HomeMy WebLinkAboutAuthorization to Collaborate with the County of Orange and A AIM) e -o 1
2000 Main street.
Huntington Beach CA
92648
City of Huntington Beach
File #: 21-940 MEETING DATE: 12/1/2021
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Oliver Chi, City Manager
PREPARED BY: Ursula Luna-Reynosa. Director of Community Development
Subject:
Authorization to Collaborate with the County of Orange and American Family Housing to
Submit an Application for the Homekey Program Grant Funding Initiative — /E5toz_"T CVJ
Statement of Issue:
In September 2021 the State released a Notice of Funding Availability (NOFA) in the amount of
$1 45 billion as part of the Homekey Program' ( Homekey-) to sustain and rapidly expand the
inventory of housing for people experiencing homelessness or at-risk of homelessness through the
development of housing opportunities. including. but not limited to. the conversion of motels/hotels
into permanent supportive housing or interim housing.
Given the Homekey program parameters. coupled with the need for permanent supportive housing
(PSH) in the City, a motel location was identified as a possible acquisition target. at 17251 Beach
Boulevard (the "Project") In order to complete the application process. the City has been in
discussions with the County and American Family Housing about applying for Homekey funds to
acquire and convert the Project As part of that process. the City has identified S4 21 million in
restricted local housing related funds that are available to contribute as matching funds to aid in this
effort
If approved by the City Council to proceed with the Homekey application effort, American Family
Housing in partnership with National Community Renaissance ('National Core") (collectively. the
"Developer") will be a co-applicant with the County of Orange (the "County") on the Homekey
application The State has indicated that requests for funding will be evaluated on a first come, first
served basis. Funding commitments are required to ensure the Homekey application is complete
and competitive. and therefore, the City Council is requested to adopt a resolution that authorizes the
City Manager, or designee, to execute a local match funding commitment letter in the amount of
$4 21 million.
Financial Impact:
The $4 21 million for the Project is proposed to be funded from the Low and Moderate Income
Housing Asset Fund (LMIHAF) in the amount of $2 40 million, and from the HOME Partnerships
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File #: 21-940 MEETING DATE: 12/1/2021
Investment-American Rescue Plan Act (HOME-ARP) in the amount of $1.81 million. The $2.40
million of LMIHAF may go toward acquisition, and rehabilitation to convert the motel units into
housing and the $1.81 million will go toward operating expenses. These funding sources are
restricted and can only be used to address housing and homelessness / at-risk of homelessness
activities, respectively.
Should the Homekey funding be successfully secured for the Project, staff will return to the City
Council with an operating contract for the $1.81 million and an acquisition/ rehabilitation loan
agreement for the $2.40 million with the developer. The City will then need to adopt an Allocation
Plan consistent with HUD guidelines allocating the $1.81 million for the Project prior to executing an
operating contract.
Recommended Action:
A) Direct staff to collaborate with the County of Orange and Developer to submit an
application for the Homekey Program grant funding for the acquisition, rehabilitation and
conversion of the motel located at 17251 Beach Boulevard, and
B) Find the Homekey Project exempt from the California Environmental Quality Act
(CEQA) per Section 50675.1.3 and Section 50675.1.4 of the Health and Safety Code
(HSC) pursuant to the enacting legislation for the Homekey Program (AB 140 (2021)) and
direct staff to file a Notice of Exemption, and
C) Adopt Resolution No. 2021-74 (Attachment 1) which provides a funding commitment of
up to $4.21 million as local contribution toward a Homekey project upon award of State
Homekey Program grant and authorizes the City Manager, or designee, to take any and all
actions necessary to secure Homekey Program grant funds, including but not limited to
executing a local match funding commitment letter.
Alternative Action(s):
Do not approve the recommended action.
