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SR-RA-2 (2) , R Pr- ;;L . , CED:HD:ML:Jt Santa MonIca, CalIfornIa ifC.1 J - TO: Mayor and CIty CouncIl Redevelopment Agency FROM: CIty Staff SUBJECT: RecommendatIon to Adopt Resolutions EstablishIng the Downtown Redevelopment ProJect Low and Moderate Income HousIng Trust Fund and to Allocate $3IHl,000 Into the Downtown Redevelopment ProJect HOUSIng Trust Fundi to Approve Program GUIdelines and AllocatIon of Funds; and to Authorize the ExecutIve DIrector to Execute the Documents IntroductIon ThIS report transmI ts proposed resolutIons to establIsh the Downtown Redevelopment Project Low to Moderate Income HOUSIng Trust Fund. These actIons are necessary to expend the funds approprIated by the Agency for thIS purpose In the Fiscal Year 1983-84 budget. As Redeve-lopment Law reqUIres that the CIty CounCIl concur WIth the Agency's fIndIngs that the expendIture of funds outSIde of the proJect area WIll be of benefIt to the proJect, a Council resolutIon to thIS effect also accompanIes thIS report. In addItIon to establIshIng the legal baSIS for the creatIon of the Trust Fund, thIS report recommends that the Agency devote thIS inItIal allocatIon to the fund for site acqUISItIon and rehabIlItatIon actIVItIes WhIch WIll preserve and expand the supply of housing affordable to low and moderate income households, WhICh WIll serve the ProJect area workforce and thereby benefIt the Downtown Redevelopment ProJect. The programmatIC mechanIsm recommended for Agency approval IS akIn to that approved by the CIty CounCIl for the PICa Neighborhood 1 Ie Pr" ~ Dtc 1 3 1983 --- t i , HousIng Trust Fund, and wIll Involve the provision of the predevelopment and long term support for a non-profIt developer. Because operatIon of thIS program will In~rease staffIng reqUIrements of the recommended developer, CommunIty Corporation of Santa MonIca, a grant for salary and related expenses In the amount of $22,900 IS included In the staff recommenda t 1 on for the allocatIon of Trust Fund resources. Background In the FIscal Year 1983-84 budget the Agency approprIated $300,000 from the Downtown Redevelopment Project Fund for hOUSIng actIVItIes. ThIS approprIatIon IS shown In the budget as LIne Item 16-200-263-126-660 and IS IdentIfIed as "Development of Replacement/Low-Moderate Income HOUSIng." More recently, the CIty CounCIl conceptually approved a menu of housing programs entItled, "Affordable HOUSIng Programs for the City of Santa MonIca" WhICh Included a programmatIC mechanIsm to assure the affordabIlltyand avaIlabIlIty of hOUSIng for low to moderate income households VIa acquiSItIon and rehabilItatIon of existIng hOUSIng by non-profit development corporatIons. ThIS report seeks to 'marry' the budgetary and legal authorIty of the Agency WIth preVIously approved program structures deSIgned to serve the labor market WhICh forms the maJorIty of the Santa Monica Place workforce. The fIrst sectIon of thIS report dIscusses the Agency's authorIty to pursue Its hOUSIng ObJectIves, the second presents the proposed program structure and gUIdelInes, the third descrIbes recommended fundIng allocations, and the fourth section relates to developer selectlon. The report concludes WI th a 2 --------- ----- ii r descriptIon of fInancial/budgetary Impacts and a serIes of recommendatIons for Agency and CouncIl actIon to establIsh the Downtown Redevelopment ProJect Low to Moderate Income HOUSIng Trust Fund and to Implement a CltY-Wlde HOUSIng AcqUISItion and Rehablli tat I on Program. 1) EstablIshment of the Downtown Redevelopment Pro]ect Housing Trust Fund The legal authorIty for redevelopment agencies to aSSIst In the prOVISIon of hOUSIng for households of low to moderate Income IS contained In Health and Safety Code SectIon 33334.2. State Law enables the Agency to undertake or fund a varIety of actIVItIes, inclUdIng the prOVISIon of subsidIes, land, SIte Improvements, construction, rehabIlItatIon, or fInancing for the benefIt of low to moderate Income households so long as the Agency determInes that these actIons WIll be of benefIt to the project area. AllocatIons to support the prOVISIon of hOUSIng for households of modest means are mandatory for redevelopment plans adopted or amended subsequent to January 1, 1977 . For plans amended or adopted prIor to that date, as IS the case wIth the Downtown Redevelopment ProJect, the Agency may voluntarIly establish indebtedness for the development of hOUSIng opportunItIes for targeted households upon a resolutIon of the Agency that such use WIll be of benefit to the proJect area. To provide empIrical support for a finding that IncreaSIng and imprOVIng the community's supply of low and moderate Income hOUSIng at affordable cost would be of benefIt to the Downtown Redevelopment Project, the fIrm of HamIlton, RabInOWItz and 3 ----------------~- ------ - - ~ , Szanton was engaged to investIgate the Impact of hOUSIng market condItIons upon the vIabIlIty of the proJect area. Santa MonIca Place, located In the Downtown Redevelopment ProJect area, provIdes employment for approxImately 1,800 peop 1 e. The consultant was asked to research the Impacts of hOUSIng market condItIons upon the future accessIbIlIty of the labor force. The consultant's InvestIgatIons and conclusIons, attached as ExhIbIt A suggest that hOUSIng market trends do not portend the prOVISIon of suffICIent hOUSIng resources for those employed In the retaIl sales sector In that Santa MonIca and In other prOXImate locatIons. As the consultant's report confIrms, prevaIling wages In retaIl employment are relatIvely low, such that hIgh commutIng costs caused by the lack of avaIlable and affordable hOUSIng can raIse employers' salary and/or recruIting costs and thereby affect competItive advantage. SInce It 15 estImated that approxImately one half of all reta i1 Jobs turn-over annually, the abIlIty to recruit IS crItIcal. As the prOVISIon of hOUSIng affordable to low and moderate Income households WIll prOVIde housing resources for the workforce employed In the Downtown ProJect Area, the Agency's finding of benefit can be substantiated. The attached resolutIon entitled "A Resolution of the Redevelopment Agency of the City of Santa MonIca EstablIShIng the Downtown Redeveloment ProJect Low and Moderate Income HOUSIng Trust Fund" Includes thIS fIndIng In complIance WIth applIcable state law. 4 ----- ----- ------------- --------~------------------- -------- ------------- ~ , Section 33334.2 also reqUIres that the legislatIve body fInd that support for the provision of affordable hOUSIng wIll be of benefIt to the proJect area when such hOUSIng is to be provided off-sIte. SInce Santa MonIca Place occupies the entIre prOJect area, efforts to address the housing needs of the labor force must necessarIly occur off-site. A resolution proposed for adoptIon by the CIty CouncIl Including necessary fIndIngs is also attached for CouncIl actIon. The fInal SIgnIfIcant reqUIrement elaborated In the Health and Safety Code IS that the Agency must approprIate funds for hOUSIng actIVItIes Into a separate account to be maIntaIned untIl the approprIatIon IS exhausted. Any Interest earned must be used to prOVIde affordable hOUSIng, USIng any of the mechanIsms or programs (SubSIdIes, constructIon, rehabIlItatIon, etc. ) descrIbed above. SInce the Agency IS not reqUIred to undertake hOUSIng actIVItIes In support of the proJect area, the Agency may approprIate any amount It deSIres. The attached resolutIon, In conformance WIth the adopted budget, allocates $300,000 Into the Downtown Redevelopment ProJect Low and Moderate Income HOUSIng Trust Fund for the CItY-WIde Housing AcqUIsition and RehabilItatIon Program, and does not preclude the Agency from makIng additIonal approprIatIons a t some future date for rent SubSIdies, new construction, or any other program vehIcle selected for fundIng. 5 ------- ----------------------------- - - - . . 