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HomeMy WebLinkAboutRDA Packet 2003/04/08 Notice is hereby given that the Chair of the Chula Vista Housing Authority has called and will convene a special meeting of the Housing Authority, Tuesday, April 8, 2003, at 6:00 p.m., immediately following the City Council meeting in the Council Chambers, located in the Public Services Building, 276 Fourth Avenue, Chula Vista, California to consider, deliberate and act upon the following: -" N tl'la\ I 8111 nenelWof ller\u " 'n the d 'declare und~r .~, .. nl . ',.: , 'J ~. ", d that I posta , b ' · e ,.. < ~ n\ an, ~ lo"e.J ~ <? ~ \" t tue MP _,.," Y;'t n ",~r)'::Ird a t' ' ~ "'" ." ,,>, n ""'" omr::\\f'l n t:"..1,1-"", HaH on .'c- -a,CltY h's {.\ ... '~!\ ,', .:!:-', n . ",0'" PUD\~C ~el<\1,CCs ~:U.h.' -' '---;IYl1lt9-. .. I ~1".3 SIGNEO- DAiE:~ CllY OF CHULA VISfA TUESDAY. APRIL 8. 2003 6:00 P.M. (immediately following the City Council meeting) COUNCIL CHAMBERS PUBLIC SERVICES BUILDING ..JOINT MEETING OF THE REDEVELOPMENT AGENCY I CITY COUNCIL AND HOUSING AUTHORITY (SPECIAL MEETING) OF THE CITY OF CHULA VISTA CALL TO ORDER ROLL CALL Agency /Council/Authority Chairman/Mayor Padilla Members Davis, McCann, Rindone, Salas; ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency and/or Housing Authority on any subject matter within the Agency/Authority's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment Agency/Housing Authority from taking action on any issues not included on the posted agenda.) If you wish to address the Agency/Authority on such a subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to the Secretary to the Redevelopment Agency or City Clerk prior to the meet.ing. Those who wish to speak, please give your name and address for record purposes and follow up action. PUBLIC HEARING The following itemls) have been advertised and/or posted as public hearings as required by law. If you wish to speak to any item, please fill out the "Request to Speak Form" available in the lobby and submit it to the Redevelopment Agency or the City Clerk prior to the meeting. 1. a. CITY COUNCIL PUBLIC HEARING TO CONSIDER THE ISSUANCE OF TAX EXEMPT OBLIGATIONS WITH RESPECT TO THE PROPOSED RANCHO VISTA APARTMENTS AT EASTLAKE - The City of Chula Vista has received a request from CIC Eastlake, L.P. to consider the issuance of tax exempt obligations to finance the development of a 150 unit affordable housing complex, within the EastLake master planned community. The proposed "Rancho Vista Apartments at EastLake" project is located on a vacant 8.25 acres site located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive in the City of Chula Vista, The Redevelopment Agency and City have received a request for financial assistance for the project" [Community Development Director] b. HOUSING AUTHORITY RESOLUTION REGARDING ITS INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS FOR A PROPOSED AFFORDABLE MULTIFAMILY HOUSING PROJECT KNOWN AS RANCHO VISTA APARTMENTS AT EASTLAKE c. COUNCIL RESOLUTION PURSUANT TO SECTION 147(F) OF THE INTERNAL REVENUE CODE OF 1986 APPROVING THE ISSUANCE OF BONDS BY THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA FOR THE RANCHO VISTA APARTMENTS AT EASTLAKE d. JOINT REDEVELOPMENT AND CITY COUNCIL RESOLUTION CONDITIONALLY APPROVING FINANCIAL ASSISTANCE, SUBJECT TO FUTURE APPROPRIATION, IN THE FORM OF RESIDUAL RECEIPTS LOANS FROM THE LOW AND MODERATE INCOME HOUSING FUND IN AN AMOUNT NOT-TO-EXCEED $1,000,000 AND $500,000 FROM THE HOME INVESTMENT PARTNERSHIP PROGRAM TO CIC EASTLAKE, L.P., FOR THE DEVELOPMENT OF THE PROPOSED 150 UNIT RANCHO VISTA APARTMENTS AT EASTLAKE 4/5THS VOTE REQUIRED STAFF RECOMMENDATION: Adopt the resolutions. OTHER BUSINESS 2. DIRECTOR'S REPORTlS) 3. CHAIR/MAYOR REPORTlS) 4. AGENCY/COUNCIL COMMENTS Redevelopment Agency, April 8, 2003 Page 2 ADJOURNMENT The meeting will adjourn to the regular meeting of the Redevelopment Agency on April 15, 2003, at 6:00 p.m., immediately following the City Council meeting in the City Council Chambers, COMPLIANCE WITH THE AMERICAN WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans with Disabilities Act (ADA), request individuals who require special accommodates to access, attend, and/or participate in a City meeting, activity, or service request such accommodation at least 48 hours in advance for meetings and five days for scheduled services and activities. Please contact the Secretary to the Redevelopment Agency for specific information at (619) 691.5047 or Telecommunications Devices for the Deaf (TOO) at (619) 585.5647. California Relay Service is also available for the hearing impaired. Redevelopment Agency, April 8, 2003 Page 3 ~lf? -.- "- - ---- -:::~~~ Community Development Department City Of Chula Vista 276 Fourth Avenue Chula Vista, Ca 91910 619.691.5047 - 619.476.5310 Fax cvcomdev@ci.chula-vista.ca.us INFORMATION MEMO CI1Y OF CHULA VISfA FROM: The Honorable Chair and Members of the Redevelopment Agency David D. Rowlands, Jr., Executive DirectorG~r' Laurie A. Madigan, Executive Secretary L~f~n L.f'\ April 3, 2003 TO: VIA: DATE: RE: JOINT CITY COUNCIL/REDEVELOPMENT AGENCY ITEM #1 - CITY COUNCIL CONSIDERATION OF THE ISSUANCE OF TAX EXEMPT OBLIGATIONS WITH RESPECT TO THE PROPOSED RANCHO VISTA APARTMENTS AT EAST LAKE As has been previously communicated to you, Chelsea Investment Corporation (CIC) has proposed a 150-unit rental housing development for families, to be known as "Rancho Vista", to satisfy the low-income housing requirement of Eastlake Trails, Woods, Vistas and "Land Swap" Parcels (see attached Agenda Statement). More recently, another proposal to satisfy this affordable housing obligation has been presented to staff. The alternate proposal would release Eastlake of providing the actual obligation of 183 low income housing units within the Eastlake community and look at satisfying the requirement with housing for the Olympic Training Center (OTC). The vacant 8.25 acre (gross) site located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive currently proposed for affordable housing would be released from this obligation and developed for market rate housing. Proceeds from the sale of this property, along with a cash contribution from CIC and/or the Eastlake Company would then be used to fund the construction of 183 apartments on the site of the OTC. It is proposed that occupancy would be limited to athletes and employees of the OTC. At this point in time, the proposal presented has been conceptual. Staff is working with the OTC, the Eastlake Company and CIC to further define and analyze the proposal. Although staff is reviewing the alternate proposal, staff is also continuing to process the proposed Rancho Vista family apartments. The Rancho Vista proposal is facing time CITY COUNCIUREDEVELOPMENT AGENCY - ITEM #1 PAGE 2 April 3, 2003 sensitive deadlines for Bond and Tax Credit financing for affordable housing developments (April 16, 2003), At the same time, details of the alternate proposal have not yet been finalized and there remains a level of uncertainty. Rather than risk losing an opportunity for funding, the City is continuing to review and consider the Rancho Vista proposal until a finalized agreement and full analysis of the alternate proposal can be completed. It is expected that staff will have additional information about the status on the alternate proposal prior to the Council/Agency meeting on April 8. J:ICOMMDEVlSTAFF.REPI04.08.03\INFO MEMO. Eastlake Aft Hsg 4.3.03.doc PAGE 1, ITEM NO.: / MEETING DATE: 04/08/03 CITY COUNCIL/REDEVELOPMENT AGENCY/HoUSING AUTHORITY AGENDA STATEMENT A) PUBLIC HEARING: CITY COUNCIL CONSIDERATION OF THE ISSUANCE OF TAX EXEMPT OBLIGATIONS WITH RESPECT