Analysis:
Background/Discussion
On September 9, 2021, the State's Housing and Community Development Department (HCD) issued
a NOFA for Homekey in the amount of $1.45 billion to sustain and rapidly expand the inventory of
housing for people experiencing homelessness or at-risk of homelessness and who are, thereby,
inherently impacted by or at increased risk for medical diseases or conditions due to the COVID-19
pandemic or other communicable diseases. The purpose of Homekey is to provide an opportunity for
state, regional, and local public entities to develop a broad range of housing types, including but not
limited to hotels, motels, hostels, single-family homes and multifamily apartments, adult residential
facilities, and manufactured housing, and to convert commercial properties and other existing
buildings to permanent supportive housing or interim housing. Homekey funds will be available to
eligible applicants on a continuous, first come, first served, over-the-counter basis.
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File #: 21-940 MEETING DATE: 12/1/2021
City staff explored Homekey opportunities in the City and identified a potential motel conversion
property consisting of the Quality Inn and Suites (66 rooms) located at 17251 Beach Boulevard. The
Developer has the property under contract for purchase and will serve as the co-applicant with the
County to cause the conversion of the motel rooms into supportive housing units and will serve as
the property management firm. The County, pending appropriate approvals, will contribute $4.92
million of funds toward the operations during years one through four. The City's $1.81 million of
HOME-ARP funds will cover year five of operations. And as previously mentioned, $2.40 million of
LMIHAF may go toward acquisition, rehabilitation and motel conversion. An award of $15.66 million
is being solicited from HCD via the Homekey program.
Proposed Project Rehabilitation
The existing structure is a three story, sixty-six unit, open-air hotel, with open corridors and units that
open onto the parking lot. The building is a mixture of 47 studio, 18 one-bedroom and 1 two-bedroom
units. Each unit receives an abundance of natural light. Overall, the existing hotel has been well
maintained. The proposed Project involves the light rehabilitation of the existing hotel to provide 64
units of interim/transitional supportive housing until such time that Project Based Vouchers (PBV) can
be obtained for a conversion to Permanent Supportive Housing (PSH), which is estimated at 3 to 5
years. The unit mix includes 31 homeless, 31 chronically homeless and two units for an on-site
manager and maintenance technician. Based on a preliminary physical needs assessment,
approximately $500,000 in repairs and upgrades are needed. Other improvements to the property
include the addition of kitchenettes in the rooms, reworking of the common areas to add office space
and other amenities, and the addition of landscaping on portions of the parking lot. The developer's
preliminary scope of work includes the following:
Site Work
Add security fencing at the front of site, restripe parking lot, upgrade / repair exterior lighting
and add security cameras.
Building Exterior
Repair walkways, roof and remove existing building signage.
Management/ Service Office and Community Center
Combine two units to create a community center for the tenants. Replace the fire alarm control
panel and add audio/communications to 2 percent of the units. Buildout the management and
service staff offices.
Building Interior
Pest control and asbestos abatement as necessary. Add kitchenettes in all units. On an as
needed basis, repair drywall, paint, replace flooring, replace ac units, replace interior lighting,
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File #: 21-940 MEETING DATE: 12/1/2021
and replace unit-plumbing fixtures.
Make code corrections in ADA units that includes, counter adjustment, bathroom
reconfigurations, cabinetry replacement, change door hardware and replace flooring.
Currently, AFH is providing services for up to five years in two motels in the City of Stanton operating
under the Homekey program. This is a bridge housing program to support participants in securing
permanent housing and ending the cycle of homelessness. The Stanton program consists of a multi-
disciplinary treatment team of clinicians and case managers who provide supportive services and
linkages to PSH for fifty-eight (58) clients at Tahiti Motel and seventy (70) clients at the Stanton Inn &
Suites.
Key Components of the Homekey Program
Target populations and subpopulations
Under the Homekey Program, the primary target populations are homeless persons or persons at risk of
homelessness. Eligible tenants would occupy this supportive housing via referral
through the Coordinated [Entry System (CFS) as required by the Homekey regulations and utilizing the
Countv%vide Homeless Management Information System (FIMIS). Both CES and HNIIS arc operated by
the Orange County Continuum of Care (CoC), with the County Health Care Agency (FICA) as lead
agency. "fhe current CIS Policy prioritizes referrals from the Service Planning Area region and the host
City. then lastly, Countvlvide.
As it is envisioned that the Project will convert to Permanent Supportive Housing (PSI-1) once and it'
Project Based Vouchers become available. the County housing authority will also follow
CIS policy for referrals. The CGS policy is determined by the CoC Board and continues to be
modified to reflect systemic priorities.
