HomeMy WebLinkAbout6/16/2004 - STAFF REPORTS (3) DATE: JUNE 16, 2004
TO: COMMUNITY REDEVELOPMENT AGENCY
FROM: DIRECTOR OF COMMUNITY& ECONOMIC DEVELOPMENT
APPROVAL OF AMENDMENT NO. 1 TO OWNER PARTICIPATION WITH ROSE
MIHATA FOR THE REHABILITATION OF A 136-UNIT MATURE ADULT APARTMENT
COMPLEX, THE HERITAGE APARTMENTS, AT 300 SOUTH CALLE EL SEGUNDO,
MERGED AREA#2
RECOMMENDATION:
It is recommended that the Agency approve Amendment No. 1 to an Owner
Participation Agreement with Rose Mihata,an individual,forthe rehabilitation of a 136-
unit mature adult apartment complex at 300 South Calle El Segundo, the Heritage
Apartments, in Merged Project Area#2
SUMMARY:
The Agency approved an Owner Participation Agreement on June 7, 2000 with the
owners of Heritage Apartments in the amount of$450,000 with the provision that half
of the units be restricted to "low income" renters. No definition of"low income" was
included in the resolution or the staff report. State and federal law define"low income"
as 80%of median income or below; however, Redevelopment Law requires that units
restricted to low income residents be made available at the lower level of 60%, rather
than the 80%figure. Attorneys caught the error prior to the agreement being finalized
for execution, staff met with the Owners over the change, and the Agreement was
subsequently executed by all parties. All of the Agency-paid work has been completed
but now the Owners desire to change the OPA back to the originally intended level of
80%. There are few ways of increasing that amount under Redevelopment Law
except for raising the restriction to the moderate income level of 110% of median and
then having the owner agree to 80% rents. However,even rents at 80%of median are
higher than market rents for those apartments.
BACKGROUND:
In January, 2000 staff received an initial request for Agency assistance from Rose
Mihata, owner of the Heritage Apartments at 300 South Calle El Segundo. Ms.
Mihata and her then-partner, Scott Timberlake, (the "Owners") had purchased the
complex in August, 1999 from a long-time owner, and were immediately confronted
with twenty years'worth of deferred maintenance on the apartments, as well as the
normal wear and tear on various mechanical systems.
Staff negotiated an Owner Participation Agreement with the Owners that provided
for$450,000 in Agency rehabilitation assistance in return for the owners spending
the amount of$225,000. These funds paid for constructing a new block wall and
security gates around the complex, new air conditioning units for each of the
apartments, rebuilding most of the stairway structures (they had been termite-
eaten), repaving the parking lot, resurfacing the swimming pool and spa, and other
smaller miscellaneous property improvements.
The complex was constructed in 1979 without any Agency assistance, and
therefore had no affordability restrictions on it. The apartments were originally built
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as "mature adult" apartments, intended for self-sufficient (not requiring special
medical attention), low- and moderate-income seniors. The project is not age-
restricted, and there are a variety of age groups and household types in the
complex today.
As staff discussed the project with the Owners, it was determined that the Agency
would restrict up to half of the units to "low income" residents. The staff report and
resolution describing the project at the June 7, 2000 meeting only described the
restrictions to be for "low income" residents. The definition staff and the Owners
had been using of "low income" rents was no more than 30% of 80% of area
median income. It was intended that the OPA reflect those provisions. (The draft
of the OPA included with the resolution had a typo — it said 88% — though all
parties agreed and there is no provision under either state or federal law that
provides for 88% restrictions and the intent was 80%.)
Staff at the time was of the opinion that the 80% restrictions were acceptable on
rehab projects, since the last rehab project the Agency had done prior to the
Heritage Apartments was the Tahquitz Court Apartments, where the Agency
provided $590,000 in rehab assistance in return for 60% of the units restricted to
low income (80%) and 40% restricted to very low income (50% of median). Other
relatively recent new construction at the time was Palos Verdes Villas, where the
Agency restricted 20%of the units to 60%of median; however, Palos Verdes Villas
was new construction. The draft OPA for Heritage Apartments reflected the desire
to restrict half the units to"low income"at 80% of median, similar to Tahquitz Court
Apartments.
However, the Owners asked for several minor changes to the OPA in a letter dated
May 31, 2000, which was after the report and agreement had been submitted for
the Council meeting but before the actual meeting. Because the questions and
changes were largely clarifications and not changes to the basic dealtaff described
those to the Agency at the June 7 meeting and the OPA was approved in a form
acceptable to Agency Counsel, with direction to work out these details (none of
which were deals points). One question, however, related to whether the Owners
could charge more for furnished apartments than for unfurnished, which caused
the attorney working on the OPA to further scrutinize Redevelopment Law for an
answer. That research lead to the following change to the agreement: that the only
acceptable definition of Low Income Rents under California Redevelopment Law
section (Health & Safety Code Section §33000 et. seq.) are 30% of 60% of Area
Median Income. The language in the OPA was changed to reflect that.
The Owners were notified of the change in July and expressed concern. Staff then
met with the Owners in early August to go over the revised language on the
restriction. The Owners do not recall such a meeting. Based on the information
the Owners provided staff at the time, rents were $460 to $525 for 1 bedroom
apartments (with new rentals at the $525 rate), and $550 to $625 for 2-bedroom
units, with the higher rate for new rentals. The project's rents fell within the range
of what was available at 80%, but the change to 60% for half the units did not
create significant economic hardship, especially in light of the $450,000 the
Agency would be contributing to the project. The Owners executed the OPA in
September and proceeded to begin making improvements to the property and
comply with the terms of the OPA.
The improvements have been completed but now the Owners have been seeking
to sell the project. (The Agency retains approval rights over the sale.) Staff would
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support a sale to another owner that specializes in owning and managing
affordable housing projects. They have reported that prospective buyers have
suggested that the 60% requirements are highly unusual and that they cannot
proceed with the sale based on those terms. They have requested that the OPA
be amended to allow for the restrictions at 80% level rather than the 60%, based
on the original approval of the Agency.
The Agency has several options:
1. Keep the OPA as executed, based on the requirements of Redevelopment
Law;
2. Amend the OPA to allow for the restricted units to be at"moderate"income
levels (110% of median), perhaps with the agreement that the Owners
would maintain the rents at 80% of median; or
3. Request that the Owner completely "buy back" a portion of the restricted
units at the Agency subsidy of$6,618 per unit. The Owners would then be
free to rent additional units at whatever the market could bear (as they
already can on the unrestricted 50% of the units).
Staff has offered to discuss such terms with any prospective buyer but the Owners
have been reluctant to set up such a meeting, nor has staff been provided with any
of the agreements with other cities described in their conversations that are
represented to be far more liberal than Palm Springs.
Therefore, staff has proposed an amendment to the OPA that changes all sixty-
eight(68) of the restricted units at the Heritage Apartments be restricted to 80% of
median, but that the units be described as moderate income (110% of median).
The difference in allowed rent on a 1 bedroom apartment is $612.00 for 60% of
median and $813.96 per month for 80% of median, a rather significant change
and, in the current rental market, nearly meaningless.
