SR-CC-3
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JM:PB:MS:homepro.mem Santa Monica, California
Council Meeting: April 12, 1994
To: Mayor and City Council
From: City Staff
Subject: Recommendations Regarding the Establishment of the HOME
Investment Partnership (HOME) Program
INTRODUCTION
This report provides information regarding the establishment of the
HOME Investment Partnership (HOME) Program, a HUD funded affordable
housing program, and recommends that city Council:
(1) approve the HOME Trust Fund Guidelines, and
(2) designate Communlty Corporation of Santa Monica (CCSM) as the
HOME Community Housing Development Organization (CHDO)
authorized to receive HOME set-aside funds.
BACKGROUND
On February II, 1992 the City Council adopted Resolution #8354
(CCS) authorizing the City Manager to apply for HOME funds and
permitting the expenditure of HOME funds for new construction and
rehabilitation of affordable housing. Since then, staff has worked
to identify a CHDO as required by HUD, draft HOME Trust Fund
Guidelines and identify eligible project(s} for which to use HOME
funds.
As mentioned in the staff report of February 1l, 1992, The HOME
Program was created under the National Affordable Housing Act of
1990, and was developed to provide a new source of federal funds to
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help expand the supply of decent and affordable housing,
particularly rental housing, for lower-income households. The HOME
program design is limited by rules established by HUD in 24 CFR
part 92. Local jurisdictions must submit an annual Program
Description which includes a general description of the city's
intended use of HOME funds. The city's HOME Program Description,
which has been approved by HUD for FY 94, specifies that funds will
be used for new construction and rehabilitation of affordable
rental housing for lower-income households.
To date, the city has received three years of HOME allocations.
The first year, FY 1992, the City received $1,091,000 in HOME
funds, the second year, $723,000, and this year, FY 1994, the City
will receive $572,000 for a cumulative allocation of $2,386,000.
As required by HUD, HOME funds must be committed within two years
of receipt. As such, the FY 92 allocation must be committed by
June 30, 1994, or funds will be recaptured by HUD.
Currently, Staff anticipates committing approximately $990,000 of
the FY 92 HOME allocation for a construction/permanent loan to the
Upward Bound House (UBH) Transit10nal Housing Project. The UBH
Transitional Project is a proposed new construction project of 22
units for homeless families to be located at 1020 12th Street. The
Task Force on Homelessness Report specifically mentions this
project as a housing project of immediate priority and urges the
City's full cooperation.
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Homeless families selected to participate in the UBH Transitional
Housing Project would reside in the facility for up to 2 years and
receive supportive services while they prepare themselves for
IItransitionll to permanent housing. The project has the necessary
zoning and planning approvals and is planned for operation within
the next 24 months.
DISCUSSION
HOME Trust Fund Guidelines
staff recommends that a new housing trust fund known as the HOME
Investment Partnership (HOME) Trust Fund be established as the
mechanism by which loan requests for HOME funds will be processed.
Further, staff recommends that the Guidelines be based on the
city's existing housing trust fund guidelines and requisite federal
requirements. Establishing a separate trust fund will ensure that
HOME funds are expended to increase the supply of affordable
hous ing to the lowest income households, as required by federal
law.
currently, the City has three housing trust fund programs; the
Citywide Housing Trust Fund (CWHTF), the Pico Neighborhood Housing
Trust Fund (PNHTF) and the City-wide Housing Acquisition and
Rehabilitation Program (CHARP) Trust Fund. All three existing
programs provide capital funds to eligible borrowers to fill the
financial gap between available non-program resources, including
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the borrower's equity and private financing, and the cost of
developing affordable mUlti-family and SRO rental housing. The
HOME Trust Fund 1S seen as a complement to the CWHTF, PNHTF and
CHARP and it is recommended that the HOME Program utilize similar
procedures and funding mechanisms.
. Loan Mechanism
As in the CWHTF, CHARP and PNHTF programs, HOME funds would be made
available in the form of a deferred or residual receipts loan,
evidenced by a promissory note, and secured by a deed of trust.
Each loan vii II also be secured by a regulatory agreement
restricting the occupancy, rent levels, and management and
maintenance of the property for a term of not less than fifty (50)
years.
Principal and interest which are not repaid through residual
rece1pts vii II be due and payable at the end of the loan term,
unless the loan term and regulatory restrictions are extended.
Upon expiration of the Regulatory Agreement and any extensions, the
remaining principal and interest shall be due and payable in full,
to the extent that the fair market value of the project exceeds the
principal balance of the existing indebtedness. The difference
between paid and accrued interest may be forgiven if the borrower
has complied with the Regulatory Agreement for its full term.
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. Eligibility Requirements
Eligible borrowers are community based non-profit housing
development corporations (HDC) and private owners of mUlti-family
and SRa rental buildings of 4 or more units.
. Eligible Projects
Projects eligible for HOME funding must involve 4 or more
apartments or single-room-occupancy (SRO) units or a group home
which will be rented to eligible lower-income households at rents
that do not exceed rents as defined by HUD and the city; have at
least 20% of the HOME assisted units rented to very low income
families as defined by HUD and the city; demonstrate financial
feasibility -- including the ability to maintain rents for the
subsidized units at affordable levels for the periods specified;
be free of significant adverse environmental impacts; minimize
tenant displacement; make efficient use of public funds; and, be
located anywhere in Santa Monica.
. Eligible Uses of the Fund
New construction activities eligible for HOME funding include~
site acquisition, cost of demolishing existing structures, site
preparation costs, financing costs, architectural, engineering and
other related soft costs, construction costs, relocation costs;
and, affirmative marketing and audit costs related to HOME program
requirements.
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Substantial rehabilitation costs eligible for HOME funding include
project acquisition, costs of temporary or permanent relocation
for existing tenants, certain financing costs, architectural,
engineering or other design costs, utility upgrade or extension
costs, costs associated with demolition (where necessary) ,
construction costs, project audit costs/ and, affirmative
marketing costs. All expenditures would be subject to city
approval and verificat~on.
. Low Income Benefit
HOME funds may only be used to flnance new construction or
substantial rehabil~tation of rental housing which is affordable
to very low and low-income as deflned by Hun and the city.
