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SR-901-003-01 , . . Y:tJ /- Ct?3 -1// l\-e JAN 2 6 1988 v.....- CjED:HSG:CR:Wp City Council Meeting: 1/26/88 Santa Monical California TO: Mayor and Clty Council FROIo!: City Staff SUBJECT: Recommendation to Adopt a Resolution Authorizing the sale of Property at 2233 Fifth street to PORTALS for Development of Housing INTRODUCTION The report recommends that the City council adopt a resolution authorizing the sale of the property at 2233 Fifth Street to POR- 'IALS, a not-for-prof it organization, for permanent housing for handicapped homeless persons. Also, this report transmits infor- mation regarding the California Special User Housing Rehabilita- tion Program (SUHRP) and the U.S. Department of Housing and Urban Development Permanent Housing for Handicapped Homeless Persons (PHH) Program, and recommends that the City Manager be authorized to execute any and all documents required to submit an applica- tion to enable PORTALS to receive funds under these programs. BACKGROL"ND In 1982 the city purchased the property at 2233 Fifth street for $168,000, utilizing Community Development Block Grant (CDBG) funds, for the purpose of establishing a neighborhood center. 'Ihe property was subsequently leased to Fraternal Endeavors (FE), a local non-profit community organization on an annual basis for one dollar ($1.00). At the end of June, 1987 FE and the Clty mutually agreed to terminate the lease of property. staff have - 1 - \ \- e, tJ~t.I 2 ~ 11368 . . determined that the property is no longer required for the original public purpose and began to examine the options for dis- position of the property. The following discusses the staff recommendation for use and disposition of this property. DISCUSSION In evaluating options for the use of the property, staff first looked at ~",hether the property could be utilized for another public purpose, such as permanent affordable hous~ng. As Council is aware, in June, 2987 the u.s. Congress passed the stewart B. Mc1<inney Homeless Assistance Act (McKinney Act). The Hc1<inney Act provides funds for a variety of programs to assist the home- less including shelter programs, transitional housing programs, and permanent housing programs. Also, the City provides funds for a variety of supportive services for homeless persons in San- ta Monica. After careful evaluation, and survey of the availability of other financing sources, it was determined that the property at 2233 Fifth Street could be best utilized as per- manent housing for handicapped homeless individuals. The follow- ing details the funding available to support this type of activi- ty, the proposed project, and the steps required to be taken in order to make the property available to PORTALS for such a development. Funding Availabillty A Request for Proposals has been issued jointly by the State through the Special User Housing Rehabilitation Program (SUHRP) and the U. S. Department of Housing and Urban Development (BUD) - 2 - . . Permanent Housing for the Homeless (PHH) for eliglble projects. Applications are due to the state by February 5, 1988. Eligible borrowers are non-profit organizations with experience in working with handicapped homeless persons. The state SUHRP will provide up to twenty-five percent (25%) or a maximum of $100,000 to as- sist in the acquisition and rehabilitation of a group home to serve five to eight individuals. The Federal PHH will provide up to fifty percent (50%) or a maXlmum of $200,000 for the acquisi- tion and rehabilitation of a property. The State SUHRP funds are provided as interest-only loans with a 30 year term, at 3% simple interest with payments deferred. The Federal PHH funds are con- ditional grants. This is a unique combination of funding avail- able, requiring that only twenty-five percent (25%) of the total eligible project costs be contributed by the locality and spon- sor, thus leveraging the locality subsidy by one to four. Proposed Project Descriptlon Staff is proposing that the property be sold to PORTALS, a non- profit organization with over thirty years experience in working with the target population, for the appraised value. The site is zoned R-3 and currently is improved with a single family dwelling unit, containing three bedrooms and two bathrooms. The property would be rehabilitated to accommodate the permanent housing of five individuals. The property requires substantial rehabilita- tion and reconfiguration in order to accommodate the proposed use. In addition, it is required that two bedrooms and one bath- room be added to the building, resulting in a five bedroom, two - 3 - _ e and one-half bathroom single family house. The household would share cooking, dining and living space. PORTALS, has extensive experience