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HomeMy WebLinkAbout2001-01-22 City Council (13)City of Palo Alto City Manager’s Repor HONORABLE CITY COUNCILTO: FROM:CITY MANAGER DEPARTMENT: PLANNING AND COMMUNITY ENVIRONMENT DATE:JANUARY 22, 2001 CMR:116:01 SUBJECT:APPROVAL OF BUDGET AMENDMENT ORDINANCE TO FUND A CONTRIBUTION TO THE HOUSING TRUST OF SANTA CLARA COUNTY IN THE AMOUNT OF $500,000 FROM THE RESIDENTIAL HOUSING IN-LIEU FUND RECOMMENDATION Staff recommends that the City Council adopt the attached Budget Amendment Ordinance to appropriate $500,000 in Residential Housing In-Lieu Funds to contribute to the Housing Trust of Santa Clara County as authorized by Council on October 23, 2000 (CMR:393:00). BACKGROUND The purpose of the Housing Trust is to increase local funding for affordable housing development and assistance within Santa Clara County. The Trust is an innovative and significant effort to address the area’s affordable housing crisis. By successfully generating new funds for housing within the County, the Trust will attract and leverage additional housing funding from outside sources which would not otherwise have been available. The Housing Trust is organized as a private, non-profit entity with its governing board ¯ composed of representatives from the County of Santa Clara, the cities, business, the housing industry and non-profit providers of housing and homeless services. Palo Alto’s contribution is being made in response to the Trust’s $20 million capital campaign to establish its initial loan fund. Contributions have been made to the Trust from major employers, private foundations and public jurisdictions including the County and five other cities. A total of $17 million has been committed-to the trust fund to date. The Housing Trust is ready to begin making loans as soon as the capital campaign goal is met. DISCUSSION There are two Palo Alto housing projects currently in the predevelopment stage that would be eligible for funding from the Housing Trust. These projects are the family housing development on the South of Forest ~Area (SOFA) Plan site and the Opportunity Center project for homeless services and housing. At this time, the amount of local housing subsidies that will be needed for these two major housing projects is not known, but the total funds needed will likely be substantial. J CMR:116:01 Page 1 of 3 Participating in the Housing Trust should help increase the available housing funding for Palo Alto projects.~ By restricting the. City’s contribution to projects that are located within Palo Alto, the City is ensuring that at least our original contribution will be available to local housing developers. Because about 60 percent of the Housing Trust’s contributions come from the private sector, and some of the public sector funds do not have locational restrictions, there should be additional funds potentially avaiiable for Palo Alto projects. RESOURCE IMPACT Approval of the BAO for $0.5 million will reduce the available unrestricted balance in the Residential Housing In-Lieu Fund from approximately $1.9 million to $1.4 million. However, because only housing projects located within Palo Alto will be eligible for funding from the City’s contribution, the funds will still be used to meet Palo Alto’s housing needs. Should all, or a portion, of the contribution not be expended or committed within 36 months of the execution of the Agreement, then the remaining funds must be returned to the City. ¯ POLICY IMPLICATIONS This action does not represent any change to current City policies. TIMELINE Alter Council adoption of the BAO, the City Manager will execute the attached Agreement that governs the terms of the City’s contribution to the Housing Trust. The City’s funds will be transferred to the Community Foundation of Silicon Valley (the fiscal agent for the Housing Trust) within 30 days of the execution of the formal agreement. ENVIRONMENTAL REVIEW This action is not subject to the Califomia Environmental Quality Act. ATTACHMENTS ’ A. Budget Amendment Ordinance to Appropriate Funds for a City Contribution to the Housing Trust of Santa Clara County B. City of Palo Alto Housing Reserve Guidelines PREPARED BY: Catherine Siegel, Housing Coordinator DEPARTMENT HEAD REVIEW: G. EDWARD GAWF Director of Planning and Community Environment CMR:116:01 Page 2 of 3 CITY MANAGER APPROVAL: AUDREY SEY~C[OUI~ Assistant to the City Manager CC:Housing Trust of Santa Clara County CMR: 116:01 Page 3 of 3 Attachment A ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 2000-01 TO PROVIDE AN ADDITIONAL APPROPRIATION OF $500,000 FROMTHE RESIDENTIAL HOUSING IN-LIEU FUND FOR CONTRIBUTION TO THEHOUSING TRUST OF SANTA CLARA COUNTY WHEREAS, pursuant to the provisions of Section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 19, 2000 did adopt a budget for fiscal.year 2000-01; and WHEREAS, on October 23, 2000 the City. Council adopted~a motion pledging a contribution of $500,000 from the Residential Housing In-Lieu Fund to the Housing Trust of Santa Clara County; and WHEREAS, the purpose of the housing trust is to increase local funding, for affordable housing development and assistance within Santa Clara County; and WHEREAS, City participation in the housing trust is anticipated to increase the available funding for affordable housing projects in Paio Alto; and WHEREAS,sufficient funds are available within the Residential Housing-In-Lieu Fund; and WHEREAS, the additional appropriation of funds requested from the Housing In-Lieu Fund is for a one-time cost and no future year ongoing costs are anticipated; and WHEREAS, City Council authorization is needed to amend the 2000-01 budget