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Receive a presentation describing a potential affordable workforce housing project on a 1.3 acre parcel owned by the County located at 580 North 1st Street (APN 0115-060-140); Consider allocating up to $1.5 million from the current balance of the Solano County Housing Trust Fund for initial site preparation and engineering costs necessary to make the site “shovel ready” for development (4/5 vote required); and Provide further comment and direction on the project concept as appropriate
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
The County Administrator’s Office (CAO) and the Department of Resource Management recommend the Board of Supervisors:
1. Receive a presentation describing a potential affordable workforce housing project on a 1.3 acre parcel owned by the County located at 580 North 1st Street (APN 0115-060-140);
2. Consider allocating up to $1.5 million from the current balance of the Solano County Housing Trust Fund (SCHTF) for initial site preparation and engineering costs necessary to make the site “shovel ready” for development (4/5 vote required); and
3. Provide further comment and direction on the project concept as appropriate.
SUMMARY:
Affordable housing was established as one of the five priority areas identified by the Board during the Priority Setting Session held on April 18, 2023. Workforce housing was a housing type of high need in the County. Since that meeting, staff has explored several sites (both County-owned and privately-owned) that might be suitable for this type of housing. The current County corporation yard in Dixon was identified as a suitable site for housing, including for the agricultural workforce serving the farming community surrounding Dixon. Active use of this site as a corporation yard ended in 2011 with the exception of a small Agricultural Commissioner’s Office and limited storage of road materials, both of which can easily be relocated. The site is located near downtown Dixon and is within 2 miles of a grocery store.
A conceptual site plan for the parcel is discussed further below. Housing would consist of up to 18 modular one-, two-, and three-bedroom units. The initial funding requested from the SCHTF would be to complete the engineering and environmental assessments of the site, removal of existing structures, and completion of initial site preparation, as well as to reimburse the County Road Fund for the value of the property. The site has current water and sewer connections with the City of Dixon but would likely require upgraded connections for the number of units proposed. Staff has consulted with the City of Dixon and received initial feedback that they could support housing on the subject site. Actual purchase and placement of units on the site would be dependent on future funding sources, most likely through State grants or returning American Rescue Plan Act (ARPA) funds needing re-allocation. The goal of this initial phase is to make the site “shovel ready” for development.
A Phase I hazard assessment of the site is nearing completion. The funding being requested would cover costs for any further assessments and clean-up that may be required.
FINANCIAL IMPACT:
Staff recommends appropriating $1.5 million of the funds currently remaining in the SCHTF to the proposed project for delivery of a shovel ready project. Of the remaining $1.8 million, $1.4 million is ARPA funds that must be obligated by December 31, 2024 and fully expended by December 31, 2026, and $400,000 is Community Investment Funds. Staff is researching other funding sources to purchase the proposed 18 units. There is no impact to the General Fund. The costs associated with preparing the agenda item are nominal and absorbed by the Department’s FY2024/25 Working Budget.
DISCUSSION:
Overview
Development of the subject site with one-, two- and three-bedroom units represents a significant opportunity for the County to create workforce housing opportunities, affordable to residents with incomes of up to 80% of the Area Median Income (AMI), which for a family of four is currently $100,650. The County would be able to receive Regional Housing Needs Allocation (RNHA) credits for units in the low-income category. The site has current water and sewer connections with the City of Dixon but would likely require upgraded connections for the number of units proposed. Staff has consulted with the City of Dixon and received initial feedback that they could support housing on the subject site. There is a mix of residential, commercial, and industrial land uses in the vicinity. The development concept prepared appears to be consistent with the mixed used nature of the surrounding properties. The current City of Dixon zoning for the property is Service Commercial, which provides for retail and service uses not typically located in shopping centers, such as auto repair, storage facilities, equipment rental, and nurseries. County-owned property is not subject to City regulations although staff would work with the City to ensure the project is compatible with their plans.
Development Concept
Attached (Attachment A) is a draft development concept for the property. The concept incorporates 18 units in a mix of six (6) one-bedroom, four (4) two-bedroom, and eight (8) three-bedroom unit prototypes. The concept attempts to balance open space and parking to achieve convenience and quality of life for future residents.