2) EstablIshment of the CIty-wIde HousIng Acquisition and RehabIlItation Program The prevIously descrIbed actIons, if approved by the Agency, wIll result in the prOVISl.On of funds for hOUSIng acqUIsItIon and rehabIlItatIon actIVItIes. This sectIon of the report presents guidelInes and procedures to implement the program for Agency approval. The procedures and gUIdelInes for the CItY-WIde HOUSIng AcquiSItIon and RehabIlItatIon Program, attached as ExhIbit B, are almost Identical to those adopted by the CIty Council for the CDBG funded PICO Neighborhood HOUSIng Trust Fund and conform to the hOUSIng programs agenda conceptually approved by the CounCIl on September 20', 1983. The applIcatIon and approval procedures, underwrItl.ng crIterIa and other aspects of program operatIon are almost identIcal to those speCIfIed in prIor reports, except that some reqUIrements have been modIfied to comply wIth state rather than federal law. For example, references to CommunIty Development Block Grant (CDBG) regulatIons have been replaced WI th the reqUIrements contained in SectIon 330'00' et. seq. of the Government Code, which are the portions of the Health and Safety Code applIcable to redevelopment activitIes and to the expendIture of incremental tax revenues. The most SIgnifIcant change In the program from a POlICY perspective, is that low to moderate Income households are defIned dIfferently In state and federal legiSlatIon. Under sta te law, low and moderate Income households are those haVIng Incomes up to 120/% of the area medIan Income whereas for federal 6 -------------- ---------- -- -------------------------------- programs, the comparable fIgure IS 80%. Under federal law, 51% of those dIrectly benefittIng from funds provIded must be income elIgIble, and the Incomes of the remaIning beneficiarIes need not be scrutInIzed. Under redevlopment law, hOUSIng proJects developed off-SIte must serve low and moderate income households (I.e., households havIng incomes of up to 120% of the area median InCOme) over the long term. According to Agency Counsel, the law fIrm of Welser Kane Ballmer and Berkman, not all reSIdents at the tIme of acqUISItion must qua Ii fy based on Income, but the percentage of elIgIbles must be predomInant. Agency Counsel also advIses that all unIts should be affordable to eligIble households, and upon vacancy be made available and rented to such households. To reflect these factors, the attached program gUIdelInes reqUIre that 85% of the reSIdents In place at the tIme of acqUISItIon shall be Income elIgIble and that all vacant l.mi ts sha 11 be rented to qualIfYIng households. The gUIdelInes addItIonally speCIfy that post acquiSItIon rents for all units be affordable to elIgIble householdsl and that a mInImum of one thIrd of the unIts be rented to households haVIng Incomes less than or equal to 80% of the area median at an affordable price. Income l1mi ts and affordable rents are IndIcated In ExhIbIt D to the attached CItY-WIde HOUSIng AcqUISItIon and RehabIlItatIon Program GUIdelines. Another ObVIOUS deVIatIon from the PICO Neighborhood Housing Trust Fund Program IS that funds from this program can be expended to acqUIre and Improve property any where In the CIty. The broader boundarIes of program operatIon reflect the fact that 7 -------------~-- ---------- ------------------------ --------- , the Downtown Redevelopment Project labor market IS CItY-WIde at least and that there are affordable housIng resources to be preserved and allocated to households of modest means In all of the CI ty's neIghborhoods. AvaIlable data IndIcates that the hIghest InCIdence of rehabilItation needs and low Incomes occur in the PICO NeIghborhood, Downtown, and in Southeast Ocean Park, such that program activitIes are most likely to occur In these areas. The proJected capacIty of the CIty-WIde AcqUIsitIon and RehabilItatIon program WIll be the acqUISItIon and rehabIlItation of approXImately 30 unIts WhIch WIll serve the workforce of the Downtown Redevelopment ProJect and other low to moderate Income persons and households. The program WIll leverage more than $900,000 in prIvate fInanCIng. 3) AllocatIon of Program Funds The types of allocations recommended here parallel those approved for the PICO NeIghborhood HOUSIng Trust Fund, except that for incremental staffIng costs recognized WIthin the program rather than funded separately. The purpose and amount of each allocatIon is as follows: 0 Earnest Money/DepOSIts: $l5,000 These funds would be provided to a non-profit developer I n a lump sum to be depOSIted Into an Interest bearIng account and used to InItiate transactIons. In thIS case, CommunIty CorporatIon of Santa Monica, a non-profit development corporatIon, is the recommended receIplent. 8 --- ------ -- 0 Predeve10pment Funds: $15,000 The predevelopment set aSIde would be used to fund necessary predevelopment expenses including archItectural fees, Inspections, and other serVIces which cannot be obtaIned on a contIngent baSiS. Predevelopment Funds WIll be advanced upon approval of a prelImInary applIcatIon as described In the attached guidelInes. These funds WIll be encorporated Into the long term program loan upon clOSIng. o Long Term Deferred Payment Subordinate Loans: $247,100 These funds will be provIded at the close of escrow to make up the dIfference between total development costs and the debt service capacity of the project folloWIng the submISSIon of a permanent lender's comm 1 tmen t. o Staff Support for Community CorporatIOn: $22,900 As CIty and Agency support for housing actIVItIes expands, both In dollar amount and compleXIty, correspondIng support must be prOVIded for staff to Implement programs. Therefore a grant In the amount of $22,900 to Community CorporatIon of Santa MonIca (CCSM) IS recommended for Agency approval. ThIS recommendatIon IS more thoroughly dIscussed in the following sectIon. 9 ------------ -- - - ---- ----------------- ------------------ - , 4) Developer SelectIon CommunIty Co~poratlon of Santa Monica (CCSM) is the non-profit developer recommended by staff to undertake housing development actIvitIes pursuant to the CIty-WIde Housing AcquisItIon and RehabIlItatIon Program for the remaInder of the fIscal yea~. ThIS recommenda t 1 on IS based upon a technIcal assessment of the CorporatIon's skill and capaCIty and the need for ImplementIng InstItutIons to achIeve suffIcIent scale to operate and manage projects in an effICIent manner. Attached for Agency approval is a standa~d grantee contract modIfIed to reflect appropriate proviSIonS of state law applIcable to redevelopment agency actIVItIes. Standard federal and local requIrements regarding grants management, equal employment opportunltYJ polItIcal actIVItIes etc. , have been retaIned. The attached Agreement would prOVIde CommunIty Corporation with $22,900 for operating expenses and $15,00'0 for deposits to InItiate transactlons.* The allocation for operatIng expenses IS almost exclusively for staff and frInge benefits, although a small amount IS requested for the development of accountIng systems necessary for ongOIng proJect ma nag emen t. The proposed budget will increase pOSItIons currently funded on a part time baSIS to full time is such that suffICIent personnel will be avaIlable to carry out the CIty WIde HOUSIng AcquiSItIon and RehabIlItatIon program. *The proposed operatIng budget Includes FICA expenses for all employees, regardless of funding source. Please refer to a report prepared by the CommunIty and NeIghborhood SerVIces DIVISIon dated December 13, 1983, for a thorough explanatIon of changes In federal law regardIng non-profIt organIzatIons. 10 ----------- --- -------- --------- ---------------- . FInanCIal and Budgetary Impact No budgetary action IS requIred to establish the Trust Fund. The tItle of the eXIsting approprIatIon shown In account number 16- 200-263-126-660 WIll be changed to "Downtown Redevelopment ProJect Low and Moderate Income HOUSIng Trust Fund". To comply wIth applIcable law, the treasurer WIll treat thIS account as a fund, i . e., will separately account for any Interest or Investment earnings. To effect the Implementation of the CIty WIde HOUSIng AcqUIsition and RehabIlitatIon Program, funds will be transferred Into new lIne items WIthin the Downtown Redevelopment Project Improvement Account SerIes, and will account for the program components as summarIzed below: 0 CIty WIde HOUSIng AcqUISItIon and RehabIlItatIon Program -- Deferred loans -- $247,100. 0 CIty WIde HOUSIng AcqUISItIon and RehabIlitatIon Program -- Predevelopment Account -- $15,000. 0 CIty WIde HOUSIng AcqUISItIon and RehabIlltatlonProgram -- CommunIty CorporatIon -- $37,900. . 11 ----------- . AddItIonally, followIng approval of IndIvidual proJects, funds w!ll be transferred from the deferred loan allocatl.on to new lIne Items to reflect each approved program loan. CommunIty CorporatIon WIll also execute a note for earnest money funds advanced. This actIon IS needed to reflect this revolVIng account accurately In the Agency's records. Recommendation It IS recommended that the Redevelopment Agency: l. Approve the attached ResolutIon of the Reaevelopment Agency of the CIty of Santa MonIca EstablIshIng the Downtown Redevelopment Project Low and Moderate Income Housing Trust . , Fund. . 2. Approve the attached ResolutIon of the Redevelopment Agency of the CIty of Santa MonIca allocatIng $30'~/000 Into the Downtown Redevelopment ProJect Low and Moderate Income HOUSIng Trust Funa. 3. Approve the attached gUIdelInes for operation of the Clty-Wlde HOUSIng AcqulsItl.On and RehabIl!tatlon Program. 4. Approve the allocatIon of funds as set forth In the Budget/~inancial Impact section ~f this report. 5. Apl?rove the attached Agreement by and between the Redevelopment Agency of the City of Santa MonIca and Community CorporatIon of Santa MonIca and authorIze the Executl.ve DIrector to execute the document. 