REPORT TO COUNCIL
SUBJECT
Title
Consider Conditional Award of Up to $5 Million in Housing Mitigation Funds to MidPen Housing for New Affordable Housing Project to Be Developed at 460 Persian Drive
Report
BACKGROUND
The City received an average of nearly $5.8 million in Housing Mitigation (HM) fee and loan repayment revenues to the HM fund in each of the prior two fiscal years (FY 2012-13 and 2013-14), and is projected to receive over $6.8 million in HM fees alone in the current fiscal year (FY 2014-15). In addition, the City receives Below Market Rate (BMR) in-lieu fees and various other deposits to the Combined Housing Fund (Fund 70), as shown in the Long Range Financial Plan on page 195 of the Adopted Budget. Staff plans to issue a similar request for proposal (RFP) for a combined total of $8-10 million in HM, BMR In-Lieu, and/or Redevelopment Agency (RDA) Housing Set-Aside funds, to be available for new affordable housing proposals in the coming fiscal year, as nearly $20 million is projected to be available in the Combined Housing Fund reserve as of July 1, 2015. Local project funding requests for new housing projects tend to be in the $4 to $7 million range, due to the rising cost of land, construction, and the local funding scoring formulas used by the California Tax Credit Allocation Committee (CTCAC), which provides the bulk of the financing for most affordable rental projects.
In February of 2014 the Housing Division released an RFP for new affordable housing projects to be funded with the City's Housing Mitigation Fund, which is generated from impact fees charged to new high-intensity industrial developments. A total of $6 million was made available through that RFP, which, if fully awarded, would utilize only about one-third of the total funds available ($18.7 million) in the Housing Mitigation Fund reserve in FY 2014-15, according to the Adopted Budget. One award of $1 million was approved by Council as part of the FY 2014-15 Adopted ...
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