Loading...
HomeMy WebLinkAboutcc min 1997/01/07 RDA M]iNUTES OF A JOINT MEETING OF THE REDEVELOPMENT AGENCY/COUNCIL OF THE CITY OF CHULA VISTA Tuesday, January 7, 1997 Council Chambers 6:54 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: Agancy/Councilmembers John S. Moot, Stephen C. Padilla, Jerry R. Rindone, Mary Salas, and Chair/Mayor Shirley A. Horton. ALSO PRESENT: Sid Morris, Assistant Director/Assistant City Manager; John Kaheny, Agency Legal Counsel/City Attorney; Beverly A. Authelet, City Clerk; and Patricia Schwenke, Deputy City Clerk. 2. APPROVAL OF MINUTES: December 10, 1996 (Special Joint Meeting) MSUC (Horton/Moot) to approve the minutes, passed and approved 50. PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES 3. JOINT PUBLIC HEARING: TO DISCUSS CITY AND AGENCY ASSISTANCE FOR A 40 UNIT AFFORDABLE HOUSING PROJECT ON 2.97 ACRES LOCATED IN RANCHO DEL REY SPA IH--On 3/7/95, the City and Agency entered into an Affordable Housing Agreement with Rancho del Rey Investors to satisfy their affordable housing requirement for Rancho del Rey SPA III as mandated by the City's Housing Element. Associated Agreements were also approved by the Council and Agency with Rancho Del Rey and Orange Housing Development Corporation. The joint venture was unsuccessful in obtaining State and Federal Affordable Housing tax credits. The previously approved agreements with Rancho del Rey Investors and Orange Housing Development Corporation are no longer applicable. A new proposal was submitted by South Bay Community Services to act as the sole developer with the contents of the new agreements being similar to previously approved forms of these agreements, while the DDA is new. Staff recommends approval of the resolutions. 4/Sths vote required for Items a and b only (Community Development Director) Continued from the meeting of 12/10/96. a) AGENCY RESOLUTION 1526 APPROVING A FOUR HUNDRED SEVENTY EIGHT THOUSAND TWO HUNDRED AND EIGHTY DOLLAR ($478,280) COMMITMENT PROM THE LOW AND MODERATE INCOME HOUSING FUND FOR A FORTY (40) UNIT AFFORDABLE HOUSING RENTAL PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA IH - 4/5ths vote required. b) COUNCIL RESOLUTION 18545 APPROVING A FIVE HUNDRED TEN THOUSAND DOLLAR ($510,000) COMMITMENT PROM THE HOME PROGRAM FOR THE DEVELOPMENT OF A FORTY (40) UNIT AFFORDABLE HOUSING RENTAL PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA IH - 4/5th vote required. c) COUNCIL RESOLUTION 18546 APPROVING A 2.97 ACRE LAND DONATION FOR A FORTY (40) UNIT AFFORDABLE HOUSING PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA IH AND RELATED DOCUMENTS INCLUDING (1) THE CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS WITH RANCHO DEL REY INVESTORS; (2) THE ASSIGNMENT OF CONVEYANCE AGREEMENT AND ESCROW INSTRUCTIONS WITH SOUTH BAY COMMUNITY SERVICES AND (3) THE LOW INCOME HOUSING AGREEMENT BETWEEN RANCHO DEL REY INVESTORS AND SOUTH BAY COMMUNITY SERVICES ALL WITH RESPECT TO 2.97 ACRES OF Minutes January 7, 1997 Page 2 PROPERTY WITHIN SPA III PROPOSED FOR DEVELOPMENT INTO A FORTY (40) UNIT AFFORDABLE HOUSING COMPLEX d) COUNCIL RESOLUTION 18547 APPROVING TIlE SECOND AMENDED AND RESTATED AFFORDABLE HOUSING AGREEMENT WITH RANCHO DEL REY INVESTORS, L.P. e) ,[O1NT COUNCIL RESOLUTION 18548 AND AGENCY RESOLUTION 1527 APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT & HOME PARTICIPATION AGREEMENT Wl'l'lt SOUTH BAY COMMUNITY SERVICES FOR THE DEVELOPMENT OF A FORTY (40) UNIT AFFORDABLE HOUSING RENTAL PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA IH Agency/Couneilmember Moot abstained from voting, due to a conflict of interest because his company represents McMillin. Juan Arroyo, Housing Coordinator, gave a presentation on the affordable housing development. South Bay Commuinty Services will be the sole developer, and the proposed financing source was changed to utilize the California Housing Financing Agency (CHFA) bond coupled with a 4 percent tax credit from the State Allocation Program. The new financing plan involves a commitment of an additional $350,000 of home funds to make the project financially feasible. The architectural design was improved to be more compatible with the surrounding neighborhood, and more than five noticed public meetings and community forums were held. The acticus/ooay are to approve the amount and form of City/Agency financing for the project and the related property transfer fmancing development and regulatory agreements. · Cathy Limbo, 315 Fourth Avenue, Chula Vista, CA, Executive Director of South Bay Community Services, spoke in support of the project because of over 40 percent of the families looking for affordable housing