HomeMy WebLinkAbout2016-08-24 e-packet@6:00Wednesday, August 24, 2016
6:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Special City Council
Special Meeting Agenda
August 24, 2016Special City Council Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council of the City of South San Francisco will hold a Special Meeting on
Wednesday, August 24, 2016, at 6:00 p.m., in the City Council Chambers, Municipal Services Building,
33 Arroyo Drive, South San Francisco, California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Special Meeting Agenda.
ADMINISTRATIVE BUSINESS
Study Session regarding Proposed MidPen Workforce Housing at the Miller/Maple
Parking Lot. (Ron Gerber; Housing Manager)
1.
CLOSED SESSION
Closed Session: Public Employee Performance Evaluation
(Pursuant to Government Code Section 45957)
Title: City Attorney.
2.
Adjournment.
Page 2 City of South San Francisco Printed on 9/21/2016
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:16-377,Version:1
Study Session regarding Proposed MidPen Workforce Housing at the Miller/Maple Parking Lot.(Ron Gerber;
Housing Manager)
For the full Staff Report, please refer to Attachment 1.
MF/LdA/AG/RG/jb
2658253.1
City of South San Francisco Printed on 8/18/2016Page 1 of 1
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Staff Report
DATE:August 24, 2016
TO:Mayor, Vice Mayor,and Councilmembers
FROM:Ron Gerber, Economic Development and Housing Manager
SUBJECT:PROPOSED MIDPEN WORKFORCE HOUSING AT THEMILLER/MAPLE
PARKING LOT
RECOMMENDATION
Staff recommends the City Council provide input on the policy issues discussed in this
report: affordability levels, financing, and unit size. In summary, staff is recommending:
Affordability Levels:Staff recommends an entirely affordable approach with all units
at the below 60 percent Area Median Incomes (AMI).
Financing:Staff recommends a financing strategy that includes:
o $2.9 million from Fund 241 (includes the $1.9 million in liquid and $1million
from the sale of 380 Alta Vista);
o Pursuing additional funding sources, such as Federal Tax Credits, Cap and
Trade, and Measure A funds.
Unit Size:Staff recommends a unit mix of studio and one bedroom units.
BACKGROUND
The purpose of this report is to update the City Council on staff’s findings through several months
of research and to present some development scenarios for City Council’s consideration. Several
technical and policy issues have affected the potential development approach that will be addressed
in this report. Specifically,staff is seeking the Council's feedback on the following two items:
1.Financing and Affordability
2.Unit Sizes and Site Constraints
On December 16, 2015, the City Council held a study session on workforce housing. As a result
of this discussion, the Councildirected staff to pursue several projects and initiatives to promote
affordable workforce housing and, to the extent feasible, provide opportunities for City employees
and provide units that could be available to households with moderate incomes rather than
exclusively for households with lower incomes.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE
PARKING LOT
Date: August 10, 2016
Page 2 of 9
As part of this overall strategy, the Council directed staff to issue a Request for Qualifications
(RFQ) for an affordable housing project at the Miller/Maple Parking Lot, which is a 14,000 square
foot City-owned parcel located at Miller and Maple Avenues (see Attachment 2 for site location).
The RFQ outlined the City’s interest in creating workforce housing that is affordable to households
of low and very low incomes (80 percent and 50 percent AMI respectively). It further stated that
the City was willing to consider the following measures to assist in creating a viable project with
rents that are restricted to these income levels for 55 years:
•Ground lease of site for a long term at a nominal rate.
•Sponsor the sale of tax-exempt multi-family revenue bonds for debt financing.
•Assist with obtaining tax credits or Cap & Trade financing for equity financing.
•If necessary, after above funding sources are applied, contribute cash from existing
affordable housing bond proceeds obtained by the former Redevelopment Agency
(requires a portion of the units to have affordability of at least 30 percent AMI).
The City received RFQ responses from four highly experienced affordable housing developers.
These developers were vetted by the Joint Housing Subcommittee(“Subcommittee”), which
included: Mayor Mark Addiego, Councilmember Karyl Matsumoto, and Planning Commissioners
Alan Wong, Aris Ruiz and Norm Faria. The Subcommittee held interviews on February 25, 2016,
andfollow-up meetings on March 1 and March 7, 2016. As a result of these meetings, the
Subcommittee recommended MidPen Housing to the City Council as a potential developer of the
Miller/Maple Parking Lot site.
