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AGENDA REPORT
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| | | | | | | | DATE:
| January 19, 2021
| TO:
| Fairfield Housing Authority Chair and Commissioners
| FROM:
| Stefan T. Chatwin, Executive Director 
| | SUBJECT: | Resolution HA2021-02 of the Fairfield Housing Authority Approving the First Amendment to Disposition and Development Agreement by and among the Fairfield Housing Authority, Affordable Housing Alliance II, Inc., and Sutton Place Development Corp. for Land Located at 1600 Woolner Avenue, Fairfield, CA |
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| | | | | | | | | RECOMMENDED ACTION | | Adopt resolution. |
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| | | | | | | | | STATEMENT OF ISSUE | | Affordable Housing Alliance II, Inc., and Sutton Place Development Corp. (collectively, “Developer”) entered into a Disposition and Development Agreement (“DDA”) with the Fairfield Housing Authority (“FHA”), dated February 10, 2020, pursuant to which the FHA agreed to sell to the Developer, upon the satisfaction of certain conditions, property owned by the FHA located at 1600 Woolner Avenue (the “Property”) for the purpose of developing an affordable housing project. Based on the Developer’s investigation of the condition of the Property, the Developer has requested that the DDA be amended to address the Developer’s discovery of underground concrete storage tanks on the Property which the Developer will need to mitigate. The First Amendment to DDA (“First Amendment”) provides, among other things, that the purchase price for the Property will be $1,500,000, minus a credit of up to $400,000 from the FHA for soils engineering work. The $1,500,000 purchase price is the current appraised fair market value of the Property and the First Amendment provides that the purchase price will be based on a new appraisal if the transaction does not close by March 12, 2021. The First Amendment also addresses the implications of COVID-19 and extends the term of the DDA and allows the Developer to seek tax credits and or alternative financing for the proposed development. |
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| | | | | | | | | DISCUSSION | The Fairfield Redevelopment Agency purchased the Property from the City of Fairfield in 2010 for the purpose of a future housing development. In 2013, after the dissolution of the Redevelopment Agency, the Property was transferred to the FHA to continue efforts to find a suitable housing developer.
On February 4, 2020, the FHA adopted Resolution HA2020-02 approving the DDA for the development of a +162-unit mixed income housing project. Subsequent to entering into the DDA, the Developer investigated the condition of the Property and discovered underground concrete storage tanks, which the Developer will need to mitigate to enable the project to be developed. Staff and the Developer entered into negotiations regarding proposed amendments to the DDA to address the soils conditions that were uncovered as part of the Developer’s due diligence and the impact of COVID-19.
The purchase price in the DDA was intended to be the fair market value of the Property and was determined by an appraisal, but the appraiser did not consider the cost of the work necessary to mitigate the storage tanks. The proposed First Amendment provides that the purchase price for the Property will be $1,500,000 (the current appraised fair market value) minus a credit of up to $400,000 for the required soils engineering work. The previous agreed upon purchase price was $1,420,000 before any consideration for the soils engineering work.
In addition, COVID-19 has negatively impacted the financial markets and the Developer is now seeking tax credits for project financing, which typically requires all units to be affordable. The proposed First Amendment provides that the Developer will apply for low-income housing tax credits (unless alternative affordable housing program financing has been secured) and that such award of tax credits or the obtaining of such other financing is a condition to the closing.
The DDA, as amended by the First Amendment, requires the Developer to develop a three story, 168-unit apartment community that will be affordable to tenants at or below 30%, 50%, 60% and 70% of the area median income for a period of 55 years per the tax credit requirements. The First Amendment will extend the term of the DDA, which is due to expire on February 10, 2021, for one year to allow the Developer to apply for tax credit financing or alternative financing. Other terms of the DDA are also amended by the First Amendment, such as escrow instructions related to the closing and disbursement of funds that will be held for the soils engineering work and related performance milestones based on when the project financing is attained.
Environmental Review
The development contemplated by the DDA and the First Amendment is a residential development project that is being undertaken pursuant to the Heart of Fairfield Specific Plan, for which an EIR was certified by the City Council on May 2, 2017 (SCH #2015122005). The Heart of Fairfield Specific Plan and the EIR analyzed the Property as a “catalytic site” for “higher density residential development,” and designates the site as Medium Density Residential - Downtown. Approval of the First Amendment in order to facilitate disposition of the Property and the proposed development is in conformance with the Specific Plan, and none of the events described in Section 15162 of the CEQA Guidelines have occurred. Accordingly, this action is exempt under Section 15182 of the CEQA Guidelines and Section 65457 of the Government Code.
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| | | | | | | | | FINANCIAL IMPACT | | The Developer will pay the FHA the appraised fair market value of the Property, which is currently $1,500,000, minus the credit of up to $400,000 for the soils engineering work. The net proceeds will be deposited into the FHA’s Low-Mod Income Housing Fund (Account Code 022-99-000-2211). |
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| | | | | | | | | PUBLIC CONTACT/ADVISORY BODY RECOMMENDATION | N/A
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| | | | | | | | | ALTERNATIVE ACTION | | The FHA may choose not to approve the First Amendment to the DDA. This would require staff to put the Property back on the market and attempt to secure another housing developer. |
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| | | | | | | | | STAFF CONTACT | Jesus M. Morales, Senior Housing Project Manager
(707) 427-7426
jmorales@fairfield.ca.gov
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| | | | | | | | | COORDINATED WITH | City Attorney's Office, Finance Department
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| REVIEWERS: | | Reviewer | Action | Date | | Alexander, Amber | Approved | 1/7/2021 - 10:12 AM |
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