Planning Entitlement Process
The enacting legislation for the Homekey Program states that projects eligible under Homekey
are deemed allowed "by right'. Therefore, local zoning and entitlement processes that may
typically apply to a motel conversion (a Conditional Use Permit or Zone Change for example)
do not apply to Homekey projects under State law (Health and Safety Code Section 50675.1.3
Subdivision i). Operating details and conditions that would typically be addressed as part of
the planning entitlement process could be addressed as part of the acquisition/ rehabilitation
loan agreement between the City and Developer for the $2.40 million.
Ground lease, Regulatory Agreement and deed restricted affordability
The property would be acquired and encumbered by the County with a memorandum of
lease/55-year ground lease to the Developer to enforce the use, operation, occupancy and
affordability requirements under the Homekey Program.
Proposed Project Financing
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The proposed Project costs for acquisition, rehabilitation, and operations are estimated at $24.78
million, of which, $16.27 million will consist of acquisition and rehabilitation with the balance of $8.51
million consisting of operating costs for five years. The Homekey application to be submitted to HCD
will include a funding ask of approximately $15.66 million ($13.87 million for acquisition/
rehabilitation, $1.79 million for operating costs).
The County has confirmed that Project Based Vouchers are not currently available for the Project.
Therefore, in addition to the $1.79 million in proposed State Homekey funds and the City's $1.81
million of HOME-ARP funds for operating costs, the remaining $4.92 million is being solicited from
the Orange County Healthcare Agency's Office of Care Coordination (the "County CoC") for five
years of operating funds, a prerequisite of the Homekey application. As previously stated, if Project
Based Vouchers become available in the future, the Project will convert to Permanent Supportive
Housing prior to Year 5.
The City has available unencumbered funds in LMIHAF of $2.67 million and $2.20 million in HOME-
ARP funding for addressing housing and homelessness-related activities. Both fund balances are
sufficient to cover the respective $2.4 million of LMIHAF and $1.81 million of HOME-ARP funds.
Further, $900,000 will be reimbursed into the LMIHAF when the TCAC financing for the Jamboree
Senior Housing project closes in January as the City's Acquisition Loan is being repaid.
Staff is recommending the City contribution for the proposed Project would be $4.21 million
consisting of $2.40 million match for acquisition/rehabilitation, and approximately $1.81 million for
year five operating expenses. Staff is also recommending that the proposed funding for the Project
be conditionally approved upon completion of the following: 1) successful acquisition of the site by
the Developer or County; 2) receipt of sufficient County operating funding (or another non-City
funding source) to cover operating costs for years one through four in the amount of $4.92 million;
and 3) Homekey award as calculated and approved from HCD.
If one or more of the conditions outlined above are not met, th3n the proposed City Project funding,
consisting of LMIHAF and HOME-ARP funds, will remain in their respective City fund accounts for
use on other future eligible activities and the proposed Project will not move forward.
Anticipated Timeline
The Project timeline is estimated as follows:
Submittal of NOFA Homekey application By December 31, 2021
Construction start date June 1, 2022
Construction completion date March 1, 2023
Estimated occupancy date June 1, 2023
Environmental Status:
The California Legislature has granted a CEQA exemption for the Round 2 Homekey program as
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File #: 21-940 MEETING DATE: 12/1/2021
part of AB 140 (2021), its enacting legislation. The enacting legislation provided the statutory basis by
adding section 50675.1.3 to the Health and Safety Code (HSC) and it exempted certain Homekey
projects by adding section 50675.1.4 to the HSC, as per Article 1, Section 101 in the State Homekey
NOFA.
If federal dollars are used in the project, such as HUD Project Based Housing Choice Vouchers
and/or HOME or ARP funds, National Environmental Policy Act (NEPA) compliance will be required.
The State has allowed for NEPA Compliance to be acknowledged and in progress at the time of
application and completed by disbursement.
