Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Amended and Restated Declaration of Restrictive Covenant with East Palo Alto Community Alliance Neighborhood Development Organization and Preserving Affordable Housing Assets Longterm, Inc.
RECOMMENDATION:
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Adopt a resolution:
A) Approving an Amended and Restated Declaration of Restrictive Covenant (“Amended and Restated Declaration”) with East Palo Alto Community Alliance Neighborhood Development Organization and Preserving Affordable Housing Assets Longterm, Inc. to preserve the long-term affordability of the homes located at 1274, 1278, 1288 and 1290 Garden Street in East Palo Alto, CA in San Mateo County, substantially in the form of Attachment A; and
B) Authorizing the Director of the Department of Housing, or designee(s), acting in consultation with the County Attorney, to negotiate and execute any and all agreements, documents, certificates and amendments related to the Amended and Restated Declaration as may be necessary and advisable to effectuate the purposes of this resolution.
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BACKGROUND:
On January 26, 2016, through Resolution No. 074300, the Board awarded $200,000 to MidPen Housing Corporation (“MidPen Housing”) and Hello Housing, an affiliate of MidPen Housing, to create a single-family home acquisition program to preserve and expand rental and ownership opportunities for low- and moderate-income households.
On December 13, 2016, through Resolution No. 074934, the Board approved the purchase of four single-family homes located at 1274, 1278, 1288 and 1290 Garden Street in East Palo Alto, (the “Property”) owned by California Family Foundation to be purchased by MidPen Housing and Hello Housing (“Housing First, LLC”), subject to the recordation of a Declaration of Restrictive Covenant (“Declaration”) limiting rental or sale of the individual homes to households of low and moderate income, for a period of 30 years. The Declaration requires that any such sale be subject to continued resale restrictions recorded to ensure the continued use of these homes as affordable housing. The Declaration is extinguished upon sale and recording of the resale restriction.
In 2021, the County approved the transfer of the Property to MidPen Housing.
On September 30, 2024, an Assignment and Assumption was recorded as document no. 2024-051511, assigning the Declaration from Housing First, LLC to East Palo Alto Community Alliance Neighborhood Development Organization (“EPA CANDO”), in connection with the transfer of the Property from MidPen Housing. EPA CANDO’s mission is to create affordable housing and promote community and economic development in East Palo Alto.
DISCUSSION:
EPA CANDO wishes to lease the land for the homes on the Property to low-income households for a term of 99 years, during which term the lessees would own the home. The land leases would be subject to affordability and resale restrictions to ensure the homes would continue to be used as affordable housing. In addition, EPA CANDO intends to use Preserving Affordable Housing Assets Longterm, Inc. (“PAHALI”), a community land trust to further ensure the long-term affordability of the Property beyond the 99-year terms of the proposed leases. EPA CANDO intends to transfer the improvements on the Property to a qualified home buyer and contemporaneously transfer the underlying land to PAHALI. PAHALI will act as stewards and the lessor in a ground lease of the land to the qualifying home buyers (and any subsequent home buyers). This approach will ensure affordability for longer than the Declaration.
EPA CANDO’s land lease approach is consistent with the County’s objectives to ensure long term affordability for the Property but would require amendments to the Declaration which anticipated recording a resale restriction upon sale of the homes with specific County approvals and terms, some of which are outdated and incompatible with the long-term lease model. Therefore, staff recommends that the Board authorize the amendment and restatement of the Declaration to maintain the County’s affordability requirements but allow for the extinguishment of the Declaration upon recording of a land lease that restricts the Property and its resale for a period of 99 years to affordable housing, which lease shall be subject to County review and approval.
The County Attorney has reviewed the proposed resolution and Amended and Restated Declaration as to form.
IMPACT:
The County is committed to providing affordable housing that is safe, healthy, and inclusive, and designed with the needs of low-and moderate-income households in mind, including proximity to job sites, schools, and access to transportation.
This Amended and Restated Restrictive Declaration will ensure the long-term affordability of the Property and create equitable rental and homeownership opportunities for low-and moderate-income households.
FISCAL IMPACT:
There is no net County cost associated with the approval of the proposed resolution.