are interested in three and four-bedroom apartments. · Brad Birck, 615 "~'" Street San Diego, CA, an architect with Studio E Architects, provided a diagram of the proposed development and explained some of the major concepts. He explained that 40 umts are proposed, and the three-bedroom units contain 1,140 square feet and the four-bedroom units contain 1,240 square feet. · Ken Sauder, 315 Fourth Avenue, Chula Vista, CA, Community Development Director for South Bay Community Services, spoke in support of the project. He stated the Quatro Corporation will professionally manage Cordova Village, the funding sources for this project require it to be well-managed, and the tenants will go through an extensive screening process. At this point, there is a funding commitment from the Local Initiative Support Corporation (LISC) and a letter of commitment for a construction loan from the Bank of America Community Development Bank. They will be submitting an application to the California Housing Finance Agency for permit financing and an application to the Tax Credit Allocation Committee for tax credits. He added that the contribution of the land by the Rancho del Roy investors makes this project feasible. Chair/Mayor Horton asked what would happen if they go over the budget, and who will they go to for additional funding. Mr. Sander answered they would possibly look for a larger commitment from either the Tax Credit Allocation commattee, LISC, or the City. He feels confident the current budget is within the budget range; there is a 5 percent contingency for hard costs and a 3 percent contingency for soft costs. He indicated they were seeking a 4 percent tax credit and bond financing for this project. Chair/Mayor Horton indicated the, so were low percentage rates, and most projects have at least a 10 percent contingency, with some projects as high as 15 percent. Minutes January 7, 1997 Page 3 Agency/Conncilmember Salas raised concern regarding the request for the City to allocate $350,000 from the home fund, as opposed to the previous proposal of $160,000. Mr. Arroyo answered this is an additional $350,000 from previous commitments the Agency/City made, which brings the total to $510,000. This being the time and place as advertised, the public hearing was declared open. Glen Googins, Agency Legal Counsel/Deputy City Attorney, advised that the City's Attorney's office is extensively involved with the review and preparation of the documents. A number of the documents required minor modifications to reflect the changed funding and timing of the project. A new agreement is the proposed loan and disposition and development agreement between the City, Agency, and South Bay Community Services; which ensures that monies being loaned are done in the safest manner and used appropriately for development of the project. He noted that one of the findings necessary is in connection with the subordination of the affordability covenants; those need to be subordinated to construction financing and permit loan financing because of the lenders' requirement; it is allowed under the redevelopment law, provided appropriate assurances are built in for the City to step in and assume those loans in the event there is a default. The second finding involves the expenditure of low and moderate income funds outside the redevelopment project area, and the resolution includes a g-mding to that extent. He suggested augmenting the factual findings contained in that resolution to include the fact there are a number of project areas which do not lend themselves to the development of affordable housing, in light of zoning and other considerations, and development of these units outside the project area would be of benefit to those project areas to the extent housing is not otherwise available in those project areas. ® Craig Fukuyama, 2727 Hoover Avenue, National City, CA, representing Rancho del Rey Partners, spoke in support of the project. He indicated Rancho del Rey was obligated to provide 23 Iow-income housing units, but felt providing 40 units was more appropriate. Since the project has 17 additional units than what they are obligated, and the amount of land they are committing and donating provides for development of the additional units, the excess becomes a credit. In this case, part of those credits accrue to the City as part of a reimbursement, as well as the residual receipt loan fi.om South Bay Community Services, and reimbursement from Rancho del Rey Partners through the sale of future credits. An example is if a credit sells for $30,000, the first $17,000 goes to the City and the excess goes to Rancho del Rey Partners. The City