Agenda Item AGENDA STAFF REPORT ASR
Control 23-000939 |
||
MEETING
DATE: |
12/19/23 |
|
legal entity taking action: |
Orange
County Housing Authority |
|
board of supervisors district(s): |
5 |
|
SUBMITTING Agency/Department: |
OC
Community Resources (Approved) |
|
Department contact person(s): |
Dylan
Wright (714) 480-2788 |
|
|
Julia
Bidwell (714) 480-2991 |
|
Subject: Approve Additional Project-Based
Vouchers for Motel 6
ceo CONCUR |
County Counsel Review |
Clerk of the Board |
||||||||
Concur |
No
Legal Objection |
Discussion |
||||||||
|
|
3
Votes Board Majority |
||||||||
|
|
|
||||||||
Budgeted: Yes |
Current Year
Cost: See Financial
Impact Section |
Annual Cost: N/A |
||||||||
|
|
|
||||||||
Staffing Impact: |
No |
# of Positions: |
Sole Source: No |
|||||||
Current Fiscal Year Revenue: See Financial
Impact Section
|
||||||||||
Prior Board Action: 12/20/2022 #3, 12/6/2022 #17,
10/18/2022 #S42F, 10/4/2022 #5 |
||||||||||
RECOMMENDED
ACTION(S):
1. |
Approve the selection of Mesa Vista
(formerly Motel 6) for the utilization of 10 additional Housing Choice
Project-Based Vouchers in accordance with the policies and procedures
identified in the Orange County Housing Authority Administrative Plan and authorize
the execution of related documents, instruments and agreements. |
2. |
Authorize the Executive Director of the
Orange County Housing Authority to execute any document related to the
commitment of the U.S. Department of Housing and Urban Development Housing
Choice Project-Based Vouchers, which incorporates the business and financial
terms set forth in this Agenda Staff Report in a form as approved by County
Counsel. |
SUMMARY:
Approval of the County commitment
to the additional 10 Housing Choice Project-Based Vouchers will allow the
County of Orange to continue to support the production of supportive housing in
Orange County.
BACKGROUND
INFORMATION:
On December 14, 2021, the Board of Supervisors
(Board) approved the selection of Mesa Vista (formerly Motel 6) (Development)
for utilization of 30 Veterans Affairs Supportive Housing (VASH), Mainstream
and/or Housing Choice Project-Based Vouchers (PBVs) and up to $2 million for
loan financing to Community Development Partners (CDP). The Board also approved
submission of the Development for Homekey Program Round 2 (Homekey) funding,
which was later awarded $10.55 million in funding. Pursuant to Homekey
requirements and the Homekey Standard Agreement, CDP will have to complete the
acquisition and rehabilitation of the Development (construction) by December
2023.
Mercy House CHDO LLC (Mercy House) is the
lead service provider for Mesa Vista and was brought on as CDP’s non-profit
partner and Co-Applicant to the 2020 Notice of Funding Availability (2020 NOFA)
application. On October 18, 2022, the Board adopted an amended Homekey
authorizing resolution to include Mercy House as an additional Co-Applicant to
the Homekey funding application and approved a $2.5 million increase to the
previously approved $2 million in County funds for loan financing to CDP and
Mercy House (Developers) for the development of Mesa Vista. On December 6,
2022, the Board approved increasing the 2020 Supportive Housing NOFA by another
$850,000 for the additional loan financing to the Developers. In total to date,
the Board has approved up to $5.35 million in capital funding and 30 PBVs to
the Developers for the Development.
The Development is the rehabilitation of a
former 94-unit motel located in the City of Costa Mesa (City) and will be
completed and financed in two phases. Phase I financing utilizes a combination
of Homekey funds, County and City funds as well as a $7.9 million acquisition
loan for the conversion of 40 units to Permanent Supportive Housing (PSH),
which is planned to include 10 PSH units for individuals who are at risk of
homelessness and meet the Mental Health Services Act (MHSA) eligibility
criteria and 30 PSH units for veterans experiencing homelessness under the 2020
NOFA. At the time of the Developers’ 2020 NOFA application, OC Community
Resources (OCCR) did not have sufficient PBVs available to subsidize rents on
the 10 MHSA units, so the Developers later applied for additional 10 PBVs under
the County’s 2023 NOFA.
