To: Contra Costa County Housing Authority Board of Commissioners
From: Choose an item.
Date: September 12, 2023
Report Title: AUTHORIZE THE SALE OF SIXTEEN SCATTERED SITES FROM THE FORMER LAS DELTAS PUBLIC HOUSING DEVELOPMENT AT THE BELOW-MARKET PRICE OF ONE DOLLAR TO NON-PROFIT HOUSING DEVELOPERS FOR REHABILITATION AND SALE TO LOW-INCOME FAMILIES FROM LAS DELTAS AND NORTH RICHMOND WITH INCOMES AT OR BELOW 80 PERCENT OF AREA MEDIAN INCOME
RECOMMENDATIONS:
ADOPT Resolution No. 5254 authorizing the sale of sixteen scattered site buildings in the North Richmond Las Deltas Development at below-market prices to non-profit housing developers to rehabilitate and sell to low-income families from North Richmond.
BACKGROUND:
HACCC has been working with North Richmond residents and community organizations over the past several years to devise a strategy to convert the former Las Deltas property in a manner that would benefit both HACCC, former Las Deltas residents and North Richmond residents to the greatest extent possible. A strong push was made by residents and community organizations to make some of the former Las Deltas units available for affordable homeownership. There was also interest in pursuing other forms of equity-building options like land trusts and co-ops.
In July 2021, HACCC collaborated with RichmondLAND, the Community Housing Development Corporation and the Richmond Our Power Coalition to successfully apply to the San Francisco Foundation for a policy grant under The Partnership for the Bay’s Future initiative (The Partnership). The Partnership is a collaborative effort to produce and preserve affordable homes and protect tenants, so the Bay Area remains a diverse place where everyone thrives. The grant provided our group with $250,000 and a Coro Fellow (Hannah Phalen) to help with planning and pre-development costs.
One of the results of this collaboration is the RFQ HACCC released on April 10, 2023, seeking local nonprofit developers who could buy 16 of the scattered site buildings from Las Deltas, rehabilitate or redevelop them into some form of homeownership or equity-building housing and sell them at an affordable rate to families at or below 80% of area median income. The priority in all sales will be for former Las Deltas residents and then other current and past residents of North Richmond. Seven proposals were submitted in response to the RFQ.
A panel comprised of community members, resident leaders, nonprofit and government representatives was formed to review the proposals submitted through the RFQ. All proposals were reviewed, scored, and ranked. The panel is recommending that the Board approve the sale of four buildings each to the top four proposals at $1 per building. Staff support this recommendation.
The top four proposals came from the following developers: Community Housing Development Corporation of North Richmond (CHDC), Richmond Community Foundation (RCF), RichmondLAND (RL) and Richmond Neighborhood Housing Services (RNHS). The developers have identified the specific buildings they wish to purchase. These buildings are identified as follows (and marked on the attached map):
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Owner |
Address |
Building Type |
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RCF |
1730 Fred Jackson Way, Richmond, CA |
Single Family |
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RCF |
1744 Fourth Street, Richmond, CA |
Single Family |
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RCF |
1710 Giaramita Street, Richmond, CA |
Single Family |
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RCF |
423 Silver Avenue/1709 Fifth Street, Richmond CA |
Duplex |
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CHDC |
1518/1520 First Street, Richmond, CA |
Duplex |
|
CHDC |
121 Chesley Street/1511 Second Street, Richmond, CA |
Duplex |
|
CHDC |
114 W. Ruby Street/1529 Second Street, Richmond, CA |
Duplex |
|
CHDC |
1710/1714 First Street, Richmond, CA |
Duplex |
|
RNHS |
525 Silver/1711 Giaramita Street, Richmond, CA |
Duplex |
|
RNHS |
1622/1624 Fourth Street, Richmond, CA |
Duplex |
|
RNHS |
1525/1527 Giaramita Street, Richmond, CA |
Duplex |
|
RNHS |
1547/1549 Sixth Street, Richmond, CA |
Duplex |
|
RichmondLAND |
1932/1934 Giaramita Street, Richmond, CA |
Duplex |
|
RichmondLAND |
1929/1931 Sixth Street, Richmond, CA |
Duplex |
|
RichmondLAND |
1943/1945 Sixth Street, Richmond CA |
Duplex |
|
RichmondLAND |
Either 1925/1927 Giaramita Street, Richmond, CA or 1923/1925 Sixth Street, Richmond, CA |
Duplex Duplex |
RichmondLAND is interested in purchasing either 1925/1927 Giaramita Street or 1923/1925 Sixth Street as their fourth property. Their decision will be based on HACCC’s process to sell the market-rate units, which is still being developed in conversation with HUD. Once HACCC establishes its sale process, RichmondLAND will determine which property they will purchase from HACCC for $1. They will seek to purchase the other property during the open-market sales process.
