To: Board of Supervisors
From: John Kopchik, Director, Conservation and Development
Report Title: Approval of $1,500,000 HOME loan, $5,000,000 Measure X loan, and $1,876,423 PLHA loan for the El Cerrito Plaza Parcel A South Affordable Housing Project in El Cerrito
☒Recommendation of the County Administrator ☐ Recommendation of Board Committee
RECOMMENDATIONS:
1. APPROVE loans of (i) HOME Investment Partnerships Program (HOME) funds in the amount of $1,500,000, (ii) Measure X (MX) funds in the amount of $5,000,000, and (iii) Permanent Local Housing Allocation (PLHA) funds in the amount of $1,876,423 to ECP Parcel A South, L.P., a California limited partnership (Developer), for the construction of an affordable housing development known as El Cerrito Plaza Parcel A South Affordable Housing, located at 515 Richmond Street in El Cerrito.
2. AUTHORIZE the Director of Conservation and Development, or designee, to execute loan documents between the County and the Developer to evidence (i) the $1,500,000 HOME loan, (ii) the $5,000,000 MX loan, and (iii) the $1,876,423 PLHA loan, subject to approval by the County Administrator and approval as to form by County Counsel.
3. FIND, as the responsible agency, that on the basis of the whole record before the County including the California Environmental Quality Act (CEQA) review prepared by the City of El Cerrito, as the lead agency, that the development is exempt under CEQA Guidelines Section 15268; and DIRECT the Conservation and Development Director, or designee, to file a Notice of Exemption for El Cerrito Plaza Parcel A South Affordable Housing with the County Clerk, and pay any required fee for the filing.
FISCAL IMPACT:
HOME funds are provided to the County on a formula allocation basis through the U.S. Department of Housing and Urban Development (HUD) (CDFA #14.239 HOME). PLHA funds are provided to the County as a grant on a formula application basis through the State’s Department of Housing and Community Development (HCD). Measure X Housing funds are part of the County General fund and derive from a countywide, 20-year, ½ cent sales tax approved by Contra Costa County voters on November 3, 2020.
BACKGROUND:
Project Description:
The El Cerrito Plaza Parcel A South Affordable Housing project site is located at 515 Richmond Street in the City of El Cerrito. The development site is currently a BART surface parking lot for the El Cerrito Plaza BART Station located adjacent to a residential neighborhood. The development will create more affordable housing opportunities near high quality transit for car-free living. The development will include the new construction of a six-story wood-frame on top of a ground floor concrete podium structure, which includes 69 rental units (a mix of one-, two-, and three-bedroom units), one manager’s unit, enclosed parking garage with 29 spaces, residential lobby, bike storage for 21 bikes, and resident amenities. The units will be affordable to households earning between 30 and 60 percent of area median income (AMI) and will include one manager’s unit.
The development’s amenities will include a community and multipurpose room, shared laundry facilities, secured entry, surveillance cameras, and a podium level central courtyard with a barbeque and playground that will be shared by all residents in the project. Residents of the development will receive no-cost broadband internet service for the first three years of initial unit occupancy after the property is placed into service and digital and financial literacy programs. In addition, the project will include an all-electric design and Green Point Rated Gold Status.
Of the 69 rental units, 31 of the units in the development will be designated as County-assisted units, of which there will be designated six HOME units, 18 MX units, and seven PLHA units. For all federally funded projects, a minimum of five percent of the total number of units must be accessible to people with physical disabilities, and an additional two percent of units must be accessible to people with auditory and visual disabilities, as defined in the Uniform Federal Accessibility Standards. This development will require a minimum of four units reserved and accessible for persons who are physically disabled, and two units reserved and accessible for persons who are hearing and/or visually impaired.
This is the first building in a multi-phased master plan for a transit-oriented development with a public-private partnership between the San Francisco Bay Area Rapid Transit District (BART), the City of El Cerrito, and a joint venture development team including The Related Companies of California, LLC (Related), Holliday Development, and Affordable Housing Access, Inc. (AHA). AHA is a 501(c)(3) nonprofit corporation founded in 1999. The Related Companies of California, LLC and Holliday Development, LLC are parties to an executed Exclusive Negotiating Agreement (ENA) dated August 3, 2021, with the San Francisco Bay Area Transit District (BART) for the entire TOD master plan area, including Parcel A South, for the development at the El Cerrito Plaza BART Station.