TO THE PROPOSED RANCHO VISTA APARTMENTS AT EASTLAKE. B) HOUSING AUTHORITY RESOLUTION REGARDING ITS INTENTION TO ISSUE TAX EXEMPT OBLIGATIONS FOR A PROPOSED AFFORDABLE MULTIFAMILY HOUSING PROJECT KNOWN AS RANCHO VISTA APARTMENTS AT EASTLAKE. C) COUNCIL RESOLUTION PURSUANT TO SECTION 147(F) OF THE INTERNAL REVENUE CODE OF 1986 APPROVING THE ISSUANCE OF BONDS BY THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA FOR THE RANCHO VISTA APARTMENTS AT EASTLAKE. D) JOINT COUNCIL AND AGENCY RESOLUTION CONDITIONALLY APPROVING FINANCIAL ASSISTANCE, SUBJECT TO FUTURE APPROPRIATION, IN THE FORM OF RESIDUAL RECEIPTS LOANS FROM THE LOW AND MODERATE INCOME HOUSING FUND IN AN AMOUNT NOT-TO-EXCEED $1,000,000 AND $500,000 FROM THE HOME INVESTMENT PARTNERSHIP PROGRAM TO CIC EASTLAKE, L.P., FOR THE DEVELOPMENT OF THE PROPOSED 150 UNIT RANCHO VISTA APARTMENTS AT EASTLAKE SUBMITTED BY: COMMUNITY DEVELOP~,~NT DIRECTOR L-~ --\1, LY\ REVIEWED BY: EXECUTIVE DIRECTOR ~. yC'" ITEM TITLE: BACKGROUND 4/5THS VOTE: YES 0 NO D The City of Chula Vista has received a request from CIC Eastlake, LP., a partnership between Pacific Southwest Community Developmenf Corporation and Chelsea Investment Corporation, to consider the issuance of tax exempt obligations to finance the development of a 150 unit affordable housing complex, within the Eastlake master planned community, The proposed ! - ( PAGE 2, ITEM NO.: MEETING DATE: ( 04/08/03 "Rancho Vista Apartments af Eastlake" project is located on a vacant 8,25 acre (gross) site located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive in the City of Chula Visfa (Exhibit 1 :,. Additionally, fhe Redevelopment Agency and City have received a request for financial assisfance for the project. The developer is in the process of preparing an application for an allocafion of fhe 2003 stafe ceiling on private activity bonds for multi-family projects from fhe California Debt Limit Allocafion Committee (CDLAC) and is requesting fhat the Chula Visfa Housing Authority be fhe vehicle for applying for an aggregafe amount not to exceed $12 million. The applicafion musf be submitted by April 16, 2003. The bond allocation will be used to substantially finance the project. At this time, fhe City Council is asked to hold a public hearing on fhe question of whether fhe Housing Authority should issue fax exempf bonds for fhe financing of the project and to approve the issuance, sale, and delivery of mulfi-family housing revenue bonds by fhe Housing Authority at the time a bond allocation is received, Additionally, it is requested thaf the Housing Authority adopf a resolution expressing its preliminary intention to issue bonds. The requested actions are preliminary and do nof commit fhe Authority to issue the bonds, Such preliminary actions are necessary in order to allow the project developer fo submit an application fo fhe State bonding authority and to allow the developer fo receive reimbursement out of bond proceeds for costs if incurs leading up to the actual sale of bonds, If successful in obtaining a bond commitment from CDLAC, the developer plans to come back to the Authority fo request final approval for fhe issuance of the bonds. In accordance with the requiremenfs of CEQA, the Environmental Review Coordinator has determined thaf the project is covered by Addendum (IS-03-009) fo fhe Eastlake Replanning Program Final Subsequent Environmenfal Impact Report (FSEIR) 97-04 and FSEIR 86-04, plus other relafed environmental documents. The proposed project will not result in any new environmental effects thaf were not previously identified, nor would fhe proposal result in a substantial increase in severity in any impacts previously idenfified, RECOMMENDATION It is recommended that the Housing Aufhority, Redevelopment Agency, and fhe City Council fake the following actions: 1. That fhe City Council conduct the required public hearing regarding the Authority's intent to issue the tax exempt obligations for the proposed Rancho Vista Apartments, 2. That the Authority adopt the resolution regarding its intention to issue tax. exempt obligations for the proposed Rancho Vista Apartments wifhin fhe Eastlake ma.ster planned community. 1-2 PAGE 3, ITEM NO.: MEETING DATE: I 04/08/03 3. That the City Cauncil adopf a resolution approving the issuance, sale and delivery of multifamily revenue bonds of the Housing Authority of the City of Chula Vista for the Rancho Vista Apartments development of the EastJake master planned community, 4. Thaf fhe Agency adopt fhe resolution conditionally approving financial assistance of $1,000,000 from the Redevelopment Low and Moderate Income Housing Fund to C1C Eastlake, L.P. for fhe development of the proposed 150 unit Rancho Vista project, 5. That the City adopt fhe resolution conditionally approving financial assistance of $500,000 from fhe HOME Investment Partnership Program to CIC Eastlake, L.P. for the development of the proposed 150 unit Rancho Vista project, BOARDS/COMMISSIONS RECOMMENDATION On February 26, 2003, the Housing Advisory Commission voted to recommend the development of fhe proposed Rancho Vista Apartmenfs and the use of tax-exempt bonds and Low and Moderate Income Housing Set-aside funds to finance the project, On April 14, 2002, the Design Review Committee (DRC) will review and consider fhe proposed plans, DRC held a preliminary hearing on the project on March 3, 2003. DISCUSSION THE PROPOSED PROJECT Under fhe City's Affordable Housing Program, fhe master developer of Eastlake Trails, Woods, Vistas and "Land Swap" Parcels (11/111)1 has an obligation to provide a total of one hundred eighty fhree (183) low. income units. Chelsea Investmenf Corporation (CIC) has proposed a 150-unit rental housing development, to be known as "Rancho Visfa", fo satisfy Eastlake II/Ill's low-income housing requirement. The project is proposed for a vacant 8,25 acre (gross) site located on fhe east side of future EastJake Parkway, approximately 3,000 feef soufh of Clubhouse Drive, in the Eastlake Greens Planned Community. The site provides a great locafion for an affordable rental community due to ifs location adjacent and/or in close proximity to public transit and neighborhoods services and facilities, Eastlake Parkway is designated as a public transit corridor and provides direct access fo public transit. Future SR-125 is located directly west of the development. Necessary neighborhood services and facilities are also easily accessible. Eastlake Village Center, located on the southeast corner of EastJake Parkway and Otay Lakes Road and just north of the development, provides a Vons grocery store, numerous eateries, bonking facilities and other appropriate neighborhood services. The site is also across the street from the proposed EastJake Terraces commercial development. The Church of the Nazarene borders the proiect to the north. Along with the proposed em-site recreational amenities, Chula Visfa Community Pork (- .3 PAGE 4, ITEM NO.: MEETING DATE: I 04/08/03 to the north, a fufure neighborhood park directly southeast and the trail system bordering the project to the east will provide ample recreational opportunifies for future residents. The educational needs of fufure sfudents could be served by Olympic View Elementary School, directly east, and Easflake High School, up fhe street from the project, The Chula Visfa Elementary School Disfrict has provided staff with written confirmation of the District's capacity to serve fhe proposed project, as well as fufure residents of the Land Swap area, The site is also advanfageous because fhe location provides minimal impact on the surrounding community, There are currently no existing housing developments within close