REPORT TO THE CITY COUNCIL December 14, 2017 FROM: JENNIFER K. CLARK, Director Development and Resource Management Department THROUGH: KELLI FURTADO, Assistant Director Development and Resource Management Department THOMAS MORGAN, Manager Housing and Community Development Division BY: CORRINA NUNEZ, Project Manager Housing and Community Development Division SUBJECT ..Title Actions pertaining to the disposition and development of City-owned property located at Willow Avenue and Byrd Avenue: 1. Approve Habitat for Humanity's second extension to the Exclusive Negotiation Agreement for the disposition and development of City-owned property located at Willow Avenue and Byrd Avenue, and 2. Adopt a Resolution for joint application in the State of California Infill Infrastructure Grant Program ..Body RECOMMENDATION Staff recommends the City Council approve Habitat for Humanity's second request to retroactively extend the Exclusive Negotiation Agreement (ENA), attached as Exhibit "A," from November 24, 2017, to June 30, 2018, for the disposition and development of City-owned property located at Willow Avenue and Byrd Avenue and authorize the City Manager to execute implementing documents approved as to form by the City Attorney. Additionally, staff recommends the City Council adopt a Resolution, attached as Exhibit "B," for participation in the State of California Infill Infrastructure Grant Program and authorize the Development and Resource Management (DARM) Director to sign all implementing documents, approved as to form by the City Attorney. EXECUTIVE SUMMARY On October 30, 2017, Habitat for Humanity (Habitat) requested a second extension to extend the ENA. On November 9, 2017, City staff met with Habitat to determine that additional time is necessary to apply for a potential funding source that would allow Habitat to complete financing of the project and work on the site plans and specifications for the creation of approximately one hundred affordable homeownership units. In an effort to secure the additional financing for the project, Habitat is proposing to submit a joint application with the City for approximately $3 million in State Infill Infrastructure Grant Program funds announced on October 2, 2017. Grant applications must be submitted on or before January 16, 2018. The State of California expects to make award announcements in June, 2018. BACKGROUND On December 15, 2016, the City Council approved an ENA, attached as Exhibit "C," with Habitat. The ENA provided Habitat with timelines of accomplishments leading up to the execution of a Disposition and Development Agreement (DDA) for approximately one hundred affordable homeownership units for the Willow/Byrd Affordable Residential Housing Project (Project). On May 22, 2017, Habitat requested, and the Council approved, an extension to the ENA as Habitat had encountered various delays with predevelopment. The first extension time period began on June 15, 2017 and expired on November 24, 2017. Habitat has completed their due diligence and now is pursuing all options related to complete financing of the Project. Pending the approval of the second extension, the existing ENA date of November 24, 2017 would be retroactively extended to expire on June 30, 2018. The potential second extension of the ENA will provide sufficient time for Habitat to prepare a joint (City/Habitat) Infill Infrastructure Grant application to the State of California Department of Housing and Community Development for approximately $3 million in funding. This funding opportunity was made available on October 2, 2017, when the State of California Department of Housing and Community Development released a Notice of Funding Availability (NOFA) for Infill Infrastructure Grant Program funding. The NOFA is being made available through the passage of Proposition 1C - Housing and Emergency Shelter Trust Fund Act of 2006. This funding opportunity will afford Habitat a chance to apply for funding to help complete financing for the Project. If the joint application is successful, the funds will be used for the Project's on-site infrastructure needs. As a joint applicant, the City's role will be to administer the grant funds by the City's Housing and Community Development Division. If Habitat's Project becomes financially viable, the City will be committed to using the Infill Infrastructure Grant funds for installing infrastructure at the Project site. If Habitat does not obtain full funding for the Project or a DDA is not approved by City Council and executed, the City will notify the State that it has cancelled the award of grant funds for lack of project viability, no further action from the City would be required at this point. A City Council adopted Resolution is a requirement for joint submittal of the Infill Infrastructure Grant Program application to the State of California. Cities are not eligible to apply for the funding source; Habitat will be the non-profit applicant. It also serves as evidence that the decision-making body has approved the Infill Infrastructure Program application, and funds for use on the proposed Project. Grant applications must be submitted on or before January 16, 2018. The State of California expects to make award announcements in June, 2018. ENVIRONMENTAL FINDINGS This is not a project for the purposes of the California Environmental Quality Act (CEQA), pursuant to CEQA guidelines Section 15378. LOCAL PREFERENCE Local preference was not considered because the ENA does not include a bid or award of a construction or services contract. FISCAL IMPACT Not applicable APPENDICES: Exhibit A - Second Extension Request Exhibit B - Resolution Exhibit C - Exclusive Negotiation Agreement