12 --------------- ---------------- -------- ---- - -------------- It IS recommended that the City CouncIl: Approve the attached ResolutIon of the CIty CouncIl of the CIty of Santa Monica Approving the EstablIshment of the Downtown Redevelopment proJect Low and Moderate Income HOUSIng Trust Fund and FIndIng. Prepared by: MIndy LeIterman, HOUSIng DIVISIOn Department of Community and Economic Development 13 - - ----- ------------- - ------------------ ----------------------- . , RETAIL DEVELOPMENT IN SANTA MONICA: THE MUNICIPAL HOUSING IMPACT This reVIew, conducted for the Redevelopment Agency of the CIty of Santa Monica by HamIlton, RabInovitz & Szanton Inc., is designed to generate informatlon about the housing impact of retaIl development, particularly of Santa MonIca Place, on the City and to assess the impact of current housing market condi- tions In the City on the future avaIlabilIty of a labor force to Santa Monica Place. As indicated below in the sectIon profilIng the nature of retail employment, the Place relIes for its employees prImarily on a low Income labor force, more than half of which reSIdes WIthin the CIty limits. The reta1l Industry does not draw SIg- nificant numbers of its workers from among those who expect long term employment at a salary adequate for a household head. A large group of women and youths has emerged who WIll accept part-tIme retail work at the minimum wage, and they are generally the basis for the retaIl mall's use of labor. The Place IS unu- sual in that more than the average number of its employees are persons over the age of 5S and more than the average number of stores are local rather than chaIn stores. As Indicated below 1n the sectIon on the Santa MonIca Hous- Ing market, the CIty'S hOUSIng market for affordable housing, In WhIch persons employed in the Place could reSIde, 1S extremely tight. Existing trends suggest that whIle the supply of low cost hOUSIng is adequate to fulfIll the needs of the eXIstIng low Income population, it is not currently occupIed by this popula- tIon. Indeed, low and moderate income famIlies are declInIng In number in the CIty, suggesting that they do not fare well In the competitIon for space. These two realities, when combIned, mean that the prIvate hOUSIng market is unlIkely to prOVIde suffIcient housing for those employed in the retail sector. Unless the CIty Increases the supply of housing available to low Income workers, the Place is lIkely to be requIred to draw its workforce from communitles outside the City, with attendant higher costs for the Place to cover the increased cost of commuting and Increases In traffIC, as well as air pOllution and parking pressures on the CIty It- self. An addItIonal problem could also be created for the Place by the attenuation of an avaIlable labor force. The major lImIts on ItS success today relate to Inadequate parkIng for customers In peak shoppIng perIods, a problem which is exacerbated to the extent that employees must commute by car rather than bus to reach their Jobs and dIsplace consumer parkIng by so dOIng. A Profile of Retail Employment No profile of retail employees In large scale malls is avaI- lable nationally, nor does the Place have such a descriptIon of Itself. Therefore, a composite profIle of the probable character of employees In such projects has been constructed through the aggregation of a varIety of sources. This profile was then revIewed by the management of Santa MonIca Place, who provided affIrmatIon of major trends and IndicatIons of where the Place has specialized characteristics that distinguish It from other simIlar bUSInesses In the natIon as a whole. The sources of profiling i nformat ion include: Ian Alexander and John Dawson, "Employment In RetaIlIng: A Case study of Employment in Suburban Shopping Centers," Geoforum, vol. lO, pp. 407-425, 1979. Barry Bluestone, Hanna, Kuhn and Moore, The Retail Revolu- tIon: Market Transformation, Investment and Labor In the Modern Department Store (Boston: Auburn House, 1981). E. LIon, ShoppIng Centers (New York: John WIley and Sons, 1976) . George Sternlleb and James Hughes, ShoppIng Centre USA (Rut- gers: UnIverSIty Press, 1981) . The WhIte House and the PresIdents Interagency CoordInatIng Council, Federal Programs for Urban BUSIness, (Government Print- Ing office, Washington DC: 1979) . Any generalIzed portraIt of the retail labor force must start wi th the fact that retaIl workers are heaVIly In part-time employment. This trend toward part-time employment IS a recent one. Before the rise of the dIscount chain, department and small retaIl stores employed a much hIgher proportIon of sk illed fu11- time sales people. Since the 1960's, however, there has been a steady movement toward part-tIme employment In the retaIl industry. Seasonal labor provIdes for further f lexlbIlI ty in schedul- ing the retailing workforce. On a natIonal basis, seasonality IS now as pronounced in retaIlIng as In agricultural employment, with part-year workers beIng used to meet peak season demands. As a result of these two trends, only about one-thIrd of retaIl employees work year round. The most lImited schedules are concentrated among younger workers, WIth two-thirds of all those under age 25 employed for no more than three months during the year. In contrast, only about one-fifth of the employees In the 25- 34 age group work thI s 11 ttle, and only 15% of those over 35. It is crItIcal to the retail industry to ha ve a large work- force of this type avaIlable to it, since the turnover rate in retail employment IS staggering. Retail experience gives 1 ts 2 --- - -- - -- ---- young workers a starting point for the i r careers; for older work- ers and particularly for women, it is often a supp lement to an- other full-tIme Job. Thus, in one study of the industry only one in 12 workers present In 1975 had been In the retaIl workforce ten years earlIer. With fewer than one new hIre in three remaInIng for more than a year, retailers must hIre at a frantic pace even in off-season and receSSIon perIods. Retailing IS an industry in which the labor market is constantly churnIng with workers coming in and out of the sector. Employees in the food-oriented sector of the retaIl malls, including the Place, have a profIle very similar to those In the non-food retaIl stores. In general, abou t one-fifth of the work force comes to retailIng eIther WIth no work experience or as returnees to the workforce after an employment hiatus. Another fifth comes from jobs In the prImary sector where employment IS declinIng -- such as durable manufacturIng. Three-fIfths come from the secondary sector -- low wage serVIce Industries and nondurable manufacturing. About a quarter of the workforce In retaIl stores comes from employment In food stores, restaurants, ta verns and bars where the employment pattern IS simIlar to that in branches of the retail trade. The movement between food stores and department stores is particularly common for men. Sales clerks leave to become waiters, workers in grocery stores to become sales clerks. The very low employment tenure IS tolerable for the retaIl em- ployer only If the sk 111 reqUIrements for many Jobs are small and, more Important for Santa MonIca's SItuation, a large work- force IS Immediately accessIble. SInce retaIlers as a group look at the prospect of replacing up to half of theIr workforce per year, they must keep their costs for recruitIng and traInIng relatIvely low. To the extent that retaIl employment becomes less attractIve because commutIng distances are Increased by the unavailabIlity of housing near the place of work, and the concom- itant cost of transportat ion to the Job rises, the industry IS forced to pay more either to recru 1 t labor or for the actual labor itself. GIven these general patterns, we ha ve attempted to draw a statistical portraIt of the probable characterl.stics of the Place workforce in somewhat more detaIl. Figure 1 on the following page illustrates the age, income and hours worked for male and female employees of large shoppIng centers or malls. Note that: (1) The probable distributIon of employment by sex 1.S 70% female and 30% male. Overall It IS estImated that 50% of the jobs are full-time, 35% part-tIme and l5% casual employment. The estimated distributIon by sex and type of employment IS shown below: 3 - - ----- - -- ------- --- - FIGURE 1: NATIONAL RETAIL WORKFORCE CHARACTERISTICS: 1978 10' 20 30 40 50 60 70 80 90 100 . . LESS THAN 25 'ill 35 35 TO 40 OVER 25 YRS YRS OF AGE YRS OF AGE 50 OF AGE YRS F E M A IESS THAN r.:: $3000 ANNUAL $3000 TO $5000 ANNUAL E (1978 OOT.TARS) OVER $5000 - ~ ANNUAL 70% . FULL-TIME PART-TIME CAS- UAL YEAR IaJND SEASONAL CASUAL PI' AND PT FT AND PT YEAR RaJND L... 25 YRS 25 TO 35 YRS 35 'ill 40 YRS 50+ M IESS 'I'HA1 ?