HomeMy WebLinkAboutAgenda Statement 1981/07/07 Item 17a
COUNCIL AGENDA STATEMENT
Item - 17a
Meeting Date 7/7/81
ITEM TITLE: Report: Acquisition of Low- and Moderate-Income Family Housing Site
SUBMITTED BY: Community Development Director (4/5ths Vote: Yes No X )
Since receiving a $1 million Section 108 loan commitment from HUD on November 7, 1979,
the Community Development Department has been engaged in a search for sites for devel-
opment of low- and moderate-income housing to be acquired with those funds. The senior
housing site at 432-438 F Street was acquired with Section 108 loan funds on July 22,
1980. My staff has now found an available site well-suited for low- and moderate-income
family units and has negotiated for purchase of the site with Section 108 funds and
additional funds. Therefore, it is my
RECOMMENDATION: That Council
Accept the report and authorize staff to continue escrow proceedings on this low- and
moderate-income housing site.
BOARDS/COMMISSION RECOMMENDATION:
The Affordable Housing Subcommittee of the Human Relations Commission has urged that
sites be acquired for affordable housing in the City.
DISCUSSION:
I am seeking direction from the Council regarding continuation of purchase negotiations
for this low- and moderate-income housing site. A number of preliminary questions
regarding the site's suitability or eligibility for such usage, including HUD's environ-
mental clearance of the site, have been resolved or are about to be resolved. There-
fore, it seems an appropriate time for seeking the wishes of the Council regarding this
acquisition process begun under significant time constraints.
The subject site is owned by Biddle Chula Vista Ltd. It is a two-acre site partially
developed for condominiums at the northwest corner of Otay Valley Road and P1elrose
Avenue (map attached). All grading, drainage, utilities, curbs, gutters, and sidewalks
are completed. The site was to be Phase III of the Melrose Villas condominium develop-
ment, but market conditions have prompted Biddle Chula Vista Ltd, to offer the parcel
for sale prior to build-out.
The City's deadline for expenditure of Section 108 loan funds is July 31, 1981. There-
fo re, it was necessary to ace expeditiously in negotiating for this property.
As Section 108 funds can be used for most costs associated with property acquisition,
I ordered a fee appraisal and appraisal review. By federal regulation, the City
cannot offer less for the property than the Fair Market Value determined by the
appraisal process. That value was $550,000.00.
Continued
Form A-113 (Rev. 11/79)
Page 2, Item ~ 17a
Meeting Date 7/7/81
On April 28, 1981, a tentative offer to purchase was made at the minimum amount, and
one dollar was offered as a good faith deposit. The offer was subject to subsequent
HUD and City Council approvals. An escrow was entered into at a selling price of
$565,000.00, 3% above the allowable minimum. The escrow was begun on May 11, 1981,
and is scheduled to close on July 31, 1981. The agreement made no commitment by the
City beyond the one dollar deposit and escrow costs under $200.00, and it was depen-
dent onfinal approval by the City Council.
Four hundred thousand dollars of the original $1 million Section 108 loan commitment
remains unexpended and would be drawdown to apply to the purchase of this property.
I would recommend that the balance of the purchase price and associated costs be ap-
propriatedfrom the Redevelopment Agency's fund for low- and moderate-income housing.
If Council authorizes continuation of the escrow on the property, the following sequence
of events will be pursued:
1. HUD approval of site acquisition with Section 108 loan funds.
2. Local environmental review approval.
3. Council approval of closing of escrow and expenditure of Section 108
loan funds.
4. Redevelopment Agency appropriation of Housing Fund monies.
5. HUD release of Section 108 loan funds.
6. Close of escrow.
This property would be used as .a site for affordable family housing. A number of
options are available to the City. One option for achieving that use is being pre-
sented to you tonight as a separate agenda statement. That is the construction and
operation on the site of conventional public housing by the Housing Authority of the
County of San Diego, under terms of an existing Memorandum of Understanding between
the City and the Housing Authority. The Housing Authority would obtain HUD approval
and funding for development of 24 two- and three-bedroom units on the property, and
they would purchase the property from the City at our purchase cost. If you decline
that approach, another option is a partnership effort with a private developer. Recent
developments in the revenue bond market have generated significant interest by several
developers, both profit and non-profit. The City could facilitate an affordable pro-
ject through such mechanisms as a bond issue, land cost writedown, or equity partici-
pation.
Whether the property were to be quickly committed to the Public Housing Program, or
whether the City would choose to shop around for another approach, the key factor is
that this property is a scarce resource which should be secured--a vacant, available
site suitable for low- and moderate-income housing.
-jG5~3
Page 3, Item 17a
Meeting Date 7/7/81
FISCAL IMPACT:
Of the purchase cost of $565,000.00
Section 108 loan funds, account no.
of $36,064.27. The remainder of the
Redevelopment Agency Housing Fund.
DKG:ah
plus closing costs, $400,000.00 would come from
640-6400-BG81, leaving a balance after drawdown
purchase price would be appropriated from the
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