Agenda Item Wording:
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Appropriation of Homekey Round 3.0 Program Income - Authorize appropriation of $202,400 of Homekey Round 3.0 program income funds, in the 2025-2026 fiscal year capital budget for the Majestic Gardens project.
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Prepared by: Margie Perez, Housing Specialist, margie.perez@visalia.gov, (559) 713-4460; Melody Much, Assistant Finance Director, melody.murch@visalia.gov, (559) 713-4379; Renee Nagel, Finance Director, renee.nagel@visalia.gov, (559) 713-4375.
Department Recommendation: Staff recommends that Council appropriate $202,400 of Homekey Round 3.0 program income funds (333) in the 2025-2026 fiscal year capital budget, for the Majestic Gardens project (CP0516).
Summary:
On April 17, 2023, Council approved an application of Homekey Round 3 program for the development and operation of the Majestic Gardens project. On September 26, 2023, the City was notified of an award of Homekey Round 3.0 funds in the amount of $13,835,376 for the Majestic Gardens project. Of this grant amount, $5,720,000 was paid directly from the granting agency, into an escrow to purchase the Majestic Motel property. The remaining $8,115,376 was paid to the City in a lump sum, which has been held in a separate fund earning interest income until spent. As a result, as of October 2025, the Homekey Round 3.0 funds have generated $202,400 in program income. The Homekey program requires Homekey generated program income funds to be used for eligible Homekey program activities; therefore, staff is requesting all Homekey Round 3.0 program income funds to be awarded to the original Homekey project Majestic Gardens (CP0516).
Background Discussion:
Homekey is a statewide effort to sustain and rapidly expand housing for people experiencing homelessness or at risk of homelessness, administered by the California Department of Housing and Community Development Department (HCD). Homekey is an opportunity for state, regional, and local public entities to develop a broad range of housing types, including but not limited to hotels, motels, hostels, single-family homes and multifamily apartments, adult residential facilities, and manufactured housing, and to convert commercial properties and other existing buildings to permanent or interim housing for the target population.
On April 17, 2023, Council authorized staff to apply in conjunction with co-applicants RHCB Development LP and Visalia Homekey LP for Homekey Round 3.0 not to exceed $15 million to assist with the development and operation of the Majestic Gardens Project to convert the Majestic Motel into permanent supportive rental housing. On September 26, 2023, the City along with co-applicants RHCB Development LP and Visalia Homekey LP, were notified of an award of $13,835,376 in Homekey 3.0 funds for the acquisition, development, and operation of Majestic Gardens.
The City of Visalia, RHCB Development LP, and Visalia Homekey LP, have been jointly awarded $13,835,376 in Homekey Round 3.0 funding for the conversion of the Majestic Motel into Permanent Supportive Housing (PSH). Of this grant amount, $5,720,000 was paid directly from the granting agency, into an escrow to purchase the Majestic Motel property. The remaining $8,115,376 was paid to the City in a lump sum, which has been held in a separate fund earning interest income until spent. The City then made reimbursement payments to Visalia Homekey LP, as the project was completed. The Homekey program requires Homekey generated program income funds to be used for eligible Homekey program activities; therefore, staff is requesting all Homekey Round 3.0 program income from interest earnings be awarded to the original Homekey project Majestic Gardens (CP0516) to support the operations of the project. At this time, staff is requesting Council’s authorization to appropriate $202,400 in Homekey 3.0 program income funds for the operation of the Majestic Gardens Project (CP0516), as shown below in Table 1: Homekey 3.0 (333) Program Income. *Any increase or decrease of the Homekey Round 3.0 program income will be an adjustment to the Majestic Garden (CP0516) project.
The Homekey Round 3.0 program income funds will be disbursed on a reimbursement basis per the City’s review and approval of eligible Homekey expenditures. While the City, RHCB Development LP, and Visalia Homekey LP are co-recipients of the Homekey Round 3.0 funding, all expenditures are reviewed by the City prior to disbursement of the Homekey funds to ensure compliance with all Homekey requirements. Eligible Homekey Round 3.0 expenditures will include any Majestic Gardens capital expenditures remaining from the completion of development, and operating expenditures which may include on-site security guards, on-site case management, rental subsidies, and/or replacement reserves.
Fiscal Impact: Approval of this item will appropriate the current balance of $202,400 in Homekey Round 3.0 program income funds to the Majestic Garden project (CP0516) for the Fiscal Year 2025-2026. Any changes in the interest earnings of the fund +/- will be added to, or subtracted from, this amount to bring the final fund balance of the Homekey grant fund (333) to a zero balance. No General Fund money is included or requested for this project.
Prior Council Action: ● April 17, 2023 - Authorization to apply for Homekey Round 3.0 for the development and operation of the Majestic Gardens project. ● April 15, 2024 - Appropriation of awarded Homekey Round 3 funds.
Other: None
Alternatives: None recommended.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council approve the appropriation of $202,400 of Homekey Round 3.0 program income funds (333) in the 2025-2026 fiscal year capital budget, for the Majestic Gardens project (CP0516).
Environmental Assessment Status: Completed
CEQA Review: N/A
Deadline for Action: 11/3/2025
Attachments: Attachment A: Homekey 3.0 Award Letter