proximity, with fhe excepfion of the affordable Antigua condo development, The project is compatible with the surrounding land uses, The vacant property adjacent to the project on the soufh side will be developed with a tofal of 600 units of multifamily housing. Such physical barriers as an SDG&E Easement and a significant grade separation exist between the proposed project and other surrounding neighborhoods. Access to fhe site is taken directly from Eastlake Parkway and not through existing neighborhoods, It is proposed that the development will consisf of 150 affordable rental dwelling units to meet the needs of lower income residenfs of Chula Vista, The developer is proposing less than fhe required 183 unifs of affordable housing as an incenfive to provide housing for families. Staff is supportive of the developer's request to receive additional credit for providing more three and four bedroom (described below in Income and Renf Resfricfions section). The project is, therefore, being designed to accommodafe the need for family housing, with 60 percenf of the units provided as three and four bedroom unifs, Five 3-story buildings will accommodate 60 two-bedroom unifs" 80 three-bedroom units and 10 four-bedroom unifs. Unit sizes will range from 868 square feef for a two-bedroom unit to 1,233 square feef for a four- bedroom unit. One unit will be used for an on-site property manager and will not be income and renf restricted. Proposed on-site amenities include a community room, fot lot, half baskefball court, and bbq/picnic areas. The project is also proposed as a rental development to address the more pressing needs of lower income residents. Of fhe City's lower income rental population, 58 percent are very low income and 42 percent are low income. Very low income households are experiencing serious housing issues with 75 percent of such households paying more than 50 percent of fheir income towards housing, With the majority of the lower income population as very low income households and so many of these households paying more than half of fheir income towards renf, homeownership is not recommended due to the limited income available to support the purchase of a home and for discretionary expenses, The proposed 55.year term of affordability also guarantees the availability of such housing for the long term. Affordable homeownership opportunities generolly end with fhe first homebuyer, With no other family rental communities within Eastlake or odjoining Rolling Hills Ranch, the proposed project would provide greater housing choice for lower income households in the (- {- PAGE 5, ITEM NO.: MEETING DATE: { 04/08/03 neighborhoods east of Interstate 805. Additionally, if would provide the Easflake community with a variety of housing types to create balance and synergy, INCOME AND RENT RESTRICTIONS For the bond funding, Section 142 (d) of the Internal Revenue Services Code, requires a minimum of twenty percent of the rental units in the Project to be available for occupancy by persons or families whose income does not exceed 50 percent of the median income for the San Diego Primary Mefropolitan Stafistical Area, or alternatively, at least 40 percenf of fhe rental units are required to be available for occupancy by persons or families whose income does not exceed 60 percent of the median income for the Area, In each case, fhe units are fo be made available at affordable rents established by the applicable State law, It is proposed that all 150 units will be affordable to and restricted for occupancy by low and moderate-income households. The City/Agency will only require fhat 49 percent of the 150 unifs be resfricted for very low and low income households and the remaining 51 percenf will be for moderafe income households fo qualify as an exempf development under Article XXXIV of the State Constitufion. Therefore, a tofal of 30 units will be affordable for very low at 50 percent of AMI, which is currently $31,900 a year for a family of four, and 43 units for low income households ot 60 percent of AMI, which is currently $38,280 a year for a family of four, The remaining 77 unifs will be affordable for moderate-income households at 120 percenf or less AMI. The restricted renfs will be based upon HUD income limits established for fhe current fiscal year, Unit Description No. of Units Target Income FY 2002 Group Rent 12 50% AMI $ 718 2 Bdrm/2 Ba 17 60% AMI $ 860 31 120% AMI $ 1623 16 50% AMI $ 861 3 Bdrm/2 Ba 23 60% AMI $ 1034 41 120% AMI $ 1875 2 50% AMI $ 925 4 Bdrm/2 Ba 3 60% AMI $ 1110 5 120% AMI $ 2091 TOTAL! WTD AVG 150 $ 1357 It is proposed that the income, rent, and age restrictions for Rancho Vista will be mainfained for a period not less than fifty-five years, exceeding fhe 30-year term of the bonds. The income and rent restrictions outlined above are to be incorporated into the Regulatory and Loan Agreements for both the bonds and the City/Agency Loan, which will be recorded against the property, The affordable housing commitment will bind all subsequent owners of Rancho Vista, so that fhe commitment remains in force regardless of ownership, except in limited circumstances following a default and foreclosure on the project, I -5' PAGE 6, ITEM NO.: I MEETING DATE: 04/08/03 The Regulatory Agreement between the Housing Authority and the developer for the bond financing will restrict 40 percent of the total units (109 units) for occupancy by low-income households at 60 percent or less of AMI. The Tax Credit financing will also require an independent regulatory agreement restricting units for occupancy by low income households at 60 percent or less of AMI, fhe terms and conditions of which are fo be determined at a later date. The Loon Agreemenf and Related Restrictive Covenants for the City/Agency's financial assistance will restrict rents and occupancy of 49 percent of the 150 units (73 units) for lower income households, with 30 units for very low and 43 units for low income households. The remaining 77 units will be affordable and restricted for occupancy by moderate-income households. Compliance with the income and rent restrictions will be subject annually to a regulatory audit and annual tax credit certificafion. The developer has successfully managed low-income housing units for fhree years. Compliance with strict property management policies and procedures will ensure that income and rent restrictions will be maintained for the full 55-year compliance period. ARTICLE XXXIV Article XXXIV of the California Constitution (Article XXXIV) requires fhaf voter approval be obtained before any "stafe public body" develops, constructs or acquires a "low rent housing project". A redevelopment agency is a "state public body" for purposes of Article XXXIV, and as a result, if a redevelopment agency participates in development of a "low rent housing project" and that participation rises fo fhe level of developmenf, construction, or acquisition of the project by the agency, approval by fhe electorate pursuant fo Article XXXIV is required for fhe project. On April 11, 1978 under Proposition C, the vofers of Chula Visfa authorized the development, construction, or acquisition of 400 units of "low renf housing" by fhe Agency, Of fhe 400 allowable credifs, Chula Vista has utilized 293 units and has a balance of 107 units remaining. This project will not have an impact on fhe remaining 118 unifs. Therefore, it is proposed that the City and the Agency limit its low-income restrictions to 49 percent of fhe total units in the project, Projects which are less than 50 percent restricted are not considered "public housing" for purposes of Article XXXIV, PROJECT MANAGEMENT. MAINTENANCE AND UPKEEP The Multifamily Revenue Bond and Tax Credit Program, along with Agency/City assistance, drive the strict management, maintenance and upkeep of affordable housing developmenfs. In order to attract private investment and public assistance, developers of affordable housing need to ensure that the investmenf made will be protected, Projects are required to establish a property management plan and to implement and enforce the policies and procedures, Additionally, $250 per unit must be set-aside on an annual basis for capital reserves to periodically pay for major repairs needed, Projects are then monitored on an annual basis for compliance with each of the regulafory agreements. 