Report Prepared by: Leah Brown, Management Analyst, Development Services Department
Title
SUBJECT: Adoption of a Resolution Authorizing the Recently Approved Housing Successor Agency Grant of $200,000 to CC915 Merced, Inc., Appropriating the Funds, and Authorizing the Execution of a Grant Agreement, Regulatory Agreement, and Related Covenants and Restrictions
REPORT IN BRIEF
Considers adopting a resolution authorizing the recently approved Housing Successor Agency Grant of $200,000 to CC915 Merced, Inc., appropriating the funds, and authorizing the execution of a Grant Agreement, Regulatory Agreement, and related covenants and restrictions for the affordable container home project.
RECOMMENDATION
City Council - Adopt a motion:
A. Adopting Resolution 2025-17, a Resolution of the City Council of the City of Merced, California, acting as the Housing Successor Agency to the City of Merced Redevelopment Agency, Approving a Housing Successor Grant to CC915 Merced, Inc. in the Principal Amount of $200,00., Approving and Authorizing the Execution of a Grant Agreement, Regulatory Agreement and related Grant Documents, and Authorizing certain other actions in connection therewith; and,
B. Approving a Deed Restriction Covenant and Grant Agreement, Regulatory Agreement and Declaration of Restrictive Covenants, Notice of Affordability Restrictions on Transfer of Property, and Agreement Containing Covenants Affecting Real Property for the CC915 Merced, Inc. affordable container home project; and,
C. Approving a Supplemental Appropriation in the amount of $200,000 from Fund-2513 Low Moderate-Income Housing; and,
D. Authorizing the City Manager to execute necessary documents and to make de minimis administrative changes if needed.
Body
ALTERNATIVES
1. Approve as requested by City Staff; or,
2. Approve, with modifications; or,
3. Deny; or,
4. Refer to City Staff for reconsideration of specific items to be addressed in City Council motion; or,
5. Continue to a future City Council meeting (date and time to be specified in City Council motion).
AUTHORITY
Charter of the City of Merced, Section 200.
CITY COUNCIL PRIORITIES
As provided for in the 2024-2025 Adopted Budget and the City Council’s Pro-Housing Policies.
DISCUSSION
In April 2021, CC915 Merced, Inc., then Custom Containers 915, responded to the City’s proposal for affordable developers. The City Council supported their container home project and provided authority to enter into an Exclusive Negotiation Agreement (ENA) for the land at 73 South R Street.
On January 18, 2022, City Council approved a joint Homekey grant application between CC915 Merced, Inc. and the City of Merced. The project is an innovative container home development that includes 20 studio units and one manager’s unit built from repurposed shipping containers. It is deed restricted for residents that are at 30% or below the average median income (AMI) and will house homeless veterans, or others that are homeless or at risk of homelessness. This project will provide a permanent supportive community in partnership with the Merced Rescue Mission, a local nonprofit service provider, that will assist in site management and other services.
The land itself was considered in kind support and had a vacant appraised value of $110,000. The Homekey funding is the only financial support to date for this project.
In March 2022, HCD announced that the City of Merced and CC915 Merced, Inc. was awarded $4,420,000 of Homekey Program grant money. The HCD Standard Agreement was fully executed on April 21, 2022.
On August 18, 2022, the City executed the Disposition and Development agreements for the transfer of the property to CC915 Merced, Inc.
In January 2023, the City experienced significant flooding and a State of Emergency was declared. Site work paused until the ground could dry out enough to continue.
On July 28, 2023, the founder and President of CC915, Merced Inc., Mr. John Glavin, passed away unexpectedly. As the project continued under new leadership, some issues were discovered that caused further delay, the final plan set was completed by the architect in October 2023.
In April 2024, the certifying company that needed to approve the containers in Texas completed their inspection and gave its stamp of approval.
In September 2024, all containers were on site and in place.
To complete the project, the developer requested a $200,000 contribution from the City, in addition to some outside financing that they are pursuing. Currently, the project is over 90% complete, with an expected completion of early Spring 2025.
On February 18, 2025, City Council approved granting $200,000 from the Housing Successor Agency’s Fund 2513 - Low Moderate-Income Housing. This grant will have restrictions equal to the Homekey grant, such as limiting the tenants to those at 30% or below the AMI. The project will house homeless veterans or others that are homeless or at risk of homelessness. The project will have affordability covenants that restrict this affordability level for 55 years from the date of occupancy.
IMPACT ON CITY RESOURCES
The $200,000 will come from Fund 2513 - Low Moderate-Income Housing. This fund has a balance of approximately $1.8 Million after direct and indirect administration for the Housing Division.
ATTACHMENTS
1. Resolution 2025-17
2. Deed Restriction Covenant and Grant Agreement
3. Regulatory Agreement and Declaration of Restrictive Covenants
4. Notice of Affordability Restrictions on Transfer of Property
5. Agreement Containing Covenants Affecting Real Property