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:

Second amendment to the Agreement with the Lesley Foundation to provide funding for the development of affordable senior housing

Recommendation

Adopt a Resolution which:

1.

Authorizes execution of a Second Amendment to the Agreement with the Lesley Foundation to provide funding for the development of affordable senior housing; and

2.

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

Background

The Lesley Foundation, with Mid-Peninsula Housing Coalition (MPHC) as development consultant, is developing 64 units of senior housing in Half Moon Bay. To date, the County has invested $1,202,269 of Community Development Block Grant (CDBG) and HOME Investment Partnerships Program (HOME) funds in the project. The County funding was provided over a two-year period - in 1999 and 2000 - specifically, $629,640 and $572,629 respectively on October 19, 1999 and March 6, 2001.

At the time, project costs were estimated at $7.8 million based on initial cost estimates made with input from a construction contractor based on preliminary plans. Since then, with the development of more detailed building plans and specifications along with unforeseen City requirements, the final construction bid came in much higher than expected. Amidst inflation and general mounting construction costs in the Bay Area and on the Coastside in particular, the total project development costs have increased to $9.6 million. Staff feels that the cost increase reflects the recent trends in Bay Area development costs.

Discussion

In late 2001/02, the Lesley Foundation requested another $1 million of off-cycle County CDBG funds to meet part of the funding gap. The Office of Housing internal loan review committee reviewed and approved the additional funding request in February 2002 pending receipt of CDBG loan repayments from MPHC's other projects to help partially offset the amount requested. The County has recently received $547,680 of these loan repayments. CDBG reprogrammed and housing reserve set-aside funds totaling $452,220 will make up the balance of the additional funding request.

Toward meeting total project costs, the Lesley Foundation/MPHC has successfully garnered another $1.5 million over and above the $5.9 million already committed from the Section 202 Program for Senior Housing, administered directly by the U.S. Department of Housing and Urban Development (HUD); Section 202 funds invested in this project will total $7.4 million.

On a per unit basis, County funds of $2.2 million translate into a County subsidy of approximately $34,400 per unit, still an effective use of County funds given that all the units are targeted for lower income seniors (except the manager's unit).

Consistent with County policy, the Agreement further authorizes the Director of the Human Services Agency to execute subsequent amendments and minor modifications not to exceed $25,000 per funding source. The Agreement has been approved as to form by the County Counsel's Office and meets HUD regulations. Risk Management has reviewed and approved the Lesley Foundation's insurance coverage.

Vision Alignment

This action keeps the commitment to: Offer a full range of housing choices and goal number 9: Housing exists for people at all income levels and for all generations of families. The action contributes to this commitment and goal by providing affordable housing choice for one segment of the County population, lower income seniors.

Fiscal Impact

No Net County Cost is involved. The request of $1 million is provided by the Community Development Block Grant Program. This project is included in the current Housing and Community Development budget.