Eighty percent (80%) of the subsidized units must be affordable
to lower-income households (65% of area median income) and at
least an additional 20% to very low income households (50% of
area median income). In addition, at least 90% of each years
funds must be invested in units occupied by families whose
incomes do not exceed 60% of the median family income. The
remaining 10% must be invested in units occupied by families
earning below 80% of median.
. Per unit Subsidy
Consistent with existing trust fund guidelines, the maximum HOME
subsidy would be $60,OOOjunit. Any project requiring more than
$60,OOOjunit, or more than a total of $2 Million, must be
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approved by the city Council.
· Application Procedures
Consistent with other guidel~nes, HOME guidelines will provide
for an "open-window" process for project submittal and approval,
allowing for submittal of applications for available program
funds throughout the fiscal year. An open-window process is
effective in Santa Monica and allows properties to be presented
at any time to the city for assistance. Project loan requests
which are cons~stent with Program Guidelines will be reviewed and
approved administratively as are loan requests for the CWHTF,
CHARP and PNHTF programs. Selection among competing project
applications w~ll be based, ln part, on criteria such as the
degree to which proJects significantly increase affordable
housing opportunitles for large famllies, or persons
traditionally served by SRO housing and the disabledi assist
homeless persons; benefit a high percentage of very low and low-
income households; and, effectively leverage non-City sources of
financing.
. Public Notice
As with existing trust fund guidelines, a neighborhood review
process will be required and will provide neighbors with an
opportun~ty to review and comment on the proposed project prior
to the release of program funds.
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Community Housinq Development Orqan1zation (CHDO)
Staff recommends that Community corporation of Santa Monica
(CCSM) be designated as the HOME CHDO for Santa Monica. Local
jurisdictions are required to set-aside 15% of each year's funds
for local CHDO's housing activities. For FY 92 the set-aside
amount was $163,650. The total set-aside for the past three
years is $357,900. In addition, the CHDO would be eligible to
receive operating funds equal to 5% of each years allocation.
CHDO set-aside activities, new construction or acquisition and
rehabilitation, must be the same activities as outlined in the
City's approved HOME Program Description.
A CHDO must be a private non-profit organization that is
organized under the State, and has no part of its earnings
inuring to the benefit of its member. In addition, the CHDO must
maintain accountability to lower-1ncome community residents by
maintain1ng at least one-third of its board members for residents
of low-income neighborhoods, have demonstrated capacity to carry
out hous1ng activities and have a history of serving the
community within which the housing is to be located.
staff of CCSM and the City are currently considering several eHDO
acquisition/rehabilitation projects that would be HOME eligible
and address the following concerns; a multi-family building that
is adversely impacting, either aesthetically or socially, the
neighborhood within wh1ch it is located: a building that is
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suffering from deferred maintenance or is earthquake damaged; or
a building that has more than 30% of the units vacant. Staff
expects to have a CHDO project identified and underway by this
summer.
FINANCIAL/BUDGETARY IMPACTS
The Program wlll expend funds allocated by HUD to the City
pursuant to City Council Resolutlon No. 8354. HOME
Administrative funds will be used to hlre an as-needed Senior
Administrative Analyst to implement the HOME Program. Funds have
been approprlated on an annual basls as part of the annual budget
process.
RECOMMENDATIONS
It is recommended that the Clty Council:
(1) approve the HOME Trust Fund Guidelines, and
(2) designate Community Corporation of Santa Monica as the
Community Housing Development corporatlon (CHDO) authorized
to receive HOME set-aslde funds.
Prepared by: Jeff Mathleu, Resource Management Dlrector
Paula Burrier, Housing and Redevelopment Manager
Mike Strader, Senior Development Analyst
Attachments: HOME Investment Partnership (HOME) Program
Trust Fund Guidelines
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April 12, 1994
HOME INVESTMENT PARTNERSHIP (HOME) PROGRAM
TRUST FUND GUIDELINES
INTRODUCTION
The HOME Investment Partnership Trust Fund (HIPTF) Program provides
funds to eligible borrowers in the form of low interest or deferred
payment loans to support the development of affordable housing
throughout the city of Santa Monica. These funds provide
supplemental financIng for the acquisitIon, rehabilItation, and new
construction of properties to preserve and Increase affordable
housing opportunitIes for lower-income households.
HOME Funds are disbursed to eligible private owners and non-profit
borrowers as deferred loans to make up the fInanCIal gap between
available non-HOME Fund resources, including the borrower's equity
and private financIng, and the costs of developing affordable
multi-family housIng.
In each fiscal year, commencing wIth FY 92-93, the City will
allocate HOME funds pursuant to ResolutIon No. 8354 which
authorizes use for construction or rehabilitation of affordable
housing In complIance with each funding year's HOME Program
Description.
The CIty establIshed operatIng polICIes and procedures for the
administratIon of the HOME Investment Partnership Funds are
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described in these program guidel~nes.
PROGRAM REQUIREMENTS
Eligible Borrowers: Ellgible borrowers are community based
non-profit housing development corporations (HDC) duly organized to
promote and undertake community development activities on a
not-for-profit basis and private owners of multi-famlly and SRO
rental buildings of 4 or more units wlth proven capacity to
develop, own and operate affordable housing. Partnerships between
a private owner and a non-profit HDC are encouraged and are also
eligible to borrow Program funds.
Eligible projects: Projects eligible for HOME funding shall:
(1) be rental projects located in the city of Santa Monlca;
(2) contrlbute to the achlevement of the Clty'S
fair houslng goals;
(3 ) involve 4 or more apartments or slngle-room-occupancy
(SRO) units or a group home which will be rented to
eligible lower-income households x at rents that do not
exceed rents as defined by 24 CFR 92.252,;
( 4) at least 20% of the HOME asslsted units shall be rented
to very low income families under the terms and
conditions set forth in 24 CFR 92.252 (a)(4);
(5) demonstrate financial feasibility -- includlng the
ability to maintain rents for the subsldized units at
affordable levels for the periods specified in 24 CFR
92.252;
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(6) be free of significant adverse environmental impacts,
except those that can be mitigated through the project
itself;
(7) Minimize tenant displacement;
(8) comply with all local building and zonlng codes and
standards, including energy efficiency and water
conservation standardsl meet housing quality standards in
Sectlon 882.109 of thlS title. Newly constructed housing
must meet the current edltion Model Energy Code of the
Councll of American BUllding Offlcials;
(9) make efficient use of public funds and avoid "layering"
of subsidies beyond those necessary to achieve a
financlally feasible project.