If the Board approves this board order, HACCC will ask HUD for approval to sell each of these buildings at the below market rate of $1/building and execute a HUD-required Declaration of Restrictive Covenants for each building in the name of the buyers to ensure that the properties remain limited to families at or below 80% of the area median income for a period of 20 years from the date of closing of escrow.
SUMMARY OF APPROVED PROPOSALS
Four of the seven proposals are being recommended by the selection panel to move forward in the sales process. The following is a brief summary of their respective projects.
Richmond Community foundation (RCF)
The Richmond Community Foundation is a nonprofit corporation established in 2000 that has been reclaiming blighted properties and selling them to moderate-income first-time homebuyers for more than eight years. Some of their successful projects include a Black Wealth Builders fund and developing our nation’s first social impact bond that provides the Richmond area with $3 million over 5 years to provide homeownership opportunities. The RCF Connects staff team that operates Healthy Richmond/Contra Costa has worked for more than ten years in North Richmond and helped lead the process that created the North Richmond Quality of Life Plan in 2019. RCF Connects Housing Renovation program is currently working on two blighted properties in North Richmond as well - one on Second Street and one on Chesley Avenue.
RCF will rehabilitate four properties (three single family homes and one duplex) into affordable homeownership opportunities costing no more than $280,000. Their construction estimates are between $150,000 to $175,000 per property. RCF Connects brings additional resources to the program, including an EPA Brownfields grant that will allow them to assess and remediate any environmental toxins found on each housing site and a California Department of Energy grant to build electric homes with modern, high-performance electric heating and cooling systems, as well as appliances that make it safer, healthier, and more comfortable while using less energy than other homes of the same size. Because an Advanced Electric Home does not burn gas, the home has cleaner and healthier indoor air. The walls, windows, roof, and appliances are designed to make the home comfortable while using less energy and water than other homes of the same size. The homes will be able to have emergency electricity during power outages with a battery for critical needs such as lighting, Wi-Fi, medical equipment, and refrigeration. The roofs are equipped with solar panels that can recharge the battery each day to maintain emergency power during longer outages. Configurations will vary by home, but all will have smart thermostats and state-of-the-art all-electric appliances such as induction stoves and heat pumps for water heating, clothes drying, and space conditioning. Homes will come with a Level 2 EV charger to accommodate high-speed charging for electric vehicles. In addition to the Las Deltas properties, RCF Connects is restoring a home at 1727 2nd Street and building a new duplex on Chesley Avenue for additional homeownership opportunities and these properties will also be connected to the micro grid.
RCF Connects has sold $3 million in social impact bonds to Mechanics Bank and will bring this capital to the restoration of the North Richmond homes. RCF Connects' success has also attracted investment interest, including investments in their Black Wealth Builders fund. This fund helps members of the Black community, whose homeownership rates are lower than any other homeownership group, purchase homes by providing zero interest loans of up to $20,000 for down payment assistance or to cover closing costs. The loan is only repaid when the home is sold, or the mortgage is refinanced.
Community Housing Development Corporation of North Richmond (CHDC)
CHDC is a 501(c)(3) non-profit development organization founded in 1990 by local leaders in North Richmond working to eliminate blight, improve housing opportunities for current and future residents, and create better economic conditions. CHDC has developed more than 250 homes for first- time, low-income homebuyers. CHDC provides homebuyer education and counseling, post-purchase counseling and HUD approved pre-purchased workshops. Additional services include down payment assistance, foreclosure services, mortgage relief, and financial capabilities workshops. CHDC is a HUD-certified, full-cycle lending organization with appropriate certifications distributed among four counselors. CHDC has maintained collaborative relationships with North Richmond residents and organizations, most notably the prominent role the organization’s staff and Board members play in the North Richmond Municipal Advisory Council decision-making process.
