TITLE
Recommendation to receive supporting documentation into the record, conclude the public hearing and adopt resolution making certain findings; approve and authorize the execution of the Disposition and Development Agreement between The Long Beach Housing Development Company and JHC Acquisitions, LLC; find that the consideration for the sale of certain real property in the Central Long Beach Redevelopment Project Area is not less than fair market value in accordance with covenants and conditions governing such sale; and approve the sale of the property and the Disposition and Development Agreement. (District 6)
DISCUSSION
The Redevelopment Plan for the Central Long Beach Redevelopment Project Area (Project Area) sets goals to ensure a diversity of housing stock for the growing population; expand, improve, and preserve the community's supply of housing available to low- and moderate-income persons; remove blighting influences; and assure high design standards for the entire Project Area.
The City Council, the Redevelopment Agency (Agency), and The Long Beach Housing Development Company (LBHDC) have also adopted a Housing Action Plan (HAP) for Fiscal Years 2005-2009 to systematically address the critical housing needs of the City and to serve as the framework for the allocation of scarce City housing resources. The HAP allocated $69 million over a five-year period for affordable housing programs. Sixty-five percent (65%) of these funds were allocated to three focus areas: Washington School, Central, and North King School. Both the Washington School and Central HAP areas are within the Central Long Beach Redevelopment Project Area. One of the recommended strategies included in the HAP is to acquire parcels that are currently vacant or have substandard improvements and, in certain instances, properties adjacent to such parcels.
Pursuant to the HAP, the LBHDC acquired three properties in the Central HAP focus area, located at 1893-1911 Pine Avenue. The properties contain 17 multifamily apartment units in five buildings. The units are severely blighted and currently unsafe for occupancy. Acquisition costs for the site totaled approximately $2,531,880 including land, buildings, relocation, escrow and other related costs. These costs were paid with redevelopment housing set-aside funds and federal Neighborhood Stabilization Program 1 Funds (NSP1).
On March 16, 2011, the LBHDC approved a proposal from Jamboree Housing Corporation (Jamboree) to purchase the site for $2,531,880, for which the LBHDC will provide an acquisition loan, and an additional $3,182,800 in construction financing to rehabilitate and reconfigure the existing substandard structures. The $5,714,680 in assistance will be structured as a residual receipts loan with a 55-year term. Jamboree subsequently created JHC Acquisitions, LLC, a wholly-owned subsidiary, to act as the developer for this project.
The proposal includes a reconfiguration of the existing 17 units into 14 apartment units, consisting of 12 two-bedroom and 2 three-bedroom units. Each unit will be fully renovated and modernized, including new windows, drywall, fixtures, kitchens, bathrooms and appliances. The proposal also includes 11 garage and two surface parking spaces, which is an increase from the existing 11 spaces; a new 480-square-foot community room, with a kitchen and bathroom; new laundry facilities; bike racks; a tot-lot; community garden; and an outdoor seating area. All units, except one on-site manager unit, will be affordable to very-low and low-income households for 55 years. A map of the site and photographs are attached (Exhibit A - Site Map and Photographs).
Although the City and the Agency are not parties to the Disposition and Development Agreement (DDA), Section 33433 of the California Health and Safety Code requires that if a property is acquired in whole or in part with tax increment funds, City Council is required to hold a Public Hearing and adopt a Resolution approving the proposed sale or transfer of the property. Pursuant to Section 33433, the Agency has made available for public inspection and reproduction a copy of the DDA and a Summary Report that contains the following:
· The estimated value of the interest to be conveyed determined at the highest and best use permitted under the Redevelopment Plan;
· The estimated value of the interest to be conveyed, determined at the use and with the conditions, covenants and development costs required by the Agreement;
· The purchase price;
· The cost of the Agreement to the Agency/LBHDC;
· An explanation of why the transfer of the Site will assist in the elimination of blight; and
· An explanation of why the sale of the Site is consistent with the Agency's AB 1290 Implementation Plan.
Summary of Disposition and Development Agreement
· The proposed Disposition and Development Agreement is between the LBHDC and JHC Acquisitions, LLC (Developer).
· The LBHDC will sell the property to the Developer for $2,531,880.
· The LBHDC will loan the Developer up to $5,714,680, of which $2,531,880 will be applied to the purchase price, and the remaining $3,182,800 will be applied to the rehabilitation costs.
· The Developer will rehabilitate the property and operate 13 income-restricted apartments, a manager's unit, a community room, open space and parking on the Site.
· The Developer will also provide social services to the residents of the units.
The Summary Report provides a more detailed description of the proposed transaction, including the responsibilities of the LBHDC and the Developer (Exhibit B - 33433 Summary Report).
In accordance with the National Environmental Protection Act, a Determination of Categorical Exclusion was issued for the proposed project on April 20, 2011 (Exhibit C - Categorical Exclusion). In accordance with the California Environmental Quality Act, a Categorical Exemption was issued on May 17, 2011 (Exhibit D - Categorical Exemption).
This letter was reviewed by Deputy City Attorney Richard Anthony on May 16, 2011, and by Budget Management Officer Victoria Bell on May 19, 2011.
TIMING CONSIDERATIONS
City Council action on June 7, 2011 will allow the LBHDC and the Developer to proceed with the sale and subsequent rehabilitation of the apartment buildings.
FISCAL IMPACT
The proposed action will not have any impact to the General Fund. The proposed development will be assisted with funds from the Housing Development Fund (SR - 135). It is unknown at this time if any new jobs will be created as a result of the development project.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LONG BEACH APPROVING THE PROPOSED DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE LONG BEACH HOUSING DEVELOPMENT COMPANY, AND JHC ACQUISITIONS, LLC; FINDING THAT THE CONSIDERATION FOR THE SALE OF CERTAIN REAL PROPERTY IN THE CENTRAL LONG BEACH REDEVELOPMENT PROJECT AREA IS NOT LESS THAN FAIR MARKET VALUE IN ACCORDANCE WITH COVENANTS AND CONDITIONS GOVERNING SUCH SALE; AND APPROVING THE SALE OF THE PROPERTY AND THE DISPOSITION AND DEVELOPMENT AGREEMENT
Respectfully Submitted,
AMY J. BODEK, AICP
DIRECTOR OF DEVELOPMENT SERVICES
APPROVED:
PATRICK H. WEST
CITY MANAGER