Staff is only bringing the action forward because of the confusion surrounding our
original OPA and the intent at the time among all parties to try to do the deal at
80% based on the prior Agency-assisted project. However, staff feels that the
Owners' assertions that the Agency changed the OPA without their knowledge
were not true and that the changes were discussed during the period from June to
the final execution of the Agreement in September. Attached also is the June 7,
2000 staff report and resolution fof comparison purposes.
?XX�71
JOHNS. MON
Director of Communi Economic Development
APPROVED
Executive Director C ra -tom
ATTACHMENTS:
45
1. Resolution
2. Amendment No. 1 to the Owner Participation Agreement
3. June 7, 2000 Staff Report and Resolution
FIRST AMENDMENT TO OWNER PARTICIPATION AGREEMENT
This First Amendment to Owner Participation Agreement (the "First Amendment') is
entered into by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY
OF PALM SPRINGS, a public body, corporate and politic ("the Agency") and ROSE MIHATA
("Owner"), and is intended to amend the income levels of the restricted units from 60% of area
median income to 80% of area median income.
RECITALS
WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the "Agency')
has established an affordable housing setaside fund in accordance with Section 33000 et. seq.
of the California Health and Safety Code; and
WHEREAS, the funds are earmarked for the acquisition, construction, or rehabilitation of
affordable housing to benefit the community; and
WHEREAS, the Heritage Apartments, constructed in 1979 as mature adult units for low- to
moderate-income seniors, was in significant need of rehabilitation, including improving the
energy efficiency of the units, security and amenities of the complex, and the Agency approved
an Owner Participation Agreement on June 7, 2000 committing $450,000 to the rehabilitation of
the project in return for having up to half (68) of the units for made available for 'low-income"
residents in the Heritage Apartments; and
WHEREAS, the property owners at the time, Rose Mihata and Scott Timberlake, desired to
participate with the Agency in its affordable housing program and agreed to dedicate the units
for low-income residents in the Heritage Apartments, with the understanding that the restrictions
be based on 80% of median income; and
WHEREAS, Rose Mihata is now the sole property owner at this time; and
WHEREAS, Health & Safety Code §50053 (b)(3) requires that Affordable Rent for Lower
Income Households be the product of 30 percent times 60 percent of the area median income
adjusted annually for family size appropriate to the unit; and
WHEREAS, in order to comply with Health & Safety Code §50053 (b)(3) and §50053(b)(4) the
OPA must be amended to restrict the units to Moderate Income Households, with the Owner
agreeing to lower the rents to 80% of area median income.
NOW, THEREFORE, based upon the foregoing recitals and the terms, conditions, covenants,
and agreements contained herein, the parties hereto agree as follows:
Section 1. Owner and Agency agree that Section 2.0 of the OPA shall be amended
as follows:
C
Heritage Apartments Amendment No.1 to Us OPA 't'
The term "Participant" shall mean ROSE MIHATA, an individual, having her offices
at 300 South Calle El Segundo, Palm Springs, California 92262, and any permitted
successors or assignees of Participant as provided herein. Participant has
represented to Agency that it is the fee owner of the Site. Accordingly, Participant
qualifies as an "Owner Participant" within the meaning of the Redevelopment Plan
and the California Community Redevelopment Law (Health & Safety Code §33000 et
sea). The term "Participant" includes any legally permissible assignee or successor
to the rights, powers, and responsibilities of Participant hereunder, in accordance
with Section 3.15 of this Agreement.
Section 2. Owner and Agency agree that the Section 8.0 of the OPA, General
Provisions, shall be amended as follows:
With a copy to: Aleshire &Wynder, LLP
18881 Von Karman Ave. Suite 400
Irvine, California 92612
Attn: David J. Aleshire
Section 3. Owner and Agency agree that the Agreement Containing Covenants
Affecting Real Property shall be amended as follows:
RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:
Community Redevelopment Agency of the
City of Palm Springs
3200 E. Tahquitz Canyon Way
Palm Springs, CA 92263
Attn: Executive Director
(SPACE ABOVE THIS LINE FOR RECORDING USE)
(EXEMPT FROM RECORDING FEE PER GOV.CODE§6103)
AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
THIS AGREEMENT CONTAINING COVENANTS AFFECTING REAL PROPERTY
("Agreement") is entered into this Ph day of June, 2000 ("Effective Date"), by and between THE
COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, a public body
corporate and politic ("Agency"), and ROSE MIHATA, an individual, ("Owner"), with reference to
the following:
A. Owner is the fee owner of record of the parcels that comprise that certain real
property (the "Site") located in the City of Palm Springs, County of Riverside, State of California,
legally described in the attached Exhibit No. "1."
B. The Property is within the Merged Redevelopment Project Area No. 2 (the
"Project Area") in the City of Palm Springs ("City") and is subject to the provisions of the
Redevelopment Plan for the Project Area approved and adopted on May 7, 1986, by the City
}Tentage Aparhnents Amendment No.1 to the OPA -2-
Council of the City by Ordinance No. 1264. The Redevelopment Project has been amended
three times, on December 21,1994 by Ordinance No. 1498, on December 15, 1999 by
Ordinance No. 1576, by Ordinance 1583 on May 31, 2000, by Ordinance No. 1624 on February
19, 2003, and by Ordinances No. 1650 and 1652 on May 5, 2004.
C. Owner entered into an Owner Participation Agreement ("OPA") with Agency,
dated as of June 7, 2000, concerning the development and operation of the Property, which
OPA is on file with the Agency as a public record and is incorporated herein by reference. All
defined terms used herein shall have the same meaning as set forth in the OPA unless
otherwise stated.
NOW, THEREFORE, AGENCY AND OWNER AGREE AS FOLLOWS:
1. Commencing on the date of this Agreement and continuing in effect until May 7,
2026, Owner, on behalf of itself, its successors, its assigns, and each and every successor in
interest to the Property, or any part thereof, hereby covenants and agrees that Owner and such
successors and assigns, shall develop, maintain, and use not the Site and related interior and
exterior improvements in accordance with the terms and conditions hereinbelow:
a. Distribution of Rental Units: Income Eligibility: Rental Cost; Occupancy
Limits.
The Site shall contain not fewer than one hundred thirty-six (136) apartment units. Not
fewer than one (1) apartment unit for each increment of six thousand six hundred seventeen
and 65/100 dollars ($6,617.65), or each portion thereof, of Agency Assistance provided to
Participant under the OPA, pursuant to Sections 6.1 and 6.1.1(a), up to a maximum of sixty-
eight (68) apartment units shall be made available to eligible persons of Moderate Income or
below (the "Affordable Units") as follows:
The Affordable Units shall be (A) rented to persons whose annual household income
does not exceed eighty percent (80%) of the median income for Riverside County as published
annually by the State of California based on income figures from the United States Department
of Housing and Urban Development, and (B) rented to such eligible persons at a monthly rental
cost, including utilities, which is not more than the amount derived as follows: (i) thirty percent
(30%) of eighty percent (80%) of the annual median income for a two person household for
Riverside County as published annually by the State of California based on income figures from
the United States Department of Housing and Urban Development, (ii) divided by 12.