Strategic Plan Goal:
Homelessness Response
Attachment(s):
1. Resolution 2021-74
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RESOLUTION N0. 2021-74
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH DIRECTING COLLABORATION WITH THE
COUNTY OF ORANGE AND AMERICAN FAMILY HOUSING AND
NATIONAL CORE TO SUBMIT AN APPLICATION FOR HOMEKL'•Y
PROGRAM GRANT FUNDING; FINDING THE PROJECT EXEMPT
FROM THE CALIFORNIA ENVIRONMENTAL QUALITY ACT AND
DIRECTING STAFF TO FILE A NOTICE OF EXEMPTION.-
CONDITIONALLY APPROVING COMMITTING THE USE OF $4.21
MILLION TOWARD THE PROJECT AND AUTHORIZING THE CITY
MANAGER, TO TAKE ACTIONS NECESSARY TO SECURE
HOMEKEY PROJECT GRANT FUNDS.
WHEREAS, on September 9, 2021, the California Department of Housing and Community
Development (I-ICD) issued a Notice of Funding Availability (Round 2) for Project Homekey
("Homekey") in the amount of S 1.45 billion to sustain and rapidly expand the inventory of housing
for people experiencing homelessness or are at-risk of homelessness and who are, thereby,
inherently impacted by or at increased risk for medical diseases or conditions due to the COVID-
19 pandeanic or other communicable diseases: and
WHEREAS, the purpose of Homekey is to provide an opportunity for state, regional, and
local public entities to develop a broad range of housing types, including but not limited to hotels,
motels, hostels, single-family homes and multifamily apartments, adult residential facilities, and
manufactured housing, and to convert commercial properties and other existing buildings to
permanent supportive housing or interim housing; and
WHEREAS. Homekev funds will be available to eligible applicants on a continuous, first
come, first served, over-the-counter basis; and
WHEREAS, The City of Huntington Beach ("City") desires to collaborate with American
Family Housing and National CORE (collectively, the "Developer') and the County of Orange
("County") to submit an application for the Homekey program grant funding for the acquisition,
rehabilitation and conversion of the motel located at 17251 Beach Boulevard, Huntington Beach
(the "Project"); and
WHEREAS. the estimated total Project costs for acquisition, rehabilitation, conversion and
operations of the Project for years one through five are $24.78 million, of which $1627 million
will consist of acquisition and rehabilitation costs with the balance of SS.J1 million consisting of
operating costs for five years; and
WHEREAS. the City contribution to the proposed Project would be $4.21 million
consisting of $2.40 million of Low and Moderate Income Housing Asset Fund (LMIFIAF) for
acquisition, rehabilitation, and conversion of the rooms into supportive housing units, and
approximately SI.81 million of HOME Investment Partnerships-American Rescue Plan Act
(HOME-ARP) funds the fifth year of operating costs: and
RESOLUTION NO. 2021-74
WHEREAS, pending appropriate approvals, Orange County Healthcare Agency's Office
of Care Coordination ("County CoC') will contribute $4.92 million of the SS.51 million in
operating funds needed; and
WHEREAS, the County, and Developer as co-applicant, will apply to HCD for an award
of I-Iomekev Funds in the amount of 515.66 million for the Project; and
WHEREAS, as part of the Project 1-lomckey program, an evaluation of potential relocation
of permanent tenants, if any, will be conducted: and
WHEREAS, funding commitments are required to ensure the Homekey application is
complete and competitive.
NOW. THEREFORE, the City Council of the City of Huntington Beach. DOES HEREBY
RESOLVE'- as follows:
Section 1. The foregoing recitals are true and correct and incorporated herein by this
reference.
Section 2. The City Council hereby finds and determines that the Project is exempt from
the California Environmental Quality Act (CEQA) pursuant to AB 140 (2021) (the "Homekey
Program") and Sections 50675.1.3 and Section 50675.1.4 of the Health and Safety Code and
directs staff to file a Notice of Exemption.
Section 3. The City Council hereby approves the conditional funding of the proposed
Project in the amount of 54.21 million consisting of 52.40 million in LMIHAF matching funds and
$1.81 million in HOME-ARP funding based upon the following conditions precedent:
a) Developer or County's successful acquisition of the proposed Project site:
b) Receipt of sufficient County CoC finding, or another non-City funding source, to
cover years one through four of operating costs associated with the proposed
Project in the amount of$4.92 million: and
c) HCD award of I iomekev funding in the amount of$15.66 million.
