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Council Meeting: July 12, 1994
JUl 1 2 1994
Santa Monica, California
To: Mayor and City council
From: City Staff
Subject: Recommendations Regarding Feasibility of 1642 Ocean
Avenue and Other City-Owned Sites for Project New Hope.
INTRODUCTION
This report provides an analysis of the potential use of three
City-owned properties as a site for a 25 unit low-income housing
project sponsored by Project New Hope and recommends that City
Council authorize staff to enter into an option agreement with
Project New Hope for a long-term ground lease at 1642 Ocean Avenue.
BACKGROUND
On April 12, 1994 the city Council instructed staff to explore the
feasibility of locating Project New Hope on several alternative
sites in the City including: 1642 Ocean Avenue, 502 Colorado
Avenue, 1920-28 Ocean Avenue (t1Bay Street site") and any other
appropriate site, and report back to council as expeditiously as
possible.
In addition, the City Attorney was asked to evaluate
several issues specific to 1642 Ocean Avenue, including the city's
replacement housing obligation associated with the site and the
City'S obligation to reimburse the Gas Tax Fund (which was used to
acquire a portion of the site).
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JUL f 2_
?A
DISCUSSION
pro;ect New Hone
Project New Hope received a reservation of $2.4 million from HUD in
October 1993 for a proposed new construction, 25 unit, rental
housing project. HUD required that they identify and secure a site
for the project by september 30, 1994. The proposed project will
provide permanent housing for the very low-income physically
disabled, with supportive services for persons with HIV/AIDS and
include a Community Room/Training Center. As per HUD guidelines
tenants will pay no more than 30% of their adjusted income for
rent.
Project New Hope is a non-profit corporation founded in 1990 to
provide supportive housing and employment retraining services for
persons with HIV / AIDS. It is an outgrowth of the Bishop I s
Commission on AIDS Ministry of the Protestant Episcopal Church in
the Diocese of Los Angeles.
Project New Hope has operated a vocational training facility for
persons with AIDS since January 1993, providing training in
advanced computer skills and job development and placement
services. In addition, they are currently developing two other
residential projects in the City of Los Angeles. Their staff
includes a part-time executive director, housing development staff
person, vocational training staff and supportive services
coordinator.
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Project New Hope works closely with Yokota and Associates on the
development of each of its affordable housing projects. JoAnne
Yokota has worked with the sponsor for over four years in
developing these projects. In addition, she has worked as a
consultant for 6 years with other non-profits to develop affordable
housing through a wide variety of housing subsidy programs,
including the Low Income Housing Tax Credit Program, CDBG and HOME
Programs, Redevelopment Agency and Housing Authority programs.
Architectural work will be performed by Killefer I Flammang, Purtill
Architects. The firm has undertaken design of affordable housing
projects in both Santa Monica and Los Angeles.
Upon completion, property management services will be performed by
the firm of Housing Management Associates. This non-profit agency
was founded in 1986 as part of the Episcopal Diocese of Los
Angeles, and merged in 1990 with an existing property management
firm. They specialize in management of subsidized housing, and
currently manage 932 units of housing. A resident manager will
live on the project site and supportive services will be provided
by Santa Monica Aids Project.
1642 Ocean Avenue Site
1642 Ocean Avenue is a City-owned vacant site at the corner of
Seaside Terrace and Ocean Avenue. The site is zoned Residential-
visitor commercial (RVC) and was most recently used as the site of
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an 11 unit apartment building. The 1642 Ocean building along with
the 1616 Ocean building received a Category IIDII removal permit
February 9, 1989, from the Rent Control Board. The 1642 Ocean
building was damaged in the January 17, 1994 earthquake, was f1red-
tagged" by building inspectors and demolished shortly thereafter.
The 1642 Ocean site is contiguous to other city-owned parcels
which, when added together, total approximately 33,607 square feet
of developable land.
In analyzing whether development of this site by Project New Hope
is feasible or desirable, a number of considerations must be
addressed. These include: (1) replacement housing and relocation
obligations associated with a removal permit obtained by the City,
(2) the impact of the City's obligation to reimburse the Gas Tax
Fund, (3) FEMA reimbursement for the replacement of the demolished
structure, (4) the expansion of the storm water treatment facility,
and (5) development standards and costs. The first two require
legal analysis. That analysis is attached as Exhibit A.
. Replacement Housing Issue
As discussed in detail in the City Attorney's memorandum, the City
is obligated to provide replacement housing in accordance with the
removal permit issued by the Rent Control Board. The total
replacement obligation for 1642 Ocean Avenue and 1616 Ocean Avenue
is 28 units.
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since the granting of the application the City has indicated to
Rent Control Board staff that it may only desire to proceed with
the redevelopment of 1642 Ocean Avenue at this time. A
redevelopment plan which only includes 1642 Ocean would need to
replace the 11 units recently removed from the site. The
replacement project approved as part of the original removal permit
granted by the Rent Board included both properties. The proposed
New Hope project differs significantly in character from the
project approved by the Rent Control Board. Accordingly, the city
would be required to apply for and obtain a redefinition of the
removal permit before the project could proceed.
