REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning & Development Department PHIL SKEI, Assistant Director Planning & Development Department BY: MARIA CAMBRON, Housing & Neighborhood Revitalization Manager Planning & Development Department SUBJECT ..Title Approve a First Amendment to the Permanent Local Housing Allocation (PLHA) Program Agreement between the City of Fresno and Broadway Plaza Apartments, LP for the Hotel Fresno Project located at 1241-1263 Broadway Plaza, Fresno, California (District 3). ..Body RECOMMENDATION Staff recommends that the City Council approve the First Amendment to the Permanent Local Housing Allocation (PLHA) Program Agreement between the City of Fresno and Broadway Plaza Family Apartments, LP. This amendment revises the residual receipts percentage to align with the California Department of Housing and Community Development's (HCD) Affordable Housing and Sustainable Communities (AHSC) Program regulations. EXECUTIVE SUMMARY Staff recommends that the City Council approve the First Amendment to the PLHA Program Agreement with Broadway Plaza Family Apartments, LP, which reduce the residual receipts percentage from 20% to 9%. This adjustment is necessary to ensure compliance with the California Department of Housing and Community Development (HCD) under the Affordable Housing and Sustainable Communities (AHSC) Program regulations. The need for this amendment arises from the Developer obtained the required Permanent Financing in the amount of $1,762,324.00 (Permanent Financing) from HCD. The modification is necessary to maintain the Developer's eligible for AHSC funding and to ensure the financial feasibility of the project. This amendment will allow the Broadway Plaza Family Apartment project to remain in compliance with State regulations, while also advancing the City's commitment to affordable housing. This project will deliver approximately 80 affordable housing units. BACKGROUND On June 15, 2023, the City entered into an agreement with Broadway Plaza Family Apartments, LP, to support the construction of 81 residential units, including 11 low-income housing units, at the Hotel Fresno Project. The City provided a $1,500,000 PLHA loan at 3% interest to cover eligible rehabilitation and construction costs. Per HCD's Uniform Multifamily Regulations Section 8314(a)(2), 50% of Residual Receipts must be distributed between HCD and the contributing public agencies. The amounts allocated to public agencies are proportional to each agency's total project assistance amount. Under the original agreement, the residual receipts percentage was set at 20%, as outlined in Exhibit "E". However, to comply with HCD's AHSC Program regulations, the Developer has requested a reduction in the residual receipts percentage from 20% to 9%. This modification is necessary for the project to continue meeting HCD requirements and to ensure sufficient cash flow for operational costs, maintenance, and debt obligations. The adjustment mitigates the risk of financial strain or default, securing the project's long-term success. The City's housing strategy relies on projects like the Hotel Fresno development, which will provide critical affordable housing in Fresno. Approving the First Amendment will support the long-term viability of the project, align with state funding requirements, and future the City's ongoing efforts to address housing needs in Fresno. ENVIRONMENTAL FINDINGS This action is not considered a "project" as defined by the California Environmental Quality Act (CEQA) Guidelines, Section 15378. LOCAL PREFERENCE Local preference is not applicable, as this action does not involve a bid or award for construction or services contracts. FISCAL IMPACT There is no direct impact on the City's General Fund as a result of this action. The modification to the residual receipts percentage aligns with the Developer's compliance with state regulations and does not alter the City's financial commitment to the project. Attachments: PLHA Loan Agt-Hotel Fresno First Amendment to PLHA Agreement Hotel Fresno