1-(.:. PAGE 7, ITEM NO.: MEETING DATE: { 04/08/03 The market demand for affordable units also enables the property owner to be selective in accepting residents. In general, CIC states that there are three to four applicants for every new unit. Lastly, C1C has also been an active participant in fhe City's Crime Free Multifamily Housing Program. St, Regis Park located in Chula Vista, owned and operafed by C1C, has been a positive example of a successful partnership between the City's Community Development and Police Departments and fhe Developer, PROPOSED FINANCING OF PROJECT Financing and developmenf of this project is a joint private-public partnership. The developer will be using Tax Exempt Mulfi-Family Revenue Bonds and Low Income Housing Tax Credif financing to support fhe majority of the estimated $21 million cosf of constructing fhe project, CIC has requested the Housing Authority of the City of Chula Visfa consider fhe issuance of $12 million in private activity bonds from the California Debt Limif Allocation Committee (CDLAC), with approximately $11 million anficipafed for issuance af this time. CIC will also apply for approximately $6.8 million in Low Income Housing Tax Credits, The Bonds and Tax Credits would cover 89 percent of fhe estimated $20,1 million cost. Wifh renfs restricted to 50 and 60 percent of the Area Median Income (AMI) for a period of 55 years, fhe net operafing income is insufficient to support a loan large enough to cover the project costs. Therefore, there remains a financing gap of approximately $3.25 million. It is proposed that the remaining financing gap of $3.25 million will be met by a combination of developer equity and City/Agency assistance. The developer has committed to deferring 50 percent of fheir fee as the developer of the project and 4 percent of the Confractor fee, for a fotal of $1.75 million or $11,667 per unit fo assist with the remaining gap. Addifionally, CIC has requested direct financial assistance of approximafely $1,500,000 or $10,000 per unit from the Redevelopment Agency and fhe City to close this financing gap, Staff is recommending fhaf the Agency/City conditionally approve financial assisfance (subject to future appropriafion) in fhe form of CI residual receipfs loan in an amount not fo exceed $1.5 million to assist with the remaining finClncing gap. It is proposed thaf the Agency/City financial assistance will come from the Agency's Low/Moderate Income Housing fund ($1,000,000) and the City's HOME funds ($500,000), The leveraging of local dollars is necessary to obtain the critical bond/tClx credif financing for fhe project, As proposed, the project would be able to leverage $14 in privClte investment for each $1 of our local resources, FinanciClI assistance for the residentiClI units will be subject to negotiation of satisfClctory terms of the RegulCltory Agreement Clnd Loan Agreement and the ClpprovClI of such terms and documents by the Agency/City af CI later date, Proiect Development Costs Development costs are one of the key variables determining the need for subsidies. It is important that those costs be reasonoble, At CI total project cost of approximately $21 million including land, the average residentiol unit cost of approximately $140,000 is consistent with (- 7 PAGE 8, ITEM NO.: MEETING DATE: f 04/08/03 typical affordable new construction multi-family developments, Exhibit 3, Summary of Sources and Uses, delineates the entire developmenf project costs associated with fhe project. Undue Gain It is important thaf any financial assistance provided has fhe effect of making fhe units more affordable and not creating undue gain for any party, The developer will receive a "Developer Fee" estimated at $1,200,000 or approximately 6 percent of fotal proiect costs and consisfs of profit and overhead for developing the project. CIC has agreed fo defer 50 percent of their developer fee in order to fill some of the financing gap of the project, Paymenfs of fhe deferred developer fee will be paid out of the project's cash flow after debt service and operating expenses, Due fo the minimal residual cash flow to be realized from this project, it is anticipated that it will fake a minimum of ten yeors to realize payment on the deferred developer fee. Staff has confirmed thaf the developer fee is within acceptable sfandards adopted by the Stafe Tax Credit Allocation Committee and fhe Federal Home Loan Bank's Affordable Housing Program for a project of fhis size and affordability. Subsidy Analysis The degree of leveraging of City/Agency Housing funds is an important factor which staff fakes into occount in fhe evaluation of affordable housing proposals, In evaluating a proposal, staff reviews fhe developer's track record, success in securing public and privafe financing, ability to complete projecfs on time and on budget and demonstrated ability to highly leverage City/Agency funds, In most cases staff has been using a minimum of 5 to 1 ratio as a general leveraging standard of City/Agency funds, which encourages developers fo be more compefitive and creative. The result is fhat this criteria increases fhe opportunity for fhe City/Agency to significanfly leverage ifs financial resources. The proposed City Agency's assistance to this project equates to an average of $10,000 per unit and amounfs fo a very high leveraging of $14 in private funds for every $1 of City/Agency funds. This leveraging ratio is calculated by dividing fhe total project cost of $21,000,000 by fhe amounf of the City/Redevelopment Agency loan of $1,500,000, ! - <6 PAGE 9, ITEM NO.: J MEETING DATE: 04/08/03 PROFORMA SUBSIDY ANALYSIS $ Financing Cost Funds Gap 21,000,000 $ 7,050,000 $ 10,700,000 $ 17,750,000 $ 3,250,000 $ 1,750,000 $ 500,000 $ 1,000,000 $ 3,250,000 21,000,000 $ 21,000,000 $ $ 140,000 $ 10,000 $14to$1 Project Cost: Sources of Funds: Tax Credit Financing Permanent Loan Subtotal Subsidies: Developer Deferred Fee City Subsidy (HOME) Agency Subsidy (Redev Low/Mod Fund) Subtotal TOTAL $ Cost per Unit (150 Units) City/Agency Subsidy per Unit City/Agency Leverage Form of Assistance Agency assistance will be provided in fhe form of a residual receipts loan secured by a note and deed of trust, Repayment of the loan will be deferred during consfruction. Once the City has issued a certificate of occupancy for all fhe units, the outstanding principal and interest on the loan will be amortized over fifty-five years. The outstanding balance shall accrue with simple interest af 3 percenf per annum. Payment of principal and interest, or portions thereof, on the Agency loan shall be made on an annual basis, out of a fund equal fo fifty (50%) percent of the net cash flow of the project after debt service on bonds, payment of deferred developer fee, and reasonable operafing expenses have been paid (Residual Receipts). More specific ferms of the loan will be further negotiated, The required loan agreement and associated documents will be negotiated and presented to fhe City/Agency for approval af such fime as final approval of the issuance of fhe bonds and fhe related bond documents is requested. Conditions of Fundinq It is recommended that funding approved for Rancho Vista be conditional, as fallows: 1. Approval of other Funding: Developer must secure all other funding necessary to fund the project. 