MidPen’s preliminary proposal included a 100 percent affordable workforce housing development
consisting of 36 dwelling units, which would be a mix of 1, 2 and 3 bedroom apartments. In terms
of affordability, their proposal reflected two options. One included a mix of incomes, ranging from
30-60 percent AMI if the project is a 100 percent tax credit project, the second option included 30-
80 percent AMI if a portion of the project is non-tax credit. Note that tax credit financing serves
60 percent AMI and below, thus serving higher incomes necessitates adifferent financing
approach.
On March 9, 2016, the City Council selected MidPen Housing as the preferred developer, and
authorized an Exclusive Negotiating Rights Agreement (ENRA) between MidPen and the City.
During the initial weeks of the ENRA, several key activities have taken place:
On May 23, 2016, MidPen hosted Councilmembers, Planning Commissioners, and City
staff for a site tour of two of their recently completed projects: the Delaware Pacific(in
San Mateo)and Alma Point at Foster Square (senior housingin Foster City) developments.
On June 28, 2016, staff and MidPen began discussions regarding the entitlement
requirements in order to establish a project schedule that will be ready in time for the March
2017 Affordable Housing and Sustainable Communities (“Cap and Trade”) grant
application deadline.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE
PARKING LOT
Date: August 10, 2016
Page 3 of 9
Staff and MidPen have continued to work closely together to refine the project concept and
identify policy issues to bring to the Council.
As per Council directive, this development was intended to promote affordable workforce housing
to the extent that it was feasible for workers in the moderate income levels (e.g.between 60 percent
and 120 percent of the AMI) and for City of South San Francisco employees. Staff andMidPen
evaluatedthe feasibility of those directives.The outcome of the analysis has shown thatproviding
housing for moderate income rental households is extremely limited since the elimination of
redevelopment.The analysis has shown thatthe major sources of affordable housing funding are
directed towards production of units that meet the needs of household earning 60percent AMI or
less,rather than moderate income households. These sources include Federal Tax Credits, State
Cap and TradeandSan Mateo CountyMeasureA (“Measure A”) grants. The elimination of
redevelopment equated to the elimination of local funding that addressed the needs of moderate
income households (households earning up to 120percent AMI). In the absence of committing
revenues from the general fund, the City is severely limited in being able to provide meaningful
funding to address the needs of moderate income households. However, the overall goal of the
Council, which is to provide affordable workforce housing at Miller/Maple,may very well beable
to be addressed with the aforementioned Federal, State and County sources that meet the needs of
households earning up to 60percentof the AMI.
PROJECT CONSIDERATIONS
In order to move forward with an accurate agreement with the developer, Council input is sought
on the issues of: (a) financing and affordability levels, and (b) unit sizes and site constraints. Using
the Council’s input, staff will then work with the developer to further refine the project scope, pro-
forma, potential funding sources, and other terms of the agreement, and bring those proposed terms
back to the Council for approval.
1. Financing and Affordability Levels
For affordable housing projects, available financing is largely contingent upon the level of
affordability provided. Offering units with lower affordability levels leverages opportunities to
maximize funding sources for affordable housing. As stated in the RFQ, the City does have funds
available to contribute towards affordable housing projects. Affordable housing projects are
eligible for multiple other sources of non-City fundingas noted above. These sources are restricted
to certain affordability levels.
The City’s funding resources available for the Miller/Maple Project include:
City Housing Fund (“Fund 241”):Currently, the City has $1.9 million in Fund 241, which
contains former redevelopment funds that are earmarked for affordable housing. By the
end of this year, staff expects the balance of Fund 241 to increase to approximately $2.9
million, due to the sale of 380 Alta Vista (as directed by the Council). In order to comply
with State law, at least 30 percent of Fund 241 (i.e. $900,000) must be used for units at 30
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE
PARKING LOT
Date: August 10, 2016
Page 4 of 9
percent AMI or below; and the remaining $2.0 million must be used for units at 60 percent
or below.
Discounted Land Contribution:By contributing the land at a deeply discounted basis (e.g.
long term ground lease at very low ground rent basis), the City can demonstrate to outside
funding sources that local resources are committed.
Non-City Funding Sources: As described earlier these sources include: Federal Tax
Credits, Cap and Trade grant and Measure A Funds funds. All of these funding sources are
restricted to units at 60 percent AMI or below.
