Special Notice / Hearing: None__
Vote Required: Majority
To: Honorable Board of Supervisors
From: Raymond Hodges, Director, Department of Housing
Subject: Agreements with MidPen Housing related to the Development and Operation of an Affordable Housing Project in Redwood City for Extremely Low-Income and Very Low-Income Households and Special Needs Households including those experiencing homelessness.
RECOMMENDATION:
title
Adopt a resolution:
A) Authorizing and directing the Director of the Department of Housing (“DOH”), or designee, to execute the new Exclusive Negotiating Agreement with MidPen Housing Corporation, or an affiliate entity, to afford the parties sufficient time to negotiate the terms of both a Development Agreement and an Agreement to provide long-term site control of property located at 1580-1590 Maple Street in the City of Redwood City (the “Property”) to MidPen Housing, or an affiliate entity, for the purpose of developing and operating an affordable housing development on the Property for extremely low-income and very-low income households and special needs households including those experiencing homelessness; and
B) Authorizing and directing the Director of DOH, or designee, in conjunction with MidPen Housing, to submit, or cause to be submitted, to the City of Redwood City all necessary entitlement application documents required for development of the Property as affordable housing to proceed in accordance with State law; and
C) Authorizing and directing the Director of DOH, or designee, in consultation with the County Attorney, to negotiate and enter into a Development Agreement with MidPen Housing, or an affiliate entity, regarding design, development, construction, ownership, and management of the Property as affordable housing, including the provision of supportive services at the Property; and
D) Authorizing and directing the Director of DOH, or designee, in consultation with the County Attorney, to negotiate and enter into necessary agreements to provide long-term site control of the Property, through a sub-ground lease, assignment of a ground lease, assignment of the County’s option to ground lease, or another instrument agreeable to both DOH and MidPen Housing, subject to County Attorney review and approval, to MidPen Housing or an affiliate entity to facilitate MidPen Housing, or its affiliate entity developing and operating an affordable housing development on the Property for extremely low-income, very-low income households and special needs households including those experiencing homelessness; and
E) Authorizing the Director of DOH, or designee, acting in consultation with the County Attorney, to negotiate and execute such other agreements, documents, certificates, extensions, and amendments as may be necessary to effectuate the purposes of the Resolution.
body
BACKGROUND:
1580-1590 Maple Street (the “Property”) is owned by the City of Redwood City (the “City”). The County currently has an option to enter into a ground lease with the City, which, once exercised, will allow the County to control the Property, as lessee, for sixty-five (65) years. The County can either exercise this option, and therefore possess and control the Property, so it can then authorize an experienced third-party, through an assignment or sub-lease of the County’s leasehold, to develop, own, and operate an affordable housing development on the Property for extremely low-income, very low-income households and special needs households including those experiencing homelessness; or assign its option to enter into the ground lease to an experienced third-party to develop, own and operate the affordable housing development. Assignment of the County’s option is subject to approval by the City, which may not be unreasonably withheld.
On May 24, 2022, DOH issued a Request for Proposals (“RFP”) to solicit proposals from affordable housing developers and service providers, with extensive experience developing, owning, operating, managing, and maintaining permanent supportive housing, and also providing high-quality resident services and supportive services, to serve as the developer, owner, and operator of the affordable housing project.
Two (2) qualified affordable housing developers and operators submitted Statements of Qualifications in response to the RFP, and a selection committee comprised of staff from DOH and the County Health Department and a representative of the City interviewed both entities and reviewed their submitted materials.
On July 25, 2022, the committee selected MidPen Housing because it possesses the experience and skills necessary to identify and secure long-term funding for the Property, to utilize a thoughtful approach in working with the local community and neighborhood groups, and to provide the property management protocols and supportive services the residents of the affordable housing development will need to maintain independence.
On March 3, 2023, the County and MidPen Housing entered into an Exclusive Negotiating Agreement (“Initial ENA”) with an initial term of 180 days, expiring on August 30, 2023. Between December 2023 and March 2025, the County and MidPen Housing executed three amendments extending the term of the ENA, with the final extension expiring in September 2025.
During the Initial ENA period, MidPen Housing made substantial progress toward development of the affordable housing project. In October 2022, the County awarded the project $15,154,688 through the Affordable Housing Fund (AHF) Round 10, followed by an additional $5,000,000 County award funded by the State of California’s Local Housing Trust Fund program. The project also secured a $5,000,000 philanthropic commitment from John Sobrato. MidPen Housing conducted community outreach meetings and submitted a planning entitlement application to the City under SB 35 in September 2023. In addition, MidPen Housing initiated National Environmental Policy Act (“NEPA”) review of the project in anticipation of federal funding.
Since 2023, progress on both local planning entitlements and the NEPA review has been delayed as the City evaluated options related to the City-required construction of a portion of the Bloomquist Road Extension by the developer of the adjacent 1548 Maple Street townhome site (Carlyle Group), affecting access to the 1580 Maple Street property.
At this time, MidPen Housing proposes to move forward with an alternative road access design and intends to submit this revised design to the City in early 2026. Advancing the project to entitlement approval will enable MidPen Housing to apply for state and federal Low-Income Housing Tax Credits and project-based Section 8 rental assistance, and ultimately to proceed to construction.
The purpose of the accompanying resolution is to authorize the Director of the Department of Housing (“DOH”) to enter into new and necessary agreements with MidPen Housing to allow the continued development, ownership, and operation of the affordable housing project on the Property. Given the extended delays and the need to update performance timelines and milestones, staff determined it was more appropriate to allow the Initial ENA to expire and to negotiate a new ENA.
DISCUSSION:
Subject to this Board’s approval, the County and MidPen Housing will enter into a new Exclusive Negotiating Agreement (“ENA”) to provide sufficient time for the parties to negotiate two key agreements during the ENA term (the “ENA Period”).
First, during the ENA Period, the parties will negotiate and enter into a Development Agreement that will set forth the terms and conditions governing the development and long-term operation of the permanent affordable housing improvements on the Property.
Second, during the ENA Period, the parties will negotiate and enter into any necessary agreements to transfer long-term site control of the Property from the County to MidPen Housing. While the final structure of this agreement will be determined through negotiations, it is anticipated to take the form of either (i) a sub-ground lease, under which MidPen Housing would become the County’s sub-lessee of the Property, or (ii) an assignment agreement, under which the County would assign its option to enter into the ground lease of the Property to MidPen Housing to enable development, ownership, and operation of the affordable housing project.
As negotiations proceed, the Director of DOH will consult with the County Attorney to determine the most appropriate approach to facilitate the timely development of affordable housing on the Property.
This resolution and the ENA have been reviewed and approved as to form by the County Attorney.
COMMUNITY IMPACT:
The County is dedicated to ensuring safe, affordable housing options for all San Mateo County residents, especially the most vulnerable households. The homes created by the project would be targeted to extremely low-income and very-low income households and special needs households including those experiencing homelessness.
FISCAL IMPACT:
There will be no fiscal impact to the County in connection with these actions.