2. Maximum Funding Level. The Agency/City assistance is based upon the assumptions presented within the sources and uses of funds, development budget, development proforma and other information filed with the Affordable Housing Review Application for the project as submitted and reviewed by the Community Development Department. The Agency/City assistance is a maximum level of participation. It is expected that any (- '1 PAGE 10, ITEM NO.: MEETING DATE: 04/08/03 substantive revisions in such financing assumptions which wauld lead fo an increase in other resources available, would therefore reduce the level of Agency/City assistance. 3, Environmenfal Review and Land Use Approvals: All necessary review and approvals must be obtained, 4. Property Management: Developer must select a qualified property managemenf firm fo manage the project. Affordable Housinq Credits The developer is requesting addifional credits for three and four bedroom units as an incentive to provide for large family unifs. Sfaff is supportive of the Developer's request to provide extra credit for those large unifs. Based upon the SANDAG formula for Housing Element self certification, staff would recommend that three bedroom units receive an additional 0.4 unit credit and four bedroom units receive a 0,8 unit credit. Approximately 84 percent of fhe rental housing in Chula Visfa are studio fo 2- bedroom unifs and 16 percent are 3+ bedroom units. Of the 3+ bedroom unifs, only 7.5 percent are affordable to lower income households, The scarcity and demand for family housing, particularly four bedroom units, warranfs greater credit, While TCAC, CDLAC, and fhe executed Affordable Housing Agreement have guidelines for the provision of three bedroom unifs, no guidelines or requiremenfs exist for fhe provision of four bedroom units, Therefore, the developer is nof obligated or required fo provide four bedroom unifs. Staff recommends allowing an additional O,8-unit credit for four bedroom units fo encourage the provision of fhis much needed unif size, Based upon sfaff's proposal, Easflake would be allowed fo actually reduce fhe number of affordable housing units produced to 150 dwelling units but receive a 190-unit credif for providing fhe large bedroom units. The 190-unit credif would be applied fowards fheir 183 minimum requirement for Easflake II/III. Therefore, their request would result in a 7 -unit credif to be used towards fhe affordable housing obligafions of Eastloke or conveyed fo anofher person or entity for their use towards their obligCltion, 2 3 4 TOTAL 1.0 14 1.8 Bedroom Credit Development Risks In its role as lender to the project, fhe Agency/City is exposed to three risks inherent to real estate development. These risks generally include: 1) predevelopment (project does not get to 1_(0 PAGE 11, ITEM NO.: MEETING DATE: 04/08/03 construction), 2) construction (project cannot be completed, cost overruns, confractor problems), and 3) operation (revenues do not cover expenses), Adding fo these risks, fhe Agency's/City's financial assistance will be subordinated to conventional financing. While the Agency/City is vulnerable and may face the loss of ifs loan due to its subordinafed financing, subordination is necessary to attract fhe private financing for the majority of the development costs. A number of factors mitigate these risks. First, the developmenf team has significant experience and an excellent frack record with this type of development project, The presence of other major financial commitmenfs, such as the tax credit invesfments, means that of her stakeholders depend on the short and long-term success of the project, By its nafure, affordable housing presents some, but very limited market risk because of the deeply discounted rents, There is significant demand for these unifs and the vaconcy rate is low, The revenue base is very reliable, The operating costs of fhe Project are stcmdard, Should problems occur, the Agency/City will be involved with the Developer fo assure proper handling, Assuming all financial commitments ore secured, consfruction is expected to begin Fall 2003 with complefion of the project estimated by Winter 2004. CONCLUSION In lighf of the short time frame for applicafion fo CDLAC for bond allocation, sfaff recommends City Council hold a public hearing fo consider issuance of fax exempt obligafions for fhe 150 unit affordable housing project, approvol of the Housing Authority resolution regarding its intent to issue tax-exempf obligations for Rancho Vista Apartments at Eastlake and approval of fhe City Council resolution authorizing the sale, issuance, and delivery of the bonds by the Authority. Approval of these resolutions do not consfitute a commitment of the Aufhority to issue such bonds, This resolution merely provides the opportunity for fhe developer fo apply to CDLAC by the April 161h submittal deadline, Based on the foregoing, staff recommends approval of fhe Agency and City resolution conditionally approving financial ossistance, subject fo future appropriation, in an amount not.to- exceed $1,000,000 from the Agency's Low/Moderafe Income Housing fund and $500,000 from the City's HOME funds. Staff's recomrnendation is based upon the following: o The proposal's effectiveness in serving the City's housing needs and priorities as expressed in the Housing Element of the Generol Plan and the HUD Consolidated Plan. o The proposal's development and operating feasibility, financing sources and the role of the City and the Agency in providing financial assistance or incentives. o It is the intent of the City to attempt to provide affordable housing opportunities to households earning at or below 50% of AMI in order to receive future credits as outlined in the Housing Element of the Generol Plan. / -I ( PAGE 12, ITEM NO.: MEETING DATE: { 04/08/03 CIC Eastlake, L.P. is proposed by a development team comprised of Chelsea Investment Corp. and Pacific Southwest Community Development Corporation, who are committed to affordable housing. The financing structure of the project is sound, The proposed City/Agency assistance meets the City/Agency's underwriting goals of reasonable project cosfs and leveraging of City/Agency resources. The proiect quality includes good design and location, The project's unit mix and affordability support fhe City/Agency housing goals, FISCAL IMPACT Approval of this resolufion only indicates an intention by the Aufhority to issue tax-exempf obligations and does nof commit the Authority fo issue bonds af this fime, All cosfs relafed fo the issuance of the bonds will be paid from bond proceeds or profifs. The bonds will be secured by fhe project and will not constifute a liability or obligafion to the Authority, Some sfaff costs will be associated with monitoring compliance with the Regulafory Agreemenf. Those costs will be reimbursed from an annual administrative and originafion fee to be paid by Developer fo fhe Authority, which will be negotiated before the Authority approves fhe actual issuance of fhe bond, The loan amount of $1,500,000 will be appropriated af the time of execution of the Agency/City Loan Agreement from the unappropriated balance in fhe Low/Moderafe fund and fhe HOME Program, Funds for sfaff services are budgefed in the sfaff services portion of the Housing Division budget. ATTACHMENTS 1. Locator Map 2, Site Plan 3. Sources and Uses Summary (HINES) J:\COMMDEV\STAFF.REP\04.08.03\A 113 Easflake III TEFRA.dac [4/3/034:21 PM] (-/2- ATTACHMENT 1 Rancho Vista Apart ments at Eastlake i- '\ /" ///- (fJ 1-/3 01/24/2003 CHELSEA INlJESnlENTS -? 