Affordable Housing Trust Fund(“Fund 205”):There is a current balance of approximately
$1.3 million in the City’s Fund 205. Fund 205 can be used to finance units at any
affordability level, up to 120 percent AMI. Staff are not recommending usingthis funding
because these funds should rather be preserved for housing developments that are intended
for moderate income BMR levels (80-120 percent).
In the long term, the City is at risk of forfeiting much of the former redevelopment financing (Fund
241) if those funds are not spent. The Miller/Maple Project is an ideal candidate for using these
City funds.
In general, affordability levels are measured as a percent of household AMI. The below table
shows the current 2016 AMI levels for San Mateo County.
Income Category
Extremely Low (30% AMI)$25,830 $29,520 $33,210 $36,900
Very Low (60% AMI)$51,660 $59,040 $66,420 $73,800
Low (80% AMI)$68,880 $78,720 $88,560 $98,400
Median (100% AMI)$86,100 $98,400 $110,700 $123,000
Moderate (120% AMI)$103,320 $118,080 $132,840 $147,600
1 Person Household
(studio - 1 b/r)
2 Person Household
(studio - 1 b/r)
3 Person Household
(2-3 b/r)
4 Person Household
(2-3 b/r)
Source: Housing and Urban Development (2016)
Affordability levels that drive the financing for the development are outlined below. Affordability
levels will inform the financing structure and budget requirements that will be addressed later in
this report.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE PARKING LOT
Date: August 10, 2016
Page 5 of 9
Scenario Affordability
(AMI levels)
Advantages Disadvantages
1 0-30 percent
0-60 percent
All units eligible for federal tax credits, County
AHF, and Cap & Trade funding.
Ability to leverage maximum other affordable
housing funding sources.
Lower City subsidy per unit.
All units exempt from property taxes, which
increases long term financial feasibly.
Unable to serve moderate income level.
City has financing for 60-120 percent AMI level that it
does not utilize.
2 0-30 percent
0-60 percent
60-80 percent
Ability to utilize maximum City financing
options to serve the gap in the market.
This scenario allows low income workers served
(60-80 percent).
Best matches South San Franciscojobs
classifications given limited housing available.
All units exempt from property taxes, which
increases long term financial feasibility.
Enables project to serve those households that
arenot served by traditional affordable housing
programs.
Not all units eligible for Federal Tax Credits, County
AHF, and Cap & Trade funding.
Requiressubstantial City subsidy per unit than Scenario
1(approximately $500,000 per unit).
One assumption that has been made is that both the City Fund 241 as well as the other non-City funding sources must include some
units at the 30 percent and below in order to qualify.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE PARKING LOT
Date: August 10, 2016
Page 6 of 9
Assuming the affordability levels in the scenarios outlined in the table above, staff and MidPen have identified some of the City financing
options that may be utilized.
Affordability
(AMI levels)
City Financing External Sources
1 0-30 percent $ 900,000 AHSC
Measure A
Tax credits
Property tax exemption
0-60 percent $ 2m(Fund 241)
TOTAL: $2.9million
This scenario should necessitate a lower City
contribution because it is leveraging maximum other
sources
2 0-30 percent $ 900,000 AHSC (under 60 percent only).
Measure A (under 60 percent only).
Tax credits (under 60 percent only).
Units over 60 percent AMI do not qualify for
affordable housing sources.
Low income units up to 80 percent AMI
qualify for welfare tax exemption which
enables project to support higher first
mortgage loan.
0-60 percent $ 2 million(Fund 241)
60-80 percent $ 1.6 million (Fund 205)
TOTAL: $4.5million
This scenario will require the maximum City
contribution and utilizing Fund 205, which would be
better preserved for a housing developmentat the
moderate level
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE
PARKING LOT
Date: August 10, 2016
Page 7 of 9
Staff recommends the first scenario, an entirely affordable income approach. This would include
a combination of extremely low (under 30 percent AMI) and very low (under 60percentAMI) in
order to maximize external funding availability. This scenario requires the lowest local subsidy
per unit and leverages the local funding to the greatest extent. By preserving the very limited local
funds available for moderate income units, thosefunds could be could be utilized at other projects
of a greater size, including market rate projects.
2. Site Constraints and Unit Sizes
The scope and nature of this project will largely be determined by the constraints of the site. The
site is small at 14,000 square feet, with no opportunities to extend this footprint. It is bounded on
three sides by streets and with a historical building on the remaining side. The maximum allowable
density, including the City’s density bonus and the State density bonus, is 40 units on this sized
site.
