COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Human Services Agency

Office of Housing

 

DATE:

September 13, 2002

BOARD MEETING DATE:

September 24, 2002

 

TO:

Honorable Board of Supervisors

FROM:

Maureen Borland, Director, Human Services Agency

 

Steve Cervantes, Director, Office of Housing

SUBJECT:

Amendment to the Agreement with the City of South San Francisco to fund an Affordable Housing Development Program with HOME Program funds

 

Recommendation

Adopt a Resolution:

 

1.

Authorizing the execution of an Amendment to the Agreement with the City of South San Francisco to fund an affordable housing development program with HOME Program funds; and

 

2.

Authorizing the Director of the Human Services Agency to execute subsequent Amendments and minor modifications not to exceed $25,000 per funding source.

 

Background

On May 14, 2002, the County entered into an Agreement with the City of South San Francisco to provide $500,000 of HOME Program funds toward an Affordable Housing Development Program, targeted at acquisition and rehabilitation of property in the Willow Gardens neighborhood. Subsequently, South San Francisco applied for additional HOME funding to expand the program area to include the downtown corridor. On June 4, 2002, the Board approved the HOME Program funding for FY 2002-03, which included $400,000 for this expanded program.

 

In fiscal years 1996 through 2000 South San Francisco acquired three 4-plex buildings in the Willow Gardens neighborhood using $547,055 of HOME funds. This was leveraged with $485,573 of City Redevelopment Agency funds and $533,589 from conventional bank financing. In addition, the City has spent approximately $120,000 of additional City funds to perform basic rehabilitation of the units to meet habitability standards. In addition, the City purchased and rehabilitated a 4-plex building on Commercial Avenue, using $322,500 in HOME funds and $467,500 in City funds. This works out to an average cost/unit of $154,750, with the HOME funds accounting for $54,347/unit.

 

Discussion

The City of South San Francisco has identified a number of opportunities to acquire and rehabilitate property in the downtown corridor to create permanently affordable rental units. This is in addition to the units that they have identified in the Willow Gardens neighborhood, which was the original focus of their program. They are currently negotiating for the purchase of a 6-unit building in the downtown area plus four 4-plex buildings in the Willow Gardens area. The HOME funds will be supplemented with Redevelopment Agency funds as well as conventional bank financing.

 

The total acquisition cost of the 6-unit building is expected to be approximately $1,270,000; $500,000 will come from the HOME funds provided under this Agreement with the balance to be provided by South San Francisco. Approximately $250,000 in additional City funds will be spent on the rehabilitation of this building.

 

Although no firm prices have yet been negotiated on the Willow Gardens 4-plex buildings it is anticipated that the costs will be at least 25% higher than what was spent on the previous 16 units due to general inflationary pressures. This would yield a total estimated cost to acquire and rehabilitate the 16 units of $3,100,000 with HOME accounting for $400,00 of this and the balance coming from a combination of City funds and conventional bank financing.

 

Vision Alignment

The Agreement with the City of South San Francisco keeps the commitment of: Offering a full range of housing choices and goal number 9: Housing exists for all people at all income levels and for all generations of families. The Amendment to the Agreement contributes to this commitment and goal by creating six affordable rental units for lower income families in South San Francisco in addition to the 16 units expected under the original Agreement.

 

Fiscal Impact

The Amended amount is $400,000, for a total contract obligation of $900,000, which is being provided by the HOME Program. All of the HOME funds are being provided in the form of loans to be paid back into the HOME Investment fund. This project is included in the current Housing & Community Development budget. There are no General Funds used in this project.