Eligible Uses of HOME Funds: HOME funds may only be used to
finance new construction or substantial rehabilitatlon of rental
housing which lS affordable to very low and low-income as defined
by 24 CFR 92.2. Eighty percent (80%) of the subsidized units must
be affordable to lower income households (65% of area median
income) and at least an additlonal 20% to very low income
households (50% of area median lncome), described below.
Eligible Activities: New constructlon costs eligible for HOME
fundlng shall be as speclfied in 24 CFR Part 92, includlng:
1. site acqulsltlon;
2. cost of demolishlng existing structures;
3. site preparation costs (gradlng, filllng, etc. )
4. financing costs as descrlbed in 24 CFR 92.206;
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5. architectural, englneering, and other related soft costs;
6. the cost of extending or upgrading utilities to the slte
to support the proposed project;
7. construction costs;
8. relocation costs; and,
9. affirmative marketing and audit costs related to HOME
program requlrements.
Substantlal rehablli tation costs ellglble for HOME funding include:
1- project acquisltlon;
2. costs of temporary or permanent relocation for existing
tenants;
3. flnanclng costs, as described in 24 CAR 92.206;
4. architectural, englneering, or other deslgn costs;
5. utillty upgrade or extenslon costs;
6. costs aSSQClated with demol~tion (where necessary);
7. construction costs;
8. project audit costs; and,
9. affirmative marketing costs.
Ineligible uses include:
1- project reserve accounts for replacement operat~ng
reserves/ and operating subsidles;
2. Payment of impact fees;
3 . Other activitles prohlbited by Federal regulatlons.
PROJECT REQUIREMENTS
Minimum Loan: All HOME ~nvestments must total not less than
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$1000 times the number of HOME assisted units in the project.
xaximum Loan: The maximum amount of subsidy per unlt shall be
$60,000 per unit. Any proJect requiring more than $60,OOOjunlt
(but in no case more than is allowed in 24 CFR 92.250), or more
than $2 Million, must he approved by the Clty Council. The city
will avoid unnecessary layering of subsidies from different
federal, state and local programs and seek to maximize the
benefit to target households from the investment of HOME funds in
a project.
property standards: Housing that lS assisted wlth HOME funds
must meet, at a mlnimum, the housing quality standards of all
local codes, rehabilitation standards and zoning codes. Newly
constructed houslng must meet the current edltion of the Model
Energy Code published by the Council of American Building
Officials. Substantlally rehabl11tated housing must meet the
cost-effectlve energy conservatlon and effectiveness standards in
CFR 39.
Qualifications as Affordable Housinq and Income Tarqetinq: A
housing proJect quallfies as a HOME assisted affordable housing
proJect if rents are limited as follows:
1. Has at least 20 % of the HOME asslsted unlts rental
units:
a) Occupied by very low-income families who pay toward
rent not more than 30 % of the family adjusted
income, or
b) Occupied by very low-lncome faml1ies and bearing
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Dear Santa Monica Planning Commissioners,
As a neighbor to~posed site of The Santa Monica Bed & Breakfast,
I (we) sUpPOrt the project Aftermee~g with mem~ mfJh~~~~ding
commumty, the developers of the project have agreee\oP~ide a much
desired security patrol as a condition of approval. "93 AlIi 23 P 1 '1 7
Please approve the project when it comes before yOU.
Thank YOU.
Itr'Af.r~ ~ (~~o ~#,e-4F()IJE pofCoj /7~ '$
NAME AND AnDRESS
.....
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Dear Santa Monica Pl3iiiring Commissioners,
As a neighbor to the proposed site of The Santa Monica Bed & Breakfast,
I (we) supPOrt the project Aftermcc1i?g w4tb'~mJhe. surrounding
commumty, the developers of the project h~~ ~ to proVIde a much
desired security patrol as a condition of app~v'Jk 23 P 1 :1 7
Please approve the project when it comes before you.
Thank you.
--::r; wi (s t? fV\;NE'R \l \~~13 OF~
. .
NAME AND ADDRESS
f. 0 0 0 5 8
HOME FUND LOAN TERMS
HOME funds may be invested in eligible affordable housIng
projects as deferred or residual receIpts loan. HOME fund loans
from the Trust Fund shall have the following terms and
conditions:
Term: Loans shall be for a fifty (50) year term subject
to the terms of the Regulatory Agreement.
Interest Rate and payments: The interest rate shall be set
at the rate establIshed by the Federal Home Loan Mortgage
corporation for the average conventional commitment of a
fixed rate, thirty-year (30) mortgage, and shall be
compounded annually.
(l) Payments of prIncipal and interest shall be deferred
for no less than five {5} years, and for no more than
thirty (30) years. Deferral for thlrty (30) years
shall only be avaIlable to proJects WhICh provide
signIfIcant benefit to very low income households, i.e.
at least 75% affordable to very lOW-Income households.
After such period, payments of principal and Interest
shall be made from project Residual Receipts, if any,
as approved by the City. Payments shall be applied
first to accrued Interest, and then to prinCIpal.
(2 ) The Borrower may elect to pay the PromIssory Note prior
to the end of the term, however, the Regulatory
Agreement shall remaIn in full force and effect for its
term regardless of any repayment.
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(3) If the Borrower violates the terms of the Regulatory
Agreement such that the city declares the Promissory
Note in default, the entire amount of unpaid principal
plus the accrued interest at the rate establlshed at
the time of loan closing, shall be due.
(4) Unless paid in full earlier, the remainlng principal
balance of the Program loan and accrued interest shall
be due and payable at the end of the term of the
Promissory Note. The remaining princlpal and accrued
but unpaid interest shall be payable only to the extent
that the falr market value of the ProJect exceeds the
principal balance of the existing indebtness secured by
the property. The difference between paid and accrued
compounded interest and simple interest at the same
rate may be forgiven lf the borrower has complied with
the terms of the Regulatory Agreement for its full
term.