-ORE THAN A $3000 $3000 - $5000 $5000 TO $15000 $15000 L E FULIr-TlME PART-TIME bs 30% YEAR ROUND PT & FT SEASONAL PT & FT CASUAL YR RD. . I . . . . . . l 10 20 30 40 50 60 70 80 90 100 ESTIMATED RETAIL EMPLOYMENT, BY SEX Male 30% Full-Time * 72% Part-Time ** 22 Casual *** 6 Female 70% Full-Time 48% Part-Time 42 Casual 10 * Full-TIme = 40 hours per week. About half the jobs in the average mall are believed to be full-time. Note that indus- try sources In New England suggest tha t as much as 75% of all department store employees are now employed part-time. One large regIonally based dIscount chaIn in New England indI- cated that only 15% of its labor force was employed on a full-tIme schedule. ** Part-time = More than 22.5 hours per week, less than 40. About 35% of the Jobs In the average mall are part-time. *** Casual = EvenIngs, weekends, at about 10 hours per week. About 15% of the Jobs in the average mall are casual. (2) Employment natIonally ln retail stores IS evenly dIS- tributed among age groups, with a SlIghtly larger proportion in the 35-50 age group. At Santa MonIca Place there IS a larger than average elderly workforce compared to natIonal patterns. Thus whereas natIonally the workforce over aged 50 is estimated at about 10%, at Santa Monica Place it may be twice that. ESTIMATED RETAIL EMPLOYMENT, BY AGE Age Group 18-25 20% 26-35 30 36-50 30 Over 50 20 (3) Two-thIrds of retail employment IS ln the sales category and 80% In the combIned sa les, clerical and manual categorIes. ESTIMATED RETAIL EMPLOYMENT, BY TYPE OccupatIon: Management/Owner 14% Sales 60 Clerical 10 UnskIlled Manual 6 SkIlled Manual 4 Other 7 4 ------- ---- -- - (4 ) For 30% of the workforce, employment in the market retaIl center IS lIkely to be the sole source of famIly income. The household Income status of otheI: workers depends on the in- come of other members of theIr household, on whlch It lS not possIble to make any estimate. However, were these employees to be tak en alone, most wou Id clearly be eligible for affordable housing. ESTIMATED WAGE STRUCTURE OF RETAIL EMPLOYMENT Average Wage: $4.50 peI: hour (Annual salaI:Y - $9,360) Entry Wage: 3.80 per hour Management: $18,000 - 21,000 per year. FIgure 2 illustrates the lIkely commutIng pattern of retaIl employees for Intown, suburban and regIonal centers. In general, employees of large shoppIng centers tend to orIgInate more from lInmed 1 a te residential areas than do workers in of fi ce or Indus- trial employment. This figure reflects our est ima tI on that: (5) It IS lIkely that from a natIonal perspectIve, about one-half of the employees in a maJor retaIl market place wlll be local reSIdents, wh i Ie the remainder will reSIde In adJacent communltles. The more compact the area, the greater the propor- tion commutIng under fI ve mIles. The 50% mark IS reached at two mIles for intown centers, three mIles for suburban centeI:S and seven mIles for a regIonal center located near a freeway JunctIon. Santa MonIca Place managers believe that the extent of local employment may be even hIgher there than elsewhere, and that up to 70% of the labor force is recI:ulted from withIn the CIty of Santa Monica. ESTIMATED RESI DENT I AL LOCATION OF RETAIL EMPLOYEES Wlthin a five mIle radIUS 50% " a 10 mIle radius 40 Beyond a 10 mile radIUS 10% (6 ) The socio-economic prOfIle of the employees of a retail center IS to a large extent reflectIve of the profile of the lImnediate residentIal area ar ou nd it, to the extent that one eXIsts. Average wages are too low to Justify long commutes and flexible part-time schedules and employee dIscounts encourage local reSIdents to work in the retaIl trades prImarIly fOI: secon- dary income or job experience. 5 ---- --------- FIGURE 2: RETAIL EMPLOYEE COMMUTING PATTERNS FOR IN TOtVN, SUBURBAN, AND REGIONAL CENTERS - 25 -=- - - ----- 100 ADDITIONAL ~ ------ 90 CUMLlIATIVE PERCENTAGE ~ -- -- . CF 20 CS\:.-............. /~ ; . .. " . PERCENTI\.GE EMPLOYRRC; , .-/ 61'-'" s . 80 OF AT ........ - 70 EMP:IDYF:P.S GIVEN 15 ./' ~;s.~..... 60 DISTANCE I cY'. .. . 50 r ./ .-.. 10 /' - . 40 // '. . . ,/ . ..- 30 , / '. S ~ . . . .'. . 20 , . ... . .... ~ 10 0 1 2 ? 4 S 6 7 B 9 10 _. , DISTANCE FID1 SHQPP~ CEN'l'lili IN MIIR~ : ----------- The Santa Monica Housing Market 1980 Census data indicates that the proportIon of households In Santa Monica able to buy the median priced home has decli ned to less than 20% of the resident populatIon. WhIle new housing is beIng produced in the private market in the CIty, prIces are so high that new unIts are affordable only to those with hIgh in- comes, or to those who have funds avaIlable through the sale of a prevIous home. Rents have also Increased substantially. Even with rent control, rent increases have outpaced median income Increases. These changes are shown below. COMPARISON OF CHANGES IN SANTA MONICA HOUSING COSTS, PRICES AND INCOME 1970 1980 % Change Median FamIly Income $10,793 22,263 106.3% Median Sales Price 36,300 189,800 423 Median Rent 132 297 125 Although prIce Increases in rental hOUSIng have been less than those In the single family market, the 1980 Census suggests that one-thIrd of Santa Monica's tenant populatIon already pays In excess of 35% of Its income for rent. The dIsparIty between abi Ii ty to pay levels and existIng prIce levels is IndIcated below. RENTER INCOME AND GROSS RENT: 1980 Income Level ProportIon PaYIng Over 35% of Income Under $5,000 35% $5,000-9,999 72 $10-14,999 32 $15-19,999 9 In addition to these rISIng costs, the City has historIcally had very low vacancy rates. The vacancy rate throughout the Southern California regIon is itself only 1.8% for rental housing; well below the 5% which IS generally regarded as indicatIve of a vi- able hOUSIng market. The problem may, however, be in part a matter of distnbutlon. The City estimates that the population 1 i VI ng in the City and elIgible for affordable hOUSIng in 1980 is lower than that in 1970, while at the same time the number of housing units In the affordable range has increased. These figures are shown below: 6 ----- - , AFFORDABLE HOUSING NEED AND SUPPLY FamilIes Eligible * Existing Affordable Units 1970 1980 1970 1980 7,300 5 , 900 12,545 17,185 * Income is below 80% of County medIan income. Obviously elIgible families suffer in the competitIon for space and are progressIvely displaced even as the stock of affordable un i ts grows. 7 - . The Nexus Between Retail Employment and the Housing Market It is not possIble to derIve an exact estimate of the number of unIts ne ed ed to support the retaIl environment because many of the retaIl employees live In households with others and thus may or may not need affordable housing on a famIly, as opposed to an indlvidual, basis. Nevertheless, when added together these statIstIcs suggest several more general conclUSIons. First, from the vieWpoInt of the labor force, for the 30% of the retaIl labor force whose income represents the sole source of support for a household, the provision of affordable housing is extremely important because it 15 di fficult to secure and retaIn In the Santa MonIca hous i ng market. Of the seventy percent of retaIl employees who are part of famll ies in which there are other wage earners, or other sources of income, most retaIl employees are likely to be young people. This suggests the importance of a nearby supply of fami ly- orIented housing as oppos ed to that WhICh might be SUItable for SIngle IndiVIduals and couples. Second, from the viewpoint of the retaIler, if the nearby residentIal area ceases to prOVIde an adequate labor supply, re- taIlers at the Place WIll probably be faced with a series of unpalatable prospects from a competItIve point of view. One alternatIve would be to Increase dependency on hIgher cost labor; another would be to abandon the fleXIbIlIty thIS existing labor force structure prOVIdes and make a commItment to employees who demand more than perIodIC work. Since most other competing re- taIlers have not had to resort to such strategems, thIS presumably would harm the pOSItion of any retail center forced to adopt this posture by the nature of ItS adjacent labor market. The Place's positIon is also complIcated by any increase In the tendency of ItS workers to commute by car. Management belIeves that at peak shoppIng periods the park Ing avaIlable to Place customers is already inadequate; to the extent that employees come from longer dIstances and commute by car rather than bus, theIr parking needs may place pressure on already strained parking res ou rces. Third, from the viewpOInt of the City, declInIng avaIlabIl- Ity of a SUItable labor force means that the retaIler WIll re- cruit from greater distances, increaSIng the traffic and air pollutIon concomItants of operating the regIonal mall. Thus, from a number of different pOInts of view the Interests of both CIty reSIdents and Place bUSInesses would be