Agenda Item Wording:
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Authorize Homekey+ Grant Application - Authorize staff to apply for Homekey+ funding to assist with the operation and capital repairs for Majestic Gardens, a permanent supportive rental housing complex with 42 Homekey+ eligible units to include 10 veteran units, upon the completion of the application by the partner agency.
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Agenda Date: 11/16/2026
Prepared by:
Margie Perez, Housing Specialist, margie.perez@visalia.gov, (559) 713-4460; Nichol Ritchie, Finance Manager, nichol.ritchie@visalia.gov, (559) 713-4379; Renee Nagel, Finance Director, renee.nagel@visalia.gov, (559) 713-4375
Department Recommendation:
Staff recommends that Council:
•Authorize staff to submit a joint application with RHCB Development LP and Visalia Homekey LP for the Homekey+ Notice of Funding Availability (NOFA) not to exceed $15 million to assist with the operation and capital repairs of the Majestic Gardens to provide permanent supportive housing that includes 41 resident units, that will include 10 units for veterans experiencing or at-risk of homelessness, and one manager unit.
•Adopt resolution 2026-74 authorizing a joint application with RHCB Development LP and Visalia Homekey LP for Homekey+ program as required by California Department of Housing and Community Development.
Summary:
The state released a competitive Homekey+ Amended NOFA through Proposition 1 to encourage veteran assisted projects including previously funded Homekey projects, such as Majestic Gardens, that will have newly restricted units for veterans.
Veteran units will only be made available at normal turnover; therefore, no existing tenants will be displaced. If units cannot be filled with Veterans at or below 30% area median income (AMI), secondary tenants can be housed. Secondary tenants are defined as 1) veterans who are at risk of or experiencing homelessness whose incomes are up to 50% AMI and are receiving income due to service-connected disability benefits, or 2) veterans experiencing homelessness with an income of up to 60% AMI. They do have to be honorably discharged Veterans to qualifications. Awarded applicants have up to 10 years to expend Homekey+ operating funds.
In addition, Tulare County is experiencing a significant shortage of rental subsidies due to the large number of permanent supportive housing (PSH) units that were developed in the past 5-year period. Thus, most of the Majestic Gardens rental subsidies for 22 of the 41 resident units are expected to end on June 30, 2027.
Homekey+ funding can include capital repairs and allow up to 10 years to expend operating funds including tenant rental subsidies. Homekey+ veteran projects are required to apply for a minimum of 10% of restricted units for veterans. Majestic Gardens is a 42-unit PSH project. Therefore, it would require applying for minimum of 4 veteran restricted units. However, to stay competitive staff recommends applying for 10 veteran restricted units which are approximately 25% of project’s total units.
Staff recommends applying for approximately $12.5 million in Homekey+ funds to restrict 10 units for veterans experiencing or at risk of homelessness with a behavioral health challenge. The remaining 31 resident units will serve individuals experiencing chronic homelessness, with one manger unit, as shown below in Table 1 - Majestic Gardens Homekey+ Recommended Funding.
• Capital repairs includes converting the on-site vacant restaurant space into a community resource room for residents and addressing critical plumbing issues, including toilet overflows and flooding.
• Operating funding includes:
o 10 designated veteran units eligible for up to seven years of operating assistance, plus bonus funds.
o 31 other resident units serving individuals experiencing chronic homelessness, eligible for up to five years of operating assistance.
Background Discussion:
The California Department of Housing & Community Development (HCD) Homekey+ program is funded through Proposition 1 to help support the development and operation of permanent supportive housing for veterans and individuals who are at risk of or experiencing homelessness and with mental health or substance use challenges. Proposition 1 authorizes approximately $2 billion, of which approximately $1 billion is for veterans. The state released a Homekey+ Amended NOFA to encourage veteran assisted projects including previously funded Homekey projects that will have newly restricted units for veterans.
The Majestic Project: On July 18, 2022, Council awarded RFP 21-22-28 to the RHCB Development LP (RHCB) to develop the Majestic motel into a Permanent Supportive Housing (PSH) project for people experiencing homelessness in accordance with HOME Investment Partnerships American Rescue Plan (HOME-ARP). Majestic Gardens was awarded $13 million in Homekey 3.0 funds for development and first 2 years of operation of the Majestic Gardens project that ends on June 30, 2027. Majestic Gardens consists of 42 total units which includes 41 chronic homeless units and one (1) on-site manager unit.
