Agenda Item Wording:
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Appropriation of Awarded Grant Funds - Authorize the appropriation of funds awarded from the State of California Homekey Round 3 grant program of $8,115,376 for the conversion of the Majestic Motel at 4545 W. Noble Avenue into a 42-unit Permanent Affordable Rental Housing complex for qualifying populations.
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Deadline for Action: 4/15/2024
Submitting Department: Finance and Technology Services
Contact Name and Phone Number: Margie Perez, Housing Specialist, 713-4460, margie.perez@visalia.city <mailto:margie.perez@visalia.city>; Melody Murch, Assistant Finance Director, 713-4379, melody.murch@visalia.city <mailto:melody.murch@visalia.city>; Renee Nagel, Finance Director, 713-4378, renee.nagel@visalia.city <mailto:renee.nagel@visalia.city>
Department Recommendation:
Staff Recommends that Council:
• Authorize appropriation of Homekey Round 3.0 funds, in the amount of $8,115,376 for the conversion of the Majestic Motel to develop a 42-unit Permanent Affordable Rental Housing complex for qualifying populations; and
• Authorize the Mayor and staff to negotiate, make minor changes, and execute the necessary contracts and loan agreements.
Background Discussion:
The City of Visalia, RHCB Development LP, and Visalia Homekey LP, have been jointly awarded $13,835,376 in Homekey Round 3 funding for the conversion of the Majestic Motel into Permanent Supportive Housing (PSH). Of this grant amount, $5,720,000 will be paid directly from the granting agency, into an escrow to purchase the Majestic Motel property. The remaining $8,115,376 will be paid to the City in a lump sum. The City will then make progress payments to RHCB Development and Visalia Homekey LP, as the project is completed. To accomplish this, the funds must be appropriated in the City budget.
History: 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.
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.
Homekey Round 3.0 Award: On May 11, 2023, the City along with co-applicants RHCB Development LP and Visalia Homekey LP applied for Homekey Round 3.0 for the development and operation of the Majestic Gardens to convert the Majestic Motel at 4545 W. Noble Avenue into a 42-unit Permanent Affordable Rental Housing complex for qualifying populations. 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. HCD will wire $5,720,000 directly to the escrow company for acquisition of the Majestic Motel. The remaining Homekey award of $8,115,376 will be provided to the City for development and operation of Majestic Gardens. At this time, staff is requesting Council’s authorization to appropriate $8,115,376 in Homekey 3.0 funds for the Majestic Gardens Project (CP0516) as shown below in Table 1: Homekey Round 3.0 Majestic Garden Award.
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Table 1: Homekey Round 3.0 Majestic Garden Award |
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Homekey Award |
$ 13,835,376 |
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HCD Wire to Escrow for Acquisition |
(5,720,000) |
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Homekey Appropriation |
$ 8,115,376 |
Next Steps: Upon receiving the fully executed Homekey Round 3.0 contract agreement, acquisition and building permits will be obtained. Rehabilitation is expected to last six months and to be completed in the fall of 2024. Full occupancy is expected to be completed by January 2025. The Majestic Gardens project will provide 41 units of permanent supportive housing and one on-site manager unit. Majestic Gardens will also have on-site case managers, an office, and resource room to assist in tenant’s long-term housing stability and lead to a life of self-sufficiency.
Fiscal Impact:
Approval of this item will appropriate $8,115,376 million in Homekey Round 3.0 funds for the acquisition, development, and operation of the Majestic Gardens project to convert the Majestic Motel into permanent supportive rental housing. No additional funding is requested from City grant sources, and there is no General Fund money budgeted or requested for this project.
Prior Council Action: • December 20, 2021: HOME-ARP Public Hearing to review and comment on the development of HOME-ARP Allocation Plan. • July 18, 2022: Approval of RFP-21-22-28 to RH Community Builders for $1.8 million in HOME-ARP funds and $900,000 in Successor Agency Housing (SAH) funds for the development of the Majestic Motel to Permanent Affordable Rental Housing. • April 17, 2023: Authorize staff to apply for Homekey Round 3.0 not to exceed $15 million to assist with the development and operation of the Majestic Project to convert the Majestic Motel into permanent supportive rental housing.
Other: None
Alternatives: None
Recommended Motion (and Alternative Motions if expected):
recommendation
I move that Council:
• Appropriate Homekey Round 3.0 funds, in the amount of $8,115,376 with Homekey affordable housing provisions for a period of 55 years with the City of Visalia and Visalia Homekey LP, for the conversion of the Majestic Motel to develop a 42-unit Permanent Affordable Rental Housing complex for qualifying populations; and
• Authorize the Mayor and staff to negotiate, make minor changes, and execute the necessary contracts and loan agreements.
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Environmental Assessment Status: Not Applicable.
CEQA Review: Not Applicable.
Attachments: Attachment A: Homekey Award Letter