Studio and one-bedroom units would be suited to one to two person households, with two and
three bedroom units better suited for families. The types of units (studios, one or two bedrooms)
and the related amount of parking required, will affect the number of units that may be built. This,
consequently, impacts the household nature and size that may be willing to live in the units. Given
the constrained size of Miller & Maplesite and the parking requirements, a larger number of
smaller units are preferable.
Typical unit sizes by unit type are listed below:
Unit Type Area
Studio 390-499 square feet
1 Bedroom 540-635 square feet
2 Bedrooms 760-800 square feet
3 Bedrooms 1,000 square feet
The unit types listed above are comparable to the units at Delaware Pacific and Alma Point that
the City Council and Planning Commissioners toured on May 23, 2016. Densities of these two
developments are comparable to the Miller/Maple Parking Lot, however the parcel sizes were far
greater.
Developing a building with larger units will require more massing and more importantly, more
parking. A building with smaller units would require less massing and consequently be better
suited to the urban landscape and not require as much parking.The below table outlines some of
the advantages and disadvantages of offering the smaller units as opposed to offering larger sized
units. The table assumes the maximum density of 40 units.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THE MILLER/MAPLE PARKING LOT
Date: August 10, 2016
Page 8 of 9
Unit
Sizes
Advantages Disadvantages Scenario
Smaller
Studios
& 1br
Most suited to small site.
Less parking required (±20
stalls vs ±44 stalls).
Required parking spaces can be
provided without expensive
subterranean parking.
Maximizes number of units,
which lowers City subsidy per
unit and increases long term
financial feasibility.
Minimizes building height.
Therefore most practical option.
Fills in gap in new smaller unit
construction in downtown area.
Unable to accommodate
large families.
Fewer larger households
served.
10 percent 2br units (3 units)
Provides minimal opportunities
for larger households;but,
Greater construction cost and
City contribution per unit.
Additional approximately $1.7m
required for a level of
subterranean parking.
Taller building.
Larger
1br-3br
Ability to serve larger families.
Larger units in high demand by
City employees.
Parking requirements
increased, which requires
additional levels of
expensive subterranean
parking required (±44
stalls vs ±20 stalls).
Additional approximately
$1.7m required for a
level of subterranean
parking.
If equivalent number of
units are provided,
building is more massive
due to increased building
square feet, minimizing
opportunities for building
articulation.
Fewer large units (±20 units)
Less parking and less total
construction costs than the 40
unit option;but,
Greater construction cost and
City contribution perunit.
Long term not financially
feasible due to less rent
generated.
Fewer household served.
Subject: PROPOSED MIDPEN WORKFORCE HOUSING AT THEMILLER/MAPLE
PARKING LOT
Date: August 10, 2016
Page 9 of 9
Staff recommends that this project focus on smaller units –i.e., studios and one bedroom units –
as this configuration is best suited to the space constraints of this small parcel. A building with
studio and one bedroom units will maximize the number of units, and therefore households served,
while minimizing the building height to fit in with the surrounding neighborhood. Smaller units
also require fewer parking stalls, which can be provided without requiring expensive subterranean
parking or a taller building.
With the proposed unit mix, the project would be well-suited to workers in the earlier stages of
their career, allowing them to save money while living in these units and be in a better position to
purchase a home of their own in the future. Furthermore, the project would complement other
housing projects in the downtown, which focus on larger, one to three bedroom units.
CONCLUSION
Staff recommends the City Council provide input on the policy issues discussed in this report:
affordability levels, financing, and unit size. In summary, staff is recommending:
Affordability Levels:Staff recommends an entirely affordable approach with all units at the
below 60 percent AMI.
Financing:Staff recommends a financing strategy that includes:
o $2.9 million from Fund 241(includes the $1.9 million in liquid and $ 1million from
the sale of 380 Alta Vista);
o Pursuing additional funding sources, such as Federal Tax Credits, Cap and Trade,
and Measure A funds.
Unit Size:Staff recommends a unit mix of studio and one bedroom units.
Using the Council’s input and direction, staff will work closely with MidPen to further refine the
project, analyze financial feasibility, and return to the Council with a proposed agreement.
Exhibit A: Aerial of Miller Maple
Miller Ave
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:16-627,Version:1
Closed Session: Public Employee Performance Evaluation
(Pursuant to Government Code Section 45957)
Title: City Attorney.
City of South San Francisco Printed on 8/18/2016Page 1 of 1
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