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STAFF REPORT. From the San Mateo County Board of Supervisors meeting on Tuesday, September 24th, 2024 as a hybrid meeting. Agenda Item #32
San Mateo County Supervisors approve a $900,000 forgivable loan to Peninsula Open Space Trust (POST) and Fifth Crow Farm to finance the purchase and installation of four new mobile home units for farm labor housing in Pescadero. Funds are from Measure K, the voter approved half-cent sales tax that provides local funds for local needs. The County established the Farm Labor Housing Loan Program in 2015 to support new farmworker housing or replace or repair existing housing.
To: Honorable Board of Supervisors
From: Raymond Hodges, Director of Department of Housing
Subject: Measure K: Loan to Peninsula Open Space Trust and Fifth Crow Farm for Purchase and Installation of Farm Labor Housing in Pescadero
RECOMMENDATION:
Measure K: Adopt a resolution:
A) Authorizing the form of and directing the execution by the Director of the Department of Housing, or designee, of an agreement to provide a forgivable loan (the “Loan”) in the principal amount of $900,000 to Peninsula Open Space Trust and Fifth Crow Farm to finance the purchase and installation of four new mobile home units to serve as farm labor housing in Pescadero pursuant to the County of San Mateo Farm Labor Housing Loan Program; and
B) Authorizing the form of a Promissory Note in connection with the Loan; and
C) Authorizing the form of a Deed of Trust to secure the Loan; and
D) Authorizing the form of an Affordability Covenant to ensure affordability restrictions on the property for 20 years; and
E) Authorizing and approving the taking of all necessary actions by the Director of the Department of Housing, or designee, in consultation with the County Attorney, to facilitate the closing of the transaction described herein and to give effect to this Resolution, including to execute and deliver any and all documents and certificates and to make nonmaterial changes to the forms approved herein deemed necessary or advisable to effectuate the purposes of this Resolution and the transaction contemplated hereby.
BACKGROUND:
The high cost of living in San Mateo County (the “County”) exacerbates many challenges especially for the approximately 1,400 farmworkers in the County. Many lack safe and affordable housing, adequate food, health care, and transportation.
In 2014, the Board, sitting as the Board of Commissioners of the Housing Authority of the County of San Mateo, approved the allocation for $500,000 of Moving to Work Funds (“Voucher Reserves”) for the Farm Labor Housing Pilot Program (the “Pilot Program”). The Board later replaced the Moving to Work Funds with Measure K funds to enable the County to better tailor the Pilot Program to meet local needs.
The Board allocated these funds to address the need for agricultural workforce housing and commissioned an Agricultural Workforce Housing Needs Assessment. The Pilot Program provided loans to repair or replace existing, agricultural workforce housing, including farmworker housing. The Pilot Program was intended to build partnerships and provide resources to enable farmers and agricultural landowners in order to provide safe and affordable housing for the County’s very low-income agricultural workforce.
In January 2017, the County expanded the Pilot Program to include construction of new housing, referred to as the Farm Labor Housing Pilot Program Phase III or “Phase III”. In Phase III, the County provided loans of up to $150,000 for each new unit (“Project Unit”) created, up to a maximum of two units for each application. The loans were interest free and forgiven at a rate of $10,000 per year per Project Unit, assuming the operator satisfied the contractual terms and conditions including contributing at least 20 percent of their own funds towards the total project costs.
On September 13, 2022, the Department of Housing (“DOH”) presented updates to Phase III to the Board, which created the Farm Labor Housing Loan Program (“Program”). The Program provides additional support through loan amounts for new units of up to $250,000 per unit for the first two Project Units and up to $200,000 for each additional Project Unit. The Program also allows loan amounts for rehabilitated units of up to $150,000 for each Project Unit. The Program made changes to the rent limits and provides for loan forgiveness.
DISCUSSION:
The Peninsula Open Space Trust (POST) is a 501(c)(3) non-profit organization whose mission is to protect open space on the Peninsula and South Bay for the benefit of the public. POST owns property located in the unincorporated area of the County commonly known as 4309 Cloverdale Road, Pescadero, CA 94060, APN 086-270-010 (the “Property”) and leases the Property to Fifth Crow Farm. Fifth Crow Farm is a diversified organic farm whose stated philosophy is to build an agriculture that is economically viable, socially just and ecologically sound.
POST and Fifth Crow Farm wish to purchase and install four Project Units on the Property for use by the agricultural workforce (“Project”). The Borrowers have applied for a loan of $900,000 ($250,000 for each the first two Project Units and $200,000 for two subsequent Project Units) to help finance the purchase and installation of Project Units under the Program. The loan term is 20 years from the date the Project is completed, will bear no interest, and will be forgiven at a rate of 20 percent per year for the last five years of the term. The loan will be secured by a deed of trust.
Under the Program, POST and Fifth Crow Farm will be responsible for providing 20 percent of the total Project costs and to agree to deed restrict the property for a period of 20 years to ensure the continued affordability of the Project Units. The Project Units will be restricted for use by members of the agricultural workforce who meet the income requirements.
Staff have prepared forms of a loan agreement, promissory note, deed of trust securing the loan, and an affordability covenant submitted with this memorandum, and recommend that the Board authorize such forms and the execution thereof in order to close the loan transaction.
These loan documents will provide a forgivable loan in a total amount not to exceed $900,000 and ensure affordability restrictions for 20 years, to finance the purchase and installation of four Project Units at the Property.
The County Attorney’s Office has reviewed and approved the resolution and the loan documents as to form.
EQUITY IMPACT:
The Project Units will be available to farmworkers making less than 50 percent of area median income, which, for a family of 4, is $97,900. This loan will therefore benefit this disadvantaged population and provide safe and dignified housing for these families, a goal of San Mateo County for all its residents. The Project Units will also help to house a stable workforce for the farms that serve our community.
FISCAL IMPACT:
The forgivable loan will use $900,000 in Measure K funds previously allocated to the Farm Labor Housing Loan Program. This amount is included in the Department of Housing’s Fiscal Year 2024-25 budget.
Photo courtesy of Fifth Crow Farm https://fifthcrowfarm.com/
2024 Election
The 2024 Board of Supervisors, from left: Ray Mueller (D3), Noelia Corzo (D2), Warren Slocum (D4, BOS President), David J. Canepa (D5, BOS Vice President) and Dave Pine (D1, outgoing BOS President).
Author: Coastside Buzz
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