(5) The Clty may accept an extenslon of the term of the
existing Regulatory Agreement for a minimum of twenty-
flve (25) years ("Extension Perlod") in lleu of full
payment of remalnlng princlpal and accrued but not
unpaid lnterest at the end of the term of the
Promissory Note.
security: 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, loans from
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conventional financing instltutions, or loans from seller
take back financing, used in conjunction wlth the Trust Fund
Loan on the same property. 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 lower-income households. The
Borrower and City shall execute an Agreement regulat1ng
project rents, tenant selection procedures, use of project
income, management and ma1ntenance, and perm1tted forms of
project ownership and/or use. The Regulatory Agreement
shall be recorded wlth the Deed of Trust and Note.
Rent Schedule and Tenant Income: The Clty must review and
approve rents proposed by the owner for un1ts assisted with HOME
Funds. The owner must recertify the lncome of each tenant
household living in the low-income unit at least annually. The
maXlmum monthly rent must be reviewed and approved by the city
and notice of any increase in rent must be provlded to the
tenants at least 30 days 1n advance of the effective date of the
increase. The maXlmum monthly rent may not exceed the MaXlmum
Allowable Rent (MAR) as determined by the Rent Control Board.
Increases in Tenant Income: Where a tenant's lncome after
occupance exceeds the income llmlts for the program, the rental
housing will continue to qualify as affordable as affordable.
However, the next vacant unit must be filled with an lncome
qualified tenant, except for proJects developed under the low-
income houslng Tax Credit program. Tenants who no longer qualify
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as low-income families must pay as rent the lesser of the amount
payable by the tenant under state of local law or 30 percent of
the family's adjusted monthly income, as recertified annually.
Tenant and participant Protection:
a) Lease: the lease between tenant and owner must be for not less
than one year.
b) Tenant selection: The borrower must adopt wr1tten tenant
selection policies and criteria that are consistent with the
purpose of providing houslng for the very low-income and low-
income families.
Mixed-Income Projects: All unlts in a project are not requlred
to be assisted under the HOME program. A project where less than
100% of the dwelling unlts quallfy as affordable is eligible, if
the houslng meets the rent llmitations and income targeting
criteria described ln these guidelines.
Mixed-use pro;ects: Houslng in a mixed use project may qualify
as affordable if such housing meets the rent limltations and
lncome targetlng criterla of the gUldelines) , and the residential
living space constitutes at least 51% of the project space.
Reliqious organizations
HOME funds may not be provlded to prlmarily religious
organizatlons, such as churches, for any actlvity lncluding
secular actlvlties. In addltion, HOME funds may not be used to
rehabilitate or construct housing owned by primarlly rellgious
organizatlons or to assist prlmarlly religious organizatlons ln
acquirlng housing. However, HOME funds may be used by a secular
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entity to acquire housing from a primarlly religlous
organization, and a primarlly religious entity may transfer title
to property to a wholly secular entity and the entlty may
participate in the HOME program in accordance with the
requirements of thls part. The entity may be an existing or
newly establlshed entlty (WhlCh may be an entlty establlshed, but
not controlled, by the rellglous organization). The completed
housing project must be used exclusively by the owner entity for
secular purposes, available to all persons regardless of
religion. In particular, there must be no religious or
membership criterla for tenants of the property.
COMPLIANCE WITH FEDERAL AND LOCAL REGULATIONS
Equal opportunity and Fair Housinq: No person shall on the
grounds of race, color, national origin, religion, or sex be
excluded from participatlng In, be denled the benefits of, or be
subjected to discriminatlon under any program or activity funded
in whole or in part with HOME funds.
Affirmative Marketinq: The Borrower shall establlsh an
affirmatlve marketing and tenant selection plan for each proJect
containing 5 or more units. The plan shall descrlbe the
marketing efforts and tenant selectlon procedures the Borrower to
attract eliglble persons from all raclal, ethnlc and & gender
groups ln the housing market area to the avallable housing. The
marketing and tenant selectlon plan shall be subrnltted wlth the
loan application.
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Environmental review: The city shall assess the environmental
effects of each activity proposed to be carr led out wlth HOME
funds in accordance with the provisions of the National
Environmental Policy Act of 1969 (NEPA) . The RMD staff will
commence the review simultaneous with issuance of the prellminary
commitment. The environmental review will take approxlmately 45
days to complete. No loan funds except for activltles normally
exempted from the environmental clearance requlrements 1n 24 CFR
Part 58.34, shall be released until the env1ronmental review 1S
completed, the notice of finding and environmental assessment
results are publlshedr and the 15 day publlC comment period
expires.
Displacement, Relocation and Acquisition: consistent with the
other goals and Ob]ectlves of thlS partr borrowers must ensure
that all reasonable steps are taken to mlnimlze the dlsplacement
of persons as a result of project activitles. To the extend
feasible, persons displaced by the project must be provided a
reasonable opportunity to lease and occupy a sUltabler decent,
safe and sanitary and affordable dwelllng unlt ln the buildlng
upon completion of the project.
A displaced person must be provided relocation assistance at the
levels described in accordance with the requirements of the
Uniform Relocation Ass1stance and Real Property Acquisitlon
Policies Act of 1970.
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Temporary relocation benefits must be provided to tenants who
will not be required to move permanently because of the project.
Reimbursement of all reasonable out-of-pocket expenses lncurred
in connection with the temporary relocation, lncluding the cost
to and from temporary housing and any increase in monthly
rent/utility costs.
Labor: Any contract for constructlon (rehab or new) of
affordable housing with 12 or more units asslsted with HOME funds
must contain a provlsion requlring that not less than the
prevailing wages paid ln the locality, as determined by the
Secretary of Labor pursuant to Davis-Bacon Act, will be paid to
all laborers and mechanics employed in the development of the
project. Contractors and subcontractors must comply with
regulations issued under this Act and pertaining to labor
standards and HUD Handbook 1344.1.
Lead-based Paint: Houslng assisted with HOME funds constitutes
HUD-associated housing for the purpose of the Lead-Based Paint
Poisoning Prevention Act and is therefore subject to 24 CFR part
35. Unless otherwise provided, borrowers are responsible for
testing and abatement.
