Report Prepared by: Leah Brown, Management Analyst, Development Services Department
Title
SUBJECT: Approval of American Rescue Plan Act Grant Agreement, Water and Sewer Connection Fees Loan, Deed Restrictions, Affordability Covenants, and Related Grant Documents with Visionary Homes Builders of California, Inc for the Bella Vista Affordable Housing Project on Parsons Avenue
REPORT IN BRIEF
Considers approving the American Rescue Plan Act (ARPA) Grant Agreement and Water & Sewer Connection Fees Loan Agreement with Visionary Home Builders of California, Inc. (VHB) along with Restrictions and Covenants related to the grant and loan for the Bella Vista affordable housing project on Parsons Avenue.
RECOMMENDATION
City Council - Adopt a motion:
A. Approving Resolution 2024-94, A Resolution of the City Council of the City of Merced, California, Approving a grant to visionary home builders of California, Inc. on behalf of VHB Bella Vista, LLC from Coronavirus local fiscal recovery funds as established under the American Rescue Plan Act in the amount of $3,500,000, 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 Resolution 2024-95, A Resolution of the City Council of the City of Merced, California, approving a water and sewer connection fee loan to Visionary Home Builders of California, Inc. on behalf of VHB Bella Vista, LLC., in the principal amount of $1,003,683.20 approving and authorizing the execution of a loan agreement, and related loan documents, and authorizing certain other actions in connection therewith; and,
C. Authorizing the City Manager to make any minor changes to the agreements should any edits be necessary, subject to the agreements and/or documents being approved as to form by the City Attorney; and,
D. Authorizing the Finance Officer to make any necessary budget adjustments to fulfill the intent of the agreements; and,
E. Authorizing the City Manager to execute all agreements and documents to fulfill the terms and conditions of the agreements and any future documents that may be necessary for the project, subject to the agreements and/or documents being approved as to form by the City Attorney.
Body
ALTERNATIVES
1. Approve as requested by City Staff; or,
2. Deny; or,
3. Refer to City Staff for reconsideration of specific items to be addressed in City Council motion; or,
4. 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, et seq
CITY COUNCIL PRIORITIES
This action is consistent with the adopted FY 2024-2025 Goals and Priorities, and Pro-Housing Policies of the City of Merced.
DISCUSSION
Visionary Homes Builders of California (VHB) intends to build a 108-unit completed affordable apartment complex on a 4.59-acre parcel at 1808 Parsons Avenue in the City of Merced. The 108 apartments will include 6-one-bedroom units, 60 two-bedroom units, 30 three-bedroom units, and 12 four-bedroom units, making the project versatile and available for single individuals to families.
On March 23, 2022, the Planning Commission of the City of Merced, considered and recommended that the City Council approve Density Bonus #22-01, initiated by VHB. The project called Bella Vista Apartments is 100% affordable for those at or below 60% of the Area Median Income (AMI).
The City Council approved a Mitigated Negative Declaration -Environmental Review for a General Plan Amendment and Zone Change for Bella Vista Apartments changing the General Plan land use designation from Thoroughfare Commercial (CT) to High-Medium Density (HMD) Residential and approving a Legislative Action Agreement on May 2, 2022. At the same meeting, City Council approved the Density Bonus and Affordable Housing Regulatory Agreement, which was exempt from review under the California Environmental Quality Act (CEQA). The Density Bonus was to allow them to have relief from certain design standards, like roof-mounted air conditioning units. The development will feature five three-story buildings and one single-story Community Center.
Community Amenities include:
- Full kitchens, pantry cabinets, and interior laundry rooms with washers and dryers
- ADA accessible/adaptable first-floor units
- 7,100 sq. ft. Community Center with a leasing office
o Head Start Childcare Services
o Computer Lab
o Teen Center
- Two playgrounds: one for young children and one for older children
- Basketball court
Visionary Property Management Group (VPMG), a division of Visionary Home Builders, will manage the property. VPMG oversees a portfolio of 26 properties, including tax credit communities, HUD developments, and USDA Rural Development Programs. VPMG is committed to fair housing and provides ongoing employee training on Fair
Housing laws.
On May 31, 2022, City Council, authorized a commitment of $3.5 Million in American Rescue Plan Act (ARPA) funding toward the Bella Vista Apartments project. Also authorized was a residual receipt loan for City related services for water and sewer connection fees. There is a requirement to pay an estimated deposit of $44,000 to Engineering before water is turned on, this is not included in the loan of funds.
In February 2023, the California Department of Housing and Community Development announced their Super NOFA awardees. The Bella Vista project was awarded a total of $25,122,245. The award included $6,059,305 from the Joe Serna Jr. Farmworker Housing Grant Program and $19,062,940 from the Multifamily Housing Program. The total project cost is expected to be $70.7 Million. Future actions will include a Public Hearing for consideration of the issuance of revenue bonds to complete the financing.
Construction is anticipated to start in February 2025, with completion expected by October 2027 and full occupancy is aimed for the same month.
The actions requested by Council are the culmination of the financial awards granted by the City in May 2022.
IMPACT ON CITY RESOURCES
The project would impact City services by creating additional housing units that would require typical City services. The project would be required to pay Public Facilities Impact Fees at the time of building permit issuance. However, as an affordable housing project and in-fill development, those fees will be reduced. As an affordable housing project, the property owner has applied for a Welfare Exemption for property taxes that would preclude the City from collecting any special taxes for this property. Additionally, certain laws preclude the City from charging for police and fire services through the Community Facilities District (CFD). The process for annexation into the CFD is costly (approximately $30,000) and would be the responsibility of the developer. Therefore, because of these reasons, staff has determined that this project should not be annexed into the CFD.
Approval of these Resolutions and actions requires an affirmative vote of 5 Council Members to pass.
ATTACHMENTS
1. Funding Commitment Letter
2. Admin Report 22-215 - Environmental Review and General Plan Amendment
3. Admin Report 22-217 - Density Bonus
4. Resolution 2024-95
5. Water and Sewer Connection Fee Loan
6. Resolution 2024-94
7. ARPA - Regulatory Agreement and Declaration of Restrictive Covenants
8. ARPA - Deed Restriction Covenant and Grant Agreement
9. ARPA - Agreement Containing Covenants Affection Real Property
10. ARPA - Notice of Affordability Restrictions on Transfer of Property
11. Slide Presentation