Commencing July 1, 2001, the initial maximum monthly rent for the Affordable Units may
be adjusted in accordance with the most recent median income figures for Riverside County
published by the State of California, and may be adjusted on July 1 of each calendar year
thereafter, as may be necessary.
The maximum occupancy of each of the dwelling units on the Site, including the
Affordable Units, shall be the lesser of (i) two persons per bedroom plus one additional person,
or (ii) the maximum number of persons that are permitted to occupy the square footage of the
unit under the applicable uniform building and housing code as adopted by the City of Palm
Springs ("City") as of the time building permits are issued for the Project.
b. Amenities: Maintenance.
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Heritage Apartrnents Amendment No.1 to Me OPA -3- ra
V
Owner, for itself and its successors and assigns, hereby covenants and agrees to
maintain and repair or cause to be maintained and repaired the Site and all related on-site
improvements and landscaping thereon at its sole cost and expense, including, without
limitation, buildings, parking areas, lighting, signs and walls, in a first class condition and repair,
free of rubbish, debris and other hazards to persons using the same, and in accordance with all
applicable laws, rules, ordinances and regulations of all federal, state, and local bodies and
agencies having jurisdiction over the Site. Such maintenance and repair shall include, but not
be limited to, sweeping and trash removal; and the care and replacement of all shrubbery,
plantings, and other landscaping in a healthy condition. In addition, Owner shall be required to
maintain the Site in such a manner as to avoid the reasonable determination of a duly
authorized official of the Agency or City that a public nuisance has been created by the absence
of adequate maintenance such as to be detrimental to the public health, safety or general
welfare or that such a condition of deterioration or disrepair causes appreciable harm or is
materially detrimental to property or improvements within one thousand (1,000) feet of such
portion of the Site.
In the event that Owner breaches any of the covenants contained in this subparagraph
(c), and such default continues for a period of five (5) business days after written notice from
Agency (with respect to landscaping, graffiti, debris, waste material, and general maintenance)
or thirty (30) days after written notice from Agency(with respect to building improvements), then
Agency, in addition to whatever other remedy it may have at law or in equity, shall have the right
to enter upon the Property and perform or cause to be performed all such acts and work
necessary to cure the default. Pursuant to such right of entry, Agency and/or City shall be
permitted (but are not required) to enter upon the Property and perform all acts and work
necessary to protect, maintain and preserve the improvements and landscaped areas on the
Property, and to attach a lien on the Property, or to assess the Property in the amount of the
expenditures arising from such acts and work of protection, maintenance, and preservation by
Agency and/or costs of such cure, including a fifteen percent (15%) administrative charge,
which amount shall be promptly paid by Owner to Agency upon demand.
G. Rental Process.
The Affordable Units shall be rented to eligible tenants in accordance with the following
terms:
(1) Leasing Preference
(a) Owner shall provide a preference in the initial leasing of
the Affordable Units to individuals residing or working in the City of Palm Springs, (i) who meet
the eligibility requirements and who are on a preference list established by the Owner subject to
audits by the Agency, or (ii) who meet the eligibility requirements and are entitled to a
preference pursuant to California Health and Safety Code Section 33411.3, or successor
statute. To encourage the greatest possible opportunity for such residents of, or persons
working in, Palm Springs to lease the Affordable Units, Owner, for both initial leasing and
ongoing leasing shall create and maintain a system to establish a list of eligible potential tenants
identified by Agency as eligible for preference pursuant to Health & Safety Code Section
33411.3, or successor statute. Owner shall contact those individuals on the list established by
Owner and offer available Affordable Units in the Project to such individuals in accordance with
this Agreement.
Heritage Apartments Amendment No.1 to tl¢OPA -4- / 16-Y
(2) Leasing of Affordable Units to Tenants Whose Income Increases
Beyond Eligibility Level.
(a) Owner shall maintain the eligibility lists referenced in
subparagraph c(1) immediately above. When an Affordable Unit becomes available, Owner
shall contact individuals on the list and offer the available Affordable Unit to such individuals in
accordance with this Agreement. Owner shall rent available Affordable Units to eligible tenants
on a first-come, first-serve basis. Affordable Units that become available as a result of tenant
vacation shall be rented to a new eligible tenant as soon as possible following the date the
Affordable Unit becomes available. Owner shall notify the appropriate housing authorities on
the list maintained by, and available from, the Agency, of any Affordable Units remaining vacant
for more than thirty(30) days.
(b) In the event a tenant in an Affordable Unit is determined to
have an income greater than the affordability level set forth in this Agreement, Owner shall allow
that tenant to remain in that rented unit and may treat that unit as a non-Affordable Unit and
may increase the rent to the rent for the non-Affordable Units in the Project; provided, however,
that if Owner treats that unit as a non-Affordable Unit by raising the rent beyond the level
permitted by the Agreement Containing Covenants, Owner shall rent the next available one-
bedroom unit in the Project as an Affordable Unit with the rent for that Affordable Unit not to
exceed the maximum rent provided for in the Agreement Containing Covenants. Owner shall
notify Agency within fifteen (15) days of Owner's actions authorized by this subparagraph (b).
(3) Verification and Monitoring.
Owner shall execute, administer, and enforce a plan approved by Agency to verify the
eligibility of prospective tenants and then to monitor the tenants' continuing eligibility. All costs
associated with such plan and its execution, administration, and enforcement shall be borne by
Owner. Owner shall bear all relocation expenses for all eligible and ineligible tenants and
tenants admitted but later found to have income(s) in excess of the levels set forth in Paragraph
1(a), to the extent such tenants are eligible for relocation assistance. During the period of time
covered by this Paragraph 1, Owner, at its expense, shall submit, or cause its property manager
to submit, to Agency, on or before the August 31 that follows the first June 30 after completion
of construction of the Project, and no later than August 31 of each fiscal year thereafter, the
annual reports required pursuant to Health and Safety Code Section 33418, as the same may
be amended from time to time, with each such report to be in a form prescribed by Agency.
Each annual report shall cover the immediately preceding fiscal year. Any fee imposed by
Agency on Owner pursuant to Health and Safety Code Section 33418(c) shall be subject to the
terms of Section 6.2.2 of the OPA. In addition, Owner and Agency acknowledge and agree that
Agency is required to monitor the affordability of units in the Project and must verify the
information contained in each annual report prepared by Owner in accordance with Health &
Safety Code Section 33418 and submitted to Agency. Therefore, Owner shall submit with each
annual Section 33418 report an audited statement prepared at Owner's cost and certified by
Owner's financial officer verifying the information in that Section 33418 report.
(4) Rental Agreement.
The initial form rental agreement for the Affordable Units and any changes to such form
rental agreement to be used by Owner shall be approved by Agency prior to the rental or
leasing of any of the Affordable Units.