in working with homeless men- tally ill individuals. This organization provides a variety of services to this population including residential care and treat- ment, employment and training programs, and counseling programs. PORTALS is recognized as an innovator in the working with the homeless mentally ill and has extensive experience in operating residential facilities. The proposed project on 2233 Fifth Street would be a component in the continuum of services available in thlS community to the homeless. Eligible occupants would be very 10vl income handi- capped homeless who are able to live independently. The resi- dents would pay no more than thirty percent (30%) of the1r income for rent. Operating costs would be covered by the rents. The lack of available, affordable housing for individuals who have been homeless is a rnaj or stumb1 ing block to their ability to rebuild their lives. The rehabilitation of this property would provide an invaluable resource to the community. Project Feasibility PORTALS, in cooperation with Comrnunlty corporation of Santa Moni- ca (CCSM), have examined the economic feasibility of the proposed housing development and are proposing to jointly submit an ap- plication for funding under the State and Federal programs. CCSM would provide technlcal assistance to PORTALS through the funding - 4 - . . application and development process. PORTALS would own and oper- ate the housing. The total estimated project cost is $330,950 which includes acquisition of the property, rehabilitation, and all related development costs. Approximately $216,560 would be available through the state and Federal loan and grant. The remaining $114,390 would be a combination of funds from the City, and equity from PORTALS of $14,387. In addition, the city would receive at least $100,000 from the sale of the property which would not be required to subsidize the proj ect, and could be reprogrammed to assist in funding the Community Services Center. Public Hearing The Municipal Code Section 2508A, as amended by ordinance No. 1125 (CCS) requires the City to hold a public hearing prior to the sale of property held by the City. A notice was published in the Evening Outlook on January 16th and 23rd, as required by the Municipal Code, specifying that a public hearing would be held on the proposed sale of the property to PORTALS. In addition, the Municipal code allows for the sale of real property without public bidding if it is in the best interest of the City. Due to the experience of PORTALS in developing and managing housing for handicapped homeless, the attached resolution finds that it is in the best interests of the City to provide PORTALS with an exclu- sive option to purchase the property. Actions Required It is required that the council provide PORTALS with site control and a commitment of City funds not to exceed $1051000 prior to - 5 - . . the submittal of the application for state and Federal funds. The City council must conduct a public hearing on the proposed sale, and adopt the attached resolution providing PORTALS with the exclusive right to the purchase the property contingent on the receipt of State and Federal funds, and compliance with the city's planning and zoning approval process. Upon receipt of funding staff will return to council for approval of the terms of the locality commitment and authorization to proceed with the sale and release of funds. In keeping ",ith the City I s other housing projects the grant deed transferring the property will contain use restrictions and provide the City with remedies in case of default by the developer. ~UDGETARY/FINANCIAL IMPACT As described herein, the property at 2233 Fifth Street would be sold to PORTALS for the appraised value estimated at $203,000. A portion of the sales proceeds, not to exceed $105,000 would be provided to PORTALS to assist in the development of the housing, and at least $100,000 would be received by the City as CDBG pro- gram income to be reprogrammed for CDBG eligible uses. There is no financial or budgetary impact of the recommended actions in this report at this time. RECOHMENDATIONS It is recommended that the city Council: 1. Hold a public hearing on the proposed sale, without public bidding, of the property at 2233 Fifth street to PORTALS for the development of housing for handicapped homeless. - 6 - . . 2. Adopt the attached resolution authorizing the sale of proper- ty at 2233 Fifth street to PORTALS contingent upon receipt of funding commitment from the California Special User Housing Rehabilitation Program and/or the u.s. Department of Housing and Urban Development Permanent Housing for Handicapped Home- less Persons for the development of housing for hand~capped homeless persons on the property. 