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HomeMy WebLinkAbout7/16/2003 - STAFF REPORTS (2) DATE: JULY 16, 2003 TO: COMMUNITY REDEVELOPMENT AGENCY & CITY COUNCIL FROM: DIRECTOR OF COMMUNITY & ECONOMIC DEVELOPMENT JOINT PUBLIC HEARING APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP AND MBA DEVELOPMENT CORP. TO FACILITATE THE APPLICATION FOR LOW INCOME HOUSING TAX CREDITS AND THE DEVELOPMENT AND CONSTRUCTION OF THE DESERT AIDS PROJECT HIV/AIDS HOUSING PROJECT AND THE PALM SPRINGS FAMILY CARE CENTER LOCATED WEST OF SUNRISE WAY SOUTH OF VISTA CHINO ROAD RECOMMENDATION: It is recommended that the City and Agency approve a Disposition and Development Agreement with Vista Sunrise Apartments, LP and MBA Development Corp. providing up to $1,300,000 (One Million Three Hundred Dollars) in Agency financial assistance and the contribution of 1.23 acres of City- owned land (via the Agency)for the construction of an 85-unit low-income, special needs apartment complex serving persons with HIV/AIDS, referred to as the DAP HIV/AIDS Apartments, and the development of the Palm Springs Family Care Center, west of Sunrise Way and south of Vista Chino Road. SUMMARY: This resolution approves a Disposition and Development Agreement with the developers of the Desert AIDS Project (DAP) HIV/AIDS Housing Project in the amount of $1,300,000. The Agency would contribute a 1.23 acre parcel of City- owned land (valued at $205,000), and reimburse the City at a future date, and provide up to$1,300,000 over two years, to assist the project with the Low Income Housing Tax Credit application process. In return, the Developer agrees to proceed with the LIHTC application and, once funded, to construct the project as proposed and approved by the City Council on July 16, 2002, BACKGROUND: Agency members are familiar with the project as proposed by Desert AIDS Project and McCormack Baron Salazar, Inc. The project has changed since the City Council reviewed it in February: the homeless day facility, as well as 6,000 square feet to accommodate non-profit offices, has been removed, and the project consists of a County-run Family Care Center and 85-units of special needs housing restricted to residents with HIV/AIDS. The prior project had a mix of special needs housing and transitional housing for formerly homeless individuals. The project has a variety of different-size apartments, from studios to 1- and 2- bedrooms, with the majority of units 1-bedroom. As with most LIHTC projects, the housing developer and the non-profit sponsor form a partnership which acts as the General Partner (and often property manager), but then sells most of the projectto a for-profit limited partnerwho would CVA4 A be able to uses the 9%credits (LIHTC). The Partnership in this case is called Vista Sunrise Apartments, LP. Agency financial participation in the project will make the developer's LIHTC application much stronger and make the project more likely to be built. The deal is structured as follows: the financial assistance and the land contribution flow to the partnership (Vista Sunrise Apartments, LP); in addition, the partnership has a separate agreement with the Desert Healthcare District for the contribution of the bulk of the project site. Finally, the County of Riverside has committed$1,500,000 in HOME funds to close the financial gap in the project. 1. Once the DDA executed, the Agency would allow the partnership to be reimbursed up to $75,000 in eligible development costs. This amount is credited against the total financial commitment of$1,300,000. 2. Once the project receives its tax credit allocation, the Agency will Grant Deed the property to the partnership. The Agency would retain reverter rights if the Developer fails to proceed or complete the project. 3. Once the project received its tax credit allocation, the Agency would also release its main disbursementof$825,000 based on invoices received from the developer, including both soft costs and hard costs. In the next year, the Agency shall make a payment of $300,000 to the project. The assistance shall be secured by a Deed of Trust. 4. The developer commits to building the project as proposed, including the architectural upgrades, noise buffering, quality landscaping, and other components. The project shall be restricted to residents with HIV/AIDS;the case management services shall be provided by Desert AIDS Project. A Regulatory Agreement with the Agency will assure that the units will count towards the City's low and moderate income housing goals. 5. The Agency shall assist the Developer in applying for the Low Income Housing Tax Credits in every way possible. 6. Plans and Drawings: Project plans and drawings would become property of the Agency at the time of the land transfer and would be necessary to the Agency in the event it becomes necessary for the Agency to complete the project. 