Heritage Apartuenis Amendment No.1 to the OPA -5- eCawbSn
(5) Remedy for Excessive Rental Charges
(a) It shall constitute a default for Owner to knowingly and intentionally
charge or accept rent amounts for the Affordable Units in excess of the amount provided for in
Agreement. In the event that Owner knowingly and intentionally charges or receives such
higher rental amounts, in addition to any other remedy Agency shall have for such default,
Owner shall be required to pay to Agency the entire amount of rent received in excess of the
amount permitted pursuant to this Agreement.
(b) It shall constitute a default for Owner to knowingly and intentionally rent
any Affordable Unit to a tenant who is not eligible for the particular Affordable Unit pursuant to
the affordability requirements set forth in this Agreement. In the event Owner does knowingly
and intentionally rent an Affordable Unit to an ineligible tenant, in addition to any other equitable
remedy Agency shall have for such default, Owner shall be required to pay to Agency an
amount equal to (i) two [2] times the greater of (A) the total rent Owner received from such
ineligible tenant, or (B) the total rent Owner was entitled to receive for renting that Affordable
Unit, plus (ii) any relocation expenses incurred by Agency or City as a result of Owner having
rented to such ineligible person.
(c) It shall constitute a default for Owner to knowingly and intentionally rent
any of the Affordable Units in violation of the leasing preference requirements set forth in
Section 1.c(1) of this Agreement. In the event Owner does knowingly and intentionally rent an
Affordable Unit in violation of the leasing preference requirements, in addition to any other
equitable remedy Agency shall have for such default, Owner shall be required to pay to Agency
an amount equal to two (2) months of rental charges for the Affordable Unit with the highest
rent.
(d) THE PARTIES HERETO AGREE THAT THE AMOUNTS SET FORTH IN
SUBPARAGRAPHS (a) THROUGH (c) IMMEDIATELY ABOVE (THE "DAMAGE AMOUNTS")
CONSTITUTE A REASONABLE APPROXIMATION OF THE ACTUAL DAMAGES THAT
AGENCY WOULD SUFFER DUE TO THE DEFAULTS BY OWNER SET FORTH IN
SUBPARAGRAPHS (a) THROUGH (c), CONSIDERING ALL OF THE CIRCUMSTANCES
EXISTING ON THE EFFECTIVE DATE OF THIS AGREEMENT, INCLUDING THE
RELATIONSHIP OF THE DAMAGE AMOUNTS TO THE RANGE OF HARM TO AGENCY AND
ACCOMPLISHMENT OF AGENCY'S PURPOSE OF ASSISTING IN THE PROVISION OF
AFFORDABLE HOUSING TO ELIGIBLE HOUSEHOLDS THAT REASONABLY COULD BE
ANTICIPATED AND THE ANTICIPATION THAT PROOF OF ACTUAL DAMAGES WOULD BE
COSTLY OR INCONVENIENT. THE AMOUNTS SET FORTH IN THIS SECTION 1.c(5) SHALL
BE THE SOLE DAMAGES REMEDIES FOR THE DEFAULTS SET FORTH IN THIS SECTION
1.c(5), BUT NOTHING IN THIS SECTION 1c.(5) SHALL BE INTERPRETED TO LIMIT
AGENCY'S REMEDY FOR SUCH DEFAULT TO SUCH A DAMAGES REMEDY. IN PLACING
ITS INITIAL AT THE PLACES PROVIDED HEREIN BELOW, EACH PARTY SPECIFICALLY
CONFIRMS THE ACCURACY OF THE STATEMENTS MADE ABOVE AND THE FACT THAT
EACH PARTY HAS BEEN REPRESENTED BY COUNSEL WHO HAS EXPLAINED THE
CONSEQUENCES OF THE LIQUIDATED DAMAGES PROVISION AT OR PRIOR TO THE
TIME EACH EXECUTED THIS AGREEMENT.
OWNER'S INITIALS: AGENCY'S INITIALS
Heritage Apartments Amendment No 1 to the OPA -6- c ,
(6) Management.
Owner shall obtain the approval of Agency's Executive Director, which approval shall not
be unreasonably withheld, any management entity engaged by Owner to manage the Site,
including Owner's self-management if applicable. Any change in such management team or
entity for the Site, shall be approved by the Agency's Executive Director, which approval shall
not be unreasonably withheld.
In the event of "Gross Mismanagement" (as that term is defined below) of the Project,
Agency shall have the authority to require that such Gross Mismanagement cease immediately,
and further to require the immediate replacement of the Property Manager. For purposes of this
Agreement the term "Gross Mismanagement" shall mean management of the Project in a
manner which violates the terms and/or intention of this Agreement to operate an affordable
housing complex of the highest standard, and shall include, but is not limited to, the following:
(a) Knowingly and intentionally leasing Affordable Units to ineligible tenants
or tenants whose income exceeds the prescribed levels;
(b) Allowing the tenants to exceed the prescribed occupancy levels without
taking immediate steps to stop such overcrowding;
(c) Failing to timely maintain the Project and the Site in the manner required
by this Agreement;
(d) Failing to submit timely and/or adequate annual Section 33418 reports as
required by this Agreement;
(e) Fraud or embezzlement of Project monies; and
(f) Failing to fully cooperate with the Palm Springs Police Department in
maintaining a crime-free environment on the Site.
2. Owner, on behalf of itself, its successors, its assigns, and each and every
successor in interest to the Site, or any part thereof, hereby covenants and agrees that Owner
and such successors and assigns:
a. prior to the recordation of a Release of Construction Covenants issued by
Agency for the improvements to be constructed on the Property, as provided in Section 3.16 of
the OPA, shall not make any sale, transfer, conveyance or assignment of the Property or any
part thereof or the buildings or structures thereon, and Owner shall not place or suffer to be
placed on the Property any lien or encumbrance other than as permitted in Sections 3.13 and
3.14 of the OPA;
b. that there shall be no discrimination against or segregation of any person
or group of persons on account of race, color, creed, religion, sex, marital status, national origin
or ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the
Property, nor shall Owner itself or any person claiming under or through it, establish or permit
any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use, or occupancy of tenants, lessees, subtenants, sublessees, or vendees in
the Property; COW
heritage Apartments Amendment No.1 to the OPA -7- ��
C. that all deeds, leases, or contracts made relative to the Property,
improvements thereon, or any part thereof, shall contain or be subject to substantially the
following nondiscrimination or non-segregation clauses:
(1) In deeds: "The grantee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, that there shall be no
discrimination against or segregation of, any person or group of persons on account of race,
color, creed, religion, sex, marital status, national origin or ancestry in the sale, lease, sublease,
transfer, use, occupancy, tenure, or enjoyment of the land herein conveyed, nor shall the
grantee itself or any person claiming under or through it, establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the land herein
conveyed. The foregoing covenants shall run with the land."
(2) In leases: "The lessee herein covenants by and for itself, its
successors and assigns, and all persons claiming under or through them, and this lease is
made and accepted upon and subject to the following conditions: That there shall be no
discrimination against or segregation of any person or group of persons, on account of race,
color, creed, religion, sex, marital status, national origin or ancestry in the leasing, subleasing,
renting, transferring, use, occupancy, tenure, or enjoyment of the land herein leased, nor shall
lessee itself, or any person claiming under or through it, establish or permit such practice or
practices of discrimination or segregation with reference to the selection, location, number, use,
or occupancy of tenants, lessees, sublessees, subtenants, or vendees in the land herein
leased."
