Stefan T. Chatwin, Executive Director/City Manager

Resolution HA2020-03 of the Fairfield Housing Authority Approving the Execution of a Disposition, Development, and Loan Agreement with MP 1700 Santa Monica Associates, L.P. to Support the Creation of New Affordable Housing on Certain Real Property Owned by the Fairfield Housing Authority in the City of Fairfield, California, and Authorizing Certain Related Actions; 

and Resolution 2020-18 of the City Council of the City of Fairfield Approving the Execution of an Affordability Restrictions and Regulatory Agreement (Density Bonus; Fee Referral; Fee Credits) and a Fee Deferral Agreement with MP 1700 Santa Monica Associates, L.P. to Support the Creation of New Affordable Housing on Certain Real Property Owned by the Fairfield Housing Authority in the City of Fairfield, California, and Authorizing Certain Related Actions

Adopt resolutions.

The FHA owns four parcels of land in the City of Fairfield totaling approximately 3.5 acres in size and collectively known as “1700 Santa Monica”. These properties are also known as Assessor’s Parcel Numbers 0037340010, 0037340190, 0037053700 and 0037053560. 

On June 28, 2011, the Governor signed into law Assembly Bill Xl 26, as subsequently amended by AB 1484, which provided for the dissolution and winding down of redevelopment agencies throughout the State of California ("Dissolution Legislation"). On January 24, 2012, pursuant to the Dissolution Legislation, the City of Fairfield elected to be the Successor Agency ("Successor Agency") to the Redevelopment Agency of the City of Fairfield ("Agency") to administer the dissolution and winding down of the Agency. On February 1, 2012, the Agency was dissolved and, upon dissolution, all assets, properties and contracts of the Agency were transferred, by operation of law, to the Successor Agency pursuant to the terms of the Dissolution Legislation.  The Successor Agency transferred the housing assets of the former Agency, including 1700 Santa Monica, to the FHA, which now administers these assets as the housing successor to the former Agency. The FHA also administers moneys in a low and moderate income housing asset fund (the “Housing “Fund”). 

FHA staff have been working with MidPen Housing Corporation (“MidPen”) to pursue development of 1700 Santa Monica for affordable housing. MidPen is a non-profit developer, owner, and manager of affordable housing and has been in operation for over 45 years and has developed over 100 communities and 8,000 homes for low-income families, seniors, and special needs individuals throughout Northern California. MidPen currently owns and operates one affordable housing development in the City of Fairfield, known as Sunset Creek, near the intersection of Travis Boulevard and Sunset Creek that is adjacent to Dover Park and 1700 Santa Monica.

Based on its history in the City of Fairfield and Northern California, MidPen has demonstrated the ability to develop and operate affordable housing projects that serve extremely low, very low, and low income households. MidPen has proposed to develop and operate 71 units of permanent supportive affordable housing, plus one manager’s unit and community space, at 1700 Santa Monica, and provide case management services and residence programs. The FHA will require 35 of the proposed units to be restricted for rental at affordable rents to extremely low income households (having incomes that do not exceed 30% of the area median income for Solano County, adjusted for family size (“AMI”)).  The City will require 11 of the units to be restricted for rental at affordable rents to very low income households (having incomes that do not exceed 50% of the AMI) and 18 of the units to be restricted for rental at affordable rents to low income households (having incomes that do not exceed 80% of the AMI). Thirty-four of the units would be reserved for homeless transitional housing and 36 units would be reserved for recipients of Project Based Vouchers (PBVs).  All of the units are restricted for affordable housing on account of the tax credits or other financing being secured and a regulatory agreement will be recorded separately for those funding sources including the City’s Regulatory Agreement.    

The chart below shows the units being restricted at 30% by the FHA Regulatory Agreement and the balance of units that are restricted by the Tax Credits or other funding sources. 

The City of Fairfield has an adopted Housing Element that demonstrates that it has a significant need for additional housing units for households within the income levels of 30% of AMI, 50% of AMI, and 60% of AMI. Further, in January of 2017, the Fairfield City Council adopted a revised Homeless Strategy that, among other components, includes developing new permanent supportive housing for homeless individuals.

On December 18, 2018, the FHA Board approved Resolution No. HA2018-20 authorizing the commitment and expenditure of up $2,000,000 for fiscal year 2018-2019 and fiscal year 2019-2020 from the Housing Fund for pre-development and development activities to support the development of affordable units at 1700 Santa Monica. The FHA and MidPen entered into a Pre-Development Loan Agreement and Promissory Note, whereby $1,300,000 was initially appropriated from the Housing Fund to support pre-development costs during Fiscal Year 2018-2019 and Fiscal Year 2019-2020, with the remaining $700,000 to be utilized for construction activities during Fiscal Year 2019-2020 and Fiscal Year 2020-2021. 