served by the use of CIty funds to improve the supply of affordable housing In the Downtown area. 8 . .. CITY-WIDE HOUSING ACQUISITION AND REHABILITATION PROGRAM GUIDELINES INTRODUCTION On December l3, 1983 the Redevelopment Agency of the CIty of Santa MonIca allocated funds to support the acqUIsItIon and rehabIlItatIon of housing. A total of $270,000 In tax Increment funds from the Downtown Redevelopment proJect has been allocated for fIscal year 1983-84 to provide supplementary fInanCIng for the acqUISItIon and Improvement of propertIes to preserve and Increase affordable hOUSIng opportunItIes for low and moderate Income households throughout the City. The Agency has establIshed operatIng pOliCIes and procedures for the admInistratIon of the CItY-WIde HOUSIng AcqUISItIon and RehabIlItation Program as follows. DEFINITIONS DC/ED: Department of CommunIty and EconomIC Development, CIty of Santa MonIca. ThIS Department WIll admInIster the Program for the Redevelopment Agency under the dIrectIon of the ExecutIve DIrector. HDC: A neIghborhood based non-profIt HOUSIng Development CorporatIon. Low and Moderate Income Households: Households wi th Incomes below 1219% of the Los Angeles Standard MetropolItan StatIstIcal Area medIan, adjusted for famIly SIze, as publIshed by the state legIslature from tIme to tIme. 1 ---------------- --- ------- --------- -- --- ~ ~-- - ~ , FaIr Market Rents: Maximum rents as publi shed by HUD for the SectIon 8 programs for the Los Angeles area, adJusted for unIt SIze. MaXImum Allowable Rent: The legal rent for the unIt under Santa Monica Rent Control Charter Amendment, adJusted by the Rent Control Board for annual expenses Increases or for capItal Improvements. Progr~m: The CIty-WIde HOUSIng AcqUISItIon and RehabIlItatIon Program. RehabIlItatIon: CorrectIon of local code VIolatIons and removal of health and safety hazardsi upgradIng of hOUSIng unIts to decent, safe and sanItary condItIons to comply WIth the HOUSIng QualIty Standards promulgated by HUD, and wIth local standards; and repaIr or replaceMent of maJor bUIldIng systems or components In danger of faIlure. EligIble rehabIlItation work may Include alteratIons, additions and Improvements needed to improve the baSIC lIvabIlIty, energy effICIency, acceSSIbIlIty for the dIsabled, securIty of the property, and to reduce overcrowdIng. PROGRAM REQUIREMENTS Program Funds shall be dIsbursed to elIgIble borrowers as deferred loans to make up the finanCIal gap between avaIlable non-program resources, IncludIng the borrower's eqUIty and prIvate fInanCIng, and the costs of acqUIrIng and rehabilItating affordable multI-famIly hOUSIng. 2 -------------- ------ , .. EligIbIlIty ReqUIrements ElIgIble Borrowers ElIgIble borrowers are neIghborhood based non-profIt hOUSIng development corporatIons duly organized to promote and undertake communIty development activItIes on a not-for-proflt baSIS. ElIgIble Properties ElIgIble properties WIll: ( 1) have flve* or more apartment unIts; ( 2) have at least 85% of the unIts occupIed by, low and moderate Income tenants at the tlme of acqulsltioni ( 3) need moderate or substantIal rehabIlItatIon; (4 ) be located In the CIty of Santa Monlca and be free from signIficant adverse envIronmental impacts except those that can be mitIgated through rehabIlitatIon, (5) and not reqUIre permanent tenant dIsplacement to carry out the program. ElIgIble Uses of the Fund Funds can be used to make deferred loans to elIgIble borrowers for the acqUISItIon and rehabilItatIon of eligible propertIes to prOVIde affordable hOUSIng, prInCIpally for low and moderate Income households. Funds can also be used for related predevelopment actIVItIes, lncludlng profeSSIonal serVIces which cannot be obtaIned on a contIngency baSIS. *Appllcatlons for properties comprIsed of fewer than fIve unIts may be accepted at the dIscretIon of DC/ED. 3 --------------------------------- ---------------- ---- ---- - ----- -- - -- --------------------------- ", Fund Use AllocatIons Funds are allocated to predevelopment and acquisitlon/ rehabIlItatIon actIvities as follows: Predevelopment Funds-Total $30,000 $15,01313 shall be avaIlable for the purchase of optIons and "earnest money" depOSIts. This fund wIll be released to the HDC prIor to approval of speCIfIc proJects. The funds shall be held In a separate, Interest-bearIng account by the HDC and used only for these purposes. Each optIon or purchase agreement acqUIred WIth funds shall contaIn the prOVIsIons lIsted In ExhIbIt A2. The remainIng $15,0013 shall be set aSIde for predevelopment expenses of projects that receIve prelImInary funding commItments from the Agency. These expenses shall be lImIted to serVIces that cannot be obtained on a contIngency baSIS and may Include archItectural and engIneerIng fees, tItle reports, legal and organizational fees, and mortgage applIcatIon fees. PrelIminary market or feaSIbIlIty studIes, or organIzatIonal operatIng expenses shall not be elIgIble. These predevelopment funds shall be dIsbursed to elIgIble borrowers as deferred loans at the tIme of the Agency's prelimInary approval of speCIfic projects. The amount of predevelopment funds dIsbursed to each proJect shall be Included in the calculatIon of the maXImum deferred loans from the program and shall be conSIdered as part of the prInCIpal. AcqUISItIon and RehabIlItatIon - $2413,131313 The remaInIng $247,000 shall be used for deferred paymen t, subordInate loans for acqUISItIon and rehabilItation. 4 -------------------- ----------------------------------------------------- ---------- - , ElIgIble uses Include: l. The purchase of eXIstIng multIfamIly buildIngs consIsting of fIve or more unIts for rent to low and moderate income households. ElIgIble development costs Include SIte acquIsition and preparation; rehabIlItation of dwellIng units, common areas and related structures; carrying charges and fInancIng fees, archItectural, legal and organIzatIonal fees, and temporary relocation costs. No permanent dlsplacement of tenants WIll be permitted. Pre- payment of certain fInancIng fees, e.g. , bond Issuance costs by the Agency, 15 an elIgIble cost If requested by the HDC as necessary to make favorable fInancIng avaIlable. 2. The purchase or lease of land and/or bUIldings for new constructIon or substantIal rehabIlItatIon of low and moderate Income hOUSIng in tandem wIth the SectIon 8 New ConstructIon or SubstantIal RehabilItatIon programs, the SectIon 202 dIrect loan program, and/or the development of Incluslonary hOUSIng through an "80/20" tax-exempt bond fInanCIng. EligIble development costs are the same as above. Loan Terms The Trust Fund loans shall have the following terms and conditIons: Term: Loans shall be deferred for the twenty-five (25) year term of the Regulatory Agreement. 5 ---------------------- -------------------------------------- ------------------------------- Interest Rate and Payments: The Interest rate shall be set In accordance wIth the needs of IndivIdual proJects. Payments shall be made as follows: A. If the Borrower elects to extend the term of the Regulatory Agreement for a mInImum of ten (l0 ) years and does not VIolate this Agreement, the CIty shall waIve payments of prinCIpal and Interest, and the entIre debt shall be forgIven at the end of the extensIon term. B. If the Borrower elects to pay the PromIssory Note prIor to, or at the end of, the term of the Regulatory Agreement the entIre amount of the unpaId prInCIpal plus simple accrued Interest shall become due. The Regulatory Agreement shall remain In full force and effect for 1 ts term regardless of any prepayment. c. If the Borrower VIolates the terms of the Regulatory Agreement such that the City declares the Promi ssory Note In defaul t, the entIre amount of unpaId prInCIpal plus Interest, added to the prInCIpal accrued, and compounded annually shall become due. 6 ----------------------------------------~------------------------------------ -, S.ecur 1 ty: The loan shall be secured by a Deed of Trust and promIssory note WhIch may be subordInated to Deeds of Trust securIng other federal or state agency loans, or loans from conventIonal fInancIng InstItutIons IncludIng seller take- back fInanCIng, used in conJunctIon wIth the Trust Fund Loan on the same property. The DC/ED must approve all requests for subordInatIon. The loan shall be further secured by a Regulatory Agreement to assure that Trust Fund Program funds are used to prOVIde long-term affordable hOUSIng opportunItIes for low and moderate income households. The HDC and Agency shall execute an Agreement regulatIng project rents, tenant selectIon procedures, use of proJect income and changes in proJect ownershIp or use. The Regulatory Agreement shall be recorded wIth the Deed of Trust and Note. MaXImum Loan Amount: The maXImum Trust Fund loan per proJect shall be $15,000 per unIt. However, loans should average no more than $10,1300 per uni t. The $15,000 per unlt ceilIng may be waived by the Agency If there WIll be a signIfIcant benefIt to low Income tenants or to the affordable hOUSIng stock. 