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HomeMy WebLinkAboutItem A,i AGENDA REPORT �/✓ ��D i2 DATE: March 25, 2002 TO: Chairperson and Members of the Redevelopment Agency THRU: John B. Bahorski, Executive Director FROM: Lee Whittenberg, Director of Development Services SUBJECT: ADOPTION OF RESOLUTION - AUTHORIZATION OF EXECUTIVE DIRECTOR TO NEGOTIATE REDEVELOPMENT LOAN AGREEMENTS AND RELATED DOCUMENTS FOR A $400,000 FUNDING COMMITMENT FROM THE AGENCY FOR THE RENOVATION OF AN APARTMENT COMPLEX AT 1119 OCEAN AVENUE; ESTABLISHMENT OF AFFORDABLE HOUSING UNITS; FINDING THAT THE USE OF TAXES FROM THE RIVERFRONT REDEVELOPMENT PROJECT AREA FOR THE RENOVATION OF THE PROPERTY AND THE PROVISION OF LOW- AND MODERATE -INCOME HOUSING OUTSIDE THE BOUNDARIES OF THE PROJECT AREA WILL BENEFIT THE PROJECT AREA SUMMARY OF REQUEST: Adopt Resolution Number, A Resolution of the Redevelopment Agency of the City of Seal Beach Authorizing the Executive Director to Negotiate Agreements in an Amount not to Exceed $400,000.00 to Facilitate the Renovation of a Four -Unit Apartment Building at 1119 Ocean Avenue; Establishing Three of the Units as Affordable Housing; and Finding that the Rehabilitation of the Property Benefits the Riverfiom Redevelopment Project Area. BACKGROUND: Overview of Previous Ag_encv Actions /Direction to Staff.' On January 28, 2002, the Redevelopment Agency authorized staff to work with housing providers to address the lack of low- moderate income housing opportunities within Seal RDA AGENDA ITEM C:Wy DacumentsV A \1119 Ocean Avenue Pmjec,,RDA Staff Report.&6Lw\03 -20.02 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency Staff Report March 15, 1002 Beach. That authorization allows the Agency Executive Director and other City staff to work with various persons and organizations that wish to explore opportunities and develop relationships with the Redevelopment Agency in regards to the utilization of the Agency "housing set - aside" funds as a financing mechanism to encourage the provision and retention of low- moderate income housing within the City. Given the previous concerns presented to the Agency regarding "excess surplus funds ", it was very important that the City staff be allowed the opportunity to discuss various projects for potential participation by the Agency in a timely manner. As indicated in the January 28, 2002 Agency Staff Report, several recent contacts with housing providers have focused on the possible private acquisition of existing apartment buildings within the City, and the Agency providing second trust deeds at either reduced or zero interest rates to rehabilitate the units and rent to low- moderate income persons and families. The assisted units would then be restricted to certain rental rates to ensure occupancy by the target income population groups, with rental assistance funding provided by the Redevelopment Agency. The City has received a proposal to assist in the rehabilitation and rental subsidy program for three units in an existing four -unit apartment building located at 1119 Ocean Avenue. The subject property is located outside of the Riverfront Redevelopment Project area, and therefore certain findings must be made by the City Council and Redevelopment Agency, which are discussed in following sections of the Staff Report. Proiect Overview/Use ofAxencv Housing Set -Aside Funds The City has received a letter proposal requesting assistance of the Redevelopment Agency in the rehabilitation of an existing 4 -unit apartment building located at 1119 Ocean Avenue (the "Property") from a local developer ( "Developer'). The proposal consists of both rehabilitation assistance and rental assistance. Please refer to Attachment 2. The rehabilitation of the 4 -unit apartment complex located on the Property and the conversion of 3 of these units into affordable housing units, one of which is to be restricted to persons and families of lower income and two of which are to be restricted to persons and families of low or moderate income, qualifies as a project eligible to receive assistance from the Agency's Low and Moderate Income Housing Fund because the Developer's renovation of the Property will serve to increase and improve the supply of affordable housing within the City of Seal Beach. The Developer has an option to purchase the Property and with Agency assistance will be able to renovate the apartment building, which is currently in a state of disrepair. In exchange for Agency assistance, the Developer will cause one of the apartment units to remain available to lower income persons and two of the apartment units to remain available to low or moderate income persons at an affordable rent for a period of at least 55 years. Consequently, the community's supply of affordable rental housing will be 1119 Ocean Avenue Pmjmt.RDA Staff Reon 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency StajfReport March 25, 2002 increased