The duplexes CHDC has identified will be converted into 3-or 4-bedroom, 3-bathroom single family homes with quality interior and exterior finishes. The Las Deltas homes developed by CHDC will be affordable and marketable, thus appealing to first time homebuyers who will benefit from the down payment assistance and financial counseling services offered by CHDC. All units will be affordable to residents at or below 80% AMI. Given the state of construction costs it will be difficult to sell the units for less than 80% AMI, CHDC will aim to structure the financing on at least one unit to have an AMI sales target between 60%-70%.
The sale prices will range from $500K to $550K (very conservative home prices), and CHDC will use several subsidy programs to reduce the buyer's first mortgage. We have a range of 10k to 30K in silent mortgages that can be layered. The total amount of these resources is over one million dollars to be used for down payment assistance in general. The Las Deltas wealth building fund for Las Deltas buyers will add another $90K to $100K in downpayment assistance. These funds will be directly tied to equity accumulation and will be restricted to non-flipping practices. Lastly there is a reserve adjuster amount that can be applied based on the sales price at time of sale to reconcile the need for down payment assistance and wealth building and closing cost. CHDC has used real market values for the homes in order to not depress the market or have these homes be labeled as below market.
Richmond Neighborhood Housing Services (RHNS)
Richmond Neighborhood Housing Services (RNHS) operates as a 501(c)(3) whose mission is to promote the investment and revitalization of under-resourced communities in the greater East Bay Area of California. To achieve homeownership, RNHS provides the following core programs and services for free or at a meager cost: property management of affordable rental housing, infill development for first-time and/or low to moderate-income homeowners, and financial counseling. RNHS has worked in the Richmond area for over 40 years, and North Richmond is a current area of focus and interest. RNHS collaborated with Healthy Contra Costa to support the research and drafting of the North Richmond Quality of Life Plan. RNHS has also identified potential contractors and realtors with a history in the city or deeply rooted in North Richmond.
So far, RNHS has rehabilitated and sold 4 single-family homes from their rental portfolio to their respective tenants and/or first-time homebuyers. For this project, RNHS will develop four duplexes to create eight units but sell them as duplexes so that there is homeownership AND wealth-building opportunities for the buyers. Each unit will have a minimum of one bedroom and bathroom. After conversing with past and existing members of the Las Deltas, the community can conclude a variety of options to select from being that family sizes vary from single-member households to families of 3 - 5 persons. RNHS plans to hold focus groups specifically working with former Las Deltas residents to understand their needs and financial status and provide them with financial literacy. RNHS aims to have a former resident go through the program, gain enough skills to be pre-approved by a lender for first-time homeownership, and connect them with down payment assistance programs. Furthermore, through our community outreach meetings, we will extend our program's offerings to the entire community of North Richmond as a value-add to educate the entire community.
This project would be run through RNHS’ Restoring Neighborhoods program and will benefit from that program's highly successful funding model. For the Las Deltas project, RNHS plans to use continuous funding from partners and lenders to invest in the Las Deltas community, including a line of credit of $450K secured for the project from Enterprise Community partners which will be leveraged in phases and reused and replenished after resale.
Finally, for those not selected for purchase, RNHS will provide them with other opportunities through the Restoring Neighborhoods program. RNHS Restoring Neighborhoods Department is continuously seeking and rehabbing homes to make available to low and very low-income families. With the experience, infrastructure, and personnel in place, RNHS can engage and funnel Las Deltas families to homeownership aside from the four from this purchase. Furthermore, while their efforts will be concentrated in the Las Deltas and North Richmond community for this sale, RNHS homeownership education and coaching is not restricted or solely for this project, thus allowing families to continue to pursue homeownership when and where it is best for them. They will be prepared to purchase other homes through the RNHS Restoring Neighborhood program or in the private market.