and Rancho del Roy Partners are beneficiaries of the sale of those credits. ® Robert Villareal, 2257 Tall Pines Drive, Chula Vista, CA, spoke in support of Cordova Village due to his confidence in South ][lay Community Services. He added this is a quality project in terms of style, design and management. · Chris Moxon, 315 Fourth Avenue, Chula Vista, CA, Comflallfliry Development Assistant for South Bay Community Services, spoke in support of the project, because it is consistent with Chula Viste's consolidated plan and housing element. He assists people with finding affordable apartments, and the majority of the families seek three and four-bedrnom apartments which is scarce in Chula Vista. The result is that most families end up living in overcrowded conditions. · Anne Wilson, 450 'B' Street, San Diego, CA, Director of the Local Initiative Support Corporation (LISC), spoke in support of the project. LISC provides technical and financial assistance to non-profit organizations. Since the Sen Diego program began in 1991, over $20 million was invested in the form of grants, loans, early working capital, and equity investments in housing developments. In San Diego, currently they have over 850 homes and apartments built by non-profits, with another 300 to 400 on-line. South Bay Community Services is one of LISC's strongest partners, and LISC has already committed $45,000 to Cordova Village. LISC has also discussed the potential of committing up to an additional $70,000 or $80,000 to help with the front-end costs of the development. She added that LISC's standard contingency reserve is 5 percent for a new construction project and higher for a rehab project or if site costs are involved. Minutes January 7, 1997 Page 4 · Barbara Worth, 1260 Third Avenue, Chula Vista, CA, representing the Housing Advisory Commission, reported · that on 12/4/96 the Commission nnanimously voted in favor of the project, because it complies with the City's housing element. South Bay Community Services will have the tenants' interests at heart, the project will provide affordable housing on the east side to low-income families, and the design blends with the surrounding community. There being no further speakers, the public hearing was declared closed. Agcocy/Councilmember Rindone expressed concern and felt there should be a contingency reserve of 10 percent. Chris Salomone, Director of Community Development, stated the performance bond provides a safeguard, and there is a condition that if the developer exhausts over 50 percent or more of the budgeted contingency amount, the City/Agency will have the right to approve any additional cost overruns. This is a fully-graded zone and developed site, there are no environmental issues or soils conditions to mitigate, and the four construction bids received were within the budget limits. Chair/Mayor Horton indicated that she hadn't considered that the site was already fully-graded, which eliminates some of the concern with the contingency. Agency/Councilmember Rindone asked what was the alternative of continuing this for one week to attempt to obtain a I0 percent reserve. He asked what was the nexus if Council approved this without the i0 pement contingency. Mr. Salomone felt the issue would not be resolved in a week or two. If a 10 percent contingency is desired by Council, he suggested including that in a motion to allow staff to creatively deal with that issue. Another option is for the City to increase its participation to cover the 10 percent contingency. Mr. Googins suggested as a condition to close, an additional determination be made by the City since there will be more information developed through the application process. At that time, we will know if a 5 percent contingency is sufficiant to build the project. It would provide us with an additional safeguard, and if we make a determination a 5 pement contingency is sufficient, the project will proceed. If the determination is made that a greater contingency was necessary, the problem will be dealt with before releasing our funding. MSC (Rindone/I-Iorton) to add Mr. Googins' suggestion regarding the condition to close. Agency/Councilmember Salas asked where would the increase in the City's participation come from. Mr. Salomone replied it would come from the Redevelopment low to moderate-income housing fund or home funds. Agency/Councilmember Padilla expressed support of the resolutions as offered, because of all tho connected issues that interrelate to a project like this, but the issue of how the City of Chula Vista's policy implements State mandates regarding Iow to moderate affordable housing needs to be addressed. Some