MidPen has provided pro-forma documentation to the FHA demonstrating that it will need additional financial support from the FHA for the creation of the affordable units at 1700 Santa Monica. MidPen has requested the FHA to enter into a Disposition, Development and Loan Agreement (the “DDLA”) with MP 1700 Santa Monica Associates, L.P. (an affiliated limited partnership formed by MidPen) (“MP”) pursuant to which the FHA will appropriate an additional $200,000 from the Housing Fund during Fiscal Year 2019-2020 to support the development of the affordable units.  There is adequate money in the Housing Fund to provide such support. 

The DDLA provides for the FHA to convey 1700 Santa Monica, which has an appraised market value of $2,287,000, to MP for no purchase price.  The DDLA also provides for the FHA to make a loan to MP in the amount of $2,200,000, consisting of the $1,300,000 predevelopment loan previously approved pursuant to the 2018 Pre-development Loan Agreement and a $900,000 construction loan, which shall be evidenced by a promissory note executed by MP pursuant to the DDLA.  The sums outstanding under the 2018 Pre-development Loan Agreement will, at the close of escrow on the property, be deemed outstanding under the new promissory note and no sums shall thereafter be payable by MidPen under the 2018 Pre-development Loan Agreement. The additional $200,000 will  assist with the acquisition of an access easement and the closure of any remaining financial gap.  The 2018 pre-development loan will be converted to a long-term 55-year residual receipts note at construction closing along with the aforementioned construction financing, not to exceed $2,200,000, and will bear 3% simple interest. The DDLA requires MP to enter into a regulatory agreement to restrict 35 of the units for rental to extremely low income households at affordable rents (see Exhibit H to the DDLA).

The DDLA will assist the FHA to comply with SB 341. On October 13, 2013, the Governor signed into law Senate Bill 341 that took effect on January 1, 2014, and amends provisions of the California Health and Safety Code relating to the functions to be performed by housing successors.  Senate Bill 341 requires the FHA to spend moneys in the Housing Fund (other than amounts spent for administration and homeless services) for the development of  housing affordable to and occupied by households at qualifying income levels, with at least 30% of the funds expended for the development of rental housing affordable to and occupied by households earning 30% or less of AMI.

Pursuant to Fairfield Municipal Code (“MC”) Sections 25.38, 5.4.3 and 5.4.4, MP has applied for specified incentives, including fee credits from the Fee Credit Bank and fee deferrals and is eligible to receive such fee credits and fee deferrals.  The City’s Director of Planning and Community Development (the “Director”) shall have the authority to grant the fee deferrals and fee credits. The DDLA provides that, subject to the approval of the Director, and as a condition to the close of escrow for the property, the City will provide fee credits in an amount not to exceed $1,000,000 and fee deferrals in an amount up to $1,500,000 (as increased by adjustments to the area of the project/improvements and by increases in the applicable fees after the date of execution of the DDLA) and the City and MP shall have entered into a fee deferral agreement (see Exhibit K to the DDLA).  Further, the DDLA requires the City and MP to enter into an affordability restrictions and regulatory agreement pursuant to which 11 of the units will be restricted for rental to very low income households at affordable rents and 18 of the units will be restricted for rental to low income households at affordable rents and MP agrees to apply the cost reduction from the fee credits to reducing the cost of the such units (see Exhibit H to the DDLA).

Summary of Financing

FHA staff and finance staff, supported by legal counsel, have evaluated the DDLA and the supporting documents for 1700 Santa Monica and believe it to be in the interest of the public health, safety, and welfare to appropriate funds from the Housing Fund to support the development of affordable units at 1700 Santa Monica for Fiscal Year 2019-2020 and enter into the DDLA.

On December 18, 2018 the Fairfield Housing Authority Board approved Resolution No. HA2018-20 authorizing the commitment and expenditure of up to $2,000,000 from the SB 341 Low Moderate Income Housing Asset Fund for pre-development and development activities. A budget adjustment in the amount of $200,000 is required to adequately fund this proposed housing development. Additional unrestricted fund balance from SB 341-Low and Moderate Income Housing Assets ($200,000, Fund 022, Division and Responsibility Code 99000) are to be appropriated to cover additional project expenses.

Jesus M. Morales, Senior Project Housing Manager

707-428-7426

jmorales@fairfield.ca.gov