REPORT TO THE HOUSING AND COMMUNITY DEVELOPMENT COMMISSION December 13, 2017 FROM: JENNIFER K. CLARK, Director Development and Resource Management Department THROUGH: KELLI FURTADO, Assistant Director Development and Resource Management Department BY: THOMAS MORGAN, Housing Manager Housing and Community Development Division CORRINA NUNEZ, Project Manager Housing and Community Development Division SUBJECT ..Title Recommended actions pertaining to HOME Investment Partnerships Program, Community Housing Development Organization, Agreement with Habitat for Humanity Fresno County, Inc.: 1. Adopt a finding of Categorical Exemption pursuant to Section 15332/Class 32 of the California Environmental Quality Act (CEQA) Guidelines. 2. Approve a $445,000 HOME Investment Partnerships Program, Community Housing Development Organization, Agreement with Habitat for Humanity Fresno County, Inc. for the construction of three affordable single-family houses at West Rialto Avenue and North Barcus Avenue in northwest Fresno (District 1). ..body RECOMMENDATION Staff recommends the Housing and Community Development Commission recommend to the City Council: 1) Adoption of a Finding of Categorical Exemption pursuant to the California Environmental Quality Act (CEQA) Guidelines Section 15332 (Exhibit "A" - CEQA Categorical Exemption form); and 2) Approval of a $445,000 HOME Investment Partnerships (HOME) Program, Community Housing Development Organization (CHDO) Agreement (Exhibit "B" - HOME CHDO Agreement) with Habitat for Humanity Fresno County, Inc. (Habitat), for the construction of three single-family houses to be located at northeast corner of West Rialto Avenue and North Barcus Avenue in northwest Fresno (Exhibit "C" - Project Location Map). EXECUTIVE SUMMARY On May 9, 2017, Habitat was selected through a Notice of Funding Availability (NOFA) to receive $445,000 in 2017 HOME CHDO funds for its Central Lots Project. Habitat is a City-certified CHDO and is eligible to receive HOME CHDO funding for its Central Lots Project. BACKGROUND On February 10, 2017, the Housing and Community Development Division released a NOFA for 2017 HOME CHDO funding. In response to the NOFA, the City received two CHDO applications one of which was the Habitat Central Lots Project. After preliminary underwriting and technical assessment, the Central Lots Project was determined to be the most "shovel ready" and is therefore being recommended for funding. The estimated project cost is $904,666 (Exhibit "D" - Project Sources and Uses of Funds), which equates to approximately $302,000 per housing unit at a cost of approximately $242 per square foot. Habitat will contribute land in the amount of $163,000 and in-house reserves and private donations in the amount of $296,666 to complete financing of the three houses to be located at the northeast corner of West Rialto Avenue and North Barcus Avenue in northwest Fresno. Habitat will enter into a HOME CHDO Agreement for the $445,000 at 2% interest, with the interest converting to zero percent upon conveyance of the loan portions to the homebuyers. Once the houses are constructed, Habitat will transfer ownership of each parcel through escrow to a low-income homebuyer. It is estimated that the $445,000 in CHDO loan funds will be proportionally conveyed and provided to the homebuyers as a second mortgage. Upon transfer of the property to the homebuyers through escrow, Habitat will be released from any further obligation under the Promissory Note. The proportionally conveyed CHDO loan amounts (1 @ $148,400 and 2 @ $148,300) will hold a no worse than second position lien. Habitat owns the project property which is located at the northeast corner of West Rialto and North Barcus Avenue in northeast Fresno, District 1. One house will be constructed as a 3-bedroom/2-bath with 1,184 square feet and the other two will be constructed as 4-bedroom/2-bath houses with 1,285 square feet each. Habitat will utilize its "sweat equity" building technique and incorporate the City's Universal Design elements into each house. The "sweat equity" method requires that each household member contribute at least 500 hours of "sweat equity" to help build the houses. Habitat will also provide homeownership training in the areas of home maintenance, home improvement, interior design, budgeting, and consumer awareness. Habitat has been a leading non-profit housing development organization in Fresno County since 1985 and continues to provide safe, decent, and affordable housing for lower income residents. Habitat's home building strategy is to partner with low-income household homebuyers to help ensure that homeownership is a life-long positive and successful experience for all members of the family. The project partners include Pacific Gas and Electric, Wells Fargo Bank, Premier Valley Bank, Bank of the Sierra, Bank of the West, Mitchell Aire, Hunter Douglas, Val-Spar, Cargill, and the San Francisco Federal Home Loan Bank. Once the project is complete, these single-family housing units will assist the City in meeting its affordable housing goals as identified in the Housing Element of the 2035 General Plan, Consolidated Plan, and HOME Program funding priorities for new housing development. The project is also expected to make a positive impact to the neighborhood by offering new, in-fill, quality, durable, affordable housing. ENVIRONMENTAL FINDINGS On November 7, 2017, the proposed activities related to the HOME CHDO funding were found to be Categorically Exempt from CEQA, pursuant to Section 15332 as Infill Development (Exhibit "A" - CEQA Exemption form). Furthermore, Staff has determined that none of the exceptions to Categorical Exemptions set forth in CEQA guidelines, Section 15300.2 apply to this project. On July 24, 2017, a National Environmental Policy Act (NEPA) for the project activities resulted in the project activity converting to Exempt status. FISCAL IMPACT The U.S. Housing and Urban Development HOME CHDO Program funds for Habitat's proposed Central Lots Project were appropriated to the Development and Resource Management Department as part of its fiscal year 2018 Budget. Attachments: Exhibit A - CEQA Categorically Exemption form Exhibit B - HOME CHDO Agreement Exhibit C - Project Location Map Exhibit D - Project Sources and Uses of Funds