Majestic Gardens Rental Subsidies:
PSH projects are heavily dependent upon rental subsidies also known as voucher subsidies to sustain operation due to the vulnerable population that is unable to afford to pay fair market rent. The Majestic Gardens project receives two forms of rental subsidies, one of which is expected to end on June 30, 2027, as explained below. Therefore, securing additional forms of rental subsidies is imperative for the project to continue to operate successfully.
• U.S. Department of Housing & Urban Development Continuum of Care
Majestic Gardens was awarded U.S. Department of Housing & Urban Development (HUD) Continuum of Care (CoC) rental subsidies for 22 units in 2024 but was not renewed in 2025. Temporary federal appropriation extended rental subsidies for one year. Therefore, the HUD CoC rental subsidies are expected to end on June 30, 2027.
• Encampment Resolution Funding
Majestic Gardens was awarded Encampment Resolution Funding (ERF) for rental subsidies for the remaining 19 chronic homeless units. The ERF funding will end on June 30, 2029.
Homekey+ Funds:
On November 26, 2024, HCD in collaboration with the CalVet, announced the availability of approximately $2.2 billion of Homekey+ grant funding statewide and approximately $117 million was available for the San Joaquin Valley, derived from Proposition 1. Homekey+ is the permanent housing component of the Behavioral Health Infrastructure Bond Act, part of Proposition 1 passed by California voters in March 2024. Homekey+ supports the development of PSH units for veterans and individuals with mental health or substance use disorder challenges who are at-risk of or experiencing homelessness.
Homekey+ Amended NOFA:
At the close of the original 2024 Homekey+ NOFA, HCD had received funding requests for only approximately $360 million for veteran units. As a result, on March 27, 2026, HCD in collaboration with CalVet released a Homekey+ Amended NOFA as shown in Attachment A - Homekey+ Amended NOFA to offer additional flexibilities and incentives to prospective applicants interested in utilizing Homekey+ for veteran-serving projects.
The amendments include, but are not limited to:
• allowing applications from projects in HCD’s existing loan portfolio with expiring regulatory agreements, as well as previously funded Homekey projects that newly restrict units for veterans;
• allowing future applications with federal tax credit and bond applications, provided a reservation of tax credits and bonds is obtained within 6 months of a Homekey+ conditional award;
• increasing new construction cost containment caps; and
• decreasing capital match requirements while increasing operating support for veteran units.
Eligible Project Types:
HCD will accept applications for the following additional project types:
1. Preservation Projects: Projects from eligible applicants for projects with an HCD loan recorded on the property which has not been paid off and meets one of the following requirements:
o All HCD regulatory agreements have expired or will expire on or before December 31, 2036.
o Projects which have executed only a loan extension, but were not awarded funding for substantial rehabilitation, under the loan portfolio restructuring program or the housing loan conversion program.
o Department legacy program projects, as defined, which have not been awarded funding for substantial rehabilitation in the past 15 years.
Applicants may apply for funding that will result in units restricted for veterans with a behavioral health challenge, or a combination of Veterans with a behavioral health challenge and other members of the Homekey+ target population. However, projects will be prioritized, and the application must include at least 10% of restricted units for veterans under the Homekey+ program. Newly restricted Homekey+ units will be required to serve the new target population as units become vacant during normal tenant turnover.
2. Previously Funded Homekey Projects: Projects previously funded as interim Homekey projects which will convert to permanent supportive housing, or previously funded Homekey projects which are already operating as permanent supportive housing but have a demonstrated need for capital improvements or operating subsidies. Such projects must meet the following:
o The Homekey+ veteran assisted units must meet all requirements detailed in Section 500 and the Homekey+ Amended NOFA.
§ Applicants may also combine veteran assisted units with units that would serve other members of the Homekey+ target population, only if those units are not already Homekey restricted.
o Any such project application must include at least 10% of restricted units for veterans under the Homekey+ program.
o Occupied units at the time of award will be required to serve the new target population when a unit becomes vacant during normal tenant turnover.
Supportive Service Requirements: To be eligible to receive funding, all applications must include a project-specific supportive services plan that shall be consistent with any representations made in the Homekey+ application, and it shall meet the Homekey+ Program Requirements. Supportive services must be within one-half mile of the project site or provided on-site to be easily accessible to tenants. Service requirements include but are not limited to enhanced case management, peer support activities, mental health care, substance use services, support in linking physical health care and dental health care, assistance in accessing and maintaining SSI/SSD, assistance in enrollment and maintaining Medi-Cal and CalFresh, basic housing retention skills, recreation and social activities, education services, employment services, and legal services.