Conflict of Interest: No person who is an employee, agent,
consultant, offlcer, or elected official or appointed officlal of
the City who exerClses or has exercised any function or
responsibillty with respect to activitles assisted with HOME
funds or who is in a position to particlpate ln a declsionmaking
process or gain inslde information wlth regard to these
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activitles, may obtain a financlal interest or beneflt from a
HOME assisted activity, or have an interest in any contract,
subcontract or agreement with respect thereto, or the proceeds
thereunder, either for themselves or those wlth whom they have
family or business ties, during thelr tenure or for one year
thereafter.
contractinq Requirements: All Borrowers wlll be required to
submit an affirmative action/equal employment opportunity plan
lndicating the methods that they wlll use to encourage the
participation of certified MBEjWBEs ln their development project.
city staff will review the plan and competitive bid and selection
process to ensure that required procedures have been followed.
City staff will also monitor construction to ensure that MBEjWBEs
are particlpating ln the project as indlcated ln the construction
contract.
In accordance with the City's Women and Minorlty BUSlness
Enterprise Program approved by city Council on March 8, 1983, all
Borrowers are required to consider the City's Women and Minorlty
Business Enterprise Program Llbrary of Dlrectories and Minorlty
and Women Vendors' listing the procurement of equipment,
material, supplles and professlonal services.
All work shall be completed by state-licensed contractors which
shall have Santa Monica business llcenses. All contracts must
comply with competitive biddlng requlrements. Contracts over
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$10,000 must be in accordance with City's Women and Minority
Business Enterprlse Program. All efforts shall be made by the
private owner or the HDC to provide equal opportunlty for
employment without discrimination as to race, martial status, sex
color, age, religion, national origin, ancestry, AIDS, or sexual
orientation, in seeking contractors and subcontractors.
APPLICATION SUBMITTAL AND REVIEW PROCEDURES
All applicatlons for Trust rund loans shall be submltted to RMD
and shall be revlewed and approved through the admlnistrative
review process as establlshed in these guidelines. All
applications shall be reviewed for consistency wlth the Clty'S
CHAS and Houslng Element.
Application submittal: The Borrower shall complete and submit to
the City the Applicatlon for HOME Program Trust Funds and prepare
all required attachments, lncludlng the management plan, tenant
selection and marketlng plan, relocatlon plan If necessary,
signed purchase agreement and escrow instructions, prellminary
title report, and limited partnership documents, if necessary.
Applications may be submitted at any time durlng the program year
and will be considered In the order submltted to RMD.
Application Review: The Housing and Redevelopment DiVlsion staff
shall review the application to:
(1 ) determine that the minimum program requlrements are
met.
(2 ) ensure that the estimated development costs are
15
reasonable.
(3 ) reVlew the estlmated mortgage amount in accordance with
the program's underwriting gUldelines.
(4) review the availabillty of funds.
(5) determ~ne the extent to which the proJect conforms with
established Clty policies and priorities.
The Housing and Redevelopment Division shall make a preliminary
determination regarding the eligibillty of the application wlthin
forty five (45) days of its submittal.
UNDERWRITING GUIDELINES
Determination of Reasonable Costs and Expenses: RMD shall review
the borrower's estimates and projectlons of rents, expenses,
reserves and development costs. Minimum percentage for reserves
will be determined on a case-by-case basis, as wlll the maximum
allowable developer fee. The Borrower shall prov~de background
documentation on all costs as necessary. The City may adJust
cost and expense amounts as appropriate to conform to current
market and industry standards. The total amount of the HOME loan
and all prlvate loans shall never exceed the total approved
development costs.
Clear Title: The Borrower will submit for city approval a
preliminary title report. RMD will conduct a title review of the
proposed property, includlng reviewing rent control registration
records and removal permit issues, conditions, covenants and
16
restrictions, and the legal descriptlon of the property. The
City Attorney will approve the title report prior to recordation
of loan documents.
Other Financinq: The Borrower shall secure other resources
such as tax exempt financlng, federal rental houslng subsldies,
and available private financing to mlnlmize the amount of the
program loan. The Borrower will submit to the city for review
the terms and conditions of all other financing. The City shall
analyze the feaslbility of the project to carry the loan.
pro;ect Manaqement Plan: The Borrower shall prepare a Project
Management Plan for the Clty'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) Tenant selectlon procedures, including applications,
walting lists, and lease agreements.
(2) Procedures for determlnlng tenant ellgibility and
certifying lncomes.
(3 ) Management/tenant relations and assistance to tenant
organizations, includlng the training and use of
tenants to perform rnalntenance and management functions
as approprlate.
(4) Maintenance and repalr serVlces, including a schedule
for on-going major maintenance and repair ltems.
(5 ) On-site management facilities.
(6 ) Rent collection.
(7) Records and reporting requirements.
17
(8) Personnel and staffing including quallficatlons of the
firm, or key staff responslble, and cllent references
if applicable.
(9 ) Fee schedule.
LOAN COMMITMENT AND CLOSING PROCEDURES
preliminary Commitment: A Prelimlnary Commitment letter shall be
prepared by the Housing and Redevelopment Divislon, reviewed by
the Director of RMD, and signed by the City Manager. The letter
shall state the maximum HOME amount reserved for the project and
list all the addltlonal condltlons, documents and steps that must
be taken by the Borrower to obtain a flrm commitment of HOME
Funds.
Public Notice: Notlces will be mailed by the City to nelghbors
of the proposed proJect informlng them of the City lntent to loan
funds to the Borrower a least one month before the proposed loan
closing. Borrowers shall provide the Clty with a complete Ilst
of addresses of all resldents wlthin 300 feet of the project.
Architectural Review: Borrowers involved in new constructlon or
change of use proJects will be responsible for notifying the
neighbors of the proposed proJect plans for the site at the time
the project is submltted to the Archltectural Revlew Board (ARB)
for approval. Neighbors will be invited to reVlew and comment on
at the ARB meeting. The Borrower shall notlfy neighbors at least
seven (7) days prior of the scheduled meeting date.
Final Commitment: The Borrower shall submit to the city the loan
18
approval from the senior lender, and shall obtain all other
required approvals building permits and removal permit as
appropriate, and meet all other conditions of the Prellminary
Cornrnltment Letter. The Housing Dlvision shall review the flnal
loan package, and if acceptable shall prepare a Final Commitment
letter and closing documents for the Trust Fund loan.