7. The Agency and City shall enter a Purchase and Sale Agreement for the property, by which the Agency shall reimburse the City for the parcel at the appraised price ($205,000) at a point in the future when the annual Low/Mod Housing Setaside reaches $1,800,000. Half of the project's units (42) shall count in the Agency's inventory of Low/Mod Housing Units. The 42 Agency-funded units, at a total subsidy of $1,505,000 (which includes cash and land), equates to $35,833 per unit, well within the prototypical financing gap in a tax-credit-funded, multi-unit project. This gap is calculated only on Agency-restricted units;since the entire projectwill be affordable due to the tax credit restrictions, the effective subsidy is $17,705 per unit. Based 6kA A V`z- on the attorney's research on the Article 34 issue, the Agency may be able to restrict all of the units based on the nature of the financing. Tax Credit financing restricts them all, anyway, for a period of 55 years. A Summary Report describing the purchase and sale of the property, as required by California Health and Safety Code Section 33433 (a), is enclosed with the resolution. 401HN . RAY O D irec r of Community & Economic Development Executive Director - ATTACHMENTS: 1. Resolution 2. Dispostion and Development Agreement 3. Summary Report 4. Public Hearing Notice NOTICE OF JOINT PUBLIC HEARING NOTICE IS HEREBY GIVEN, that the Community Redevelopment Agency of the City of Palm Springs and the City of Palm Springs will hold a Joint Public Hearing in the City Council Chambers, located at 3200 Tahquitz Canyon Way, Palm Springs, California 92262, beginning at 7:00 p.m., Wednesday, July 16, 2003, to consider the following: A Disposition and Development Agreement ("DDA") between Vista Sunrise, L.P. and the Community Redevelopment Agency to the City of Palm Springs, including the sale of a 1.23 acre parcel located on the south side of Vista Chino Road near Sunrise Way Palm Springs, California 92262 The Community Redevelopment Agency of the City of Palm Springs ("Agency") proposes to enter a DDA with Vista Sunrise, L.P. for the purpose of developing an 85-unit low- income, special needs apartment complex adjacent to the Desert AIDS Project offices and a County-run Family Medical Center on Sunrise Way. The DDA calls for the Agency contributing the 1.23 acre City-owned parcel to project, as well as $1,300,000 in Agency Low Income Housing Setaside funds over a period of two years. The partnership intends to apply for Low Income Housing Tax Credits under Article 42 of the IRS Code. The general partner in the project is McCormack Baron Salazar, Inc., a housing developer located in Los Angeles. The limited partner is Desert AIDS Project, which is contributing land to the project and will provide case management services for the residents of the housing development. All interested persons are invited to attend the Public Hearing and express opinions on the item listed above. If you challenge the nature of the proposed action 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 the City Clerk, at the address listed above, at or prior to the Public Hearing. Members of the public may view this document and all referenced documents in the Community Redevelopment Department, City Hall, and submit written comments to the Community Redevelopment Agency at or prior to the Community Redevelopment Agency Meeting at or prior to the public hearing described in this notice. Further information, including a copy of the Amendment and Resolution, prepared in accordance with Health and Safety Code Section 33433, is available in the Office of the City Clerk, at the above address. PATRICIA A. SANDERS, City Clerk PUBLISHED: July 1 and July 8, 2003 SUMMARY REPORT: DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE PALM SPRINGS COMMUNITY REDEVELOPMENT AGENCY AND VISTA SUNRISE APARTMENTS, LP AND MCCORMACK BARON SALAZAR, INC. JULY 2003 INTRODUCTION Before real property acquired by a Community Redevelopment Agency with tax increment proceeds may be sold or leased, the transaction must be approved by the Agency Board in accordance with California Health and Safety Code Section 33433. This Section requires a "Summary Report", which describes and specifies certain information in regard to the proposed transaction, be available for public inspection. DESCRIPTION OF THE PROPOSED AGREEMENT Site and Interests to be Conveyed The Site consists of one (1) parcel of land of approximately 1.23 acres. The Site is located near the southwest corner of Vista Chino Road and North Sunrise Way Drive in the City of Palm Springs. It is a remainder parcel from the development of the Vista Serena