REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning and Development Department THROUGH: PHIL SKEI, Assistant Director Planning and Development Department BY: JENNIFER E. DAVIS, Senior Management Analyst Housing Finance Division SUBJECT ..Title Actions pertaining to the State of California's Homekey 3 Program and Travelodge located at 3876 North Blackstone Avenue (436-260-22) to facilitate the development of permanent affordable housing (District 4) 1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 and Section 15332/Class 32 of the California Environmental Quality Act (CEQA) guidelines; 2. Approve the Purchase and Sale Agreement with PRABHATBHAI T. PATEL and SUSHILABEN P. PATEL as TRUSTEES of The Prabhatbhai T. Patel and Sushilaben P. Patel Living Trust u/t/d/ dated September 12, 2019, for $4,400,000; 3. ***RESOLUTION - Authorizing joint application and acceptance of funding from participation in the State of California's Homekey 3 Program to sustain and rapidly expand housing for persons experiencing or at risk of homelessness and authorizing the City Manager to sign all required implementing documents (Subject to Mayor's veto); and 4. ***RESOLUTION - Declaring a commitment for a future City contribution of funds for rehabilitation expenses in an amount not to exceed $5,000,000 upon full award of Homekey 3 funding for the Travelodge Project (Subject to Mayor's veto). ..Body RECOMMENDATION Staff recommends the City Council adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 and Section 15332/Class 32 of the California Environmental Quality Act (CEQA) guidelines; approve the Purchase and Sale Agreement relating to the Travelodge; adopt a resolution authorizing joint application with Fresno Mission and acceptance of funding from participation in the State of California's Homekey 3 Program to sustain and rapidly expand housing for persons experiencing or at risk of homelessness and authorizing the City Manager to sign all required implementing documents; and adopt a resolution declaring a commitment for a future City contribution of funds for rehabilitation expenses in an amount not to exceed $5,000,000 upon full award of Homekey 3 funding for the Travelodge Project (Project). EXECUTIVE SUMMARY HCD announced the availability of approximately $736 million through a Homekey Notice of Funding Availability, Round 3. Fresno Mission has proposed to apply jointly with the City as Co-Applicants for up to $15,000,000 in financial assistance for a project to redevelop the Travelodge into permanent affordable housing for families and individuals experiencing or at risk of homelessness. If approved, Fresno Mission will work with City staff to complete the application and administer the grant on behalf of the City. Additionally, if approved, the City will commit up to $5,000,000 from non-general fund Housing Division resources, which may include HOME, HOME-ARP, ARPA, PLHA, or others. BACKGROUND The California Department of Housing and Community Development (Department) has issued a Notice of Funding Availability, dated March 29, 2023, announcing the availability of approximately $736 million of Homekey Program grant funding through Round 3, for the purpose of sustaining and rapidly expanding housing for persons experiencing or at risk of homelessness. Homekey 3 builds on the success of Project Roomkey, as well as the first two rounds of Homekey, to continue a statewide effort to rapidly sustain and expand housing for persons experiencing homelessness or at risk of homelessness, and who are, thereby, disproportionately impacted by and at risk for medical diseases or conditions due to the COVID-19 pandemic and other communicable diseases. Of the $736 million in Homekey funding, $435 million is derived from the Coronavirus State Fiscal Recovery Fund (CSFRF) established by the federal American Rescue Plan Act of 2021 (ARPA) (Public Law 117-2) and $301 million is State General Fund. The $301 million in State General Fund money is intended to supplement the acquisition of, and to provide initial operating subsidies for Homekey sites to promote project feasibility. Homekey 3 funding is available on a first come, first serve basis until July 28, 2023, or until the available funds are exhausted, whichever occurs first. Projects receiving an award from the state's direct allocation of the federal ARPA must expend the funds within eight months of the date of award. The portion of a project's award associated with State General Fund must be expended by June 30, 2026. Fresno Mission has requested to apply jointly with the City for its proposed redevelopment project of the Travelodge into a permanent affordable housing development for families and individuals experiencing or at risk of homelessness. As the eligible entity, the City would be the Lead Applicant with the understanding that Fresno Mission will complete the application with the support of City staff. Fresno Mission is a multipurpose organization dedicated to providing shelter, housing, and case management services to displaced persons in the greater Fresno County area. Fresno Mission has a successful history of partnership with the City and continues to provide support in the City's efforts to reduce homelessness and increase housing. The proposed Homekey 3 project at the Travelodge will provide approximately 44 units of housing that target qualified households and individuals who are experiencing or are at risk of homelessness. Approval of the resolutions will authorize submission of the joint application to HCD and declare a future funding commitment. Staff intends to return to council for authority to accept funding and to approve an MOU establishing the roles and responsibilities of the parties in administering the grant. ENVIRONMENTAL FINDINGS Staff has performed a preliminary environmental assessment of this Project and has determined it falls within the Categorical Exemption set forth in CEQA Guidelines Sections 15301/Class 1 (existing facilities) and Section 15332/Class 32 (in-fill development). Staff has determined that none of the exceptions to Categorical Exemptions set forth in the CEQA Guidelines, Section 15300.2 apply to this project. Further CEQA analysis will be performed at a future date once this project reaches the building application phase. LOCAL PREFERENCE Local preference is not applicable because the resolutions provide support for a State funding application and City acquisition of real property does not involve bidding or awarding. FISCAL IMPACT Funding for this agreement will be through the State of California's Project Homekey award to the City of Fresno for this Project. Attachments: - Categorical Exemption (Travelodge) - Purchase and Sale Agreement (Travelodge) - Resolution Authorizing Joint Application to Homekey 3 - Resolution Declaring Funding Commitment