REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning and Development Department BY: PHIL SKEI, Assistant Director Planning and Development Department DANIELLE GONZALES, Senior Management Analyst Planning and Development Department SUBJECT ..Title Actions pertaining to a proposed permanent affordable housing project at 6507 North Polk Avenue, known as the Welcome Home Project (District 2): 1. ***RESOLUTION - Authorizing acceptance of Project Homekey 3 Funding from the State of California Department of Housing and Community Development for the Welcome Home Project in the amount of $21,983,607 and authorizing the City Manager or designee to enter into and execute a standard agreement to secure the Homekey 3 funds and participate in the Homekey 3 Program (Subject to Mayor's Veto) 2. ***RESOLUTION - Adopting the 24th amendment to the Annual Appropriation Resolution (AAR) No. 2023-185 appropriating $21,983,700 to the Homekey Program fund for Fiscal Year 2023-2024. (Requires 5 Affirmative Votes) (Subject to Mayor's Veto) 3. Approve a State and Local Fiscal Recovery Funds (part of the American Rescue Plan Act) Agreement with Valley Teen Ranch for development of the Welcome Home Project, in an amount not to exceed $2,800,000. 4. Approve a Memorandum of Understanding with Valley Teen Ranch related to the Welcome Home Project and the State of California Homekey 3 Program. ..Body RECOMMENDATION Staff recommends the City Council adopt a resolution accepting a Homekey 3 grant award from the California Department of Housing and Community Development (HCD) in the amount of $21,983,607 for the development of the Welcome Home Project in northwest Fresno and authorize the City Manager or designee to sign all necessary implementing documents. Staff also recommends the City Council adopt the 24th amendment to the Annual Appropriation Resolution No. 2023-185 appropriating $21,983,700 to the Homekey Program fund for Fiscal Year 2023-2024. Staff additionally recommends approval of a State and Local Fiscal Recovery Funds (SLFRF) Agreement in an amount not to exceed $2,800,000 and a Memorandum of Understanding (MOU) with Valley Teen Ranch related to the Welcome Home Project as part of the Homekey 3 program. EXECUTIVE SUMMARY The Welcome Home Project will provide 96 units of permanent affordable housing in northwest Fresno. The project will be funded primarily through the State of California's Homekey 3 program, with the City and Valley Teen Ranch (Developer) contributing additional funds. The proposed resolution will authorize the City Manager to accept the awarded Homekey 3 grant award by entering into a Standard Agreement with HCD. Approval of the AAR will appropriate $21,983,700 to the Homekey Program fund for Fiscal Year 2023-2024. The SLFRF agreement will provide the Developer with $2,800,000 for payment of SLFRF eligible acquisition, pre-development, and construction costs. The proposed MOU will establish a schedule for the disbursement of Homekey funds to Valley Teen Ranch and will outline roles and responsibilities between the City and Developer as co-applicants of the Homekey award. BACKGROUND In March 2023, the Department of Housing and Community Development (HCD) issued a Notice of Funding Availability for Homekey 3. On April 27, 2023, the City Council adopted Resolution 2023-109 authorizing a Homekey 3 joint application with the Developer for the Welcome Home Project. In addition, on April 27,2023, the City Council adopted Resolution 2023-10 expressing an intent to contribute up to $2.8 million for the project, subject to the full allocation of Homekey 3 funds and the City's execution and recordation of one or more funding agreements. In May 2023, the City jointly applied for Homekey 3 grant funds with Developer. The Welcome Home project cost is estimated at $26,345,283: $21,983,607 in Homekey 3 funds, $1,561,676 in Developer funds, and $2,800,000 in City of Fresno SLFRF funds. This project consists of the construction of modular, factory-built residential housing that will be delivered and anchored to a permanent foundation on land being purchased by the Developer located at 6507 N Polk Avenue, Fresno 93722 (APN: 506-130-04s) (Attachment - Photos and Site Plan). The project site is approximately 3.91 acres or 170,320 square feet. The project consists of 96 units of permanent housing for homeless youth, youth at risk of homelessness, and the general homeless. Sixty units will be set aside for Homeless Youth or Youth at Risk of Homelessness, and 35 units for the broader homeless population. One unit will be reserved for an on-site manager. All 96 units will be one-bedroom units. The unit size is 440 square feet per unit. Qualifying tenants' income will be at or below 30% of area median income. The Developer will provide the following services to individuals, couples, and small families experiencing homelessness: outreach services, intake and assessment services, case management, assistance obtaining benefits and essential documentation, education and employment assistance services, life skills, and referrals for behavioral health services, physical health services, education and employment opportunities, substance abuse treatment, food resources, and clothing and household goods. The Developer will utilize two on-site community buildings to provide these services and others. The resolution presented to Council authorizes and directs the City Manager, or designee to accept the Homekey 3 grant award and execute the Homekey Standard Agreement, subject to approval as to form by the City Attorney's Office. The AAR will appropriate the Homekey 3 grant award to the Homekey Program fund for Fiscal Year 2023-2024. If approved as recommended, the Developer will enter into an SLFRF Agreement with the City for $2.8 million at 3% interest for eligible acquisition, pre-development, and construction costs. The proposed MOU will establish a schedule for the disbursement of Homekey funds to the Developer and will outline Homekey terms and conditions. The approximate completion date of the Welcome Home project is October 2024. Once completed, Welcome Home will help the City of Fresno achieve its affordable housing goals and objectives as outlined in the One Fresno Housing Strategy, 2020-2024 Consolidated Plan, and Housing Element of the 2035 General Plan. ENVIRONMENTAL FINDINGS Pursuant to Assembly Bill (AB) 2162, this project is ministerial. Ministerial projects are exempt from the requirements of CEQA under CEQA Guidelines Section 15268. In addition, pursuant to the "Coronavirus State and Local Fiscal Recovery Funds Final Rule" document published by the U.S. Department of the Treasury, in July 2023, the National Environmental Policy Act (NEPA) does not apply to Treasury's administration of the funds. FISCAL IMPACT The State and Local Fiscal Recovery Funds for the proposed Welcome Home project were appropriated to the Planning and Development Department as part of its fiscal year 2024 Budget. Additional funding will be provided by the State of California's Project Homekey grant. Attachments: 1. Resolution 2. Resolution - Annual Appropriation Resolution (AAR) 3. SLFRF Agreement (Valley Teen Ranch - Welcome Home) 4. Photos and Site Plan 5. Memorandum of Understanding (Valley Teen Ranch - Welcome Home)