(3) In contracts: "There shall be no discrimination against or
segregation of any person or group of persons on account of race, color, religion, creed, sex,
marital status, national origin or ancestry in the sale, lease, sublease, transfer, use, occupancy,
tenure, or enjoyment of the land, nor shall the transferee itself or any person claiming under or
through it, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use, or occupancy of tenants, lessees,
subtenants, sublessees, or vendees of the land."
d, to maintain in effect and to furnish or cause to be furnished to Agency
duplicate originals or appropriate certificates of insurance policies as set forth in Section 6 and 7
herein and by this reference incorporated herein, and, in the event of total or partial destruction
and subject to the rights of any lender, to effect 'restoration of the Project subject to the
provisions of paragraph 3 of this Agreement;
e. shall protect, maintain and preserve the improvements located on the
Site, and shall not make any substantial alteration or modification to the architectural style and
treatment of the facade of such improvements without the prior written approval of Agency; and
f. shall indemnify, defend, and hold harmless Agency, City, and their
respective officers, officials, members, employees, agents, and representatives from and
against any loss, liability, claim, or judgment relating in any manner to the Site excepting only (i)
any such loss, liability, claim, or judgment arising out of the intentional wrongdoing or active
negligence of Agency, City, or their respective officers, officials, members, employees, agents,
or representatives, and (ii) costs and expenses which are Agency's responsibilities pursuant to
express provisions of the OPA. Owner, while in possession of the Site, and each successor or
Heritage Apartments Amendment No.1 to the OPA -8- CC&
- ♦
assign of Owner while in possession of the Site, shall remain fully obligated for the payment of
property taxes and assessments in connection with the Site. The foregoing indemnification,
defense, and hold harmless agreement shall only be applicable to and binding upon the parry
then owning the Site or applicable portion thereof.
3. The following covenants and conditions shall apply to repairs of damage:
a. Obligation to Repair and Restore Damage Due to Casualty Required to
Be Covered by Insurance or Covered by Insurance .
Subject to subparagraph c below, if the Project shall be totally or partially destroyed or
rendered wholly or partly uninhabitable by fire or other casualty required by this Agreement to
be insured against by Owner, or is insured against by Owner whether or not required by this
Agreement, Owner shall take the steps set forth in either(1)or(2) below:
(1) Owner shall promptly proceed to obtain insurance proceeds and
take all steps necessary to begin reconstruction and, immediately upon receipt of insurance
proceeds, to promptly and diligently commence the repair or replacement of the Project to
substantially the same condition as the Project is required to be maintained in pursuant to this
Agreement, whether or not the insurance proceeds are sufficient to cover the actual cost of
repair, replacement, or restoration, and Owner shall complete the same as soon as possible
thereafter so that the Project can continue to be operated and occupied as an affordable
housing project in accordance with this Agreement. Subject to Section 8.3 of the OPA, in no
event shall the repair, replacement, or restoration period exceed eighteen (18) months from the
date Owner obtains insurance proceeds unless Agency's Executive Director, in his or her sole
and absolute discretion, approves a longer period of time. Agency shall cooperate with Owner,
at no expense to Agency, in obtaining any governmental permits required for the repair,
replacement, or restoration. If, however, the then-existing laws of any other governmental
agencies with jurisdiction over the Site do not permit the repair, replacement, or restoration,
Owner may elect not to repair, replace, or restore the Project by giving notice to Agency and
paying Agency the amount set forth in subparagraph (2) below (in which event Owner will be
entitled to all insurance proceeds but Owner shall be required to remove all debris from the
Property), and thereafter Owner may reconstruct such other improvements on the Property as
are consistent with applicable land use regulations and approved by the City, Agency, and the
other governmental agency or agencies with jurisdiction.
(2) Owner shall promptly (but in no event later than sixty [60] days) after the
casualty event, repay to Agency an amount defined herein as the "Owner's Casualty Payment"
The Owner's Casualty Payment shall be an amount calculated by (A) adding (i) the "Agency
Affordability Covenants Acquisition Amount" defined in the OPA, plus (ii) the amount derived by
multiplying the Agency Affordability Covenants Acquisition Amount by the percentage increase
in the Consumer Price Index published by the United States Department of Labor, Bureau of
Labor Statistics, for Urban Wage Earners and Clerical Workers, Los Angeles-Long Beach-
Anaheim Average, All Items (1984 = 100) (the "Index) (or if the Index is discontinued the most
nearly equivalent index established for similar consumer price index purposes), dating from the
date of Agency's disbursement to Owner of the Agency Affordability Covenants Acquisition
Amount to the date of Owner's Casualty Payment pursuant to this subparagraph (2), and (B)
multiplying the amount of clause (A) by the fraction in which the numerator is the number of full
calendar years remaining in the affordability covenant period set forth in this Agreement and the
denominator is twenty six (26). The following example illustrates the operation of this
subparagraph (2):
Heritage Apartments Amendment No.1 to the OPA -9-
i
Example: The casualty event occurs in the eleventh (11th) year of the
approximately 26-year affordability covenant period. The Index is 36%.
The amount in subparagraph (b) is $450,000 plus the Index amount of
$162,000, for a subtotal of $612,000, multiplied by the fraction 15/26 (or
.577), which yields an Owner's Casualty Payment of$363,076.92.
b. Continued Operations.
During any period of repair, Owner shall continue, or cause the continuation of, the
operation of the housing complex on the Property to the extent reasonably practicable from the
standpoint of prudent business management.
C. Damage or Destruction Due to Cause Not Required to be Covered by
Insurance.
If the improvements comprising the Project are completely destroyed or substantially
damaged by a casualty for which Owner is not required to (and has not) insure against, then
Owner shall not be required to repair, replace, or restore such improvements and may elect not
to do so by providing Agency with written notice of election not to repair, replace, or restore
within ninety (90) days after such substantial damage or destruction. In such event, Owner
shall remove all debris from the Property. As used in this subparagraph (c), "substantial
damage" caused by a casualty not required to be (and not) covered by insurance shall mean
damage or destruction which is fifty percent (50%) or more of the replacement cost of the
improvements comprising the Project. In the event Owner does not timely elect not to repair,
replace, or restore the improvements as set forth in the first sentence of this subparagraph (c),
Owner shall be conclusively deemed to have waived its right not to repair, replace, or restore
the improvements and thereafter Owner shall promptly commence and complete the repair,
replacement, or restoration of the damaged or destroyed improvements in accordance with
subparagraphs (a) above and continue operation of the housing complex during the period of
repair (if practicable) in accordance with subparagraph (b) above.
4. Owner shall not, whether voluntarily, involuntarily, or by operation of law, effect
any transfer or assignment (as defined in Section 3.13 of the OPA), including any transfer of
management responsibilities for the Project including as set forth in Section 3.13 of the OPA,
without Agency's prior written approval, except as permitted by Section 3.13 of the OPA. The
procedures to be followed in obtaining such approval, the criteria to be utilized by Agency in
determining whether to grant such approval, and certain exceptions to the foregoing prohibitions
and restrictions are set forth in Section 3,13.