Funding Sources
On May 9, 2023, the Board of Supervisors (Board) approved an award of $1,500,000 in FY 2023/24 HOME funds and $2,000,000 in FY 2023/24 MX funds to Related for the construction of the El Cerrito Plaza Parcel A South Affordable Housing project, plus an additional $50,000 for the County’s project delivery costs. On June 25, 2024, the Board approved an award of $1,876,423 in FY 2024/25 PLHA funds to Related for the construction of the project. On June 24, 2025, the Board approved an award of $3,000,000 in FY 2025/26 MX funds to Related for the project. As a result, the total loan contributed by the County is $8,376,423 (the “County Loan”). On April 8, 2025, the project obtained an award for tax credits and bonds. The project has all funding for the project and will begin construction in November 2025 after execution of legal documents.
Related has formed a California limited partnership, ECP Parcel A South Housing Partners, L.P. (Developer), to develop and be the owner of this development. The property will remain under BART ownership. There will be a ground lease between BART and the Developer. The ground lease will have a term of 65 years. The HOME/MX/PLHA funds will be provided by the County in the form of a 55-year residual receipts loan. The County Loan will bear a zero percent simple interest rate at the request of the Developer, which is less than the typical 3% for County loans. Further information is detailed in the section below regarding the request and need for the lower interest rate. There may be some loan repayments if the project has a surplus cash flow (also known as "residual receipts") during the operation of the development. Affordability and use restrictions are incorporated into the County Loan documents. The County will have a Regulatory Agreement with a 55-year term of affordability. Additional non-County financing for the development includes a City of El Cerrito loan, State Affordable Housing Sustainable Communities Housing Related Infrastructure loan, State Affordable Housing Sustainable Communities Affordable Housing Development loan, State Infill Infrastructure Grant Catalyst loan, Metropolitan Transportation Commission Bay Area Housing Finance Authority Priority Sites loan, a private construction loan, and 4% tax credits. The final loan documents between the County and the Developer are anticipated to be substantially similar to those that are attached to this report.
Through this action, the Director of Conservation and Development, or designee, is authorized to execute subordination agreements and estoppels that are consistent with the subordination terms in the Loan Agreement. Due to the high construction costs and limited revenue from the restricted rents, the total amount of the financing provided to the project will likely exceed the value of the completed project. Even though the proposed equity investment from low-income housing tax credits is substantial compared to the amount of long-term debt, the partnership agreement will have numerous safeguards for the investor's equity. These safeguards essentially subordinate the County’s debt to the investor’s equity. As a result, the County Loan may not be fully secured through the leasehold interest.
Interest Rate Reduction
Related has requested that the County reduce its interest rate on the County Loan from 3% to 0% to ensure that the project can maintain cash flow positive through year 11. Related has requested the same interest rate reduction from other lenders including the City of El Cerrito, Bay Area Housing Finance Authority, and the State’s Department of Housing and Community Development.
Developer Fee
Related has also requested that the County modify the standard requirements for the cash out limit of the developer fee and allow the Developer to collect a cash out developer fee of approximately $3.68 million where the County’s guidelines limit this amount to $2.5 million with any amount above $2.5 million required to be deferred or reinvested into the development. This request for an increased developer fee is in part due to changes to the regulations made by the California Tax Credit Allocation Committee (TCAC), which allows for a higher cash out amount that exceeds the County’s limit of $2.5 million. The total amount of the developer fee is approximately $4.1 million, which is allowed by TCAC regulations. County staff recommends the County agree to a cash out developer fee to be paid out of development sources if the Developer represents that all other lenders in this finance deal have approved this level of cash fee. Any deferred fee must be paid out of the Developer’s share of residual receipts or be recontributed into the project.
Environmental Review
National Environmental Policy Act (NEPA): HOME projects are subject to NEPA and 24 CFR Part 58 environmental regulations. The NEPA review for this project has been completed by County staff and the required mitigation actions are included in the loan agreement. However, the NEPA review process is still in the HUD public comment/objection period, with HUD being provided with the County’s Request for Release of Funds (RROF) for this project. HUD’s public comment and objection period ends on November 12, 2025, and HUD may issue the AUGF after this date. As such, the County will not execute any legal documents relating to this development until after the County receives HUD’s approval of the Authority to Use Grant Funds (AUGF), which completes the NEPA review for this project. The County, as a responsible agency under CEQA, concurs with the City of El Cerrito’s CEQA determination and will file the appropriate notice with the Recorder's Office.
CONSEQUENCE OF NEGATIVE ACTION:
If the County Loan is not approved and legal documents not executed by the anticipated closing date of November 17, 2025, the Developer will not be able to construct the project.