REPORT TO THE CITY COUNCIL FROM: JENNIFER CLARK, Director Planning and Development Department PHILIP SKEI, Assistant Director Planning and Development Department BY: JENNIFER DAVIS, Senior Management Analyst Housing Finance Division SUBJECT ..Title Actions pertaining to the Valley Inn located at 933 North Parkway Drive, Fresno, CA 93728 (Council District 3) 1. Adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 (Existing Facilities) of the California Environmental Quality Act (CEQA) guidelines 2. ***RESOLUTION - Authorizing Joint Application to, and participation, in the Homekey+ Program with co-applicant, Fresno Prime LLC, for the Valley Inn Project and authorizing the City Manager, or designee, to sign all required implementing documents (Subject to Mayor's Veto) ..Body RECOMMENDATION Staff recommends that the City Council adopt a finding of Categorical Exemption pursuant to Section 15301/Class 1 (Existing Facilities) of the California Environmental Quality Act (CEQA) Guidelines and adopt a Resolution authorizing a joint application to, and participation in, the California Department of Housing and Community Development (HCD) Homekey+ program with Fresno Prime LLC for the Valley Inn project. EXECUTIVE SUMMARY On November 26, 2024, HCD announced the availability of approximately $2.145 billion in Homekey+ grant funding through a Notice of Funding Availability (NOFA). The City of Fresno (City) proposes to submit a joint application to the Homekey+ program with Fresno Prime LLC for the Valley Inn project. The application seeks up to $35,000,000 in Homekey+ grant funds for the development of Permanent Supportive Housing at the Valley Inn, located at 933 North Parkway Drive, Fresno, CA 93728. BACKGROUND The California Department of Housing and Community Development (HCD), in collaboration with the California Department of Veterans Affairs (CalVet), announced the availability of approximately $2.145 billion in Homekey+ grant funding via a NOFA dated November 26, 2024. Homekey+ will support the development of Permanent Supportive Housing for veterans and individuals facing mental health or substance use challenges who are at risk of or currently experiencing homelessness. Building on the success of Roomkey and the $3.572 billion awarded over three rounds of Homekey, Homekey+ continues the statewide effort to expand Permanent Supportive Housing for individuals experiencing homelessness. The City is proposing to submit a joint application with Fresno Prime LLC to convert the Valley Inn into 80 units of Permanent Supportive Housing for individuals or households experiencing Homelessness, Chronic Homelessness, or At Risk of Homelessness, and who are also dealing with Behavioral Health Challenges. The Valley Inn, located at 933 North Parkway Drive, Fresno, CA 93728 (APN 449-335-32), consists of a 2.42-acre parcel. On May 7, 2021, City Council approved the City's acquisition of the property for use as an interim low-barrier emergency homeless shelter as part of Project Homekey. The City was awarded Homekey 2 grant funds in August 2022, enabling significant improvements to the facility that enhanced the shelter experience for residents. The project involves converting the existing motel into approximately 80 units of Permanent Supportive Housing, including a mix of studio and one-bedroom units, as well as a manager's unit. The project aligns with the City's affordable housing goals, as outlined in the "One Fresno Housing Strategy" and the Housing Element of the 2035 General Plan. It will have a positive and lasting impact on the neighborhood by providing supportive housing for individuals or households experiencing homelessness, chronic homelessness, or at risk of homelessness, and those living with behavioral health challenges. The project will also help restore housing stability in this vulnerable community. ENVIRONMENTAL FINDINGS Staff has conducted a preliminary environmental assessment of this project and determined it qualifies for a Categorical Exemption under CEQA Guidelines Section 15301/Class 1 (Existing Facilities). This exemption applies to projects that involve negligible or no expansion of an existing facility. The proposed resolution supports a state funding application, which, if awarded, will fund the rehabilitation of the Valley Inn without expanding the facility. Therefore, the project fits within the definition of "existing facilities" under Section 15301/Class 1 and is Categorically Exempt from further CEQA review. Staff has also determined that none of the exceptions to Categorical Exemptions in CEQA Guidelines Section 15300.2 apply to this project. LOCAL PREFERENCE Local preference is not applicable in this case, as the resolution supports a state funding application. FISCAL IMPACT There is no impact to the City's General Fund as a result of this action. Funding for the project will be provided through the California Department of Housing and Community Development's Homekey+ Program award to the City of Fresno. Attachments: CEQA Categorical Exemption for the Valley Inn Resolution Authorizing Homekey+ Application for the Valley Inn