments if the project has surplus cash flow. Affordability and use restrictions are incorporated into the HOME/HOPWA loan documents. The County will have a HOME/HOPWA Regulatory Agreement with a 20-year HOME term and a 10-year HOPWA term and as well as a County Regulatory Agreement that will maintain the affordability following the expiration of the HOME term for the full 55-year term. Through this action, the DCD Director or designee is authorized to execute subordination agreements and estoppels that are consistent with the terms in the Loan Agreement.

Due to the high construction costs and limited revenue from the restricted rents, the total amount of the financing provided to the project will likely exceed the value of the completed project. Even though the proposed investment from the State HCD Accelerator funds is substantial compared to the amount of long term debt, the partnership agreement will have numerous safeguards of the project's equity. These safeguards essentially subordinate the County's debt to the State HCD Accelerator funds equity. Therefore the County's HOME and HOPWA funds may not be fully secured by the value of the property; however, HOME and HOPWA funds provided to the County in the form of a grant, are dedicated to providing affordable housing options for low-income households and the same risk would be present in any comparable project.

National Environmental Policy Act (NEPA): HOME and HOPWA projects are subject to NEPA and 24 CFR Part 58 review. The NEPA review for this project is complete and the required mitigation actions are included in the loan agreement. The County, as a responsible agency under CEQA, concurs with the City's CEQA determination and will file the appropriate notice with the Recorder's Office.

CONSEQUENCE OF NEGATIVE ACTION:

Without the approval and execution of the HOME and HOPWA legal documents, the project will not be constructed. Galindo, L.P. must close the transaction and begin construction in August 2022, or forgo the State HCD Accelerator funds upon which the project's financing depends.