5. The covenant set forth in Paragraph 2.a shall be for the period therein stated.
The covenants set forth in Paragraphs 1.a, 1.b, 1.c, 1.d, 2.d, 2.e, 2.f, 3, and 4 shall remain in
effect until May 7, 2026. The covenants contained in Paragraphs 2.b and 2.c shall remain in
effect in perpetuity.
6. Indemnification. Owner shall indemnify, defend, and hold harmless the Agency
and City and their respective officers, officials, members, employees, agents, representatives,
and volunteers from all loss, cost, and expense, including but not limited to any judgments
against same and attorneys' fees and costs, arising out of any liability or claim of liability for
personal injury, bodily injury to persons, contractual liability, and damage to property sustained
or claimed to have been sustained arising out of acts or activities of Owner or Owner's officers,
Heritage Apartrnents Amendment No.I to the OPA '10- 06 s
�� 0
employees, agents, representatives, or volunteers, whether or not such act or activity is
authorized by this Agreement; and Owner shall pay for any and all damage to the property of
Agency and City, or loss or theft of such property, done or caused by such persons. Agency
and City assume no responsibility whatsoever for any property placed on the premises. Owner
further agrees to waive all rights of subrogation against Agency and City. The indemnification
provisions set forth herein do not apply to any damage or loss caused solely by the willful
misconduct of Agency or City or any of their respective officers, officials, members, employees,
agents, representatives or volunteers.
7. Insurance Requirements. Owner shall procure and maintain during both
construction and subsequent operation of the Project, and in all cases for the duration of this
Agreement, insurance against claims for injury and property damage which may arise from or in
connection with the performance of this Agreement.
a. Minimum Scope of Insurance. Coverage shall be at least as broad as:
(1) Commercial General Liability insurance to include products and
completed operations, contractual, independent contractors, broad form property damage, fire,
legal, and personal injury.
(2) Comprehensive Automobile Liability insurance to include all autos
owned, hired, and non-owned.
(3) "Builder's Risk Property Insurance" to include Owner's
improvements and betterment; and following construction but prior to Agency's disbursement of
the Agency Assistance hereunder, Owner shall provide All Risk Property insurance to include
Owner's improvements and betterment (continuously for the duration of this Agreement).
(4) Workers' Compensation as required by the Labor Code of the
State of California and Employers' Liability insurance.
b. Minimum Limits of Insurance. Owner shall maintain limits no less than:\
(1) Commercial General Liabilitv: One Million Dollars ($1,000,000)
combined single limit per occurrence for bodily injury, personal injury, and property damage.
(2) Automobile Liability: Five Hundred Thousand Dollars ($500,000)
combined single limit per occurrence for bodily injury and property damage.
(3) All Risk Property: Following construction of the Project, ninety
(90%) percent of the replacement value of the building(s) on the Property and Owner's
improvement and betterment.
(4) Workers' Compensation and Employers' Liabilitv: Workers'
Compensation limits as required by the Labor Code of the State of California and Employers'
Liability limits of One Million Dollars ($1,000,000) per accident.
C. Deductibles and Self-Insured Retentions. The All Risk Property
insurance and the Builder's Risk insurance shall each have a maximum deductible of $10,000,
All other deductibles or self-insured retentions must be declared to and approved in advance by
the Agency's Executive Director, who in his/her sole discretion may require the insurer to reduce
Heritage Apamnents Amendment No.1[o the OPA -t f- ��� / 1
or eliminate such deductibles or self-insured retentions with respect to Agency and City and
Agency's and City's respective officers, officials, members, employees, agents, representatives,
and volunteers; or Owner may be required to procure a bond guaranteeing payment of losses
and related investigation, claims administration, and defense expenses.
d. Other Insurance Provisions. The policies are to contain, or be endorsed
to contain, the following provisions:
(1) General and Automobile Liability Coverage. Agency and City and
Agency's and City's respective officers, officials, members employees, agents, representatives,
and volunteers are to be named as additional insureds with respect to liability arising out of the
acts or activities performed by or on behalf of Owner.
(2) Property Coverage (and Builder's Risk) If Inclusive. Agency shall
be named as a loss payee on the policies and any settlement will accordingly include the
Agency on the draft or check.
(3) Workers' Compensation and Employers' Liability Coverage. The
insurer shall agree to waive all rights of subrogation against the Agency and City and Agency's
and City's respective officers, officials, members, employees, agents, representatives and
volunteers, for losses arising from work performed by Owner for the Agency.
(4) All Coverage.
1 Owner's insurance coverage shall be primary insurance
and non-contributory with respect to Agency and City and
Agency's and City's respective officers, officials, members,
employees, agents, representatives, and volunteers, and
with respect to any insurance Agency and Agency's
officers, officials, employees, agents, representatives, and
volunteers may have.
2 Any failure to comply with reporting provisions of the
policies shall not affect coverage provided to Agency and
City and Agency's and City's respective officers, officials,
members employees, agents, representatives, and
volunteers.
3 No coverage shall be suspended, voided, cancelled,
reduced in coverage or in limits, or non-renewed, except
after thirty (30) days' prior written notice by personal
delivery or certified mail has been given to Agency's
Executive Director.
4 All insurance with respect to Agency and City and
Agency's and City's officers, officials, members,
employees, agents, representatives, and volunteers shall
be "date of occurrence" insurance and not "claims made"
insurance.
Heritage Aparhmnts Amendment No.Ito the OPA -12- ��' ,
5 All insurance shall apply separately to each insured
against whom claims is made or suit is brought, except
with respect to the limits of the insurer's liability.
e. Acceptability of Insurers. Insurance is to be placed with insurers with a
BEST rating of no less than B+ Class X.
The procuring of insurance by Owner shall not be construed as a limitation on
Owner liability or as full performance of Owner's obligation under the Indemnification Provisions
of this Agreement, including as set forth in Section 6 herein, and Owner understands and
agrees that, notwithstanding any insurance, Owner's indemnification obligation, as set forth in
Section 7 herein, extends to the full and total amount of any damage, injuries, loss, expense,
costs, or liabilities suffered or incurred by Agency or City or Agency's or City's respective
officers, officials, members, employees, agents, representatives, and volunteers.
8. All conditions, covenants and restrictions contained in this Agreement Containing
Covenants Affecting Real Property shall be covenants running with the land, and shall, in any
event, and without regard to technical classification or designation, legal or otherwise, be, to the
fullest extent permitted by law and equity, binding for the benefit and in favor of, and
enforceable by Agency, its successors and assigns, and the City and its successors and
assigns, against Owner, its successors and assigns, to or of the Site or any portion thereof or
any interest therein, and any party in possession or occupancy of said Site or portion thereof.
