In November 2020, the Garden Grove Housing Authority was awarded and allocated seventy-five (75) Mainstream Vouchers and funding as authorized by the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) to help prevent, prepare for, and respond to the COVID-19 pandemic. Concurrently, the Office of Economic Development has engaged with local affordable housing developers to explore Permanent Supportive Housing opportunities within the City. To that end, discussions with American Family Housing were initiated to explore potential redevelopment of 11742 Stuart Drive and use of the Mainstream Vouchers.

The Office of Economic Development and Developer representatives have completed negotiation of the HOME Agreement under which the Housing Authority will provide to the Developer the assistance in the amount of a $1.4M Authority Loan sourced solely from the HOME Program funds to be transferred by the City to the Housing Authority pursuant to the Cooperation Agreement and to be expended on this Project, and (2) the allocation of eight (8) Mainstream Project Based Vouchers (PBVs), as the financial subsidy for Developer to undertake, complete and operate the Project. The HOME Agreement, including Attachment Nos. 1 to 18, incorporates the terms and conditions between the Housing Authority and Developer. The Project is anticipated to have a total development cost of $3,700,000.

Summarized below are the salient provisions of the HOME Agreement:

· The Housing Authority will contribute an amount of $1,400,000 of HOME program funds.

· The Property will be owned, used, and operated as affordable housing for the 55-year Affordability Period.

· The Developer will cause substantial rehabilitation of the Project for a total cost estimated at $796,089 or $79,609/per unit. After completing the Rehabilitation, eight (8) Housing Units will be occupied by qualified Extremely Low Income tenants; one (1) Housing Unit will be occupied by a Very Low Income tenant; and, one (1) unit is reserved for the onsite Property Manager. The eight Extremely Low Units will be assigned the Mainstream PBVs.

· The Housing Authority will award eight (8) Mainstream PBVs for nonelderly, disabled individuals and families for the Project pursuant to the HAP Contract for a period of twenty (20) years. The vouchers may be extended for up to another 20 years in one or more increments, in the sole, absolute discretion of the Housing Authority and pursuant to federal law, including Housing Opportunities Through Modernization Act (“HOTMA”) and the Section 8 Laws.

· Relocation costs, including administration of the Relocation, will be completed by the Developer pursuant to an approved Relocation Plan.

· The Supportive Services Plan will be implemented by the Developer to provide supportive services to the tenants based on the tenant population and needs, in particular the needs of the nonelderly, disabled individuals and families.

In connection with the HOME Agreement, an environmental assessment has been prepared in accordance with the National Environmental Policy Act (“NEPA”) and determined that the Project qualifies for a categorical exclusion thereunder, including 24 CFR 58.35, and meets one or more categorical exemptions under the California Environmental Quality Act and implementing regulations (“CEQA”), which findings are included in the Housing Authority Resolution approving the HOME Agreement. If the Resolution is adopted, then promptly after approval, City staff will cause a Notice of Exemption to be posted at the County Clerk in compliance with CEQA.

An economic analysis of the Developer’s proforma, budget and all financing sources for the Project was completed by the City’s economic/housing consultant, Harris and Associates, which also supports the City subsidy to the Project. The Housing Authority’s (and City) investment in the Project is in the public interest and will increase the number of affordable housing units in the community; and, this Project will carry out the goals and objectives of the City’s 2014- 2021 HCD-certified Housing Element of its General Plan.

Sufficient funds are available in the HOME Program funds for this Project.  Approval of the HOME Agreement and subsequent Housing Assistance Payment (HAP) Agreement will provide for the commitment of a HOME funds loan in the amount of $1.4M as well as eight (8) project-based Mainstream Vouchers. 

Based on the foregoing information, staff recommends the following actions be taken in the following order:

1.  City Council adopts the Resolution approving the Relocation Plan for the Project at 11742 Stuart Drive;
2. City Council and Housing Authority approve, either jointly or each separately, the Cooperation Agreement by which the City will transfer $1,400,000 of HOME Program funds to the Housing Authority to implement the Project;
3. Housing Authority adopts the Resolution approving the HOME Agreement and making certain other findings. The Resolution authorizes the Authority Director to sign the HOME Agreement, subject to minor, non-substantive changes as approved by the Director or his designees, and approved by Housing Authority counsel.  And, the Resolution authorizes issuance of warrants, later minor waivers, interpretations, and related implementing actions; and,
4. Housing Authority approves the AHAP for the eight (8) Mainstream PBVs.