7 ---------- ------ ------------------------------------------------ UnderwrItIng GUIdelInes Loan To Value RatIo The Agency shall reVIew each loan to ensure that the borrower has adequate eqUIty, In-kInd or In cash, In the project to guarantee security for the Trust Fund. As a general rule, the total loan (Program plus non-Program Fund loans) to value (total development cost) ratio should not exceed 95%. ThIS reqUIrement may be waIved by DC/ED only to the extent necessary to facilItate partIcIpatIon by new HDC(s) WIthout suffICIent capItal reserves. DetermInation of Reasonable Costs and Expenses DC/ED shall reVIew borrower's estImates and prOJectIons of rents, expenses, reserves and development costs. If necessary, the Agency may request background documentatIon from the borrower and may adJust fIgures as approprIate. SenIor FInanCIng If the Trust Fund loan IS subordInate to a variable payment loan the HDC must submit projected cash flows for the terms of the loan, shOWIng the maXImum pOSSIble Increases In debt serVIce perIods per year, the prOJected rent and expense Increases, and the means of makIng up any defICIts. 8 ------------------------------------- -~--- Use of AlternatIve Favorable FInanCIng Terms The Borrower must attempt to use all other resources such as tax exempt fInanCIng, hOUSIng SubSIdIes, etc. to mlnlmi ze the amount of the Program loan. The Agency may, at its sole dIscretIon, calculate the mortgage amount at the terms and rates of avaIlable fInanCIng programs other than that proposed by the HDC, 1 f the alternative terms and rates would reduce the amount of Agency SUbSIdy reqUIred and otherWIse conform to the Program reqUIrements. Reflnancln9 of PrImary Loan If the Borrower re-flnances the prImary debt, or borrows additional funds from a non-Program source after the InItial closing, theAgency must reVIew and approve the terms and condItIons, and the proposed use of proceeds. ElIgIble uses of cash from refInanCIng or new debt are: 1. The malntainence, operation, or Improvement of the secured propertYi 2. The purchase of addItIonal propertIes subject to the Program elIgibIlIty and operating reqUIrements; 3. The prepayment of the principal and Interest on the Program loan. Compliance WIth State RegulatIons All proJects must comply WIth all applicable state reqUIrements for the expendIture of the HOUSIng Trust Fund established In accordance WIth Health and Safety Code SectIon 33334.2. 9 --------------------------- ------------------------------------------------------------~---------~-- -------- MarketIng and Tenant SelectIon The Borrower and the Agency shall establIsh an affIrmatIve marketIng and tenant selectIon plan as an attachment to the fInal loan package for the project. The plan shall descrIbe the marketIng efforts and tenant selectIon procedures the Borrower wIll use to maIntaIn and, where feaSIble, to Increase low and moderate-Income housing opportunItIes In the proJect. Borrower shall specIfIcally market avaIlable unIts to persons employed In the Downtown Redevelopment Project area and other households who work In but do not lIve In the CI ty of Santa Monica. Project Management Plan The Borrower shall prepare a Project Management Plan for the Agency's reVIew and approval. The Plan shall be an attachment to the Regulatory Agreement. The Plan shall descrIbe the Borrower's pOlIcies and procedures concernIng: 1. Management/tenant relatIons and aSSIstance to tenant organIzatIons. 2. Tenant selectIon and orIentatIon. 3. Procedures for determln~ng tenant elIgIbIlIty and certIfyIng incomes. 4. MaIntenance and repaIr services. 5. On-SIte management faCIlItIes. 6. Rent collectIon. 7. Records and reportIng requirements. 8. Personnel and staffIng. 9. ComplIance WIth all tenant protectIon laws, IncludIng rent control law and bUIldIng Health and Safety Codes. 10 -------- --- ---------------------- - ------------ ------------------ PROPOSAL EVALUATION CRITERIA The proposal evaluatIon crIterIa are divlded Into mInimum elIgibIlIty reqUIrements for all proJects, and competitive crIterIa to be applIed In selectIng amont elIgIble proJects, as necessary. MInImum ReqUIrements A. FInancial FeaSIbilIty: Each proJect must meet two feaSIbIlIty tests: 1. The Program loan shall not exceed the total amount of the gap between the maXImum affordable mortgage amount avaIlable from non-Program sources and the Total Development Costs as defIned In the program applIcatIon. The maXImum Program loan shall average $l0,000 per unIt per proJect and may not exceed $15,000 per unIt per proJect WIthout DC/ED determInation of speCIal benefit to the neighborhood and elIgIble tenants. 2. The total Program request shall not exceed 33% of the Total Development Cost (TDC} of the project WIthout DC/ED determInatIon of speCIal benefIt WIthout DC/ED determinatIon of special benefIt. The maXImum affordable mortgage amount shall be calculated USIng: (l} SectIon 8 Fair Market Rents for the subsidized unI ts, (2) the maXImum allowable rent for the unsubsidlzed unIts, (3) the proposed Interest rate and terms of the prImary loan (s}, reasonable operatIng allowances and reserves IncludIng a reserve to amortIze a varIable rate mortgage as needed, and (4 ) the 11 ------------------------- --------------------- --------------------------------------------------- -. equIty contrIbutIon of the HDC and Its partners other than the Program Funds. The HOC's estimate of total development costs wIll be reviewed by DC/ED, which may adjust costs as approprIate gIven market InformatIon. No proJect shall receIve a greater deferred loan than IS required to meet the gap between the maXImum affordable mortgage amount and the total development costs. B. Low and Moderate Income Benefit: Each proJect must meet the mlnlmum reqUIrements for benefIt to low and moderate Income persons at the tIme of acqUIsItIon by the HDC. One thIrd of the unIts must be affordable and avaIlable to very low and low Income households. All unIts after acqUIsItIon and rehabIlitation must rent at levels affordable to low-moderate Income persons, as defIned ln sectIon 50093 of the CalIfornIa Health and Safety Code. The current rent and Income lImIts are shown In ExhIbIt D attached hereto. C. ProJect LocatIon: All proJects must be located In the CIty of Santa MonIca. ProJect SItes must be free from adverse envIronmental impacts, e.g. , noise, or the rehabIlltation actiVItIes must successfully mItIgate these impacts. D. Tenant PartIcipatIon: At least 51% of the eXIstIng tenants In a proposed proJect must affIrm Interest by signIng letters to the HDC, In partICIpatIng In the program. 12 -------- ----------- --------------------------------- .. CompetItIve SelectIon Criteria Priority shall be given to proJects that: A. significantly Increase affordable housIng opportunItIes for households who have dIffIculty fInding hOUSIng In the prIvate Santa MonIca market IncludIng large famil ies, famIlIes, and the dIsabled. B. Use bargaIn sale or seller-fInancIng technIques, and/or use of equIty syndIcatIon proceeds to reduce total acqUIsitIon costs. C. SIgnIfIcantly Improve the hOUSIng stock by rehabIlItatIng bUIldings with health and safety problems, local code vIolatIons or IncipIent danger of failure of major bUIldIng systems. D. Leverage other federal or state hOUSIng subSIdy programs. E. BenefIt high percentage of very low and low Income households. F. Have a borrower's equIty contribution In excess of 10%. 13 ----------------- --------------------------- -- -------- " APPLICATION SUBMITTAL AND REVIEW PROCEDURES ElIgIble borrowers shall submIt applIcatIons for Program Funds as follows: "Earnest Money" Fund 1. The HCD shall submIt a request for earnest money fundIng and a standard Grantee Agreement to be approved by the Agency. The HCD shall submIt eVIdence of the followIng: a. The HDC IS a duly organized neIghborhood based non- profIt development corporatIon; b. The HDC can demonstrate capacity to successfully carry out acqUIsItIon and rehabIlItatIon actIVItIes; c. The HDC certifies that all funds shall be used for elIgible actIVItIes under the CIty-Wide HOUSIng AcqUISItIon and RehabIlItatIon program. 2. If the HCD's qualIfIcatIons are acceptable, DC/ED shall recommend that the Agency approve the executIon of the Grantee Agreement . 3. Upon Such approval the Agency shall dIsburse the funds to the HDC. 4. The HDC shall depOSIt the funds In an Interest-bearing account. The funds shall "revolve" ; as loans are closed the HDC sha 11 return the amount of the earnest money depOSIt to the account for use In other acquIsitions. 14 --------- ------------ -------------------- -. 