Approve and authorize a loan in the amount of $457,000 in Permanent Local Housing Allocation (PLHA) Program funds to 641 5th Street LP, including approval of a Promissory Note, Loan Agreement and Regulatory Agreement Secured by a Deed of Trust for an Affordable Housing Project to be Located at 641 5th Street in the City of West Sacramento. (No general fund impact) (Brazil/Nguyen)

Approve and authorize a loan in the amount of $457,000 in Permanent Local Housing Allocation (PLHA) Program funds to 641 5th Street LP, including approval of a Promissory Note, Loan Agreement and Regulatory Agreement Secured by a Deed of Trust for an Affordable Housing Project to be Located at 641 5th Street in the City of West Sacramento.

The California Department of Housing and Community Development (HCD) announced the release of this Entitlement and Non-entitlement Local government formula component Notice of Funding Availability (NOFA) in February 2020, for approximately $195 million for the Permanent Local Housing Allocation (PLHA) program. Funding for this NOFA is provided pursuant to Senate Bill (SB) 2 (Chapter 364, Statutes of 2017). SB 2 established the Fund and authorizes the Department to allocate monies collected and deposited in the Fund, beginning in calendar year 2019, to local governments for eligible housing and homelessness activities. The intent of the bill is to provide a permanent, on-going source of funding to local governments for housing-related projects and programs that assist in addressing the unmet housing needs of their local communities. 

On February 27, 2024, the Board of Supervisors approved staff to request access to the funds allocated to the County totaling $579,185 for the following Fiscal Years: 
FY 2020 allocation $222,882
FY 2021 allocation $234,679
FY 2022 allocation $121,264

On July 22, 2024, the County released a Request for Proposal (RFP) to implement the PLHA for affordable rental housing in Yolo County to assist persons who are experiencing or at risk of homelessness, including, but not limited to, new construction, rehabilitation, and preservation of permanent and transitional housing. The County received two proposals and awarded New Hope Community Development Corporation (New Hope) $457,000 (FY 2020 and 2021 funds) for an affordable multifamily housing project located at 641 5th Street in West Sacramento. New Hope is the ancillary nonprofit public benefit corporation formed by Yolo County Housing to develop affordable housing.  New Hope is working with Brinshore Development LLC and Operative Office Inc. to finance and construct the project.  The PLHA funds will be provided to 641 5th Street LP, a special purpose limited partnership formed by New Hope and the development partners to facilitate development of the project for federal low-income housing tax credits, via a low-interest loan.  Loan terms will include a simple interest rate of 2.0% and a term of 55-years with all payments deferred until maturity.  The loan will be evidenced by a loan agreement and promissory note secured by a deed of trust.  (See Att. A-D.) As a condition to making the loan, the project will also be encumbered by a regulatory agreement restricting occupancy of four units in the project for families earning 30% less of the area median income for Yolo County. The County's PLHA loan commitment is expressly conditioned upon successful application for low-income housing tax-credits and all other necessary financing to make the project feasible.

Due to a timeline provided by the California Department of Housing and Community Development (HCD), the County was required to submit loan documents for approval prior to requesting the PLHA program funds. Since the County still has 2020 funds available for disbursement, any 2020 PLHA funds not requested within HCD's timeframe would be disencumbered and funds will revert to the Multifamily Housing Program (MHP).  To prevent the disencumbrance of the PLHA program funds, staff is requesting the Board approve the Regulatory Agreement (Att. A.), Promissory Note (Att. B.), Loan Agreement (Att. C), and Deed of Trust (Att. D.) in substantially the form attached hereto with final approval of County Counsel as to form for the use of the PLHA program funds for the 641 5th Street project.