Richmond LAND
Richmond LAND is a non-profit 501(c)3 member-based organization led by women of color dedicated to creating pathways for Richmond and West Contra Costa County residents to design, finance, build, and sustain affordable housing and community development projects that fulfill community needs and aspirations for lasting collective benefit. Richmond LAND was established in 2018 as Contra Costa's first Community Land Trust. As an emerging local neighborhood developer, they utilize grassroot organizing, participatory design, and cultural cultivation to generate project concepts with deep intention and transformative significance.
Richmond LAND is behind the resident-led North Richmond Eco Village Project which brought together North Richmond residents, neighborhood leaders, and community stewards to co-create a powerful vision for revolutionary community-controlled land and housing initiatives in North Richmond, leveraging participatory design and collective decision-making.
The North Richmond Eco-Village will be Richmond LAND's first new construction development project. They are partnering with an experienced tiny-home developer and building a team of expert advisors in real estate development, financing and new construction project management. Richmond LAND will pursue either a joint venture or partner with a turnkey developer depending on availability, financial requirements, and long-term strategic objectives. Richmond LAND has already selected a team of architects, engineers, and consultants, and they have been collaborating with them since the concept phase of the Eco-village.
Richmond LAND intends to transform the duplexes into 20-22 high-quality, sustainably constructed cottage units that will serve between 20-44 residents and benefit low-income households at 30-60% AMI. The North Richmond Eco-Village cottage homes will be approximately 400 square feet and include small private porches. Amenities to the units include a private porch space, large windows, state-of-the art appliances, and ecologically sustainable features. Site improvements include ecologically-restorative landscape along Wildcat Creek. The Village was intentionally chosen to be proximate to Verde Elementary School and adjacent to the creek and trail to exemplify smart urbanism, deepen community connection, broaden outdoor education opportunities, and enhance walkable and bikeable access to local neighborhood assets.
Richmond LAND’s shared-equity model for The Village serves as an alternative to ownership that equips low-income families and individuals with the opportunity to build equity while balancing the goal of long-term affordability. The 99-year ground lease is the legal mechanism that enables this by restricting the resale price to preserve affordability in perpetuity to support continual accessibility for low-income residents. Their housing programs are specifically designed for rent-burdened households and those seeking a feasible way to move out of rental housing. Richmond LAND will provide financial literacy workshops and partner with community-based financial institutions to educate and prepare interested individuals and families with knowledge about what a housing cooperative entails, and to become prequalified to live in The Village. While the members of the Housing Cooperative do not own their units, as they would in a condominium structure, they would hold a proprietary lease to occupy a unit and owns a share in the entity that owns the building/ site improvements (i.e. the Housing Cooperatives). Residents pay monthly for housing costs, including their pro-rata share of the cooperative's debt service, maintenance, taxes, insurance, reserves, and ground lease payment to the CLT. Housing Cooperative residents participate on a board of directors, which is tied to the ownership of a share in the cooperative. They will also have the right to serve on Richmond LAND's board of directors to represent the interests of the lessees. This innovative structure fosters a sense of communal ownership, collective governance, and self-sufficiency. It also enables residents who would otherwise pour their limited wages into rent payments to build wealth with shared equity.
Richmond LAND projects a development budget of approximately $4.9 million. Thus far, they have raised $345,000 for pre-development expenses. To finance the construction phase, which they estimate at $4.6 million, they will apply for public financing and a private loan and launch a capital campaign of three million dollars ($3M) that they will use to pay the remaining amount and serve as one of the permanent sources of funding to pay down construction loans.
FISCAL IMPACT:
HACCC will incur approximately $600,000 for the sale of the sixteen properties. These costs are primarily for realtor services and for closing costs that will be allocated to the seller. These funds will come from HACCC reserves.
CONSEQUENCE OF NEGATIVE ACTION:
If the action to approve the sale of sixteen scattered site buildings from the former Las Deltas public housing development at the below-market price of one dollar each to non-profit housing developers for rehabilitation and sale to low-income families from Las Deltas and North Richmond with incomes at or below 80 percent of area median income is not approved, then HACCC will not be able to proceed with the disposition plan for the former Las Deltas scattered site properties.
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I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. |
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ATTESTED: |
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Joseph Villarreal, Executive Director |
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