Co-op and Vista Del Monte Co-op Apartments. Because the Agency had held the parcel longer than five (5) years, it was required to dispose of the property on October, 2001. The property was sold to the City of Palm Springs for the amount of$60,000. Proposed Development The Purchaser is building 85 low-income apartment units serving residents with HIV/AIDS. The units shall consist of studios, one (1)- and two (2)-bedroom units. The majority of the units shall be our one-bedroom. Case management services shall be provided by Desert AIDS Project, one of the partners in the development partnership responsible for the project. In addition, a Family Care Center staffed and managed by the County of Riverside's Department of Public Health shall be built as part of the project. The entire project shall be built on the City/Agency's site, land currently owned by the Desert Healthcare District, and land owned by Desert AIDS Project. Financing The developer is unable to acquire the additional money, at this time, through outside agencies, as the primary funding source of the project shall be federal Low Income Housing Tax Credits (LIHTCs). The secondary source of financing shall be federal HOME funds committed by Riverside County in the amount of$1,500,000. The Agency's contribution, at One Million Three Hundred Thousand Dollars ($1,300,000) is third, followed by the dedication of land from the Desert Healthcare District at approximately$800,000. The entire project cost is$9,696,000. The project will be able to support a relatively small amount of permanent debt. Agency Responsibilities Besides the purchase price, the Agency will incur other administrative, appraisal, report and legal costs, in carrying out the Agreement. These costs are relatively minor and occur as normal administrative costs of the Agency. Developer Responsibilities Agency's other standard terms and conditions, including non-discrimination and maintenance covenants, and other terms and conditions remain as in Disposition and Development Agreement for Developer. COST OF AGREEMENT TO THE AGENCY 094 19 _b Summary Report Vista Sunrise Apartments, LP Page 3 The Agency will commit a total of$1,300,000 to the project over a two-year period. In addition, the Agency has assumed the responsibility of repaying the City$205,000 for the 1.23 acres at a point in the future when annual Housing Setaside reaches $1,800,000. ELIMINATION OF BLIGHT The Site is in Merged Project Area #1, in the former Project Area #9-B. This lot has been remained vacant since the development of the co-op apartments,largely because it is rather small and would need to be combined with an adjacent parcel for development parcels. The combination of partners, including McCormack Baron Salazar, Desert AIDS Project, the County of Riverside, and the Desert Healthcare District, have taken the opportunity to develop a high- quality, necessary project for the community. CRC � -7 Proof of Publication In Newspaper STATE OF CALIFORNIA County of Riverside Jacquelin K. Welch says: 1. 1 am a citizen of the United States, a resident of the City of Desert Hot Springs, County of Riverside, State of California, and over the age of 18 years. 2. 1 am the Research & Production Assistant of The Public Record, a newspaper of general circulation printed and published in the City of Palm NOTICE OF JOINT PUBLIC HEARING Springs, County of Riverside, State of NOTICE IS HEREBY GIVEN, that the Community California. Said The Public Record is a Redevelopmenl Agency of the City of Palm Sprigs and the City of Palm Sprigs will hold a Joint Public Hearing in the City newspaper of general circulation as that Council Chambers, located aP 3200 Tahmeb, Canyon Wag Palm Springs, California 92262, beginning at 700 form, term is defined in Government C Code Wednesday, 2003,to consider the following. section 6000, its status as such havingA Disposition and Development Agreement("DDA")between Vista Sunrise,L P and[he Community Redevelopment been established by judicial decree of the Agency to the City of Palm springs, including the sale of a 1 23 acre parcel located on the south Superior Court of the State of Californian s,doof Vista Cood Head he.,Such..Way and for the County of Riverside in Palm Sprigs,California 92262 The Community Redevelopment Agency of the City of Proceeding No. Indio 49271 , dated Palm Sprigs(Agency')proposes to enter a DDA with Vale Sunrise. L P for the purpose o1 developing an 85man low- March 31, 1987, entered in Judgment income, special needs apartment complex adjacent to the Book No. 129, page 355, on March 31 , Desert AIDS Project offices and a County-run Family Medical Comer on Sunrise Wav The DDA calls for the Agency con- 1 987 mail the 1 23 wore City.owned area to proleot,as well as Sr 300000 r Agenev