by 3 units, and the surrounding community will be improved as well due to the rehabilitation of the apartment building. The three units will be subject to affordability covenants, to be executed by the Developer and recorded against the Property, which restrict the Property to remaining available at affordable rental rates to qualifying tenants which meet the requisite income limitations for a minimum period of 55 years, as required by law as discussed below. The Developer shall agree to incorporate these affordability covenants into any lease executed for the rental of these units, which leases shall prohibit the tenants from violating the covenants. It is the understanding of staff that three of the units are currently occupied. Although it has not been determined as of this time, it is anticipated that the occupants of these units will be in the moderate - income category. If that is the case, up to two of the existing tenants could qualify for the rental assistance provisions and remain within their existing living units. - An amount not exceeding $150,000.00 of the total loan amount will be used to reimburse Developer for the costs of renovating the three units to be restricted as affordable rental housing. The remaining amount, not to exceed $250,000.00, will be used for rental assistance. The Agency will grant rent subsidies directly to the owner/landlord of the Property, on a monthly basis, over a minimum period of twenty-five (25) years. Compliance with Provisions o Redevelopment Law: Pursuant to the Community Redevelopment Law, specifically Section 33334.2(a) of the California Health and Safety Code, a redevelopment agency is required to use a minimum of twenty percent (20 %) of all taxes which are allocated to the agency pursuant to Section 33670 for the purposes of increasing, improving, and preserving the community's supply of low- and moderate-income housing available at affordable housing cost to persons and families of very low, lower and moderate income, as those terms are defined in the California Health and Safety Code. Therefore, the Agency is obligated, by law, to spend at least 20% of its tax increment monies to increase, improve, and preserve the supply of affordable housing within its community. Pursuant to California Health and Safety Code Section 33334.3(f), all new or substantially rehabilitated housing units developed or otherwise assisted with moneys from a redevelopment agency's Low and Moderate Income Housing Fund pursuant to an agreement approved by an agency on or after January 1, 1988, must be subject to a covenant requiring the units to remain available at affordable cost for the longest feasible time, but not less than fifty-five (55) years for rental units and forty -five (45) years for owner occupied units. (These minimum time periods were formerly fifteen (15) years and ten (10) years, respectively; however, effective January 1, 2002, the new legislation of AB 637 and SB 211 changed the law by increasing these minimum time periods as described above.) Therefore, since the housing units proposed to be built by the Developer on the Property will be rental units in an apartment complex, the 3 affordable 1119 Ocean Avenue Pmjxt.RDA Staff Report 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency StajfRepon March 2J, 2002 units must be subject to a recorded covenant which requires the units to remain affordable for a period of at least fifty -five (55) yews. Use ofAeencv Funds Outside Redevelopment Project Area- Necessity of Agency Findings - Pursuant to California Health and Safety Code Section 33334.2(g), an agency may use monies from its Low and Moderate Income Housing Fund outside the redevelopment project area only if both the Agency and the City Council adopt a resolution which makes a determination that the affordable housing project in question will benefit the project area. Therefore, because the Property is outside the Riverfront Pmject Area, the Agency and the City Council must each adopt a resolution making a finding that the renovation of the Property by the Developer will benefit the Riverfront Project Area. The City Council will be considering adoption of a resolution making the appropriate findings this evening. It is the opinion of staff that the renovation of the Property will constitute a benefit to the Riverfront Project Area. There are no currently existing multi - family rental housing located within the Riverfront Project Area, other than the Oakwood Apartments building which is not in need of rehabilitation assistance. As there are no other multi - family developments within the Riverfrom Project Area, it is not possible to provide multi- family . residential rehabilitation programs within this project area. The Property is located in an area immediately adjacent to the Riverfront Project Area and is within walking distance of the Riverfront Project Area, just 800 feet away. Due to the proximity of the