Tenant Referrals: Referrals to Homekey+ assisted units shall be made through the local Coordinated Entry System (CES), or another comparable prioritization system based on greatest need for housing and services, to determine the most appropriate referral. Homekey+ units should be reserved for serving the Target Population where households are more appropriately served by permanent supportive housing, including referrals from persons exiting encampments. Households with lower levels of need may be better served by other housing and less intense service interventions.
Affordability Covenant: Homekey+ projects requires a 55-year affordability covenant for permanent supportive housing that (a) is recorded in first position against the project real property for the benefit of the City, (b) restricts the use, operation, occupancy, and affordability of the project in accordance with all applicable requirements of the Homekey+ program requirements.
Grantee Liability: The City as the lead applicant shall remain liable if awarded Homekey+ funds for performance and compliance with all program requirements regardless of a third party undertaking all or any of the Scope of Work. Likewise, each co-applicant shall remain jointly and severally liable to HCD for performance and compliance with Homekey+ program requirements regardless of any third party for the undertaking of all or any part of the scope of work. Therefore, both the City and co-applicant(s) are equally responsible for compliance of Homekey+ program requirements including ensuring the 55-year affordability covenant
Populations to be Served:
The Homekey+ programs serves veterans and other individuals with a behavioral health challenge who are at risk of or experiencing homelessness. For the purpose of this program the target populations to be served are identified below.
• Veteran - is defined as a person who served in the active military, naval, or air service, and who was discharged or released under conditions other than dishonorable.
• Homelessness, chronic homelessness, or at risk of homelessness - has the same meaning as defined by 24 CFR Section 578.3 and has an annual income below 30% of the area median income level.
• Behavioral health challenge - has a serious mental illness or substance use disorder.
Veteran Assisted Units:
• CalVet will be available to provide technical assistance on referral issues as well as barriers related to discharge status, VA pension and compensation claims, healthcare, education, and employment.
• Homekey+ projects proposing to serve veterans may also serve other qualifying members of the target population. The veteran units will be funded from the Veterans allocation, and the remaining units will be funded from the other applicable allocation(s).
• Projects with units allocated for veteran projects must provide housing for veteran households that include at least one veteran experiencing or at risk of homelessness with a behavioral health challenge.
• During a vacancy, if units cannot be filled with veterans at or below 30% Area Median Income (AMI), secondary tenants can be housed. Secondary tenants are defined as
1) Veterans who are at risk of or experiencing homelessness whose incomes are up to 50% AMI and are receiving income as a result of service-connected disability benefits, or
2) Veterans experiencing homelessness with an income of up to 60% AMI.
The Majestic Gardens project is also partnering with the San Joaquin Valley Veterans (SJVV), a program within WestCare, to provide veteran services to quickly identify eligible veterans to ensure units are quickly filled at normal turnover. SJVV will also provide veteran services to eligible veteran tenants to assist with tenants’ long-term housing stability. Services may include case management, counseling services, veteran advocacy, employment assistance, and financial assistance for employment-related education. SJVV may also assist with providing mental health services and substance use disorder treatment.
Capital Award:
For permanent supportive housing projects not seeking gap funding under Section 502 of the Homekey+ NOFA, HCD will contribute a baseline amount of $200,000 per unit for each assisted Homekey+ unit and manager’s unit. This baseline contribution does not require capital match. As result, Majestic Gardens’ potential capital funding is $200,000 per unit for all 42 units for a total of $8.4 million as shown below in Table 2 - Majestic Gardens Potential Homekey+ Capital Funding. The proposed capital funds would assist with converting the on-site vacant restaurant space into a community resource room for residents and address critical plumping issues such as toilet overflows and flooding.
Operating Awards:
Homekey+ provides operating funding referred to as Capitalized Operating Subsidy Reserve (COSR). COSR refers to funding that is set aside at the beginning of a project to cover potential or projected operating deficits over time. The purpose of a COSR is to ensure that adequate funds are on hand should operating costs such as utilities, management staff salaries, and maintenance exceed the amount available from a project’s income at any time in the project’s operation. Homekey+ operating funds may pay for a project’s necessary, recurring operating expenses. Qualifying expenses include utilities, maintenance, management fees, taxes, licenses, tenant rents and supportive services costs. Homekey+ will fund a maximum operating grant amount per unit.
o Veteran Units - If projects can demonstrate a match commitment of three years or more for the veteran units, HCD will provide an award for operating expenses sized up to a total of 7-years (84-months) for the veteran units. Projects with veteran units will also receive an additional operating award of $30,000 per veteran unit.
§ Project match funds were established from the projects committed HUD Continuum of Care rental subsidies, Encampment Resolution Funding, and Elevate Community Services Cal Aim services. No additional city funding is being requested to provide match funding.
o Non-Veteran Units - If projects can demonstrate a commitment of five or more years of non-Homekey+ operating funds for non-veteran units, HCD will provide an operating award sized for up to 5-years (60-months).