Low Income Housing Setacke run. 3. The Public Record is a newspaper of over c paned of two years The partnership intends to apply for general circulation ascertained and Low(Income Housing Tax Cedilla under Article 42 of the IRS established in the City of Palm Springs n code The general partner In the project Is McCormack Baron the County of Riverside, State of _Salazar,Inc..ahousing developer located in Los Angeles The California, Case No. RIC 358286 Filed limited partner is Desert AIDS Project, which is commas rig land to the project and will provide case management seraces June 8, 2001. for the residents of the housing development. All Interested persons are Invited to attend the Public 4. The notice, of which the annexed is a Hearing and express opinions on the item listed above. It you true printed co was published in the challenge the nature of the proposed action in coud,you may p copy, p be limited to reusing only those issues you or someone else newspaper on the following publication raised at the Public Hearing described in this notice,or in will dates t� wit. tan correspondence delivered to the City Clerk,at the address listed above,at or poor to the Public Hearing. Members of the public may view this document and all r� talent ad documents in the Community Redevelopment July 1 , 2003 Department, City Hell, antl submit written comments to me Jul 8 2003 Community Redevelopment Agency at or prior to the Y , Community Redevelopment Agency Meeting at or prior to the I certify under penalty of perjury that the public heenng described In this notice. Further"forme den,Including a copy of the Amendment above is true and correct. and Resolution,prepared In accordance with Health and Safety Dated at Palm Springs, California, Code Section 3W3,Is available In the Off I.of the City Clerk, this 81h day of July 2003. at the above address. a/PATRICIA A.SANDERS, City Clerk July 1,8,2003 Jacquelin K, Welch Research & Production Assistant RESOLUTION NO. OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP TO EFFECTUATE THE DEVELOPMENT OF A LOW-INCOME HIV/AIDS APARTMENT COMPLEX AND FAMILY CARE FACILITY WEST OF SUNRISE WAY, SOUTH OF VISTA CHINO ROAD 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 at. 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, DAP HIV/AIDS Housing Project, proposed for low-income persons with HIV/AIDS, and Family Care Center, operated by the County of Riverside, was approved on July 16, 2003 by the Palm Springs City Council; and WHEREAS, the property developers, McCormack Baron Salazar, Inc. and Vista Sunrise Apartments, LP, sought Agency financial assistance to cover a portion of the development cost; and WHEREAS, the property developers are submitting a tax credit application to the California Tax Credit Allocation Committee for the July 24, 2003 application round and have requested Agency assistance to strengthen the application; and WHEREAS, Section 33430 of the Community Redevelopment Law allows that an agency may, "for purposes of redevelopment, sell, lease, for a period not to exceed 99 years, exchange, subdivide, transfer, assign, pledge, encumber by mortgage, deed of trust, or otherwise, or otherwise dispose of any real or personal property or any interest in property;" and WHEREAS, the owners shall agree to restrict, though a Regulatory Agreement approved as an attachment to the Disposition and Development Agreement, the rents on 49% of the proposed units(42)to levels affordable to families with incomes no more than 60%of Area Median Income (AMI); and WHEREAS, a Notice of Public Hearing concerning the Disposition and Development Agreement was published in accordance with applicable law; and WHEREAS, the City Council and Agency have considered the staff report, and all the information, testimony and evidence provided during the public hearing on July 16, 2003. NOW THEREFORE BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs, as follows: SECTION 1. The above recitals are true and correct and incorporated herein. SECTION 2. Pursuant to the California Environmental Quality Act (CEQA), the Community Redevelopment Agency finds as follows: ICU R- �. a) The City Council adopted a Mitigated Negative Declaration for the project based on the preparation of an Initial Study and the recommendation of the Planning Commission. Mitigation measures are included in the project design and adopted as part of the Conditions of Approval for the Project. b) The Agency finds that the Planning Commission adequately discussed the potential significant environmental effects of the proposed project (land use, traffic/circulation, parking, air quality, noise, aesthetics, geology/soils, water quality, drainage, public utilities, public services, archaeological/historic resources, public