16195855698 ATTACHMENT 2 ;.1";1 PROPOSED DEVELOPER, (858) t:/l-21:.~4 CHELSEA IN\It.::;TMt..~) CfJ/i:Pll;{AI IOI'l 21~ SOUTII tllG~IWAY 101, SUITE. 2)) $l)IANA FlFACII, CM.lr:oRNI^~2075 \> '~, \"\ \. '\~" "'" '\ \, \ '\ \ \, AREA SUMMARYI CROSS SITE AREA =il~.; ACRE'S NE::l PAL.: AKI:::A = ~,Z2ACRES DCN511Y = ~4.1 LlwELLIl'lGS PER. ACRE \ \ , \ \ - '\. '\ '\ \ \,\ \\ \ ~~ '\\ \\ \ <- ".""',". -~ '. kE FAMILY APARTME'NTS,' ~ ",,,,,,......., "'.,_......."......___...."....__..___..__._______.____....,.n...,.,.,....., T fA~LY-APARTMa;:N' DEVELOPMENT' iL' '---- I -l '-I SCHEME ..~ ,~J ATTACHMENT 3 SUMMARY OF SOURCES AND USES Descriotion of Uses $ % Per Unit Per So Ft Acquisition 5,000 0% 33 0.03 New Construction 12,577,734 60% 83,852 81.83 Architectural 240,000 1% 1,600 1.56 Survey & Engineering 60,000 0% 400 0.39 Construction Interest & Fees 1,144,627 5% 7,631 7.45 Permanent Financing 492,185 2% 3,281 3.20 Attorney Costs 55,000 0% 367 0.36 Reserves 800,942 4% 5,340 5.21 MarkeUAppraisal 20,000 0% 133 0.13 Contingency 786,434 4% 5,243 5.12 Other 955,412 5% 6,369 6.22 Local Development Impact Fees 2,524,725 12% 16,832 16.43 Permit Processing Fees 105,000 12% 16,832 16.43 Subtotal 19,767,059 94% 131,780 128.60 Developer 1 ,200,000 6% 8,000 7.81 TOTAL PROJECT COSTS 20,967,059 100% 139,780 136.41 TOTAL NO. OF UNITS 150 TOTAL sa FT OF RES UNITS 153,710 Sources $ Tax Credit Financing 7,050,000 Private Activity Bonds 10,700,000 Developer Deferred Fee 1,750,000 City (HOME) 500,000 Agency (Redev Low/Mod Fund) 1 ,000,000 TOTAL 21,000,000 I_IS RESOLUTION NO. RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA REGARDING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS FOR A PROPOSED AFFORDABLE MULTIFAMILY HOUSING PROJECT KNOWN AS RANCHO VISTA APARTMENTS AT EASTLAKE WHEREAS, the Housing Authority of the City of Chula Vista (the "Issuer") desires to assist CIC Eastlake, L.P. (the "Applicant") in financing the costs of constructing and acquiring a multifamily rental housing project, as described Exhibit A attached hereto and incorporated herein (the "Project"); WHEREAS, the Issuer intends to assist in the financing of the acquisition and construction of the Project or portions of the Project with the proceeds of the sale of obligations the interest upon which is excluded from gross income fi~r federal income tax purposes (the "Obligations"), which Obligations are expected to be issued pursuant to Chapter 10fPart 2 of Division 24 the Health and Safety Code of the State of California; provided, however, that this Resolution shall not authorize the issuance of the Obligations and provided further that neither the faith and credit nor the taxing power of the Issuer shall be pledged to repay such Obligations if, and when, authorized; and WHEREAS, prior to the issuance of the Obligations the Applicant expects to incur certain expenditures with respect to the Project from its own available monies which expenditures it desires to have reimbursed from a portion of the proceeds of the sale of the Obligations if, and when, issued; and WHEREAS, Section 146 of the Internal Revenue Code ofl986, as amended (the "Code") limits the amount of multifamily housing revenue bonds that may be issued in any calendar year by entities within a state and authorizes the governor or the legislature of a state to provide the method of allocation within the state; and WHEREAS, Chapter 11.8 of Division I of Title 2 of the Government Code of the State of California (the "Government Code") governs the allocation of the state ceiling among governmental units in the State of California having the authority to issue multifamily housing revenue bonds; and WHEREAS, Section 8869.85 of the Government Code requires a local agency to file an application with the California Debt Limit Allocation Committee ("CD LAC") prior to the issuance of multifamily housing revenue bonds; and WHEREAS, the Issuer desires to apply to CDLAC for an allocation for the Project; NOW, THEREFORE, the BOARD OF COMMISSIONERS ofthe HOUSING AUTHORITY OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE, ORDER AND DETERMINE AS FOLLOWS: SECTION 1. The Issuer has received an application for the financing of the Project on behalf of the Applicant (the "Application"). The Applicant will incur costs with respect to the Project prior to the issuance of the Obligations. The Issuer hereby states its intention and reasonably expects to reimburse to the Applicant for such costs with proceeds of the Obligations; provided, /_/(" however, that nothing herein obligates the Issuer to issue the Obligations or provides the Applicant with any legal right to compel the issuance of the Obligations, which decision remains in the final discretion of the Issuer. Exhibit A describes the general character, type, purpose, and function of the Project. SECTION 2. The reasonably expected maximum principal amount of the Obligations is $12,000,000. This Resolution is being adopted no later than sixty (60) days after the date (the "Expenditure Date or Dates") that the Applicant will expend moneys for the portion of Project costs to be reimbursed from proceeds of the Bonds. The expected date of issue of the Bonds is within eighteen (18) months ofthe later of the Expenditure Date or Dates and the first date the Project is placed in service and, in no event, later than three years after the Expenditure Date or Dates. SECTION 3. Proceeds of the Bonds to be used to reimburse for Project costs are not expected to be used directly or indirectly to pay debt service with respect to any obligation or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the Issuer or any entity related in any manner to the Issuer, or to reimburse any expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are or will be used in such manner. SECTION 4. This Resolution is consistent with the budgetary and financial circumstances of the Issuer, as of the date hereof. No monies from sources other than the Obligations are, or are reasonably expected to be reserved, allocated on a long-term basis, or otherwise set aside by the Issuer (or any related party) pursuant to their budget or financial policies with respect to the portion ofthe Project costs to be financed with the Obligations. This Board of Commissioners is not aware of any previous adoption of official intents by the Issuer that have been made as a matter of course for the purpose of reimbursing expenditures relating to the Project and for which tax-exempt obligations have not been issued. SECTION 5. This Resolution is adopted as official action of the Issuer in order to comply with Treasury Regulation S I.I03-8(a)(5) and Treasury Regulation S 1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of expenditures incurred prior to the date of issue of the Obligations, is part of the Issuer's official proceedings, and will be available for inspection by the general public at the main administrative office of the Issuer. SECTION 6. The officers and employees of the Authority are hereby authorized and directed to apply to CDLAC for a portion of the private activity bond allocation set aside for the calendar year 2003 for the Project in an aggregate amount not to exceed $ I 2,000,000, to collect from the Applicant and hold pursuant to CDLAC requirements the required CDLAC deposit for the requested allocation, and to certify to CDLAC that such amount has been placed on deposit in an account in a financial institution. Because the amount of private activity bond allocation is limited, such officers are also authorized to resubmit the