Property to the Riverfront Project Area, the rehabilitation of the apartment building on the Property by the Developer will serve to increase the supply of affordable housing to residents of the Riverfront Project Area and in this manner will benefit the Riverfront Project Area as well as the surrounding Seal Beach community as a whole. FISCAL IMPACT: Commitment of a maximum of $400,000 of "Housing Set - Aside" Funds from the Riverfront Redevelopment Project "Housing Set - Aside "Fund. This fund has in excess of $1,600,000 available. RECOMMENDATION: Adopt Resolution Number 6- -/, A Resolution of the Redevelopment Agency of the City of Seal Beach Authorizing the Executive Director to Negotiate Agreements in an Amount not to Exceed $400,000.00 to Facilitate the Renovation of a Four -Unit Apartment Building at 1119 Ocean Avenue; Establishing Three of the Units as Affordable Housing; and Finding that the Rehabilitation of the Property Benefits the Riverfront Redevelopment Project Area. 11190ceen Avenue Pmjet.]WA SMJYRe n 4 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency StafjRepon March 25, 2002 NOTED Whittenberg Jo orski Dvector of Development Se ices E five Duector Attachments: (4) Attachment 1: Resolution Number oa -i , A Resolution of the Redevelopment Agency of the - City of Seal Beach Authorizing the Executive Director to Negotiate Agreements in an Amount not to Exceed $400,000.00 to Facilitate the Renovation of a Four -Unit Apartment Building at 1119 Ocean Avenue; Establishing Tbree of the Units as Affordable Housing; and Finding that the Rehabilitation of the Property Benefits the Riverfront Redevelopment Project Area Attachment 2: Project Proposal Attachment 3: California Health and Safety Code Sections Attachment 4: 2002 Orange County Income Guidelines 1119 Ocean Avenue Pmjcct.RDA Staff Report 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency Staff Report March 25, 2002 ATTACHMENT 2 PROJECT PROPOSAL 11190cean Avenue PmjwtRDA Stnff Report 11 I. ZOTO £9£ 6b6 91:ST ZBBZ-LZ -632 -SUNWASI EQUITY INVESTMENTS Dear City of Seal Beach/Lee Wittenberg/Pam Arends -King We at Salt Creek Realty have the option to purchase 1119 Ocean Ave,Seal Beach.This property as you know is in great disrepair.We are requesting 400,000.00 in city help. This money will be used in the following manor 150,000.00 in building renovation, 250,000.00 in rent assistance for the four unit apartment complex In return we will keep three of the units as working/low income /federally approved rent controlled units. This four unit building after renovation will be an attractive asset to the City of Seal Beach. We have attached a building renovation proposal-Please call us if you have any questions. Zo / Vie Presiden� P.O. Box 873 tag.. Beach, CA 92652 Phone: 949- 813 -2230 •949- 813 -8083 Fax 949497 -6892 2'd 2010 ESE 646 A3343 i1US dS1:40 20 L2 qa3 1 s £0'd iSL 20TB £'9[ five 91:61 20OZ- fi -93d Feb 27 02 e3:44p Oel Toro Residenee 999 - 499 -4141 p.I E -d General Construction B -1 and Roofing C -39 License No. 771813 Re: 1119 Ocean Ave, Seal Beach California PAGE I OF 3 Februery27,2002 Richard Zorn, 3011 Ivy Gkml Dr Suhe 124 Llgvna Niguel, Ce 92627 Dear Richard TTG Construction Semite, INC. is Gcemed with The Cadrarnia State Contme0rs Board for B-1 Gene li COtlsnantlon, C -39 Roofing / Waterproofing. TTG Comtruefion Serviw, INC. 4 oho tbx parent mmpany for THE TEBMrM GIIY Which is licemsd with the St2ncYmal Pest Coal Board h7rthe inspection and eradication ofwood duhoying mire's ms. We also wry a 2 million aggregme Commercial Liability I Wurunce Policy and are insured op to 1 rmllion for worker's compensation (addidorW insured cetificetc u hide within). TTG Coml.cat t Services, INC bas great ezpn ionne and advbone kno W, when doeling with pmjees oRhit sift and impoa.— locludedwithourminlinalsyouwill find references ofprojecis in 0ke sirs and value We thank you for this opporomity in pmndir, om services art, look forward to o,baing with you in the future Sincerely, Alex A del Tom Owned Opcwor 16212 Coenrwaxe Cir. Eon 6uin B Wkw-G 926H Office 9e4654.4177 F.:%96544176 Toll Free. 1477-837 2020 Ese 646 3319 East Piw BIA. Us Anaelu. CA 9W23 323 262.9n46:OR1m 323 262A056:17u 1. 977 - 937.6493 TWI Free N33B3 111:1S d91:en 2n 62 nai D0'd YSL 2010 £9E 666 9T:6S Z00Z -LZ -633 Feb 27 02 03:44p Del Toro Residence 949 -497-7193 p.2 CONSTRUCTION SERVICES, INC r General Construction B -1 and Roofing C -39 License No. 771813 Re: 1119 Ocean Ave, Seal Beach California PAGE 2 OF 3 The Co 3l-lmg ere the uDpmveamhas that we think will be ICC666My. teem vemo. 