Agenda Item Wording:
title
Authorize Homekey+ Grant Application - Authorize staff to apply for Homekey+ funding not to exceed $12 million to assist with the development of Crescent Meadows, a senior affordable housing complex with 25 Homekey+ eligible units, upon the completion of the application by the partner agency Crescent Meadows, L.P. to fully comply with the grant and City requirements.
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Deadline for Action: 2/3/2025
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Margie Perez, Housing Specialist, margie.perez@visalia.city <mailto:margie.perez@visalia.city>, (559)713-4460; Melody Murch Assistant Finance Director, melody.murch@visalia.city <mailto:melody.murch@visalia.city>, (559)713-4379; Renee Nagel, Finance Director, renee.nagel@visalia.city <mailto:renee.nagel@visalia.city>, (559)713-4375
Department Recommendation:
Staff recommends that Council:
• Receive a summary of the funding available for the Homekey+ program and authorize staff to submit a joint application with Crescent Meadows L.P. for the Homekey+ 2024 Notice of Funding Available (NOFA) not to exceed $12 million dollars to assist with the development of Crescent Meadows to provide senior affordable housing with 25 Homekey+ eligible units for senior experiencing or at-risk of homelessness;
• Adopt Resolution 2025-02 authorizing a joint application with Crescent Meadows, L.P., for the Homekey+ program as required by California Department of Housing and Community Development; and
• Authorize the Mayor to sign Resolution 2025-02.
Background Discussion:
On November 26, 2024, the California Department of Housing and Community Development (HCD) in collaboration with the California Department of Veterans Affairs (CalVet), announced the availability of approximately $2.145 billion of Homekey+ grant funding statewide and approximately $117 million will be available for the San Joaquin Valley, derived from Proposition 1 as shown in Attachment “A” - Homekey+ NOFA. 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 Permanent Supportive Housing (PSH) for Veterans and individuals with mental health or substance use disorder challenges who are at-risk of or experiencing homelessness.
Homekey+ NOFA Timeline: The Homekey NOFA was released on November 26, 2024. The application period for these funds is expected to begin in late January 2025. Gap financing project applications are due April 3, 2025. All other project applications are due May 30, 2025, or until funds are exhausted, whichever occurs first. The City of Visalia’s Homekey+ application is a gap financing project, which is due no later than April 3, 2025. New construction and gap financing projects must break ground within 6 months of award and be completed with 24-months of award. All other projects including project conversions (i.e. motel/hotel conversions) must be completed within 12-months of award.
Crescent Meadows: On January 3, 2025, Self-Help Enterprises (SHE) submitted a formal request to partner with the City of Visalia as a co-applicant on a Homekey+ application for phase 1 of Crescent Meadows, an 80-unit senior affordable housing project with one- and two-bedrooms located at the northwest corner of Ferguson Ave. and N. Dinuba Blvd. in the City of Visalia. Crescent Meadows is being developed by Crescent Meadows, L.P. a California Limited Partnership in partnership with SHE, and Visalia Senior Housing (VSH). The project will be affordable senior housing serving individuals over the age of 62, and 25 units will be set aside for seniors experiencing homelessness, or at-risk of homelessness. The project includes a community center which will provide office space for a full-time on-site manager and resident services staff and will be available for gatherings and community workshops. Crescent Meadows will be an all-electric project which includes renewable solar photovoltaic (PV) technology to off-set 100% of the residential and common area electrical loads. The result will be a project that is affordable to operate and generates as much energy as it uses, creating zero net energy (ZNE). Site amenities include a pickleball court, accessible drop off/pick up locations, and a loop walking trail that connects with the existing Visalia trail system to allow for safe and accessible recreation. The community center will be equipped with an active listening system to allow ease of use for the hearing impaired, and a partnership with Family Healthcare Network will allow aging-in-place support to extend the length of time residents can remain independently housed.