application to CDLAC one or more times during the calendar year 2003 in the event the application is denied by CDLAC. SECTION 7. The officers and employees of the Issuer are hereby authorized and directed, jointly and severally, to take any actions and execute and deliver any and all documents which any of them deem necessary or advisable, with the advice of City Attorney, in order to effectuate the purposes of this Resolution, and such actions previously taken by such officers and employees are (-( 7 hereby ratified and confirmed; provided that the terms and conditions under which the Bonds are to be issued and sold must be approved by this Board in the manner provided by law prior to the sale of the Bonds. SECTION 8. All the recitals in this Resolution are true and correct. SECTION 9. This Resolution shall take effect immediately upon its adoption. Presented by Approved as to form by d Laurie A. Madigan Community Development Director Ann . Moore C' Attorney t/ua. J:\COMMDEV\RESOS\INDUCEMENT RESOLUTION FOR CHULA VISTA (EASTLAKE).DOC (_(<6 EXHIBIT A DESCRIPTION OF PROJECT A proposed multifamily rental housing project of approximately 150 units to be known as "Rancho Vista Apartments at Eastlake" and to be located on 8.25 gross acres of vacant land located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive in the Eastlake Greens Planned Community in the City of Chula Vista, California. A-I DOCSOC\95 505 5v3\22245.0 138 (-I"! RESOLUTION NO. A RESOLUT]ON OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA PURSUANT TO SECTION ]47(f) OF THE INTERNAL REVENUE CODE OF 1986 APPROVING THE ISSUANCE OF BONDS BY THE HOUS]NG AUTHORITY OF THE CITY OF CHULA VISTA FOR THE RANCHO VISTA APARTMENTS AT EASTLAKE WHEREAS, the Housing Authority of the City of Chula Vista (the "Authority") proposes to issue up to $] 2,000,000 aggregate principal amount of multifamily housing revenue bonds to finance a proposed multifamily rental housing project of approximately] 50 units located on the east side of future EastIake Parkway, approximately 3,000 feet south of Clubhouse Drive in the EastIake Greens Planned Community, in the City of Chula Vista described in the form of notice of public hearing attached as Exhibit A hereto (the "Project"); and WHEREAS, in order for interest on the Bonds to be tax-exempt, Section 1 47(f) of the Internal Revenue Code of 1986 requires that the Bonds be approved by the City Council as the applicable elected representative after a public hearing following reasonable public notice; and WHEREAS, notice of a public hearing with respect to the proposed issuance of the Bonds was published in a newspaper of general circulation in the City on March 28, 2003; and WHEREAS, the hearing was held on April 8, 2003, and an opportunity was provided for interested persons to express their views on the issuance of the Bonds and on the nature and location of the Project. NOW THEREFORE,BE IT RESOLVED, by the City Council of the City of Chula Vista that this City Council, as the applicable elected representatives under Section 147(f) of the Code, approves the issuance of the Bonds by the Authority. Presented by Approved as to form by Laurie A. Madigan Community Development Director J:\COMMDEV\RESOS\TEFRA Resolution of City Council ofChula Vista Eastlake.DOC ( - 2..0 EXHIBIT A PUBLIC NOTICE CITY OF CHULA VISTA NOTICE OF PUBLIC HEARING REGARDING ISSUANCE OF MULTIFAMILY HOUSING REVENUE BONDS NOTICE IS HEREBY GIVEN that, at its regular meeting to be held at 6:00 p.m. on Tuesday, April 8, 2003, at the City Council Chambers of the City of Chula Vista located at 276 Fourth Avenue, Chula Vista, California 91910, the City Council of the City of Chula Vista will conduct a public hearing as required by Section 147(f) of the Internal Revenue Code of 1986, as amended, at which it will hear and consider information concerning the issuance by The Housing Authority of the City of Chula Vista (the "Authority") of bonds (the "Bonds") to finance a proposed multifamily rental housing project of approximately 150 units to be known as "Rancho Vista Apartments at Eastlake" located on 8.25 gross acres of vacant land located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive, in the Eastlake Greens Planned Community in the City of Chula Vista, California (the "Project"). The Project is to be owned and/or operated by CIC Eastlake, L.P., a California Limited Partnership. The Authority proposes to issue the Bonds in an aggregate principal amount not to exceed $12 million. By law, at least 20 percent of the rental units in the Project are required to be available for occupancy by persons or families whose income does not exceed 50 percent of the median income for the San Diego, California Primary Metropolitan Statistical Area, or, alternative]y, at least 40 percent of the rental units are required to be available for occupancy by persons or families whose income does not exceed 60 percent of the median income for the Area, in each case at affordable rents established by applicable State law. It is expected that the Authority will require that all of the units be made available to persons of low or moderate income. ALL PERSONS HAVING ANY INFORMATION RELEVANT TO THE PROPOSED ISSUANCE OF THE BONDS DESCRIBED ABOVE ARE HEREBY INVITED TO APPEAR AT THE TIME AND PLACE MENTIONED ABOVE TO PRESENT SUCH INFORMA nON TO THE CITY COUNCIL. If you wish to challenge the City's action on the matter in court, you may be limited to raising only those issues you or someone else raised at the public hearing described in this notice, or in written correspondence delivered to lhe City Clerk's Office at or prior to the public hearing. For further information, contact Leilani Hines, Community Development Specialist, of the City ofChula Vista, at (6]9) 585-5722. Susan Bigelow City Clerk of the City of Chula Vista DATED: March 25, 2003 DOCSOC\846028v3\24036.Q025 1-.2...( RESOLUTION NO. _ (COUNCil RESOLUTION NO. 2003------> JOINT RESOLUTION OF THE CITY COUNCIL AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA CONDITIONALLY APPROVING FINANCIAL ASSIST ANCE, SUBJECT TO FUTURE APPROPRIATION, IN THE FORM OF A RESIDUAL RECEIPTS LOAN FROM THE LOW AND MODERATE INCOME HOUSING FUND IN AN AMOUNT NOT- TO-EXCEED $1 ,000,000 AND $500,000 FROM THE HOME INVESTMENT PARTNERSHIP PROGRAM TO CIC EASTLAKE, L.P., FOR THE DEVELOPMENT OF THE PROPOSED 150 UNIT RANCHO VISTA APARTMENTS AT EASTLAKE WHEREAS, the City of Chula Vista is an entitlemenUparticipating jurisdiction for the U.S. Department of Housing and Urban Development (HUD) funding programs and is awarded on an annual basis a formula grant from the HOME Investment Partnership Program (HOME); and WHEREAS, HOME funds are designed exclusively to create affordable housing opportunities for low-income households through the construction, purchase, and/or rehabilitation of affordable housing for rent or homeownership or provide direct rental assistance to low-income people; and WHEREAS, California Health and Safety Code Sections 33334.2 and 33334.6 authorize and direct the Redevelopment Agency of the City of Chula Vista (the "Agency") to expend a certain percentage 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 low- and moderate-income, lower income, and very low income; and WHEREAS, pursuant to applicable law the Agency has established a Low and Moderate Income Housing Fund (the "Housing Fund"); and WHEREAS, pursuant to Health and Safety Code Section 33334.2(e), in carrying out its affordable housing activities, the Agency is authorized to provide subsidies to or for the benefit of very low income and lower income households, or persons and families of low or moderate income, to the extent those households cannot obtain