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W96544176 Sall Ever, - 87M7N83 3319 Em Pin Blvd. Ln Aa,In CAMU 325 M2.99a6 .]Riot 313 M340563u 1- 971- 937fi493:Toll &m 5'd 2010 69C 6b6 N33U3 LIXS d91:60 20 L2 Ra3 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency Staff Report March 25, 2002 ATTACHMENT 3 CALIFORNIA HEALTH AND SAFETY CODE SECTIONS "Section 33334.2. (a) Not less than 20 percent of all taxes that are allocated to the agency pursuant to Section 33670 shall be used by the agency for the purposes of increasing, improving, and preserving the community's supply of low- and moderate - income housing available at affordable housing cost, as defined by Section 50052.5, to persons and families of low or moderate income, as defined in Section 50093, and very low income households, as defined in Section 50105, that is occupied by these persons and families, unless one of the following findings is made annually by resolution:" (Remainder of section language not applicable to Riverfront Redevelopment Project) "Section 33334.2(8) (1) The agency may use these funds inside or outside the project area. The agency may only use these funds outside the project area upon a resolution of the agency and the legislative body that the use will be of benefit to the project. The determination by the agency and the legislative body shall be final and conclusive as to the issue of benefit to the project area. The Legislature finds and declares that the provision of replacement housing pursuant to Section 33413 is always of benefit to a project. Unless the legislative body finds, before the redevelopment plan is adopted, that the provision of low- and moderate - income housing outside the project area will be of benefit to the project, the project area shall include property suitable for low- and moderate - income housing." "Section 33334.3([)(1) The requirements of this subdivision apply to all new or substantially rehabilitated housing units developed or otherwise assisted, with moneys from the Low and Moderate Income Housing Fund, pursuant to an agreement approved by an agency on or after January 1, 1988. Except to the extent a longer period of time may be required by other provisions of law, the agency shall require that housing units subject to this subdivision shall remain available at affordable housing costs to, and are occupied by, persons and families of low or moderate income and very low income households for the longest feasible time, but for not less than the following periods of time: 1119 Ocean Avmue P j.t,MA Staff Report 12 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency SlajfReport March 15, 1001 (A) Fifty -five years for rental units. However, the agency may replace rental units with equally affordable and comparable rental units in another location within the community if (A) the replacement units are available for occupancy prior to the displacement of any persons and families of low or moderate income residing in the units to be replaced and (B) the comparable replacement units are not developed with moneys from the Low and Moderate Income Housing Fund. (B) Forty -five years for owner - occupied units. However, the agency may permit sales of owner-occupied units prior to the expiration of the 45 -year period for a price in excess of that otherwise permitted under this subdivision pursuant to an adopted program which protects the agency's investment of moneys from the Low and Moderate Income Housing Fund, including, but not limited to, an equity sharing program which establishes a schedule of equity sharing that permits retention by the seller of a portion of those excess proceeds based on the length of occupancy. The remainder of the excess proceeds of the sale shall be allocated to the agency and deposited in the Low and Moderate Income Housing Fund. Only the units originally assisted by the agency shall be counted towards the agency's obligations under Section 33413. (C) If land on which those dwelling units are located is deleted from the project area, the agency shall continue to require that those units remain affordable as specified in this subdivision. (2) The agency shall require the recording in the office of the county recorder of covenants or restrictions implementing this subdivision for each parcel or unit of real property subject to this subdivision. Notwithstanding any other provision of law, the covenants or restrictions shall run with the land and shall be enforceable, against the original owner and successors in interest, by the agency or the community." . • s . 1119 On Avenue P.i.t.RDA Suff Report 13 1119 Ocean Avenue Rehabilitation Project Redevelopment Agency StajfReport March 15, 2002 ATTACHMENT 4 2002 ORANGE COUNTY INCOME GUIDELINES Provided below for the information of the Agency we the current income limits for Orange County that define very low, lower, median, and moderate income: Number of Persons In Family Income Limits Very Low Lower Median Moderate Income Income Income Income l 26,450 38,100 52,900 63,500 2 30,250 43,500 60,500 72,550 3 34,000 48,950 68,050 81,650 4 37,800 54,400 75,600 90,700 5 40,800 58,750 81,650 97,950 6 43,850 63,100 87,700 105,200 7 46,850 67,450 93,750 112,450 8 49,900 71,800 99,800 119,700 1119 Ocean Avenue Proja RDA Staff Report 14