9. In amplification and not in restriction of the provisions set forth hereinabove, it is
intended and agreed that Agency shall be deemed a beneficiary of the agreements and
covenants provided hereinabove both for and in its own right and also for the purposes of
protecting the interests of the community. All covenants without regard to technical
classification or designation shall be binding for the benefit of Agency and such covenants shall
run in favor of Agency for the entire period during which such covenants shall be in force and
effect, without regard to whether Agency is or remains an owner of any land or interest therein
to which such covenants relate. Agency shall have the right, in the event of any breach of any
such agreement or covenant to exercise all the rights and remedies, and to maintain any action
at law or suit in equity or other proper proceedings to enforce the curing of such breach of
agreement or covenant.
10. Both Agency and its successors and assigns, and Owner and the successors
and assigns of Owner in and to all or any part of the fee title to the Site, shall have the right to
consent and agree to changes in, or to eliminate in whole or in part, any of the covenants,
conditions, or restrictions contained in this Agreement Containing Covenants Affecting Real
Property without the consent of any tenant, lessee, easement holder, licensee, mortgagee,
trustee, beneficiary under a deed of trust, or any person or entity having any interest less than a
fee in the Site. That covenants contained in this Agreement Containing Covenants Affecting
Real Property, without regard to technical classification shall not benefit or be enforceable by
any owner of any other real property within or outside the Project Area, or any person or entity
having any interest in any other such property.
IN WITNESS WHEREOF, Agency and Owner have entered into this Agreement as of
the Effective Date. /+
Heritage Apartments Amendment No.1 to Flee OPA -13- • !'
"Agency"
COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS
Attest: By.
Chairman
Agency Secretary
Approved as to form:
ALESHIRE &WYNDER, LLP
Attorneys for the Agency
"Owner"
ROSE MIHATA, an individual
Rose Mihata
Heritage Apartments Amendment No.1 to the OPA -14-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date of execution by the Agency.
"Agency"
COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS
By:
Attest: Executive Director
Agency Secretary
Approved as to form:
ALESHIRE &WYNDER, LLP
Attorneys for the Agency
"Owner"
ROSE MIHATA, an individual
Rose Mihata
[END OF SIGNATURES]
Heritage Apartments Amendment No.1 to the OPA 't- CAO�
DATE; JUNE 7,2000
TO: COMMUNITY REDEVELOPMENT AGENCY
FROM: REDEVELOPMENT DIRECTOR
APPROVAL OF OWNER PARTICIPATION WITH ROSE MIHATA AND SCOTT
TIMBERLAKE FOR THE REHABILITATION OF A M-UNIT MATURE ADULT
APARTMENT COMPLEX,THE HERITAGE APARTMENTS,AT 300 SOUTH CALLS EL
SEGUNDO
RECOMMENDATION:
It is recommended that the Agency approve an Owner Partidpation Agreamentwlth
Rose Mihate,an kxWkkral,and SoottTknbedake,an individual,for the rehabilitation
of a 130u t mature adult apartment complex at 300 South Coe El Segundo,the
Heritage Apartments,in the Saristo-Farrell Redevelopment Project Area
BACKGROUND:
In January,2000 staff received an initial request for Agency assistance from
Rose Mihata,owner of the Heritage Apartments at 300 South Calle El Segundo.
Ms.Mihata and her partner,Scott Timberlake,had purchased the complex In
August,1999 from a long-time owner,and were immediately confronted with
twenty years worth of deferred maintenance on the apartments,as well as the
normal wear and tear on various mechanical systems.
What precipitated the request was the Chy's Community Preservation Officers'
requirements that the new owners perform a number of significant property
repairs:Included in these repairs were the replacement of the block wall
surrounding the parking K repaving the parking lot,and resurfacing the
swimming pool and spa. The estimated cost of these repairs,based on
contractor estimates,was 000,000. Ms.Mihata requested that the Agency pay
the cost of these repairs,in return for a commitment to restrict a number of units
(10-16)to low-or moderate-income residents. Those repairs need to be made
whether or not we proceed with this agreement.
The complex was oonstnrcted in 1979 without any Agency assistance,and
therefore has no affordability restrictions on IL The apartments were originally
built as'mature aduir apartments,Intended for seff-suffident(not requiring
special medical attention),low-and modera"come seniors. The units are
smaller than typical for a project of this type;it was anticipated that smaller units
would reduce both the rent and maintenance costs of the units,thus making
them more affordable to the residents. Smaller units,along with the R-13
insulation and extensive sun control through landscaping, roof overhangs, and
canopies,was also supposed to make the units more energy efficient and
therefore less costly.
The priorities of the Agency's Low/Mod Housing Program thus far have been
correcting health and safety problems in existing units, as well as helping make�r• A
the units affordable to the tenants. As staff discussed the projectwith the VW.
Owner,it was determined that we could probably make the greatest impact on
the tenants by replacing the 20•yea"Id roof-top aftonditioning units with new
energy efficlent units. The tenants'electric bills should decrease in the summer,
and their comfort will Increase. Staff also asked the Local Government
Commission In Sacramento, who provide energy-efficiency design assistance to
cities through their Local Energy Assistance Program (LEAP), to assist In
packaging additional energy-related improvements. Based on two preliminary
bids obtained by the Owner, the cost of air conditioner replacement would be
between$260,000 and$300,000. Staff would look to package that with an
additional $40,000 to$50,000 in recommended energy efficiency improvements
to the units.
Generally, on multi-fanuly projects, the Agency has required one unit to be set
aside for persons of low-or moderate income for every$5,000 to$10,000 In
assistance given. Based on the Information the Owner provided staff, rents are
$460 to$525 for 1 bedroom apartments (with new rentals at the$525 rate), and
$550 to$625 for 2-bedroom units,with the higher rate for new rentals. The
project's rents fall within the range of what is available to low income
households so, in effect, the entire complex Is currently eligible. However, in the
future,the increase in rents in the`restricted"apartments can be no faster than
Increases in the regional median Income. Ultimately,it could mean that the
Owner could have two sets of rents: for unrestricted units and restricted units.
While the Owner was looking for grant funds for this project,in terms of how the
Agency normally contributes its funds to a project,it typically makes a low-
interest, 'silent"loan to an owner rather than an outright grant Both achieve the
same goal, but silent loans protect the covenants,since a loan would be fully
repayable upon any breach of the agreement In addition, loans are easier to
monitor than grants because they are recorded on the deed. The Agency
typically subordinates the loan to the Owner's first trust deed, provided it were
held by an anVs length lender, not one of the owners. The loan would be
forgiven at the end of the tern;therefore,the Owners would probably never
need to make payments on the loan unless they failed to perform according to
the terns of the Agreement
The most typical breach of the loan covenant would be if the Owner sold the
property to a new owner that did not wish to honor the affordability covenant;or,
If the current owners did not wish to honor the agreement Unlike the
Neighborhood Revitalization Program (Single Family Rehab), there will be no
amortization (principal reduction)of the loan In order to maintain a substantial
penalty upon contract breach.
Therefore, based on an overall Agency assistance package of$450,000,we
would require that sixty-eight(68)of the units at the Heritage Apartments fail
under the regulatory agreement That works out to about one restricted unit for
every$6,600 in Agency assistance, at the lower(more favorable to the Agency)
end of the average range of$5,000 to $10,000 per unit of assistance in rehab.