Project Budget Assumptions
In order for the units to be affordable, rents cannot exceed 30% of the Area Median Income (AMI) for the family size that could occupy the unit based on typical occupancy standards (1 bedroom = 2 people; 2 bedroom = 4 people; and 3 bedroom = 6 people).
The following formula is used to determine maximum rent under the assumption that the tenant would pay all utilities:
Area Median Income limit for the typical household size divided by 12 months multiplied by 30% minus the Utility Allowance as determined by the local housing authority.
1-bedroom maximum monthly rent = $1,740
(2 person AMI of $80,500 ÷ 12 = $6,708.33 x 30% = $2,012 - $272 U.A. = $1,740)
2-bedroom maximum monthly rent = $2,197
(4 person AMI of $100,650 ÷ 12 = $8,387.50 x 30% = $2,516 - $319 U.A. = $2,197)
3-bedroom maximum monthly rent = $2,552
(6 person AMI of $100,650 ÷ 12 = $9,729 x 30% = $2,918 - $366 U.A. = $2,552)
Staff, or a consultant through a Request for Proposals (RFP) process, will research and recommend actual initial rents based on current market conditions at completion that are at, or below, the rents listed above, depending on the AMI and Utility Allowance schedules in effect at completion. Based on these rents, annual income from the property would be approximately $475,000. These funds would be utilized for operations and maintenance, with any remaining funds at fiscal year-end being returned to the SCHTF for future development and/or preservation of affordable housing in the County.
Planned Management of Site
Staff is researching property management options for the project which would be brought back to the Board at a future date.
Site Preparation/Development Strategy
Currently the County’s Department of Agriculture maintains an office on the site, and the County Public Works Division uses a portion of the property for a small corporation yard. Both uses can easily be consolidated or relocated to continue to meet their programmatic needs. A Phase I environmental review is currently underway to assess the site and to determine whether a Phase II review would be required as well as any mitigation or cleanup. The site was initially acquired by the County with federal funds which will require a portion of the approved budget to reimburse the County Road Fund for the value of the land (approximately $600,000).
After approval by the Board and prior to completion of site preparation, staff would pursue acquisition of prefabricated units through an RFP process which would allow for a quick turnaround time for project completion.
Affordable Housing Trust Fund
In August 2022, the Board of Supervisors approved the creation of an affordable housing trust fund and allocated $2 million in ARPA funds to establish the fund. An additional $1.7 million in ARPA funds was allocated on December 12, 2023 as part of the Board’s approval of the County’s pilot program with the Napa Sonoma ADU Center agenda item. After allocating $3.2 million in SCHTF to The Hampstead Company and $93,000 to Napa-Solano Habitat for Humanity through a Notice of Funding Availability process, the SCHTF has a remaining balance of $1.8 million, comprised of $1.4 million in remaining ARPA funds previously allocated to the SCHTF, and $400,000 from the County’s Community Investment Fund. Staff recommends the Board allocate $1.5 million to this project, leaving $300,000 in the SCHTF that does not have expenditure deadlines.
Environmental Review CEQA/NEPA
The project qualifies for a Class 32 categorical exemption from the California Environmental Quality Act (CEQA) for In-Fill Development Projects under California Code of Regulations, Title 14 §15332. The project is not subject to the National Environmental Policy Act (NEPA) because, as stated in the U.S. Department of Treasury’s Recovery Fund FAQ document, NEPA does not apply to the administration of ARPA State and Local Fiscal Recovery Fund allocated to the category of Negative Economic Impacts pursuant to Code of Federal Regulations, Title 31 §35.6(b). This project is not anticipated to be funded by any other federal financial assistance program or have federal licensing or registration requirements that would cause it to be subject to NEPA.
ALTERNATIVES:
The Board could choose not to receive the presentation or to provide direction; however, neither of these alternatives are recommended as the Board has established affordable housing as a Board priority. Additionally, this project supports a typically underhoused demographic vital to County agricultural businesses.
OTHER AGENCY INVOLVEMENT:
The CAO’s Office and Resource Management have worked with the County’s Department of Agriculture due to the possible relocation, and staff has contracted with an outside consultant to conduct a Phase I environmental assessment to determine the extent of any clean-up that may be required. County Counsel has been consulted to ensure compliance with both federal and State environmental requirements (NEPA and CEQA) as well as other legal requirements.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION