SB Council Agrees To Last Minute Loan To Make Apartment Conversion

After continuing its discussion on the issue for five days, the San Bernardino City Council on Monday approved loaning $880,000 in federal money available to the city for affordable housing efforts to Housing Partners I, a local non-profit involved in renovating an apartment complex in the northeastern quadrant of the city.
The city was under the gun to make the loan because the federal government was poised to take the money back if it were not activated by August 31.
In September 2016, the Housing Authority of the County of San Bernardino, known as HACSB, purchased the real property commonly known as the Golden Apartments and located at 2312, 2324 & 2336 North Golden Avenue in the San Bernardino for $2,035,000, using what are called unrestricted local funds. The Housing Authority of the County of San Bernardino was purposed to complete the sale of the property to Golden Apartments San Bernardino, L.P. a venture under which the project to renovate the property was to be carried out. Previously, the City of San Bernardino committed to make $880,000 in HOME funds available to the county for having undertaken the project in San Bernardino. The remaining funds due to the Housing Authority of the County of San Bernardino from the sale will be in the form of what officials termed a “seller carry-back loan” to the Golden Apartments San Bernardino, L.P. in the amount of $1,155,000.
The HOME Investment Partnerships Program (HOME) is a form of United States federal assistance provided by the U.S. Department of Housing and Urban Development to states and local communities to provide affordable housing, particularly housing for low- and very low-income Americans.
As the “seller carry-back loan is repaid over its 57-year term, that money will be invested in other San Bernardino projects that are eligible for HOME funds.
According to Maria Razo, the executive director of the Housing Authority of the County of San Bernardino, “The Golden Apartments consists of three detached buildings containing 21 townhome style apartment homes. The majority of the construction will be interior, converting 19 townhome units into 38 flat, efficiency units. Exterior renovation will be limited to removal and replacement of existing asphalt, wood and stucco repair, and exterior paint, as required. The converted units will serve as permanent supportive housing for chronically homeless individuals and will further the county’s efforts to address chronic homelessness. Each unit will consist of one bedroom, one bathroom, kitchen and a living area. In addition to creating a quality living space, the purpose of this project is also to provide extended social services on-site, in order to better serve the needs of the residents.”
According to Razo, “HACSB is partnering with its affiliate non-profit, Housing Partners I, Inc. (HPI), a community housing development organization, for the purposes of accepting HOME funds from the county, which have been approved in the amount of $3,158,308.”
“The County HOME funds have been designated for renovation of the Golden Apartments,” said Razo. “In addition to the County’s HOME funds, the city will also be investing HOME funds into the limited partnership in the amount of $880,000, which will be allocated toward the acquisition costs.”
It was that element of the project’s funding that came before the city council on Monday. The city council previously approved the project to convert all 21 apartments into 38 permanent housing units for homeless and low-income individuals with the proviso that Housing Partners will attempt to draw its tenants from within the city. Upon completion, the project near the corner of Golden Avenue and Highland Avenue will offer supportive services such as job placement and mental health counseling. Monday’s vote allows $880,000 in HOME funds from the U.S. Department of Housing and Urban Development to be used as a loan to help the developer acquire the property.
With councilman Henry Nickel absent and councilman Fred Shorrett abstaining because he is Housing Partners I board member, the council voted 4-1 to make the loan. That loan came from a pool of money originating with the federal government that has been available to the city since 2013 for low- and very low-income residents. Its availability would have expired after August 31 if it were not expended. City staff had recommended that the money be provided to Housing Partners I as a 57-year term loan. Staff, in the personages of city manager Andrea Travis-Miller and Community Development Block Grant coordinator Diane Cotto, recommended that the loan be made and that as the money is paid back, it be utilized for homeless housing programs to be approved by future city councils.
Because of the sunsetting of the funds’ availability, the council had to make a decision before August 31, hence the reason for the meeting on Monday night, which was specially scheduled. Four members of the council expressed dismay at having to function under that deadline, saying they resented being stampeded into making the approval.
Councilman John Valdivia attempted to explore with Travis-Miller and Cotto other possible projects in which the $880,000 could be invested. Cotto informed him that the money had to be put into a project that would be actively proceeding by the August 31 deadline, and no such housing projects were in the works that could be actuated by that date. “This is late notice,” Valdivia lamented. “It’s near the end.” He characterized the rush that was being made toward the approval to get the federal money without regard to the wider implication, saying it was typical of government to act with dispatch on issues of importance internally and involving the expenditure of public money while dragging its feet on issues and projects of importance to residents. “Government moves quickly on a deadline,” he said. “I don’t think this is a good project and I cannot and will not support it tonight,” he said.
Councilwoman Bessine Richard expressed a similar sentiment with regard to the rush, as well as expressing her belief that money available to the city for housing programs should be used for upgrading existing dilapidated properties. “Let’s work on what we have and stop building new ones,” she said. She relented, however, saying, “I said that I would support this if they changed the language,” Richard said. “Because you guys changed the language – and this project is going to happen whether we approve it (i.e., the loan to Housing Partners I) or not – I’m going to stick by my word and say since the language was changed I’m going to support it, not happily.”
Richard said that she was disappointed in staff saddling the council with a do-or-die decision at the last minute, and called upon staff to not let projects lapse to the point where the council’s options are so limited. “I don’t want to see more of these [decisions at the brink of a deadline],” she said. “We’ve got to do better.”
Councilman Benito Barrios echoed that sentiment, saying, ”We need to get away from this [decisions just before an expiration date]. What other issues are we going to have to deal with as far as deadlines? I don’t like the position the council is put in at the last moment. I don’t like supporting this project. We need to look at other options. This is the one option we have. It is all we can do and this is where we are going. I feel obligated to support it. I know there is a better approach we could have taken on this. I hope this is the last and we can make a better judgment on what is coming up. We need to get ahead of the game. We are in a position to where this city is rebuilding itself. We are healing. We are moving away from the type of politics we had in the past.” Barrios said the city needed to “get a hold of” its destiny. “You are quarterback to make that happen,” he told Travis-Miller, who was elevated to the position of city manager three weeks ago.
Councilwoman Virgina Marquez was critical, as well, of being called upon to make the call in favor of the loan or have to forfeit the funding, but said, “At the end of the day, we have to spend this money or it will go back to the U.S. Treasury.”
A number of residents expressed opposition to making the loan, though their rationales did not entirely line up. Some were critical of the city for spending money on what they deemed to be programs with a “socialistic” bent rather than utilizing available money to rejuvenate the economy and spur economic development. Others said there were more efficient housing assistance options that the money should have been used toward.
Resident Deana Adams took issue with the increase in the number of units and the reduction of their size, saying it would result in “squeezing people in like sardines.”
Karmel Roe expressed concern about the 21 families now living at the apartments who are being displaced.
Scott Olsen signaled his disapproval of the city waiting until the last minute to utilize the money on the apartment conversion instead of making a more timely expenditure, saying “City Hall [should have] used that money for what it should have done in the first place.”
One resident, Jim Smith lauded the city for its action, saying “Take this as an opportunity to move our city forward.”
Councilman Jim Mulvihill articulated the justification for making the loan, saying, “What we are doing is essentially sheltering the money and that money will be paid back to us over time. That money [in the form of loan repayments] will be used for other housing purposes.”
-Mark Gutglueck

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