REPORT TO COUNCIL
SUBJECT
Title
Consider Request from Charities Housing for Forgiveness or Extension of $100,000 Community Development Block Grant (CDBG) Loan for HomeSafe Santa Clara
Report
SUMMARY OF COMMISSION ACTION
The Housing and Human Services Commission considered this item on June 26, 2024 (see Attachment 1 for Report to Housing and Human Services Commission).
The Housing and Human Services Commission voted 6-0 (Commissioner Riviere was absent) to approve Alternative 3: Do not approve the CDBG Loan Forgiveness or Extension Request from Charities for HomeSafe Santa Clara, and require the loan be due and payable upon HomeSafe demolition in accordance with the Loan Agreement.
FISCAL IMPACT
If the request to forgive the CDBG loan is approved, it would reduce projected loan payment revenues to the CDBG Revolving Loan Fund in 2055 by $265,107 including principal and interest. If the request to extend the loan is approved, the City would not collect payment on the loan until approximately 2080.
If neither forgiveness nor extension is approved, the CDBG Revolving Loan Fund would receive approximately $170,000 in principal and interest if the HomeSafe demolition occurs (with additional interest if delayed), or $265,107 in 2055 if the loan is active through maturity.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Approve the CDBG Loan Forgiveness Request from Charities for HomeSafe Santa Clara and waive all financial requirements of the loan agreement and authorize the City Manager to enter into a loan forgiveness agreement.
2. Approve the CDBG Loan Extension Request from Charities for HomeSafe Santa Clara for a new 55-year term and Authorize the City Manager to enter into an amendment to the Loan Agreement and an agreement to subordinate to new funding sources for new construction.
3. Do not approve the CDBG Loan Forgiveness or Extension Request from Charities for HomeSafe Santa Clara, and require the loan be due and payable upon HomeSafe demolition in accordance with the Loan Agreement.
4. Other Council Direction.
STAFF RECOMMENDATION
Recommendation
Alternative 3: Do not approve the CDBG Loan Forgiveness or Extension Request from Charities for HomeSafe Santa Clara, and require the loan be due and payable upon HomeSafe demolition in accordance with the Loan Agreement.
JUSTIFICATION FOR RECOMMENDATION
While the financial stability of Charities and the HomeSafe services are important, the difficulty of maintaining an appropriate balance in the City’s Revolving Loan Fund (RLF) impacts the ability to fund critical housing repairs for low income residents and the staffing to manage these city housing programs. While the City does not wish for Charities to be burdened with an earlier payment schedule, the project transition from community living to standard affordable housing will prioritize City of Santa Clara residents, and Sunnyvale residents may have a lower priority access to the new housing. Additionally, the repayment of this CDBG loan would allow the City to allocate additional funding to the City’s Home Improvement Program which will benefit lower income Sunnyvale residents in future years.
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html
A check or “Y” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
_X_ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract
___ Labor or personal employment contract
___ General policy and legislative actions
Staff
Prepared by: Matthew Hazel, Housing Programs Analyst
Reviewed by: Amanda Sztoltz, Homeless Services Manager
Reviewed by: Jenny Carloni, Housing Officer
Reviewed by: Trudi Ryan, Director, Community Development
Reviewed by: Connie Verceles, Deputy City Manager
Approved by: Tim Kirby, Interim City Manager
ATTACHMENTS
1. Report to Housing and Human Services Commission [24-0712, June 26, 2024] (without attachments)
2. Existing Loan Agreement for HomeSafe Santa Clara
3. Loan Strategy Request from Charities Housing
Additional Attachments for Report to Council
4. Excerpt of Draft Minutes of the Housing and Human Services Commission Meeting of June 26, 2024