If approved, the Orange County Housing
Authority (OCHA) will provide Housing Choice PBVs for up to 10 studio units, in
addition to the previously committed VASH PBVs for up to 30 studio units, which
will be available to the Development after construction is completed and a
Certificate of Occupancy has been issued. These PBVs will be guaranteed for 20
years, consistent with the U.S. Department of Housing and Urban Development
(HUD) regulations. All referrals for units supported with a PBV must be via the
Coordinated Entry System.
All 40 PSH units are restricted by the
County for 55 years as required under the Homekey Program, including up to 10
studio units for MHSA eligible individuals at-risk of homelessness earning at
or below 30 percent Area Median Income (AMI) and 30 units for VASH eligible
veterans experiencing homelessness earning at or below 30 percent AMI.
Since the Board’s approval of additional
funding on December 6, 2022, the Developers have begun construction on Phase I
and are simultaneously working on securing financing on Phase II. The
Developers applied for and were awarded $3,015,072 from Orange County Housing
Finance Trust 2023 NOFA for two MHSA units and $8 million from CalOptima Health
under their Notice of Funding Opportunity for Housing and Homeless Incentive
Program.
The Developers also applied for funding
under State California Tax Credit Allocation Committee in May 2023 to finance
the Phase II portion of this development but were unsuccessful. They reapplied
in September 2023, and at the time this Agenda Staff Report was prepared, are
awaiting the award decision on December 6, 2023.
The Development’s
financing has not changed and the $5.35 million in County loans for Phase I
will remain in place and be converted to a permanent loan at permanent loan
closing for Phase II financing once both phases are complete and occupied. The
specific rent and occupancy restrictions may ultimately change based on the
final financing structure of the Development.
The recommended
action in this Agenda Staff Report supports the 2022 Housing Funding Strategy
Update received and filed by the Board on December 20, 2022, which outlines the
recommendations for a strategic approach to achieve an updated goal of
developing 2,396 supportive housing units by 2029. The Development will
continue to follow the best practices, guiding principles and commitments of
the Homeless Service System Pillars Report which was created by the Commission
to End Homelessness and received and filed by the Board on October 4, 2022.
Compliance with CEQA: This action is
not a project within the meaning of CEQA Guidelines Section 15378 and therefore
is not subject to CEQA, since it does not have the potential for resulting in
either a direct physical change in the environment or a reasonably foreseeable
indirect physical change in the environment. The approval of this agenda item
does not commit the County to a definite course of action in regard to a
project since it is for approval to utilize 10 additional Housing Choice PBVs
for the Development and support the production of supportive housing in Orange
County. Therefore, this proposed activity is not subject to CEQA. Any future
action connected to this approval that constitutes a project will be reviewed
for compliance with CEQA.
Compliance
with NEPA:
Per 24 CFR Part 58, an Environmental Assessment of the project was completed
and the Authority to Use Grant Funds was issued by HUD on May 21, 2022, for
HOME Investment Partnership Program funds, on May 23, 2022, for 30 VASH PBVs.
Upon Board approval of the 10 Housing Choice PBVs, an Environmental Review for
Supplemental Assistance for the Activity/Project that is Categorically Excluded
Not Subject to Section 58.5 Pursuant to 24 CFR Part 58.34(a) and 58.35(b) will
be completed and retained on file by the County, as the Responsible Entity, in
an Environmental Review Record for the activity/project.
FINANCIAL
IMPACT:
The 30 VASH and 10 additional
Housing Choice PBVs are funded 100 percent by Federal HUD funding. The cost of
the VASH and Housing Choice PBVs can be absorbed with existing appropriations
within OCHA Fund 15F. These PBVs are available to the recipient upon issuance
of the Certificate of Occupancy anticipated in FY 2023-24.
STAFFING
IMPACT:
N/A
REVIEWING
AGENCIES:
OC
Health Care Agency
ATTACHMENT(S):
Attachment
A – Code of Federal Regulations Title 24 Subtitle A Part 58
Attachment B – Code of Federal Regulations Title 24 Part 58.34(a) and 58.35(b)