Crescent Meadows is the only project that has requested assistance from the City to apply for Homekey+ funds. Crescent Meadows is also the only known project within the City that will meet Homekey+ NOFA rigorous timelines. In addition, during the work session held on December 3, 2024, Council requested to include senior affordable housing in the next 5-year Consolidated Plan. This project will assist in meeting Council’s expressed priority to provide much needed affordable senior housing in the City of Visalia. Crecent Meadows total project development costs are estimated to be $36 million. The project has secured approximately $11.5 million and is seeking approximately $13.5 million in Limited Partner Equity funding; therefore, it has a remaining development gap of $11,250,000, as shown below in Table 1 - Crescent Meadows Development Funding.
Homekey+ NOFA: The Homekey+ funding available in this NOFA is targeted to provide Permanent Supportive Housing for individuals or households with an individual who is Homeless, Chronically Homeless, or At Risk of Homeless, and who are also living with a Behavioral Health Challenge. Homekey+ provides applicants the flexibility to take advantage of opportunities available within their specific communities that will result in the prompt acquisition and availability of new homes with a focus on cost containment. It will also finance new construction for projects that can be built quickly in a cost-efficient manner. Examples of eligible uses include acquisition and rehabilitation of existing sites (e.g. hotels/motels, apartments), master leasing, new construction, and the purchase of affordability covenants. All Homekey+ projects are required to have an abundance of supportive services within one-half mile or on-site to ensure tenants long-term housing stability and prevent recidivism.
Eligible Applicants: Cities, counties, cities and counties, and all other state, regional, and Local Public Entities, including councils of government, metropolitan planning organizations, Public Housing Authorities, and regional transportation planning agencies. Each entity may apply independently or jointly with a nonprofit or for-profit organization, a limited liability company (LLC), and/or a limited partnership (LP) as a Co-Applicant. A Local Public Entity is required as a lead Applicant.
Program Deadlines: New construction and gap financing projects must break ground within 6 months of award. New construction and gap financing projects must be completed within 24-months. Full occupancy must be achieved within 90-days of completing construction. HCD reserves the right to recommend special conditions for longer occupancy timeframes for larger projects over 75 units up to an additional three (3) months.
Gap Financing Project Requirements: HCD will accept gap financing applications from Projects which meet, or could meet, the population targeting requirements of Homekey+ but have not started construction. The intent is to move projects, forward that are otherwise “shovel ready” and thereby quickly increase the number of units available. Applications will be prioritized as follows:
i. Projects with an Existing HCD Award Commitment with a pending disencumbrance per HCD’s disencumbrance policy within 6 months of the date of this NOFA.
ii. Projects with an Existing HCD Award Commitment with at least one prior unsuccessful application for tax credit/bonds ranked by total HCD funds committed.
iii. All other HCD funded Projects ranked by total amount of HCD funds committed.
a. All prior Homekey Projects awarded as “interim to permanent”, seeking funding to convert interim units to Permanent Supportive Housing, fall into this category. Only Projects that complied with the terms of the original Homekey “interim to permanent” award by completing construction and are currently achieving full on-site occupancy as interim housing will qualify for this funding. HCD at its sole discretion will determine compliance.
iv. All other Projects that are stalled due to an unsuccessful tax credit/bond application ranked by total amount of public resources committed (may include resources such as local or federal funding, donated land, etc.).
Self-Help Enterprises has been awarded $5,713,219 in HCD National Housing Trust Funds (NHTF) for the Crescent Meadows project; therefore, qualifies as a Homekey+ Gap Financing Project.
Homekey+ Requested Funding:
For the purposes of this gap financing Projects only, Homekey+ will award no more than $450,000 per unit, inclusive of any Operating Award needed to buy down units originally contemplated as higher than 30% AMI. Any amount over $450,000 per unit will be required to provide an Enforceable Funding Commitment at the time of application.
Applicants may seek gap financing for all units or a portion of units. If Applicants seek gap financing for only a portion of units, an alternative, nonHomekey+ source is required at the time of application to fill any capital gaps associated with the non Homekey+ units. All units funded by Homekey+ will be required to serve the Target Population. Crescent Meadows plans to apply for 25 Homekey+ units; resulting in a maximum of $11,250,000 in Homekey+ funding as shown below in Table 2 - Crescent Meadows Potential Homekey+ Funding. However, per HCD’s guidance the City will be rounding up to request $12 million in the event the Homekey+ award is greater than the City’s projection. If the application amount approved by Council is not sufficient, it could compromise an award because HCD cannot award more than the Applicant is authorized by their governing body to apply for or receive.
