REPORT TO THE CITY COUNCIL FROM: JENNIFER K. CLARK, Director Planning and Development Department PHIL SKEI, Assistant Director Planning and Development Department BY: CORRINA NUNEZ, Project Manager Community Development Division SUBJECT ..Title Actions pertaining to the HOME Investment Partnerships Agreement for the Dakota Apartments project to be located at 3787 N. Blackstone Avenue (District 7): 1. Approve Amendment I to HOME Investment Partnerships Agreement with Dakota Fresno, LP; 2. Approve Amendment I to HOME Investment Partnerships Promissory Note; 3. Approve Amendment I to HOME Investment Partnerships Declaration of Restrictions; and 4. Approve Amendment I to HOME Investment Partnerships Deed of Trust and Assignment of Rents ..Body RECOMMENDATION Staff recommend the City Council approve: 1) Amendment I to HOME Investment Partnerships (HOME) Agreement Section 5.12 Ownership, Item B and Section 11.18 Notice; and 2) Amendment I to HOME Promissory Note Section 1 Residual Receipts and Section 2 Operating Expenses; 3) Amendment I to HOME Declaration of Restrictions Section 2 Restrictions (a)(iii) Household Income Requirements, and 4) Amendment I to HOME Deed of Trust Section 13, to revise the cure rights. EXECUTIVE SUMMARY The City has entered into a $3,000,000 HOME Agreement with Dakota Fresno, LP for the development of the Dakota Apartments, a 113-unit affordable multifamily housing project that will include 11 floating HOME-assisted units located at 3787 N. Blackstone Avenue (APN: 435-020-11). The developer has requested material changes to the HOME Agreement and related documents BACKGROUND On May 1, 2025, Council approved a $3,000,000 HOME loan Agreement (Exhibit "A" HOME Agreement), for the development of the Dakota Apartments project. The 113-unit affordable multifamily housing project, which will include 11 floating HOME-assisted units, will be located at 3787 N. Blackstone Avenue (APN: 435-020-11). The HOME Agreement and related documents are fully executed and will be recorded at the close of escrow. On May 27, 2025, the developer requested material changes to the HOME Agreement and related documents (Exhibit "B" - Developer's Request Letter for Revisions to HOME Agreement and Related Documents) at the request of their other funding sources to ensure consistency among all funding documents as follows: Amendment I to the HOME Agreement Section 5.12 Ownership Item B, to allow for partnership restructuring and Section 11.18 Notice to allow for CREA Dakota, LP to receive notices (Exhibit "C" - Amendment I to HOME Agreement); Amendment I to the HOME Promissory Note to revise Section 1: Residual Receipts to allow for repayment of senior financing and Section 2: Operating Expenses to include costs that cannot be paid from reserve accounts (Exhibit "D" - Amendment I to HOME Promissory Note); Amendment I to the HOME Declaration of Restrictions Section 2 Restrictions (a)(iii) Household Income Requirements to clarify when the income limit is restricted (Exhibit "E" - Amendment I to HOME Declaration of Restrictions); and Amendment I to the HOME Deed of Trust Assignment of Rents. Section 13, to revise the cure rights (Exhibit F - Amendment I to HOME Deed of Trust). Since Council approved the original HOME Agreement, the existing structure located at the project site (the former Smuggler's Inn restaurant) has been demolished, and the general contractor has set up trailers on site in anticipation of construction commencing by June 16, 2025 as outlined in the HOME Agreement. ENVIRONMENTAL FINDINGS On March 1, 2025, the Council adopted a finding of Categorical Exemption pursuant to Section 15332/Class 32 of the California Environmental Quality Act (CEQA) Guidelines. In addition, on February 9, 2022, the developer received authorization to use grant funds from the U.S. Department of Housing and Urban Development. LOCAL PREFERENCE Not applicable FISCAL IMPACT The Amendments do not have a fiscal impact on the Planning and Development Department FY 2025 Budget. APPENDICES Exhibit A - HOME Agreement Exhibit B - Developer's Request Letter for Revisions to HOME Agreement and Related Documents Exhibit C - Amendment I to HOME Agreement Exhibit D - Amendment I to HOME Promissory Note Exhibit E - Amendment I to HOME Declaration of Restrictions Exhibit F - Amendment I to HOME Deed of Trust