housing at affordable costs on the open market, and to provide financial assistance for the construction and rehabilitation of housing which will be made available at an affordable housing cost to such persons; and WHEREAS, pursuant to Health and Safety Code Section 33413(b), the Agency is required to ensure that at least 15 percent of all new and substantially rehabilitated dwelling units developed within a project area under the jurisdiction of the Agency by private or public entities or persons other than the Agency shall be available at affordable housing cost to persons and families of low or moderate income; and WHEREAS, CIC Eastlake, L.P. ("Developer") proposes to construct a 150 unit multifamily rental development, with 30 units affordable to very low households at 50 percent of the Area Median Income (AMI), 43 units affordable to low households at 60 percent of the Area Median Income (AMI) and 77 units affordable to moderate-income households at or below 120 percent of AMI, within the Eastlake master planned community on a vacant 8.25 acre (gross) site located on the east side of future Eastlake Parkway, approximately 3,000 feet south of Clubhouse Drive in the City of Chula Vista ("Project"); and (-22-- WHEREAS, Developer is applying for an allocation of Multifamily Housing Revenue Bonds from the California Debt Limit Allocation Committee (CDLAC); and WHEREAS, Developer is applying for four percent (4%) tax credits from the Tax Credit Allocation Committee (TCAC); and WHEREAS, additional financing is necessary in order to make the Project feasible; and WHEREAS, the provision of affordable housing units like the Project is consistent with and called for by the City's General Plan Housing Element, Consolidated Plan, and California Health and Safety Code; and WHEREAS, the Agency/Citywishes to provide Developer with a development loan of one million five hundred dollars ($1,500,000) to assist with the financing gap for the construction of the residential units of the Project; and WHEREAS, the Agency's/City's provision of funds to the residential use ofthe Project will directly improve the City's supply of very low and moderate-income housing; and WHEREAS, in accordance with California Health and Safety Code Section 33334.2 (g), staff is recommending that the Agency find and determine that even though the Project is to be located outside the City's redevelopment project areas, those areas will benefit through the creation of jobs in the project area and elsewhere in the City by providing housing for persons who work within the City's redevelopment project areas, and through the policies served by dispersing affordable housing throughoutthe jurisdiction rather than clustering it all in one area; and WHEREAS, the Agency has adopted an Implementation Plan pursuant to Health and Safety Code Section 33490, which sets forth the objective of providing housing to satisfy the needs and desires of various age, income and ethnic groups of the community, and which specifically provides for the construction of new affordable rental housing units through Agency assistance; and WHEREAS, the Project furthers the goals of the Agency set forth in the Implementation Plan as it will facilitate the creation of affordable housing which will serve the residents of the neighborhood and the City; and WHEREAS, the City's Housing Advisory Commission did, on the 26th day of February, 2003, hold a public meeting to consider said request for financial assistance; and WHEREAS, the Housing Advisory Commission, upon hearing and considering all testimony, if any, of all persons desiring to be heard, and considering all factors relating to the request for financial assistance, has recommended to the Redevelopment Agency that the appropriation be approved because the Commission believes that the Agency's financial participation in the development of the Project will be a sound investment based upon Developer's ability to effectively serve the City's housing needs and priorities as expressed in the Housing Element and the Consolidated Plan and the cost effectiveness of the Agency's financial assistance based upon the leveraging of such resources; and WHEREAS, in accordance with the requirements of CEQA, the Environmental Review Coordinator has determined that the project is covered by Addendum (IS-03-009) to the Eastlake Replanning Program Final Subsequent Environmental Impact Report (FSEIR) 97-04 and FSEIR 86-04, plus other related environmental documents and no further action by the City Council is necessary. The proposed project will not result in any new environmental effects that were not previously identified, nor would the proposal result in a substantial increase in severity in any impacts previously identified. I - .2-3 NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula Vista does hereby conditionally approve a residual receipts loan subject to future appropriation in an amount not-to-exceed $1,000,000 from the Agency's Low and Moderate Income Housing Set-Aside fund and $500,000 from the City's HOME funds to Developer for the construction of the Project subject to the Agency's/City's approvals of an affordable housing and loan agreement which shall include, at a minimum, the following terms and conditions: 1. The loan repayment will be secured by a Deed of Trust and Promissory note for the property on behalf of the Redevelopment Agency of the City of Chula Vista and the City of Chula Vista and recorded against the Projec:t property. 2. The term of the loan shall be fifty-five (55) years. 3. The outstanding balance shall accrue with simple interest at 3 percent per annum. 4. Payment of principal and interest on the Agency/City loan shall be made, on an annual basis, out of a fund equal to fifty percent (50%) of the "Residual Receipts", rental income from the Project minus debt service on the bonds, payment of the deferred developer fee, and reasonable operating expenses. 5. Developer will be required to operate the Project consistent with the Regulatory Agreement required by the Project's tax credit financing, the covenants imposed by the Agreement, and any other project requirements. 6, Developer shall enter into a loan agreement with the Agency/City consistent with the terms set forth above and with such other terms as shall be required or approved by the Agency Attorney. 7. The Agency/City assistance is based upon the assumptions presented within the sources and uses of funds, development budget, development proforma and other information filed with the Affordable Housing Review Application for the project as submitted and reviewed by the Community Development Department. The Agency/City assistance is a maximum level of participation. It is expected that any substantive revisions in such financing assumptions which would lead to an increase in other resources available, would therefore reduce the level of Agency/City assistance. 8. This conditional approval remains subject to final approval by the Agency/City in its sole discretion. BE IT FURTHER RESOLVED in accordance with California Health and Safety Code Section 33334.2 (g), the Agency finds and determines that even though the Project is to be located outside the City's redevelopment project areas, those areas will benefit through the creation of jobs in the project area and elsewhere in the City by providing housing for persons who work within the City's redevelopment project areas, and through the policies served by dispersing affordable housing throughout the jurisdiction rather than clustering it all in one area. Presented by Approved as to form by Laurie A. Madigan Director of Community Development J:\COMMDEV\RESOS\Reso Rancho Vista Financial.doc 1-2..'1