In addition to the Agency's contribution to the project,the OPA will require the
Owner to match the public investment with additional private investment. While
a dollar for dollar match(or even more on the private side)is preferable,the
minimum acceptable private match would be 5095 of the public investment, or
$225,000 in the case of a $450,000 public investment.
These improvements will focus on repairing safety, structural, or system
problems, such as staircases, roofing, mechanical, plumbing, or otherwise, that
will prolong the life of the property and keep it in good order. Secondly, other
r .f ir- ,.' -, 0
"quality of life•improvements such as repainting the apartments,providing new
appliances, upgrading the parting lot lighting,would be included. Staff
understands that$225,000 or more Is a substantial investment in the property
(and far more than the$900,000 in originally required repairs),this program Is
an opportunity for the Owner to leverage up to$2 in Improvements for every
dollar they invest in the property,without having to service all of the debt.
In addition to the rent restrictions that will be outlined in the agreement, an OPA
will also contain other property requirements, in the form of CC&Rs. These
usually rotor to property maintenance standards,and wig require that the
Owners keep the premises maintained and in good repair. They'll refer,
primarily,to exterior maintenance, since it is the easiest for the City to monitor
from the street:wags,fences, paving,trash enclosures and pickup,landscaping,
exterior ggMing,eta
Staff will include this project—the$450,000 Agency share—in the 2000-
2001 Community Redevelopment Agency Low/Mod Housing budget(not the
General Pund),since it not anticipated that any Agency expenditures mil be
made in the remainder of the fiscal year.
JOHNS. RAYMOND
RedevelPR ent Q
APPROVED
E)Mcutive Director
ATTACHMENTS:
1. Resotu6on
2. Owner Participation Agreement
KOM BYWEOFFIN=
RESOLUTION NO. 1100
OF THE COMMUNITY REDEVELOPMENT AGENCY OF
THE CITY OF PALM SPRINGS, CALIFORNIA,
APPROVING AN OWNER PARTICIPATION
AGREEMENT WITH ROSE MIHATA AND SCOTT
TIMBERLAKE TO REHABILITATE THE HERITAGE
APARTMENTS, A 136-UNIT APARTMENT COMPLEX AT
300 SOUTH CALLE EL SEGUNDO IN THE BARISTO-
FARRELL PROJECT AREA (AREA#8)
WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the
"Agency") has established an affordable housing setaside,fund in accordance with
Section 33000 et. seq, of the California Health and Safety Code; and
WHEREAS, the funds are earmarked for the acquisition, construction, or rehabilitation
of affordable housing to benefit the community; and
WHEREAS, the Heritage Apartments, constructed in 1979 as mature adult units for
low-to moderate-income seniors, is in significant need of rehabilitation, including
improving the energy efficiency of the units and the amenities of the complex; and
WHEREAS, the property owners, Rose Mihata and Scott Timberlake, desire to
participate with the Agency in its affordable housing program by dedicating up to half
(68) of the units for low-income residents in the Heritage Apartments, which is in the
Baristo-Farrell Redevelopment Project Area (Project Area#8).
NOW THEREFORE BE IT RESOLVED by the Community,Redevelopment Agency of
the City of Palm Springs, as follows:
SECTION 1. An Owner Participation Agreement with Rose Mihata and Scott
Timberlake for the rehabilitation of 136 units at the Heritage Apartments,
300 South Calle El Segundo, is approved.
SECTION 2. The Agency authorizes an allocation of up to $450.000 for this project.
SECTION 3. The Executive Director, or his designee, is hereby authorized to execute
on behalf of the Agency the Owner Participation Agreement ajld other
documents necessary to the Agreement, and make minor chanties as
may be deemed necessary, in a form approved by Agency Counsel.
ADOPTED this 7th day of June 2000.
AYES: Members Jones, Hodges, Oden, Vice-Chair Reller-Spurgin
NOES: None
ABSENT: Chairman Kleindienst a
` 8 ��ATTEST: COMMUNITY REDEVELOPMENT AGENCYAGENCY
F THE CITY OF PALM SPRING , CALIFORNIA
L'
B 'v
Assistant Secretary Chairman
REVIEWED &APPROVED AS TO FORM "
RESOLUTION NO.
OF THE COMMUNITY REDEVELOPMENT AGENCY OF
THE CITY OF PALM SPRINGS,CALIFORNIA,APPROVING
AMENDMENT NO. 1 TO AN OWNER PARTICIPATION
AGREEMENT WITH ROSE MIHATA TO REHABILITATE
THE HERITAGE APARTMENTS,A 136-UNIT APARTMENT
COMPLEX AT 300 ,SOUTH CALLE EL SEGUNDO IN
MERGED PROJECT AREA#2, AMENDING THE INCOME
RESTRICTIONS FROM LOW-INCOME UNITS TO
MODERATE-INCOME UNITS AND AMENDING THE
OWNERSHIP OF THE PROJECT
WHEREAS, the Community Redevelopment Agency of the City of Palm Springs (the
"Agency") has established an affordable housing setaside fund in accordance with Section
33000 et. seq. of the California Health and Safety Code; and
WHEREAS, the funds are earmarked for the acquisition, construction, or rehabilitation of
affordable housing to benefit the community; and
WHEREAS, the Heritage Apartments, constructed in 1979 as mature adult units for low-
to moderate-income seniors, was in significant need of rehabilitation, including improving
the energy efficiency of the units, security and amenities of the complex, and the Agency
approved an Owner Participation Agreement on June 7, 2000 committing $450,000 to the
rehabilitation of the project in return for having up to half (68) of the units for made
available for"low-income" residents in the Heritage Apartments; and
WHEREAS, the property owners at the time, Rose Mihata and Scott Timberlake, desired
to participate with the Agency in its affordable housing program and agreed to dedicate
the units for low-income residents in the Heritage Apartments,with the understanding that
the restrictions be based on 80% of median income; and
WHEREAS, Rose Mihata is now the sole property owner at this time; and
WHEREAS, Health & Safety Code §50053 (b)(3) requires that Affordable Rent for Lower
Income Households be the product of 30 percent times 60 percent of the area median
income adjusted annually for family size appropriate to the unit; and
WHEREAS, in order to comply with Health&Safety Code§50053 (b)(3)and §50053(b)(4)
the OPA must be amended to restrict the units to Moderate Income Households, with the
Owner agreeing to lower the rents to 80% of area median income.
NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the
City of Palm Springs, as follows:
SECTION 1. Amendment No. 1 to an Owner Participation Agreement with Rose Mihata,
changing the legal designation of the restricted units to Moderate Income
Units and changing the income level of the restrictions from 60% of area
median income to 80% of area median income, is hereby approved.
SECTION 2. The Executive Director,or his designee, is hereby authorized to execute on
behalf of the Agency the Owner Participation Agreement.
ADOPTED this day of 2004.
AYES:
NOES:
ABSENT:
ATTEST: COMMUNITY REDEVELOPMENT AGENCY
OF THE CITY OF PALM SPRINGS, CALIFORNIA
By
Assistant Secretary Executive Director
REVIEWED &APPROVED AS TO FORM