Needles approves $135,000 HCD incentive for Chestnut Street rehab; 50-year covenant required

The Needles City Council voted unanimously on Jan. 14 to approve a housing incentive agreement that will supply $135,000 toward the rehabilitation of a vacant building at 108–110 Chestnut Street into two rental units. The agreement with the Danny and Cynthia Brayboy Family Trust requires a 50-year affordability covenant and authorizes the city manager to execute the agreement.

Why it matters: The project is part of the city’s use of California Department of Housing and Community Development (HCD) pro-housing incentive funds; city staff said the broader HCD allocation available to Needles totals roughly $445,000 and will support several small rehabilitation projects intended to bring vacant housing back into service for lower- and moderate-income households.

The council’s action authorizes the incentive payment and records conditions: the owner will sign a 50-year covenant that limits rents and requires annual income recertification for tenants. Staff explained the HCD guidelines use area income limits (an 80% area median income test) and that rents cannot exceed HCD’s formula; a consultant gave examples of the HCD caps used in other jurisdictions.

At the meeting, Mike Bracken of Development Management Group, who consults on affordability covenants for the program, explained how HCD’s income limits translate into maximum rents. “The maximum rent that can be charged is based on that 82,000… the maximum rent that could be charged is $2,050 a month for a family of 4,” he said, illustrating how the program’s caps compare to local market rents.

Property owner Danny Brayboy, participating by phone, said the rental properties he operates in Needles are intentionally priced low; “Our lowest rent is $715, and our highest is $978,” he said, adding the two rehabbed units will likely be offered at a similar market-friendly level.

Council discussion covered how the HCD funds must be spent quickly, how the covenant will be enforced, and whether the owner might accept federal Section 8 vouchers (staff said Section 8 participation would be at the owner’s option but that vouchers can be used if the property meets housing authority inspection standards). Staff and consultants noted that if a tenant’s income later exceeds the qualifying limit the tenant is given a transition period (approximately six to 12 months) before the unit is re-rented to an income-qualified household.

City staff said the Chestnut Street project will create two units (roughly 1,100–1,150 square feet each as described by staff), leverage the state incentive to return a vacant property to the rental market, and count toward the city’s grant spending obligations. The council approved the agreement by unanimous vote and authorized the city manager to execute the contract.

The council was told a second, larger rehabilitation project (about 29 units) will be returned to the council for approval in two weeks; staff said using the available HCD funds on several vacant-building rehabs offers a relatively low-per-unit cost compared with other state programs.