BACKGROUND
At the January 16, 2019, City Council/Housing Successor meeting, the final Disposition and Development Agreements (DDAs) for the 65-unit Main Street Plaza Apartments affordable housing development at 304 Washington Boulevard and 134 Main Street were approved. The project will include one, two and three bedroom apartment units over 3,000 square feet of commercial space with the required on-site parking spaces. The apartments will have access to a community room, bbq space, a tot lot, resident services, and other amenities. The project will also include project-based housing choice vouchers and other subsidies to offer affordable housing to families, veterans, and individuals with a physical or mental disability.
Within the approved DDAs for the project, the Housing Successor approved sale of its parcels to the affordable housing project (through a land loan for each parcel) and the City approved two loans to the project from affordable housing funding sources.
The first City loan is for $2,000,000 from the Affordable Housing Fund and Housing Trust Fund. This loan will be for a term of 55 years and will bear simple interest at a rate of 3% annually, repaid through residual cash flow of the project. While these funds are already committed, this budget adjustment allocates the funding within the City's budget so that it can be spent.
The second City loan, as approved in the FY 2018-19 budget, was for $793,503 from the Community Development Block Grant (CDBG) Fund. This loan has the same terms as those listed above and is already in the City's budget. In order to ensure the timely use of CDBG funds, the project will now fully utilize the $793,503 of funding to cover associated project costs as follows:
Acquisition of 134 Main Street $644,612.54 (previously $483,503)
Demolition of 134 Main Street $111,222.95 (previously $150,000)
Business Relocation of 134 Main Street $37,667.51 (previously $160,000)
Notice of the change in how these funds will be used within this project has been provided on the City's website. This change is not a substantial amendment to the City's Annual Action Plan for CDBG because the same total amount of funding is still being provided to the same project and the national objectives and outcomes will still be achieved. This change in allocation of funding does not reduce or reflect the total cost for these items, it only ensures timely use of CDBG funding.
Staff recommends that the City Council approve the attached budget adjustment in order to fully budget the City funding commitments to the Main Street Plaza Apartments under the City's executed DDAs to the project.