controversy, and light and glare). The Community Redevelopment Agency further finds that the Mitigated Negative Declaration reflects its independent judgment. SECTION 3. The Developer has proposed building 85 low- and very low-income apartment units on the site for persons with HIV/AIDS, with case management services provided by Desert AIDS Project (DAP), as well as a 25,000 square foot Family Care Center to be operated by the County of Riverside. The 85 units will be contained in one-story and two-story buildings, with each building containing from 2 to 6 units. The project, while receiving several reductions in development standards and a density bonus required under Section 65915 of the California Government Code, contains significant architectural and landscaping upgrades as well the social-and medical services available to the residents and the community. The project will help the City meet its requirements to provide affordable housing under California law. SECTION4. TheAgency agrees,through this Disposition and Development Agreement, to contribute the 1.23 acre site valued at $205,000 to the project, as well as a loan of an $1,300,000 spread over two years, once the project receives its tax credit allocation by the California Tax Credit Allocation Committee. The Agency agrees to contribute the land to the project when the tax credits are allocated, all permits have been obtained, and the Developer is prepared to commence construction. The Agency would retain reverter rights if the Developer fails to proceed or complete the project. In addition,the Agency agrees to assist the Developer in applying for Low Income Housing Tax Credits. The Agency shall purchase the site from the City pursuant to the terms contained in the Agreement for Purchase and Sale and Promissory Note. SECTION 5. The Agency does hereby find and determine as follows: a) The project was originally approved by the City Council on July 16, 2003. In June, 2003 the Developers requested Community Redevelopment Agency assistance. b) The parcel was acquired by the Community Redevelopment Agency for the purposes of providing low- and moderate-income housing on it in 1976. A portion of the acquired parcel was used for the development of Vista Serena Co-op and Vista Del Monte Co-op. Redevelopment Law prohibits an Agency from holding land acquired for affordable housing for longer than five years; hence, it was sold to the City of Palm Springs in October, 200 C A c) The Developer intends to apply for 9%tax credits(LIHTC), and has received a commitment in County HOME funds in the amount of $1,500,000. Agency financial participation in the projectwill make the developer's LIHTC application much stronger and make the project more likely to be built. d) The DDA effectuates the purposes of the Community Redevelopment Law by assisting in the development of housing affordable to families with incomes below 60% of Area Median Income and preserving the affordability of that housing for a period of 55 years. f) The DDA effectuates the purposes of the Community Redevelopment Law as it is intended to eliminate blight and promote the health, safety and general welfare of the people of Palm Springs. SECTION 6. The proposed project is consistent with the Amended and Restated Redevelopment Plan for Merged Project Area #1, the Five Year Implementation Plan and Housing Compliance Plan for the Palm Springs Community Redevelopment Agency, insofar as this project will provide additional housing for persons of low- or moderate income within the City of Palm Springs. SECTION 7. Based on foregoing reasons, this DDA with Vista Sunrise Apartments, LP, is hereby approved and incorporated herein by this reference. SECTION 8. The Chairman, or his designee, is hereby authorized to execute on behalf of the Agency the Disposition and Development Agreement and other documents necessary to the Agreement, and make minor changes as may be deemed necessary, in a form approved by Agency Counsel. ADOPTED this day of 2003. AYES: NOES: ABSENT: ATTEST: COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA By Assistant Secretary Chairman REVIEWED & APPROVED AS TO FORM RESOLUTION NO. OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS,CALIFORNIA, CONCURRING WITH THE COMMUNITY REDEVELOPMENT AGENCY REGARDING THE APPROVAL OF A DISPOSITION AND DEVELOPMENT AGREEMENT WITH VISTA SUNRISE APARTMENTS, LP NOW THEREFORE BE IT RESOLVED by the City Council of the City of Palm Springs that it concurs with the action of the Community Redevelopment Agency regarding the approval of a Disposition and Development Agreement with Vista Sunrise Apartments, LP ADOPTED this day of 2003. AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By City Clerk City Manager REVIEWED &APPROVED AS TO FORM elA P