as hereinafter set forth. NOW, THEREFORE, The Council of the City of Palo Alto does ordain as follows: SECTION i. The sum of Five Hundred Thousand Dollars ($500,000) is hereby appropriated to non-salary expenses in the Residential Housing In-Lieu Fund. SECTION 2. This transaction will reduce the Residential Housing-In-Lieu Fund reserve from $1,936,491 to $1,436,491. SECTION 3. As specified in Section 2.28.080 (a) of the Palo Alto Municipal Code, a two-thirds vote of the City Council is required to adopt this ordinance. SECTION 4. The Council of the City of Palo Alto hereby finds that this project is exempt from the provisions of the California Environmental Quality Act, and therefore, no environmental impact assessment is necessary. SECTION 5. As provided in Section 2.04.350 of the Palo Alto -Municipal Code, this ordinance shall become effective upon adoption. INTRODUCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: ATTEST:APPROVED: City Clerk Mayor APPROVED AS TO FORM:City Manager Senior Asst. City Attorney Director of Administrative Services CITY OF PALO ALTO HOUSING RESERVE GUIDELINES1 Attachment B Purpose The Housing Reserve (the Reserve) is. a separate City fund set aside for the specific purpose of assisting in the development of housing that is affordable to low, moderate and middle income families and in assisting in the housing needs of low and moderate income persons. All monies contributed to the Reserve and interest earnings accrued shall be used solely, for these purposes, subject to guidelines set forth below. The Reserve is made up of two accounts, the "Industrial-Commercial" and the "Residential- Miscellaneous" accounts. Monies received from industrial and commercial developers, pursuant to Chapter 16.47 of the Palo Alto Municipal Coo~ are deposited by the City Finance Department in the Industrial-Commercial account. Monies received from residential developers, in-lieu of providing housing under the City’s Below Market Rate (BMR) Program (Program 13 of the Housing Element), are deposited by the Finance Department in the Residential-Miscellaneous account. This second account also includes monies from miscellaneous sources that are intended for housing purposes (e.g., Mortgage Revenue Bond fee payment, Webster Wood payments, and any repayment of loans from the Reserve). Eligible Uses The Reserve will be used to reduce the cost of housing to levels that are affordable to low, moderate and middle income families, as defined in the City’s Comprehensive Plan. A preference will be given to projects with housing for families with minor children; however, this preference does not preclude the use of funds for other types of housing affordable to the low, moderate and middle income. Monies that have been credited to the Industrial- Commercial account must be used to Support the Construction of new housing development, whereas monies credited to the Residential-Miscellaneous account may be used for either new or existing housing. However, no-interest loans may be made ona case-by-case basis as determined by the City Council from the Industrial-Commercial account to the Residential- Miscellaneous account to support the acquisition of existing housing to be used for low and moderate income families. Eligible uses include, but are not limited to, the following: Eligible Uses in Support of New Low/Moderate/Middle Income Housing Development 1. Purchase of land or air rights fo~: resale to developers at a reduced cost to facilitate housing development for low, moderate and middle income households; Reduction of interest rates for construction loans or permanent financing used by developers or purchasers of low, moderate and middle income housing; 1Approved by Palo Alto City Council on February 3, 1986, amended November 19, 1990 2Including payments required pursuant to the California Environmental Quality Act Prior to enactment of Chapter 16.47 Payment of predevelopment anddevelopment costs, including the costs associated with obtaining Mortgage Revenue Bond financing; and. Payment of off-site costs directly relating to low, moderate and middle income housing development (e.g., utility connections, road improvements). ¯ Eligible Uses in Support of Existing Low/Moderate Income Housing - 1. Costs in support of the City’s Rental Housing Acquisition Program; and 2.Reasonable expenses necessary to administer the City’s Below Market Rate Program or other City-Sponsored housingprograms. Procedures Request for use of the Reserve funds shall be submitted to the City Manager for review and recommendation to the City Council. A request for funding should provide the following minimum information: 1. Size of loan or grant requested; o A description of the proposal to be funded and the organizations involved in the project. Public benefit and relevant Comprehensive Plan Housing policies and programs should be identified; o Identification of the number of low, moderate and middle income persons to be assisted and the specific income range of those assisted; 4.Reasons why a grant, rather than a loan, is requested (if. applicable); °Identification of loan rate and terms, security or collateral and source of repayment funds (if applicable); and Identification of leverage achieved through City grant or loan. Audit At the close of each fiscal year, the Director of Finance and the Director of Planning and. Community Environment shall report on activity during the previous year (deposits and transfers) and available funds. The City Auditor’s Office shall periodically examine this report and all Housing Reserve funds, and shall report on the results of this examination. h: vict/hou sing/hsgresrv, gdl rev.7/97