Majestic Gardens Veteran Minimum and Maximum Veteran Units:
The Homekey+ NOFA requires a minimum of 10% (4 units) of Homekey+ units to serve veterans. Staff believes an application proposing only the minimum 4 units would not be sufficiently competitive to justify the time and resources required to apply for this grant. Due to recently approved funding that will be announced in the next 2-3 weeks, the maximum veteran units that can be applied for is 22 units.
Veteran Unit Concerns: Although dedicating more units to veterans could increase available funding, staff is concerned about potential vacancies if eligible veteran tenants cannot be identified. If eligible veterans cannot be identified, approval from the state would be needed before a designated veteran unit could house a non-veteran tenant, potentially resulting in an extended vacancy. Below are the Point in Time Count number of veterans in the last 3-years in the City of Visalia as well as an upcoming Visalia Homekey+ project.
• Point in Time Count: The 2026 Point in Time Count reported 7 veterans, the 2025 Point in Time Count reported 26 veterans and 2024 Point in Count reported 37 veterans in the City of Visalia.
• Crescent Meadows: Crescent Meadows is an 80-unit new construction senior affordable housing project in the City of Visalia. Crescent Meadows was awarded approximately $12 million in Homekey+ funds for 24 Homekey+ veteran units for veterans age 62 and older experiencing or at-risk of experiencing homelessness. Crescent Meadows is currently under construction. All eligible senior veterans will be referred to Crescent Meadows.
Recommeded Majestic Gardens Homekey+ Veteran Units:
Staff recommends dedicating 10 units (approximately 25%) to veterans to strengthen the application’s competitiveness while preserving the project’s original purpose of serving individuals experiencing chronic homelessness. Dedicating the maximum of 22 resident units to veterans would shift a majority of the resident units to a veteran-specific designation, which could potentially cause units to be vacant. The declining veteran Point-in-Time Count and the upcoming Crescent Meadows project also support a more limited allocation. The recommended 10 veteran units would leave 31 resident units available for individuals experiencing chronic homelessness, including eligible veterans. Majestic Gardens recommended Homekey+ operating funding per unit is shown below in Table 3 - Majestic Recommended Homekey+ COSR Funding.
Fiscal impact including annual maintenance and operating costs:
If awarded, the Homekey+ funding will generate approximately $12.5 million toward capital replacement and operation of the Majestic Gardens project to provide permanent supportive housing. No additional funding is requested from the City for the grant. Staff is requesting Council to approve up to $15 million as directed by the State if they decide to increase the funding request.
Prior Council Action:
• December 20, 2021: HOME-ARP Public Hearing to review and comment on the development of the HOME-ARP Allocation Plan.
• April 4, 2022: Review and comment on the draft 2022 Action Plan, and draft 2021 Action Plan Amendment including the draft HOME-ARP Allocation Plan.
• April 18, 2022: 2022 Action Plan, and 2021 Action Plan Amendment including the HOME-ARP Allocation Plan public hearing and adoption.
• July 18, 2022: Awarded RFP-21-22-28 to RH Community Builders (RHCB) for the conversion of the Majestic to develop a 42-unit Permanent Affordable Rental Housing.
• April 17, 2023 - Approval to apply for Homekey Round 3 for the development of the Majestic Gardens project.
Alternatives:
Do not apply for Homekey+ funding for Majestic Gardens.
Recommended Motion (and alternative motions if expected):
recommendation
I move to:
• Authorize staff to apply for Homekey+ program funding as a joint application with RHCB Development LP and Visalia Homekey LP not to exceed $15 million to assist with the operation and capital repairs of Majestic Gardens to provide permanent supportive housing that includes 42 units, consisting of 41 resident units, including 10 units designated for veterans experiencing or at risk of homelessness and one manager unit;
• To Adopt resolution 2026-74 authorizing a joint application with RHCB Development LP and Visalia Homekey LP, for Homekey+ program funding as required by the California Department of Housing and Community Development.
Environmental Assessment Status:
Not Applicable.
California Environmental Quality Act (CEQA) Review:
Not Applicable.
Deadline for Action: 11/16/2026
Attachments:
● Attachment A - Homekey+ Amendment NOFA
● Attachment B - Homekey+ Program Fact Sheet
● Attachment C - RHCB Majestic HK+ Letter of Request
● Attachment D - Resolution 2026-74
Strategic Goal: Indicates which City Strategic Goal(s) this item supports. Select all that apply.
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