of the issues that need to be examined are the manner of application, the State mandate, the economic impacts on the City and potential developers, how the credits are established and values assigned, where it is applied, the degree and manner of the City's participation of public funds in certain projects, and the use of low-mod funds from redevelopment areas. He advised he would be returning with the entire policy for examination and discussion. Chair/Mayor Horton shared some of Agency/Councilmember Padilla's concerns and felt that a workshop would be beneficial for Council to discuss these options. VOTE ON MOTION: Approved 4-0-0-1 with Moot abstaining, RESOLUTIONS 18545, 18546, 18547, 18548 AND AGENCY RESOLUTION 1527 O~'I~'ERED BY CHAIR/MAYOR HORTON, reading of the text was waived, titles read, passed, and approved 4-0-0-1 with Moot abstaining. Minutes January 7, 1997 Page 5 ORAL C OMM~N~CATIONS None. ACTION ITEMS 4. REPORT: PROPOSED CHANGES TO THI~; OWNER PARTICIPATION AGREEMENT SCRIPPS HEALTH FOR THE EXPANSION OF HOSPITAL FACILITIES-On 11/1/91, the Agency approved an OPA with Scripps for expansion of their hospital located at the northeast comer of 5th Avenue and H Street within the Town Centre II Redevelopment Project Area. In February 1996, Scripps submitted proposed revisions to the OPA which would result in substantial downsizing of their expansion plans. Staff requests the Agency review the financial impacts of the proposed changes and direct staff to bring back a proposal. (Community Development Director) Fred Kassman, Redevelopment Coordinator, reported that Scripps entered into an owner participation agreement with the Agency in 1991 and that agreement is currently in effect. As part of that agreement, a former Redevelopment Agency required Scripps to pay the full cost of the property acquisition and relocation of use serving facilities, which included Rollerskate Land and Fiesta Twin Cinema. The property settlement and acquisition occurred in 1993, and development of the first phase of the hospital expansion and the first medical office building should have occurred or been under construction by this time; however, since the early 1990s there have been significant changes in the medical services industry which are generally characterized by a dowusizing and consolidation of facilities and a concentration on outpatient short-term care, as opposed to long-term hospital care. The Agency and Scripps have agreed on deal points which are conceptual in nature and will require a considerable amount of details to be worked out. If the conceptual deal points are approved by the Agency, they will function as direction to negotiators for City staff to continue to work with Scripps to refine the terms and develop the language for the revised owner participation agreement. Chris Salomone, Director of CommuRity Development, indicated Scripps literally paid all of the fare of this project and the enormous legal costs. There were a number of businesses with leases there, and it was one of the most complicated redevelopment projects the City was involved with. · James Leery, 9845 Irma Road, San Diego, CA, architect representing Scripps, explained that health care industry is undergoing a revolution in San Diego, and the costs of health care are the heart of the issue. The difficulties it presents to a planner is the uncertainty of what the land use needs will be over the next 20 years. The combination of that site with the existing site, less the amount they will give to the school, represents approximately 13 acres. If they build the first outpatient facility on the comer, they can still park the required cars on the surface of the site. If the first facility is moved to the rear, they will have to build a parking structure with that medical office building. Assuming they would leave the comer open for potential commercial or non-hospital use, a reversion would force them to probably invest an additional $5 million with that first element, which makes the whole project come apart financially. Senate Bill 1953 is asking hospitals to evaluate their seismic characteristics and certain components of existing hospitals may have to be replaced. Scripps needs the flexibility with the pJannlng to deal with these kinds of things. MSUC (Padilla/Horton) to accept staff's report. OTHER BUSINESS 5. DIRECTOR'S/CITY MANAGER'S REPORTIS}: None. Minutes January 7, 1997 Page 6 6. CHAIR'S/MAYOR'S REPORT(S): None. 7. AGENCY/COUNCILMEMBER COMMENTS: None. The meeting adjourned at 8:22 p.m. Respectfully submitted, BEVERLY A. AUTHELET, CMC/AAE, City Clerk by: ~/~ ~.~ O~'~ ~--~..~ Patricia Schwenke, Deputy City Clerk