If the Crescent Meadows project does not get awarded Homekey+ funding or only receives partial Homekey+ funding, SHE will continue to seek additional funding, such as, the Continuum of Care Build, HOME Investment Partnership Program (HOME), and Multifamily Housing Program (MHP).
Homekey+ Gap Financing Terms, Deadlines, and Restrictions:
Homekey+ financing terms, deadlines, and restrictions are as follows.
• Gap financing awards will be in the form of a grant. All Homekey+ gap financing
awarded Projects must commence construction no later 6 months, starting 60 days from the date of the Homekey+ Conditional Award letter. HCD may, in its sole and absolute discretion, extend this deadline due to conditions beyond the control of the Sponsor, for a period not to exceed 90 days.
• The Homekey+ gap financing awarded project must receive, and submit evidence to HCD, a temporary certificate of occupancy (TCO) within 24 months, starting 60 days from the Homekey+ Award.
• Homekey+ gap financing Grantees are prohibited from applying for or receiving a tax credit allocation on a Homekey+ funded project for a period of 20 years from the Homekey+ Conditional Award date for the project.
• If, following a Homekey+ application and award, a Sponsor syndicates and sells a portion of their ownership interest to a partner or equivalent party seeking tax losses associated with the project, nine-tenths of the gross proceeds of that sale shall be remitted to HCD. Negative points may be assessed to the Sponsor in the event the project is sold or refinanced with a distribution of net equity. Therefore, resulting in negative points on future HCD applications in accordance with HCD’s Negative Points Policy.
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.
Housing First: Homekey+ projects shall employ the core components of Housing First in its property management and tenant selection practices. Projects shall accept tenants regardless of sobriety, participation in services or treatment, history of incarceration, credit history, or history of eviction in accordance with practices permitted pursuant to Housing First practices, including local CES prioritization protocols, or other federal or state Project funding sources.
Affordability Covenant: Homekey+ Projects require 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 all 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 are equally responsible for compliance of Homekey+ program requirements including ensuring the 55-year affordability covenant. Given the longevity and long-term quality performance of both Self-Help Enterprises and Visalia Senior Housing, and the funding/partnerships already in place, staff is comfortable that this is a low risk proposal for all parties.
Fiscal Impact:
If awarded, the Homekey+ funding will generate approximately $12 million toward the development of the Crescent Meadows project to provide permanent supportive housing to seniors 62-years and older. No additional funding is requested from City grant sources as part of this application, and there is no General Fund money budgeted for this project. This project will be requesting HOME CHDO Senior Housing project funding in the next 5-year Consolidated Plan.
Prior Council Action: ● December 3, 2024: FY 2025/26 - FY 2029/30 Consolidated Plan (ConPlan) work session discussion to include senior affordable housing in the next 5-year ConPlan.
Other: None
Alternatives: Do not apply for Homekey+ funding for Crescent Meadows.
Recommended Motion (and Alternative Motions if expected):
recommendation
I move to:
• Authorize staff to apply for Homekey+ program funding as a joint application with Crescent Meadows, L.P. not to exceed $12 million dollars to assist with the development of Crescent Meadows to provide senior affordable housing that includes 25 Homekey+ eligible units for seniors experiencing or at-risk of homelessness;
• Adopt Resolution 2025-02 authorizing a joint application with Crescent Meadows, L.P., for Homekey+ program funding as required by the California Department of Housing and Community Development; and
• Authorize the Mayor or their designee to sign Resolution 2025-02.
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Environmental Assessment Status: Not applicable.
CEQA Review: Not applicable.
Attachments:
● Attachment A - Homekey+ NOFA
● Attachment B - Homekey+ Facts Sheet
● Attachment C - SHE’s Crecent Meadows Request
● Attachment D - Resolution 2025-02