5. At the end of the term of the Grantee Agreement the Agency shall review the "earnest money" fund actIvIty and determIne that: a. TheHDC may retaIn the funds In the account for another year; or b. The HDC shall return all or part of the funds to the CIty-WIde HousIng AcquisItIon Program. ApplIcatIons for Deferred Loans 1. The HDC shall negotiate WIth potentIal Sellers to secure a SIgned Purchase Agreement on a speCIfIC property. The HDC may use the "ReSIdentIal Purchase Agreement and DepOSIt ReceIpt" form attached as ExhibIt Al. Before executIng the purchase agreement the HDC shall Include the condItions attached as ExhIbit A2. 2. The HOC shall complete the ApplIcatIon for Program Funds and prepare all required attachments. ApplIcations may be submitted at any tIme during the program year and WIll be considered in the order submItted to DC/ED. The HDC shall submit a copy of the signed purchase agreement and three copIes of the ApplIcatIon for PrelImInary Commitment to the Housing DiVISIon of DC/ED. 3. The HOUSIng DIVISIon staff shall reVIew the applicatIon to: a. determine that the mInimum program reqUIrements are met; b. ensure that the estImated development costs are reasonable; c. reVIew the estImated mortgage amount and HDC eqUIty contributIon In accordance WIth the program's underwrItIng gUIdelines. 15 ----------- -------- - ---------------------------------- - ---------- .. 4. WIthIn thIrty days of the applicatIon submission the HOUSIng DIVIsIon shall determIne that the proposal IS approvable for PrelImInary CommItment (WIth or without conditIons), or IS not approvable for speCIfIC reasons. 5. A Preliminary CommItment Letter shall be prepared by the Housing DIVIsion, revIewed by the DIrector of DC/ED, and SIgned by the ExecutIve Director. The letter shall state the maXImum amount of Program Funds reserved for the project and list all the addItIonal condItIons, documents and steps that must be taken by the HDC to obtaIn a fIrm commItment of Program Funds. 6. Upon Issuing a PrelImInary Commitment Letter the ExecutIve DIrector shall authorize release of the predevelopment funds approved for the project. 7. The HDC shall complete the loan approval process with the pri mary lender and sha 11 obtaIn all other required approvals such as the Section 8 Moderate RehabIlItatIon Agreement and local bUIldIng permIts. When the lender has glven final approval of the loan package,whlch may be contIngent upon a fInal fundIng commitment by the city, the HDC shall submit the fInal loan clOSIng documents package to the DC/ED for reVIew. 8. The DC/ED's HOUSIng DIVISIon sha 11 reVIew the fInal loan package using the crIterIa detaIled above, and If acceptable shall prepare a flnal commitment letter and the clOSIng documents for the Program loan. The DIrector of DC/ED shall reVIew, and the ExecutIve Director shall SIgn the fInal letter and package. 16 -------- ---------------- -~ " 9. The ExecutIve DIrector shall authorIze release of the deferred loan funds Into the escrow account established for the loan closing wIth InstructIons for disbursement. If the Program loan proceeds wIll not be entIrely drawn in the InItIal dIsbursement foracquisltlon costs, the prImary lender or other agent selected by the Agency shall disburse the funds durIng rehabIlitatIon. ImmedIately upon loan clOSIng the HOC shall submIt one copy of the loan clOSIng package (ExhIbIt "E") to the Housing DIVISIOn for the proJect files. 10. The Housl.ng DIVl.SIOn shall monItor the proJect durIng rehabilItatIon as needed to ensure complIance WIth state regulatIons. The HOUSIng DIVIsion shall request notifIcatIon of the fInal inspectIon and fInal constructIon release from the prImary lender, and shall reVIew management practIces and reportIng procedures with the HOC and proJect management agent at that tIme to ensure full understandIng of program reqUIrements. 11. Thereafter the HDC shall submIt reports and maintaIn records as speCIfIed in the Regulatory Agreement. The HOUSIng DIviSIon shall monItor complIance WIth the Regulatory Agreement on an annual baSIS. 17 ----------- -------- -------------------------- ~-- ---------------- '. LISt of ExhIbIts Al: ReSIdental Purchase Agreement and De{losIt Recel(lt A2 : Sample ConditIons for InclUSIon In a Purchase Agreement B: ChecklIst of Items to be submItted prIor to release of "Earnest Money" Funds c: Deferred Loan ApplIcatIon for AcqUIsitIon/RehabIlitatIon D: Regulatory Agreement -(Reserved) 1. Section 8 Rents 2. Income LImIts 3. Management Plan 4. Affordable Rent Levels E: Contents of ClOSIng Document Package l8 ------------------------ RESOLUTION NUMBER 3i8 (Redevelopment Agency Series) A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA INVOKING THE PROVISIONS OF HEALTH AND SAFETY CODE SECTION 33334.2 AND ESTABLISHING THE DOWNTOWN REDEVELOPMENT PROJECT LOW AND MODERATE INCOME HOUSING TRUST FUND. WHEREAS, the Redevelopment Plan for the Downtown Redevelopment Project was adopted by Ordinance Number 1921 of the Council of the City of Santa Monica on January 13, 1976; and WHEREAS, the Santa Monica Place Shopping Center has been developed in implementation of the Redevelopment Plan for the Downtown Redevelopment Project within the Downtown Redevelopment Project area and has created approximately 1,890' new jobS, resulting in an increase in the demand for affordable housing for the employees of the development and other persons employed or i residing in the City of Santa Honica; and I I WHEREAS, the Redevelopment Agency desires to assist in the development of an adequate supply of low and moderate income housing available at affordable costs for such employees and other pe~sons and families of low and moderate income; and WHEREAS, the Redevelopment Agency desires to make applicable the provisions of Health and Safety Code Section 33334.2 to the Downtown Redevelopment Project, NOW, THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF S~NTA MONICA DOES RESOLVE AS FOLLOWS: ~ SECTION l. The Redevelopment Agency does hereby establish the Downtown Redevelopment Project Low and Moderate Income HousIng Trust Fund (the "Hous i ng Trust Fund") into which funds may be appropriated by the Agency from time to ti me and expended to increase and improve the supply of low and moderate income housing available at affordable costs within the City of Santa Monica. SECTION 2. The Redevelopment Agency hereby elects to make part of the requirements of Health and Safety Code Section 33334.2 (tax increment expenditure for low and moderate income housing) applicable to the Downtown Redevelopment Project, subject to indebtedness incurred to implement the Project, and only to the extent provided for in each specific implementing resolution tha t may be adopted from time to time by the Redevelopment Agency appropriating funds into the Housing Trust Fund and providing for their expenditure. SECTION 3. Subject to the availability of funds to be provided at the discretion of the Redevelopment Agency from time to time in specific implementing resolutions, the Redevelopment Agency shall use funds expended from the Housing Trust Fund pursuant to Health and Safety Code Section 33334.2 to increasing and expanding the supply of low and moderate income housing available at affordable costs within the City of Santa Monica for employees of Santa Monica Place Shopping Center and other low and moderate income persons and families. Each specific implementing resolution of the Redevelopment Agency shall be deemed to be a determination of the Redevelopment Agency that the provision of such housing will increase and improve the supply of low and 2 moderate income housing available at affordable costs within the City of Santa Monica, that the provision of such housing is of benefit to the Downtown Redevelopment Project, and that the Redevelopment Agency is indebted to the Housing Trust Fund to the extent necessary to provide such housing, subject to indebtedness incurred to implement the Downtown Redevelopment Project, and only to the extent provided for in each specific implementing resolution that may be adopted from time to time by the Redevelopment Agency appropriating funds into the Housing Trust Fund and providing for their expenditure. In increasing and improving the supply of low and moderate income housing available at affordable cost wi th monies appropriated into the Housing Trust Fund, the Redevelopment Agency may exercise any or all of its powers including those set forth in Health and Safety Code Section 33334.2(d). SECTION 4. Each specific implementing resolution of the Redevelopment Agency appropriating funds into the Housing Trust Fund and providing for their expenditure, shall be deemed to be, to the extent provlded therein, an election by the Redevelopment Agency to make part of the requirements of Health and Safety Code Section 33334.2 appllcable to the Downtown Redevelopment Project and an obligation of the Redevelopment Agency to meet such requirements to the extent provided therein, and shall constitute an Indebtedness of the Redevelopment Agency for the Downtown Redevelopment Project to the extent of the funds appropriated lnto the Housing Trust Fund pursuant to Health and Safety Code 33334.2. 