Leqal Documents: simultaneous with the review of the final loan
package the Housing Dlvision shall submit a request for a
Promissory Note, Deed of Trust, and Regulatory Agreement from the
Clty Attorney's Offlce. The request shall include copies of the
prelimlnary title report, the instructions to escrow concerning
the items that may appear on the title upon loan closing, and the
purchase agreement.
Final Approval and Release of Loan Funds: The Director of RMD
shall revlew, and the City Manager shall sign the final letter
and loan package. The c~ty Manager shall authorize release of
the deferred loan funds. A request for warrant for the full
amount of the loan wlll be submltted to the Finance Director
accompanled by the Final Commitment letter and the final loan
documents. The Finance Department shall transmit a warrant to
the Housing Division to be deposited into the escrow account
assigned to the loan. This warrant shall be delivered to the
private escrow officer with the legal documents to be executed by
the borrower and the escrow instructions twenty-four hours (24)
prior to the scheduled close of escrow.
19
------- ---
PROJECT MONITORING
The Housing Division shall monitor the project during
rehabilitation or constructlon as needed to ensure compllance
with HOME regulatlons. The Housing and Redevelopment Division
shall request notlfication of the flnal inspection and flnal
construction release from the primary lender, and shall reVlew
management practices and reporting procedures with the Borrower
and project management agent at that time to ensure full
understanding of program requirements. Borrowers shall be
required to certify annually that they have compiled wlth
affirmative marketlng and tenant selectlon procedures.
Thereafter the Housing and Redevelopment Dlvislon shall monitor
compliance with the Regulatory Agreement on an annual basis.
Notices stating that a housing project is subject to Fair Housing
and Equal Employment Opportunity requirements of 24 CFR 92.350
and 351 will be posted at each project site. The name and
telephone number of the Fair Houslng Offlcer of the Clty of Santa
Monica wlll be included on the notices.
Fair Houslng complaints are referred to the Clty Attorney's
office for investigation. If, after lnvestlgation, it is
determined that discrimlnatlon in the rental or sale of housing
has occurred, the City Attorney wlll attempt to mediate a
settlement between the owner/seller and the complalnlng party.
Mediation is usually successful. However, if lt is not, the
20
party with the complalnt may proceed to file agalnst the
owner/seller. If a pattern of discrimination has occurred, the
city may file suit for unfair business practlces.
LIST OF EXHIBITS
Exhibit A: Definitions
B: Deferred Loan Application with checklist of
documents required before loan closing
MS\a:HOMETFG.3
21
ATTACHMENT A
DEFINITIONS
RMD: Resource Management Department, C1ty of Santa Monica. This
Department will adm1nister the program for the City under the
direction of the City Manager.
CHDO: A Community Housing Development Organization is a private
non-profit organization organ1zed under California state law,
maintains accountability to the lower-income neighborhoods it
serves and has demonstrated capac1ty to carry-out hous1ng
development and management activ1t1es as defined by HUD.
CRAS : Comprehensive Hous1ng Affordability strategy. A strategy
developed by the city to assist 1n the delivery of affordable
housing serV1ces.
Lower Income Households: Households w1th incomes below 80% of
the Los Angeles Standard Metropolitan statistical Area median,
adjusted for family s1ze, as published by the U.S. Department of
Housing and Urban Development ( HUD) from time to time. With~n
this group of households those with incomes below 50% of the
median are considered Very Low Income.
Fair Market Rents: Maximum rents as determined by HUD for the
section 8 Existing or Moderate Rehabilitation programs for the
Los Angeles area, adjusted for unit size.
HOME Rents: (estab11shed by HUD)
A. High HOME Rents: E1ghty (80%) of the HOME assisted
units must have rents that do not exceed 30% of
adjusted gross income for household at 65% of median
-------
income, mlnus tenant pald utilities.
B. Low HOME Rents: At least 20% of HOME assisted unlts
must have rents which are equal to or less than 30% of
annual incomes of households at 50% of median income,
minus tenant paid utilities.
Maximum Allowable Rent (MAR) : The legal rent for the unit under
Santa Monica Rent Control Charter Amendment, wlth adjustments
allowed by the Rent Control Board for annual expense increases,
or for capital improvements.
Moderate-Income Families: Families whose annual lncomes are
between 80% and 95% of the medlan lncome for the area, as
determined by HDD, with adJustments for smaller and larger
famllies.
New construction: The constructlon of new houslng lncluding, but
not limited to assembly of factory-bullt modular houslng, or
conventional on-slte construction.
participating Jurisdiction: Any Jurlsdiction that has been so
designated by HUD in accordance with 92.105, such as the city of
Santa Monlca.
Rehabilitation: Correction of local code vlolations and removal
of health and safety hazards; upgradlng of housing unlts to
decent, safe and sanitary conditions to comply wlth the Housing
Quality standards promulgated by HUn, and with local standards;
and repair or replacement of maJor bUlldlng systems or components
in danger of failure. Eligible rehabllltatlon work may lnclude
alterations, additions and lmprovements needed to lmprove the
basic livability, energy efflclency, accesslbllity for the
disabled, security of the property, and reduction of
overcrowding.
substantial Reconstruction: Means the rehabilitation of
residential property at an average cost for the project ln excess
of $25,000 per dwell1ng unit.
Transitional Housinq: Housing that is deslgned to provlde
housing and supportive serV1ces to persons including
deinstitutionalized individuals w1th dlsabilit1es, homeless
individuals with disabillties, and homeless families with
children, and whose purpose is to move individuals and families
to lndependent living within a time per10d that 1S not less than
one year but not longer than two years.
Very low-income Families: Famllies whose annual income do not
exceed 50 percent of the median fam1ly income for the area, as
determined by HUD, with adJustments for small and large famllies.
ATTACHMENT B
CITY OF SANTA MONICA
Re~aurce Managemeot Department
Deferred Loan Applicatlon
HOME TRUST FUND
Date:
Applicant:
Address:
Phone.:
Property Address:
.
