Title
Modification of Scope for the Gateway Mixed-Income Housing Project
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FileID
File ID: 2024-01246
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Location
Location: 3400-3401 Stockton Boulevard, District 5, Represented by Vice Mayor Maple and District 6, Represented by Councilmember Guerra
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Recommendation
Recommendation: Adopt a Resolution: 1) approving a revised Exhibit B of Resolution No. 2022- 0327, modifying the scope for the Gateway Mixed-Income Housing Project at 3400-3401 Stockton Boulevard from 230 to 196 mixed income housing units; and 2) allowing the City Manager or the City Manager’s designee to negotiate and execute a $15 million loan agreement with CT Gateway LLC with the revised scope for the Gateway Mixed-Income Housing Project at 3400-3401 Stockton Boulevard, subject to City Attorney approval as to form.
Contact
Contact: Leslie Fritzsche, Economic Investment Manager, (916) 808-5450, lfritzsche@cityofsacramento.org; Ya-yin Isle, Housing Policy Manager, (916) 808-1869, yisle@cityofsacramento.org; City Manager’s Office of Innovation and Economic Development
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Presenter
Presenter: None
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Attachments
Attachments:
1-Description/Analysis
2- Resolution
3- Attachment A to the Resolution
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Additional Description/Analysis
IssueDetail
Issue Detail: On October 25, 2022, Council adopted Resolution No. 2022-0327, which allocated $15 million for the development of a 230-unit mixed-income housing project at 3400-3401 Stockton Boulevard at 9th and 10th Street. Since that time, College Town International (CTI), the owner and developer of the project, has been hard at work finalizing the planning entitlements and building permit applications. Due to significant increases in construction costs and higher interest rates, CTI has revised their plans. The changes include a reduction in the number of total units in the project from 230 to 196. This reduction will take place on the eastern parcel which is now proposed to contain 65 units from the original 99 along with 50 parking spaces. The project is being redesigned by Vrilakas and Groen Architects, a local architectural firm specializing in catalytic infill projects.
Though the number of total units is changing, the percentage of affordability has increased. The original project had 4% of the units at 60% AMI, 31% of the units at 80% AMI, 30 at 120% AMI and 35% at market rate. This has been modified with 4% of the units at 60% AMI, 36% of the units at 80% AMI, 37% at 120% AMI and 23% at market rate. The mix of studios, one-bedrooms and two-bedrooms remains largely similar to the original composition. The revised project includes the following:
|
|
3400 Stockton (West) |
3401 Stockton (East) |
PROJECT TOTALS |
|
|
80% |
120% |
Market |
Total |
80% |
60% |
Total |
|
|
Studios |
4 |
25 |
16 |
45 |
15 |
5 |
20 |
65 |
|
1 |
8 |
37 |
24 |
69 |
37 |
1 |
38 |
107 |
|
2 |
1 |
10 |
6 |
17 |
6 |
1 |
7 |
24 |
|
|
13 |
72 |
46 |
131 |
58 |
7 |
65 |
196 |
The project will have a 30-year affordability covenant on all the affordable units except for the 60% units which will be regulated for 55 years.
If the modification is approved by Council, construction of the 131-unit project at 3400 Stockton will begin in July 2024 with an anticipated completion date in early 2026. The 65-unit eastern project at 3401 Stockton is currently being redesigned and, upon securing permits, is anticipated to begin construction by early 2025.
PolicyConsiderations
Policy Considerations: The actions outlined in this report will support the City’s policy of focusing resources to key infill areas such as Oak Park and Tahoe Park and further the development of affordable housing along Stockton Boulevard. These policies are reflected in the City’s 2040 General Plan, Housing Element, Transportation Priorities Plan and Vision Zero Action Plan. The project also furthers the housing development goals and objectives in the Aggie Square Community Benefit Partnership Agreement.
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EconomicImpacts
Economic Impacts: None.
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EnvironmentalConsiderations
Environmental Considerations: The permits for construction required by the City are ministerial, and are not subject to the requirements of the California Environmental Quality Act (CEQA). The actions requested here, which include establishment of a funding mechanism for local projects, are a fiscal activity and not a project pursuant to CEQA Guidelines section 15378(b)(4) because they do not constitute the commitment to or approval of any particular project that could have a significant effect on the environment. The project entitlements have been previously approved; no new discretionary permits would be required. CEQA Guidelines Sections 15378(b)(4); 15060(c)(3).
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Sustainability
Sustainability: The allocations outlined in this report will provide funding to assist with the redevelopment of two vacant sites on Stockton Boulevard and further sustainability goals for promoting infill development.
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Commission/Committee Action
Commission/Committee Action: Not applicable.
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RationaleforRecommendation
Rationale for Recommendation: This project is a catalytic one for Stockton Boulevard and will be the housing development closest to Aggie Square. The mixed-income nature of the project will allow for prospective tenants with a diversity of incomes in the surrounding workforce and neighborhoods to live together in a community and have the ability to stay as their income changes. Increasing the number of units on Stockton Boulevard overall will allow more opportunities for all incomes to be better served as the Aggie Square reinvestment comes to the area. Initiation of construction will be a significant milestone towards fulfilling the City’s goal for infill along Stockton and furthering the objectives outlined in the Aggie Square Community Benefit Partnership Agreement of providing City resources towards the construction of new mixed-income housing near Aggie Square.
Affected by higher interest rates and the building costs, the modification of the unit count and redesign will reduce costs for the project thus allowing the project to begin construction in the near term. This will result in much-needed new housing being added to the Oak Park and Tahoe Park area.
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FinancialConsiderations
Financial Considerations: On October 25, 2022, Council adopted Resolution 2022-0327, providing $15 million in funding for the Gateway project from the City’s Risk Fund as part of the City’s External Loan Policy for Public Benefit. There are no changes to the level of City funding recommended in this report. The proposed loan will be a 10-year loan carrying an interest rate of City’s Pool A rate plus 100 basis points with a 2.5% floor and a 3.71% interest rate ceiling, updated annually. Specific terms are outlined in the revised Exhibit to the Resolution.
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LocalBusinessEnterprise
Local Business Enterprise: Not applicable.
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