Section 4. If one or more of the conditions outlined in Section 2. above are not met then
the proposed Project funding, consisting of LMIHAF and HOME-ARP funds, will remain in their
respective City fund accounts for use on other future eligible activities as determined by the City
Council and the proposed Project will not move forward.
Section 5. In the event that relocation of permanent residents is required as part of the
Project, the Director of Community Development is delegated the authority to evaluate and
approve any Relocation Plan and associated documents with approval as to form by the City
Attorney.
21-10740/272265
RESOLUTION NO. 2021-74
Section 6. The City Nlanager, or designee, is delegated the authority to take any and all
actions necessary to secure Flomekey Program grant funds, including but not limited to executing
a local match funding commitment letter.
Section 7. This resolution shall take effect immediately upon its adoption.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a
special meeting held on the 1" day of December, 2021.
Mayor
REVIEWED AND APPROVED: APPROVED AS TO PORr4:
Ci
City i 4anagcr ity Attorney Oil
INITIATED AND APPROVED:
1 - �—
Director of Community Development
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21-10740/272265
Res. No. 2021-74
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk
of the City of Huntington Beach, and ex-officio Clerk of the City Council of
said City, do hereby certify that the whole number of members of the City
Council of the City of Huntington Beach is seven; that the foregoing resolution
was passed and adopted by the affirmative vote of at least a majority of all the
members of said City Council at a special meeting thereof held on
December 1, 2021, by the following vote:
AYES: Bolton, Delgleize, Carr, Posey, Moser, Kalmick,
NOES: None
ABSENT: Peterson
ABSTAIN: None
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
Switzer, Donna
From: Fikes. Cathy
Sent: Tuesday, December 7, 2021 liS7 PM
To: Agenda Alerts
Subject: FW: Request from Huntington Beach residents to pursue affordable housing funding
Attachments: HHAW 2021 Huntington Beach.pdf
From: Elizabeth Hansburg P4H<elizabeth@peopleforhousing.org>
Sent:Thursday, December 2, 20219:43 AM
To: Kalmick, Dan<Dan.Kalmick@surfcity-hb.org>; Delgleize, Barbara <Barbara.Delgleize@surfcity-hb.org>; Posey, Mike
<Mike.Posey@surfcity-hb.org>;Carr, Kim<Kim.Carr@surfcity-hb.org>; Moser, Natalie<Natalie.Moser@surfcity-hb.org>;
Peterson, Erik<Erik.Peterson @surfcity-hb.org>; Bolton, Rhonda <Rhonda.Bolton@surfcity-hb.org>
Cc: Homeless United Huntington Beach<homelessunitedhb@gmail.com>; Fikes,Cathy<CFikes@surfcity-hb.org>
Subject: Request from Huntington Beach residents to pursue affordable housing funding
Dear Mayor and Councilmembers,
As part of Hunger and Homelessness Awareness Week, we built a coalition of people and organizations
concerned about housing and homelessness to ask the city councils in OC cities councils to pursue the new and
existing state funding to build affordable housing and supportive housing. The coalition partners include:
People for Housing OC YIMBY
United Way of Orange County
Kennedy Commission
League of Women Voters of Orange County (all chapters)
Pathways of Hope
Women for OC
San Clemente Affordable Housing Coalition
Costa Mesa Affordable Housing Coalition
Homeless United Huntington Beach
Housing is a Human Right OC
Welcoming Neighbors Home
We have drafted a coalition letter and residents who support these policies signed on to show their support to
their city council representatives. Every city must do it's part to house our neighbors in need, and the residents
who signed on are supportive of your pursuit of these funds. We hope you will act to increase the supply of
affordable housing and supportive housing that Orange County so desperately needs. Thank you for your
consideration.
Elizabeth Hansburg
Co-Founder& Executive Director
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PEOPLE FOR HOUSING
Orange Count'
[. (714) 872-1418
e. clizabethAmooleforhousinc�.org
Click here to become a member of People for Housing!
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