Legal Descriptlon:
Existing Use of Property 0
Nature of Applicant's Interest: Fee Leasehold
Names and addresses of sponsors (if corporation, partnership,
etc. identify officers and stockholders) :
-'
General Contractor's name, address and license number:
Architect's name and address:
Applicatlon submitted by:
Name Title Date
Submlssion approved by:
-
Signature, Executive Director
I. DESCRIPTION OF PROPOSED PROJECT
A. GENERAL INFORMATION
New Construction conversion Substantial Rehabilitation
project Type: Row Detached Semi-Oetached__ Walk-up__
Elevator Mixed-Use
Foundat~on Type: Full Basement Partial Basement__crawl space__
SlabjGrade_
Number of Stories:
Number of Un~ts:
Number of Buildings:
Building Sq. Ft.
Number of Parking Spaces
Parking Type: Subterranean Semi-Subterranean Tuck-Under
- On-Grade
- -
Amenities: Pool Laundry Other
Accessory Buildings ( no. , type, size):
B. SITE INFORMATION
Lot Size: sq. ft. Zoning:
Lot Dimensions: X ft. Rear Alley Width:
Date Escrow Opened: Deposit in Escrow:
Date Escrow Closes: Purchase Price:
Existing Improvements:
Building Sq. Ft. :
Residential Area:
Commercial Area:
Exterior Finish: Yr. Built:
Construction Type: - Heating/AC System:
--
Park~ng Type: No. of Parking Spaces:
--
C. EQUIPMENT AND SERVICES INCLUDED IN RENT (check items included)
Ranges {gas} elec) Dishwasher
Refrig (gas/elec) Carpet
Air Cond (equip only) Drapes
Kitchen Exhaust Fan Hot Water
Laundry Facility Heat
Garbage Disposal Water
Gas Electr1city
Other -
D. ESTIMATE OF RENTAL INCOME
(provide below or attach rent schedule)
Unit# Bedrooms Existing Proposed
Rent Rent
Total Anticipated Income:
II. INCOME AND EXPENSES
A. ESTIMATE OF ANNUAL EXPENSE
ADMINISTRATIVE 1. Marketing $
2. Management $
3. Other $
4. TOTAL $
OPERATING 5. Electricity $
- 6. Water $
7. Gas $
8. Garbage $
9. Employee Payroll $
10. Insurance $
11. Other $
12. TOTAL $
.
MAINTENANCE 13. Repairs $
14. Service Contracts $
15. Other $
16. TOTAL $
TAXES 17. Real property $
18. Pers. Property $
19. Payroll $
20. Other $
21. TOTAL $
,
RESERVES 22. Replacements $
23. Operating $
24. TOTAL $
TOTAL EXPENSES.... III . . . .. . . .. ... . ... . . ... ... III . . . . . . . ... . ... . ... II ... $
B. NET INCOME COMPUTATION
GROSS PROJECT INCOME $
VACANCY LOSS 1:r %
EFFECTIVE GROSS INCOME $
TOTAL PROJECT EXPENSES $
NET PROJECT INCOME $
III. ESTIMATED DEVELOPMENT COSTS
A. SITE IMPROVEMENTS
1- New Utilities $
- - ~
2. Public Works $
3 . Site Work/Demolition $
TOTAL SITE IMPROVEMENTS $
B. CONSTRUCTION COSTS
4. Construction Contract $
A. Bond $
B. o & p $
5. Cont.ingency @ % of 4. $
6. Architect - Des~gn $
-- 7. Architect - Supervision $
8. Engineering $
- 9. Soils/Survey $
~ 10. Permits $
1l. Other $
TOTAL CONSTRUCTION $
C. CARRYING CHARGES AND FINANCING
12. Construction Interest $
( Mos. @ %)
On $
13. Loan Fees $
14. Taxes $
--' $
15. Insurance
16. Title and Recording $
17. Expenses of Syndication $
18. Other: $
TOTAL FINANCING $
D. LEGAL, ORGAN I ZATIONAL, AND DEVELOPMENT FEES
19. Temporary Relocation $
20. Legal Fees $
2l. organizat1onal $
22. Development Fee
( % of $ ) $
TOTAL LEGAL/ORGANIZATIONAL $
-
TOTAL ESTIMATED CONSTRUCTION........................ $
E. LAND/BUILDING ACQUISITION $
TOTAL ESTIMATED DEVELOPMENT COST.................... $
IV. PRE-CLOSING EXPENSES
DESCRIPTION AMOUNT REQUESTED DATE NEEDED
TOTAL REQUEST $
V. PROJECT FINANCING
A. PROPOSED PRIVATE FINANCING
. 1. Construction Loan
- - Amount $ Interest %
Terms
- Lender
2. Permanent Loan
Amount $ Interest %
Fixed Variable
If Variable, describe terms
.
Monthly debt service $
Lender
3. Sponsor Equity
Amount $ --"
Source
4. other Loans
Amount $ Interest %
Terms -
Monthly Debt Service
Lender
5. Total Monthly Debt Service
B. TOTAL FINANCING SOURCES
-
1. citywide Housing Trust Fund $
2. Sponsor Equity $
3. Pr~vate Lender(s) $
4. Other $
TOTAL SOURCES $
VI. OCCUPANCY PROFILE
UNIT# FAMILY SIZE/ OCCUPANCY BY INCOME TYPE OF RENTAL
BEDROOMS 50% 60%' 80% 100% 120% ASSISTANCE
SUMMARY OF PROJECT BENEFIT
#UNITS AFFORDABLE/AVAILABLE TO HOUSEHOLDS EARNING:
50% OF MEDIAN INCOME
60% OF MEDIAN INCOME
80% OF MEDIAN INCOME
100% OF MEDIAN INCOME
-- 120% OF MEDIAN INCOME
- OTHER
-
TOTAL
VII. ATTACHMENTS
Attach the following documents to this application:
1. Est1mated Costs and Support Documents
2. 3o-year Cash Flow Projection
2. Project Schedule
3. Purchase Agreement with Seller/Escrow Instructions
4. Preliminary Title Report
5. Corporate Resolution Approving Transaction
VIII. ADDITIONAL SUBMITTALS
The following items must be-submitted and approved before a loan
commitment is finalized:
1. Rehabilitation/Construction Work Write-Ups/Bid Package
2. Prelimi~ary Plans
3. Description of Terms and Conditions of Financing
(final commitment: attach copies of financing documents)
4. Evidence qf Permissive Zoning & any necessary Variances, etc.
5. Management Plan
6. Limited Partership Agreement (if applicable)
See the attacned checklist for additional items to be submitted
and approved before loan funding.