3. Commit up to $105,000 in proceeds from the sale of the prop- erty at 2233 Fifth street to assist in development of the property for handicapped homeless persons. 3. Authorize the City Manager to execute any and all documents required to submit an application for funding under the state and Federal programs detailed herein. Prepared by: Candy Rupp, Housing Program Manager Department of Community & Economic Development Exh~bits: 1) Resolution 2) Public Notice - 7 - . . (CCS) RESOLUTION NO. (CITY COUNCIL SERIES) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AUTHORIZING THE SALE OF PROPERTY AT 2233 FIFTH STREET TO PORTALS WHEREAS, the city of Santa Monica (hereinafter "City") owns the property at 2233 Fifth street (hereinafter "Property"): and WHEREAS, there is an urgent need for housing for homeless handicapped persons in Santa Monica: and WHEREAS, Portals, a non-profit organization, (hereinafter "Portals") will submit an application to the California Special User Housing Rehabilitation Program and the U.S. Department of Housing and Urban Development Permanent Housing for Handicapped Homeless Persons Program (hereinafter "programs") for funds to develop housing for handicapped homeless persons: and WHEREAS, Portals desires to purchase the Property for development of housing for handicapped homeless persons; and WHEREAS, the City desires to sell the Property to Portals for the purpose of developing housing for handicapped homeless persons: and WHEREAS, the city has caused a notice of its intent to sell the Property to be published in a local newspaper and posted notice on the Property providing information on the date and time of a public hearing; and - 1 - . . WHEREAS, the City Council has held a public hearing at 7:30 p.m. on January 26, 1988 to hear from the public on the proposed sale of the Property, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES RESOLVE AS FOLLOWS: SECTION 1. The City agrees to sell the property to Portals subject to : A. Receipt of funding commitment from the California Spe- cial Users Housing Rehabilitation Program and/or the U.S. Depart- ment of Housing and Urban Development Permanent Housing for Hand- icapped Homeless Persons Program for development of housing for handicapped homeless persons on the Property. B. Compliance with the provisions of all applicable local codes and ordinances pertaining to the development of housing for handicapped homeless persons. C. Execution of a Grant Deed between the City and Portals. SECTION 2. Municipal Code section 2508A provides that the sale of real property shall be by notice inviting bids unless the City Council finds that advertising for bids would not be in the best interests of the City. The City Council finds that adver- tising for bids would not be in the best interests of the city because: - 2 - . . A. The City has determined that the development of housing for handicapped homeless persons is of benefit to the City of Santa Monica. B. The City has identified the Programs as the most suitable source of funding necessary in order to develop such housing, and this funding is available only to qualified non- profit organizations. C. The City has found Portals to be the most suitably qualified non-profit organization, with experience in working with handicapped homeless persons, to develop such housing in santa Monica. SECTION 3. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter the same shall be in full force and effect. Approved as to form: RO~M::S '~ City Attorney :res99 - 3 - 2 -- ---...... l~=-~ . The Outlook . Saturday, January 16, 1988 l- ---- ~ I .\ ~ I i -.. ~ i u . I " d ;i Ii :1 lonCE OF A PUBLIC HEARIIIB TO BE HELD BY THE CITY OF SANTA MONICA Ok THE PROPOSED &ALE WITHOUT PUBLIC BIDDlIIG OF CITY DWXEO PRDPERTY FOR DEVELOPMENT OF HOUSING OFFICIAL NOTICE il hereby g....n that the City of SantCl Monica 'W,II hold CI pvbhc hearing on Tuesday, January 26. J 988. to consider the lole of e,'Y owned property, WI.nOllt publll: b.d- dIn iii. to POr1gls. a non-profit organ- Ization, for the development of hous. '"0 for hand.capped penonl on the Ide ut 2233 fifth Street, Sonta Mon- ICa, Cahfom.a. nME AND PLACE IIllh PUBLIC HEAR. ING I... rOIlIlWI: " ~ ; - TIME: TUE.. JAN. 26. 1988 7:30 P.M. PLACE: COUNCil CHAMBER, (:':, CITY HAll, RM 213, 1685 MAIN STREET. Santa Monica, Calif. il1 ij 'I l P_'" -;,.,.;y tnterelted persOll may appear In ,person or by agent and be heard Wntten commenll may b. oddren.d to the Hovslng D'Vlllon ut the C1bo... Qddren. w ~ ,Th. meeting facility Is hgndlcap occesslbl. If you have ony lpee.ed needs Iud! 01 111iIn-longuoge inter- pratmg plea... CDlltod Off~e of the Disabled of (213) 458-8701. THE CITY OF SAIlTA MONICA APPROVED AS TO FORM: .. 4 - ~ jlDBERT M. MYERS. , City AUDfltr , ......~. e - ,1- -~~~ ~f -'~ L~ \ I -J