SR-RA-1 (2)
f(A-\
1e5b-lf ~lo 1
RM HSG MHM F \MERL\REDEVELOPMENT\HOUSING\SUBORDIN
Council Meeting July 20, 1999 Santa Monica, California
TO Chairperson and Redevelopment Agency
FROM City Staff
SUBJECT Redevelopment Agency authorization to the City for administration of
Agency Housing Set-Aside Fund and authorization to the Executive
Director to enter Into contracts for the Agency, including subordination of
Agency deeds of trust and covenants to other lenders
I ntraductlon
This report recommends that the Redevelopment Agency (the "Agency") adopt a
resolution that authorizes the follOWing actions 1) formally delegates to the City the
administration of the Redevelopment Housing Trust Fund on behalf of the Agency, 2)
authorizes the Executive Director to enter mto contracts and agreements on behalf of
the Agency, 3) authorizes the Executive Director to make findings, where warranted, to
allow subordination of Agency deeds of trust and regulatory agreements to the loans of
other lenders providing financing to affordable housing projects, and 4) ratifies
admmlstratlve actions taken on behalf of the Agency over the past four years
Background
The Housing and Redevelopment DIVISion of the CIty administers the Agency's housing
"set-aSide fund" on behalf of the Redevelopment Agency In most Instances,
Redevelopment Agency funds have been used to augment City funds for affordable
housing loans made and administered by the City
1
RA-I
On November 24, 1998, the CIty Council adopted the ConsolIdated Rental Housing
Trust Fund GUidelines ("Guidelines"), setting forth the combIned program requirements
for all the housing funds admlmstered by the City, Including the Redevelopment
Housmg Trust Fund (formerly called the Citywide Housing AcqUisition and
Rehabilitation Program), which IS comprised of the Agency's housing set-aside funds
The GUidelines outline the parameters for the use of the Redevelopment Housing Trust
Fund monies and the legal requirements of Callforma Redevelopment Law The
GUidelines, however, do not Include the Agency's authOrization to Implement certain
actions necessary to faCIlitate the makmg of Agency loans
DISCUSSion
Callforma Redevelopment Law (Health and Safety Code 33000 et seq) requires that the
housing set-aside funds be used by the Agency for increasing, Improving and
preservIng the community's supply of low and moderate Income housing The
Redevelopment Housmg Trust Fund IS currently administered by the City on behalf of
the Agency City staff and legal counsel recommend that the Agency give expliCit
authOrization to faCIlitate the admlmstratlon of project financing
The Agency's Bylaws authOrize the Chairperson to sign all contracts, deeds and other
Instruments made by the Agency, except as otherwise authOrized by resolution of the
Agency Staff recommends that the Agency authOrize the Executive Director to enter
into contracts, deeds and other Instruments made by the Agency
2
California Redevelopment Law states that loans made from the set-aside funds (I e,
Redevelopment Housing Trust Fund) cannot be subordinated to other project finanCing
without the explicit approval of the Agency upon a finding that an economically feasible
alternative method of finanCing IS not reasonably available Without subordination
Subordmatlon of the City's loans and regulatory agreements IS usually required by other
lenders and agreed to by the City In order to maXimize private debt and minimiZe the
amount of City assistance Although the City Manager currently has the authonty to
subordinate City loans from the other HOUSing Trust Funds, the Agency must expliCitly
authOrize the Executive Director to do so on behalf of the Agency Without such
authOrization, subordination of all Agency-funded loans must be approved Individually
by the Agency Given real estate transaction deadlines, there IS not always suffiCient
time to coordinate these actions With the Agency's scheduled meetings Therefore,
staff IS recommending that the Agency authOrize the Executive Director to make the
reqUIred findIng, where warranted
Finally, staff IS recommending that the Agency ratify administrative actions taken on
behalf of the Agency over the last four years Dunng thiS time, the City has lent or
committed Agency funds, prlmanly In conjunction With City funds, to seven affordable
hOUSing developments. Ratification Will affirm these eXisting loan agreements
Budget/FinanCial Impact
These recommendations have no budgetary of financial Impact
,.,
.)
Recommendation
It IS recommended that the Redevelopment Agency adopt the attached resolution to
1 Authorize the City to administer the Redevelopment Housing Trust Fund on
behalf of the Agency
2 Authorize the Executive Director to enter Into contracts, deeds and other
Instruments made by the Agency
3 Authorize the Executive Director to make findings, where warranted, to allow
subordination of Agency deeds of trust and regulatory agreements to loans of
other lenders providing financing on affordable housmg projects
4 Ratify administratIve actions related to the loans made by the City on behalf of
the Agency over the last four years
Prepared by
Jeff Mathieu, Director, Resource Management
Bob Moncnef, Manager, Housing and Redevelopment
Lyn Cacciatore, Deputy City Attorney
Linda Mills, Deputy City Attorney
Tina Rodnguez, Redevelopment Administrator
John Read, Housing Coordinator
Mona Miyasato, Senior Administrative Analyst
Jim Kemper, Senior Development Analyst
Attachments
Resolution
4
,
RESOLUTION NUMBER 461 (RAS)
(Redevelopment Agency Senes)
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA
MONICA AUTHORIZING THE CITY' OF SANTA MONICA TO ADMINISTER THE
REDEVELOPMENT AGENCY HOUSING SET-ASIDE FUNDS, AUTHORIZING THE
EXECUTIVE DIRECTOR TO ENTER INTO CONTRACTS AND MAKE FINDINGS TO
ALLOW SUBORDINATION OF AFFORDABLE HOUSING LOANS. AND RATIFYING
PAST ADMINISTRATIVE ACTIONS
WHEREAS. the Redevelopment Agency of the City of Santa Montca (the "Agency")
has approved redevelopment plans for the Ocean Park 1 a, Ocean Park 1 b, Downtown and
Earthquake Recovery Redevelopment ProJect Areas whIch result In the allocation oftaxes
from the Project Areas to the Agency for the purposes of redevelopment, and
WHEREAS, Section 33334 2(a) of the California Community Redevelopment Law
(Health and Safety Code Sections 33000 et seq) requires that not less than 20 percent
of all taxes so allocated be used by the Agency for the purposes of Improving, increasing
and preserving the commumty's supply of low and moderate Income housing available at
an affordable housing cost. unless certain findings are made, and
WHEREAS, the City of Santa Monica (the "City") has adopted Consolidated Rental
Housing Trust Fund GUidelines (the "Guidelines") to prOVIde cntena forfinanclal aSSistance
to support the acquIsition. rehabIlitation and new construction of properties In the
community to preserve and Increase affordable rental housmg opportunities through the
expendIture of hOUSIng trust funds adminIstered by the CIty, Including the Redevelopment
HOUSing Trust Fund compnsed of the Agency's allocatIon of taxes pursuant to Section
33334 2(a) I and
WHEREAS, the City of Santa MOnica adopted Resolution 9341 on November 24,
1998 affirming Its mtentlon that property acqUired or otherwise aSSisted with
Redevelopment HOUSing Trust Funds be used for the development of hOUSing affordable
to persons and families of low and moderate mcome, and
WHEREAS. SectIon 2 of Article /I of the Bylaws of the Agency, adopted on June
11. 1968 and revIsed on May 12. 1981 and November 24,1981, state that the Chairperson
of the Agency shall slg n aU contracts, deeds and other Instruments made by the Agency,
except as otherwise authorized by resolution of the Agency. and
WHEREAS, Section 33334 14 of the Cahforma Community Redevelopment Law
allows for covenants or restnctlons Imposed by the Agency to be subordinated under