HOME- TRUST FUND PROGRAM
CHECKLIST OF DEFERRED LOAN CLOSING DOCUMENTS
THE FOLLOWING DOCUMENTS MUST BE SUBMITTED PRIOR TO THE DEFERRED
LOAN CLOSING:
LOAN DOCUMENTS
1. APPLICATION FOR DEFERRED LOAN
2. EXECUTED FINAL COMMITMENT LETTER FROM TRUST FUND
PROGRAM
3. FINAL COMMITMENT OF CONSTRUCTION AND PERMANENT
FINANCING FROM PRIMARY LENDER(S)
4. REGULATORY AGREEMENT WITH CITY
ORGANIZATION DOCUMENTS
5. CERTIFIED ARTICLES OF INCORPORATION
6. CERTIFIED BY-LAWS
7. CERTIFIED RESOLUTION OF BOARD OF DIRECTORS
-. AUTHORIZING TRANSACTION
8. TAX EXEMPTION RULING LETTERS FROM IRS AND FRANCHISE
- TAX BOARD
- 9. LIMITED PARTNERSHIP AGREEMENT (where applicable)
CONTRACTOR DOCUMENTS
10. BORROWER - CONTRACTOR CONTRACT
11. PERFORMANCE BOND/LETTER OF CREDIT
, 12. FINAL COST BREAKDOWN BY TRADE
13. INSURANCE POLICIES OR BINDERS INCLUDING WORKER'S
COMPENSATION, LIABILITY AND BUILDER'S RISK
14. BUILDING PERMITS IF REQUIRED
15. CONSTRUCTION SCHEDULE
-' 16. OWNER - ARCHITECT AGREEMENT (SUPERVISION AND DESIGN)
OTHER
16. PRO FORMA ALTA LENDER'S POLICY IN FAVOR OF CITY FOR
AMOUNT OF PROGRAM LOAN
17. INDORSEMENTS TO ALTA INCLUDING:
A. 100 COVERING CC&R VIOLATION
B. 116 COVERING STREET ADDRESS AND LEGAL DESCRIPTION
(AT RE-WRITE)
C. MECHANICS' LIEN GUARANTEES (FOR EACH
DISBURSEMENT)
D. TAX SERVICE
18. ALTA SURVEY OF PROPERTY CERTIFIED WITHIN 60 DAYS OF
CLOSING
-
:--loan3
~8
APR 1 2 199't
CA: F:ATTY\MUNI\LAWS\JL\QUAKE. RES
City Council Meeting 4-12-94 Santa Monica, California
RESOLUTION NUMBER - (CCS)
CITY COUNCIL SERIES
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA DECLARING
THE EXISTENCE OF A CONTINUING LOCAL EMERGENCY
WHEREAS, on January 17, 1994, an earthquake struck
Southern California causing severe damage within the City of Santa
Monica;
WHEREAS, on January 17, 1994, as a result of the
earthquake the City's Director of Emergency Services issued a
declaration of local emergency;
WHEREAS, on January 17, 1994, as a result of the
earthquake a state of emergency was declared in the County of Los
Angeles by the federal, state and county governments;
WHEREAS, as a result of the earthquake a state of local
emergency continues to exist within the City of Santa Monica.
NOW, THEREFORE, the City Council of the City of Santa
Monica does resolve and proclaim as follows:
SECTION 1. The City Council declares that a state of
local emergency continues to exist within the City of Santa Monica.
SECTION 2. The city Council directs the Director of
Emergency Services or his or her designee to take such actions as
1
APR 1 2 199ft
loB
~~ ----- ~
.
i
CA: F:ATTY\MUNI\LAWS\JL\QUAKE. RES
City Council Meeting 4-12-94 Santa Monica, Caliform.a
RESOLUTION NUMBER ~O(CCS)
CITY COUNCIL SERIES
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA DECLARING
THE EXISTENCE OF A CONTINUING LOCAL EMERGENCY
WHEREAS, on January 17, 1994, an earthquake struck
Southern California causing severe damage within the City of Santa
Monica;
WHEREAS, on January 17, 1994, as a result of the
earthquake the City's Director of Emergency Services issued a
declaration of local emergency;
WHEREAS, on January 17, 1994, as a result of the
earthquake a state of emergency was declared in the County of Los
Angeles by the federal, state and county governments;
WHEREAS. as a result of the earthquake a state of local
emergency continues to exist within the City of Santa Monica.
NOW, THEREFORE, the City Council of the City of Santa
Monica does resolve and prOClaim as follows:
SECTION 1. The City Council declares that a state of
local emergency continues to exist within the City of Santa Monica.
SECTION 2. The City Council directs the Director of
Emergency Services or his or her designee to take such actions as
1
...
\
are appropriate to the fullest extent provided by federal, state
and local law, to protect the public health, welfare, safety and
property of the residents of the city of Santa Monica.
SECTION 3. The City Council further authorizes the
Director of Emergency Services or his or her designee to negotiate
or execute such contracts, agreements, applications or other
documents with such other federal, state or local agencies or other
groups and organizations as are necessary to provide or to obtain
emergency aid, assistance or services to the City of Santa Monica
and to contract for the immediate expenditure of public funds to
safeguard life, health or property, including when necessary to
protect public health and safety to expedite, including, but not
limited to shortening all requl.red notice periods, or waive
competitive bidding procedures for pUblic works and other City
projects.
SECTION 4. A copy of this Resolution shall be forwarded
to the State Director of the Office of Emergency Services with a
request that he or she find it acceptable.
SECTION 5. 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:
ItttD~~~~
MARSHA JONES~MOUTRIE
city Attorne
2
"
,
Adopted and approved thiS 12th day of Apnl, 1994
Ct I<?)
~l/ Mayor
I hereby certify that the foregomg Resolution No 8740 (CCS) was duly adopted at a
meetmg of the CIty Council held on the 12th day of April, 1994 by the followmg vote:
Ayes Councilmembers: Abdo, Genser, Greenberg, Holbrook, Olsen, Rosenstem,
Vazquez
Noes. CouncIlmembers
Abstam CouncIlmembers
Absent: Councllmembers:
ATTEST
~ /r)d.
A~2Lu p ~ U~
~ City Clerk