3 . SECTION S. Funds appropriated into the Housing Trust Fund by speclfic implementing resolutions shall be held thereln until used for the purposes described hereinabove. Any interest earned by the Housing Trust Fund shall accrue to the fund and may only be used for the purposes of the Fund as described hereinabove. SECTION 6. The Agency secretary shall certlfy to the adoption of this Resolution. and thenceforth and thereafter the same shall be in full force and effect. Approved as to form: - _~""'+_-i'.LOt;;'::>'; " Robert H. Hyers Agency Attorney 4 ... ADOPTED AND APPROVED THIS 13th DAY OF December , 1983. ~ B '5 -- I HEREBY CERTIFY THAT THE FOREGOING RESOLUTION NO. 378(RAS) WAS DULY ADOPTED BY THE RE~EVELOPMENT AGENCY OF THE CITY OF SANTA MO~ICA AT A MEETING THEREOF HELD ON Deceraber 13 . 1983 BY THE FOLLOWING AGENCY VOTE: AYES: AGENCY t1EMBERS: Conn, JennIngs, Press, Zane and \layar Edwards riDES: AGENCY MH1BERS: Epstein and Reed ABSENT: AGErlCY MEr~BERS: .'Jone ABSTAIil: AGE1ICY ~'nlBERS: .'Jane ATTEST: /' it ~/) 1 .1 BY c.-1G-11 /u.d.I0;~ A!lN M. SHORE - SECRETA1(Y --- --- ---- -- - . , RESOLUTION NUMBER 379 (Redevelopment Agency Series) A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ALLOCATING $300,000 INTO THE DOWNTOWN REDEVELOPMENT PROJECT LOW AND MODERATE INCOME HOUSING TRUST FUND TO PROVIDE FINANCING FOR THE CITY WIDE HOUSING ACQUISITION AND REHABILITATION PROGRAM AND FINDING THE PROVISION OF SUCH HOUSING TO BE OF BENEFIT TO THE DOWNTOWN REDEVELOPMENT PROJECT WHEREAS, the Redevelopment Agency has adopted Resolution Number 378 (RAS) establishing the Downtown Redevelopment ProJect Low and Moderate Income Housing Trust Fundi and WHEREAS, in accordance with Resolution Number 378 (RAS) , the Redevelopment Agency desires to allocate money to the Housing Trust Fund, NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION l. Pursuant to Resolution Number ~7a (RAS) , the Redevelopment Agency does hereby allocate the sum of $399,90" into the Housing Trust Fund to be paid into the Housing Trust Fund from property taxes allocated to the Redevelopment Agency pursuant to Health and Safety Code Section 33679 and the Redevelopment Plan for the Downtown Redevelopment Project. SECTION 2. The funds so allocated shall be held in the Housing Trust Fund until expended by the Agency for the purposes set forth in Resolution Number 378 (RAS) . SECTION 3. The Redevelopment Agency herer.y elects t,-, make part of the requirements of HE'alth and Safety Code Section 33334.2 applicable tc the Downtown Redevelopment Project to the extent provided for in this resolution. SECTION 4. By adopting this resolution, the Redevelopment 1 -------- - .... - ~ ~ Agency obligates itself to meet part of the legal requirements of Section 33334.2 to the extent set forth herein. The payment of funds into the HousIng Trust Fund as required by the Resolutlon pursuant to said Health and Safety Code Section 33334.2 shall constltute an obligation and inJebtF~~~&g ~f the Rede~elop~-r- Agency for the Downtown Redevelopl'!!:,lt ~'I~ject. SECTION 5. Pursuant to Resolution Number 378 (RAS) , the Redevelopment Agency hereby finds, determines and resolves that the use of Housing Trust Funds outside of the Downtown Redevelopment Project is of benefit to the Downtown Redevelopment Project. SECTION 6. The Controller of the Redevelopment Agency is hereby authorized to retain or pay all interest income earned on this allocation into the Housing Trust Fund. The Controller of the Redevelopment Agency is further authorized to pay all other inccme or loan repayments or revenues received by the Redevelopment Agency arising f1:om the expenditure of the funds allocated by this Resolution into the Housing Trust Fund and to use those funds to the extent available to supplement Downtown Redevelopment Project Funds needed to fund the allocation descrIbed in Section l. SECTION 7. The Agency secretary sha 11 certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. Approved as to form: Rober H. Hyers /' . k Agency Attorney :2 -- '- --. ADOPTED AND APPROVED THIS 13th DAY OF DecePlber , 198 3. .~'~ -1 ( ~ By,_hA/l~~ ~AIRPER~N ~ I HEREBY CERTIFY THAT THE FOREGOING RESOLUTION NO. 379(RAS) WAS DULY ADOPTED BY THE ~EDEVELOPHEHT AGENCY OF THE CITY OF SANTA HO~ICA AT A MEETING THEREOF HELD ON December 13 , 1983 BY THE FOLLOWING AG nlC Y VOTE: AYES: AGENCY MEMBERS: Conn, Jennlngs, Press, Zane and Mayor Edwards llOES: AGENCY MEMBERS: Epsteln and Reed ABSENT: AGENCY MEMBERS: None ABSTAIfI: AGENCY MEMBERS: None ATTEST: f2 ~ ,,/ lJ if BY , Vj{ ll~ ANN M. SHORE - SECRETARY ~~ --- RESOLUTION NUMBER 6787 (CIty CouncIl SerIes) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING THE ESTABLISHMENT OF THE DOWNTOWN REDEVELOI?HENT PROJECT LOW .lI.ND MODERATE INCOME HOUSING TRUST FUND AND FINDING THAT SUCH EXPENDITURE WILL BE OF BENEF IT TO THE DOWNTOWN REDEVELOPMENT PROJECT. WHEREAS, It IS the POlICY of this localIty to assure an adequate supply of standard hOUSIng affordable to low and moderate Income persons and families; and WFEREAS, the Downtown Redevelopment ProJect has been establIshed In the CIty of Santa MonIca In the area bordered by Broadway, Fourth Street, Colorado, and Second Street; and v-JHEREAS, the Downtown Redevelopment ProJect has been fully developed WIth a commercIal facilIty; and ~';HEREASr the Redevelopment Agency of the CIty of Santa Monica seeks to establIsh a Downtown Redevelopment ProJect Low and '1oderate Income HOUSIng Trust Fund pursuant to Health and Safety Code Section 33334.2 for the purpose of IncreaSIng and ImprovIng the supply of low and moderate income housing avaIlable a1: affordable costs WIthin the City of Santa MonIca; and I-lHEREAS, Health and Safety Code Section 33334.2 requires that the CIty CouncIl concur WIth the Redevelopment Agency's fIndIng that the use of the funds will be of benefIt to the redevelopment proJect area when the funds WIll be expended outSIde the boundarIes of the redevelopment proJect area; 5 - DATE January 17, 1984 TO: Mindy Lelterman, Houslng Division FROM: Ann M. Shore, CIty Clerk SUBJECT: DOWNTOWN REDEVELOPMENT PROJECT LOW AND MODERATE INCOME HOUSING - CITY COUNCIL/REDEVELOPMENT AGENCY AGENDA OF DECEMBER 13, 1983, RESOLUTION NO. 379 (RAS) . Thank you very much for returning the Res01utlons of the December 13, 1983 meeting to us. Please advise us the Redevelopment Agency Resolution No. that should be inserted in the second paragraph of Resolution No. 379(RAS) In order that we may process the resolutIon. Please see attachment. AMS' . . (' ) Y11. -1.i _ J. ~ . J J l ~'--Y" II IJ t.. "<)../1 L(f!./"(j.!... ,~ Attachment / I / " RESOLUTION NUMBER 379 I < (Redevelopment Agency Series) A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA ALLOCATING $399,IHJIJ INTO THE DOWNTOWN REDEVELOPMENT PROJECT LOW AND MODERATE INCOME HOUSING TRUST FUND TO PROVIDE FINANCING FOR THE CITY WIDE HOUSING ACQUISITION AND REHABILITATION PROGRAM AND FINDING THE PROVISION OF SUCH HOUSING TO BE OF BENEFIT TO THE DOWNTOWN REDEVELOPMENT PROJECT WHEREAS, the Redevelopment Agency has adopted Resolution Number 378 (RAS) establishing the Downtown Redevelopment Project Low and Moderate Income Housing Trust Fund; an WHEREAS, in accordance with Resolution Numb r (RAS) , the Redevelopment Agency desires to allocate III Housing Trust Fund, NOW THEREFOIlE, THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. Pursuant to Resolution Number 378 (RAS), the Redevelopment Agency does hereby allocate the sum of $399,999 into the Housing Trust Pund to be paid into the Housing Trust Fund from property taxes allocated to the Redevelopment Agency pursuant to Health and Safety Code Section 3367' and the Redevelopment Plan for the Downtown Redevelopment Project. SECTION 2. The funds 80 allocated shall be held in the Housing Trust Fund until expended by the Agency for the purposes set forth in Resolution Number 378 (RAS) . SECTION 3. The Redevelopment Agency hereby elects to make part of the requi:rements of Health and Safety Code Section 33334.2 applicable to the Downtown Redevelopment Project to the extent provided for in this resolution. SECTION 4. By adopting this resolution, the Redevelopment 1 -- - ------ -- OAT!::' January 3, 1983 TO- }hndy LeIterman, Housing Dlvls10n FROH: Ann Shore, C1 tv Clerk SUBJECT- DOWNTOWN REDFVELOP~ENT PROJECT 101': A)lD HODEfi,ATE I NCmU: HOUSING - CITY C()UNCIL/~EDEVELOPHE~T AGENCY AGENDA OF DECEMBER 13, 1983 Attached IS a memo we sent to vour office on December 14, 1983. ThIS 1S a follow-u~ regarding the resolut1ons of December 13, 1983 meeting. Please advIse of the status of these resolutions. a<--,.-1 A~ At tacPJT1ent ---- -- --------