. Relocation Obligation
The Category nD" Removal Permit was approved on the condition that
existing tenants have the right of first refusal to rent any new
units built on the site. There are currently five former tenants
of the 1642 Ocean Avenue building that have the t'right" to return
to units constructed on the site. However, these tenants would
probably not be eligible to occupy the 25 units built by Project
New Hope under HUD funding, since these units would be restricted
to low-income persons with disabilities. Preliminary discussions
are underway wi th the tenants to determine their interest in
returning to the site or being compensated for waiver of their
right of first refusal. Several of the five tenants have indicated
their preference for compensation in lieu of a right of first
refusal. However, for those tenants wishing to return to the site,
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Project New Hope would be required to build additional units with
non-HUD funding. Either scenario will add additional cost to the
development of the site.
. state Gas Tax Funds
A portion of the 1642 Ocean Avenue property was purchased by the
city in 1975 for proposed highway improvements using state Gas Tax
Funds. The extent of the City's obligation to reimburse the Gas
Tax Fund is addressed in the City Attorney's memorandum. The fair
market value of the reimbursement to the Gas Tax Fund for the
housing portion of the site is estimated to be between $215,000 and
$330,000, dependent upon the actual square footage of land utilized
by Project New Hope. This money will be paid by Project New Hope
as part of its site acquisition costs.
. FEMA Reimbursement
The ll-unit building on the site was demolished as a result of the
January, 1994 earthquake. As such, the cost to demolish and to
replace the 11 units is expected to be eligible for reimbursement
from FEMA. The application to FEMA is in the process of being
submitted and it is anticipated by staff that the city will receive
approximately $700,000 for the replacement of that building. The
FEMA funds may be used by the City as part of any potential housing
trust fund subsidy for Project New Hope or for any other affordable
housing project.
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. storm Water Treatment Expansion
The Environmental & Public Works Management Department is proposing
a new storm water treatment facility to be located on the north
side of the 1642 Ocean property along Appian Way. The new facility
will extend to the north along Appian Way and away from the
proposed housing site. The process used to treat the storm water
is not harmful, and measures needed to mitigate any sound, odor or
visual impacts could be addressed in the design and construction of
both the housing and the storm water treatment facility.
. Development standards
The proposed 25-unit project is consistent with the current zoning
for the site and will include a least a 35 foot landscaped set-back
along the Ocean Avenue frontage. Maintenance responsibility for
this landscaped area is currently under discussion between Staff
and Project New Hope. The Zoning would also allow the construction
of relocation units for former tenants who select that option.
. Development Costs
Development costs for the site include acquisition, construction,
financing and indirect costs. The estimated development cost for
the 25 unit New Hope project on this site is as follows:
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Estimated Development Cost Cost Per Unit
site Acquisition(est) $1,520,000 $60,800
Construction 2,479,864 $99,195
Financing 5,000 $ 200
Indirect costs 816,470 $32,659
TOTAL DEVELOPMENT COST $4,821,334 $192,853
Project New Hope has obtained financing commitments of
approximately $2,425,000 from HUD and $500,000 from the City of Los
Angeles' Office of Housing Opportunities for Persons With AIDS
(HOPWA). Consistent with housing trust fund guidelines and based
on discussions with the project sponsor, Staff anticipates the
project may qualify for a housing trust fund loan of up to
$900,000. This will leave a financing gap of approximately
$1,000,000. The project sponsor has indicated that they will be
able to close this gap through a combination of construction cost
savings, funds from other financing sources, or a lower land value
based upon a future HUD appraisal.
Although several issues remain to be fully resolved, as outlined
above, the 1642 Ocean site appears to be feasible for the proposed
Project New Hope project.
. Alternatives for 1642 Ocean Avenue
City Council also directed staff to look at alternative uses for
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1642 Ocean Avenue such as a view corridor for the Pier and other
visitor serving uses. staff reviewed the alternatives and
determined that the site is best suited for housing, primarily
because of the replacement housing requirements for the site. In
addition, the availability of a qualified developer, like Project
New Hope, bringing $2,900,000 in funding commitments provides the
city an opportunity to meet it's replacement housing obligation for
the site.
staff also considered the possibility that Project New Hope could
satisfy the replacement housing obligations for both 1616 Ocean
Avenue and 1642 Ocean Avenue. However, because the tenants at 1616
Ocean Ave must be provided a right of first refusal for the new
units but are not disabled (disabled status is a requirement of New
Hope's funding), this option is not considered viable.
Further, staff considered holding the 1642 Ocean Avenue site vacant
until another housing developer could be found. Staff concluded
that the immediate replacement housing advantage and the worthwhile
nature of the Project New Hope development outweigh the
unpredictability of a future housing developer coming to the site.
Bay street Site
The Bay Street site, located at 1920-28 Ocean Avenue, is the second
of three sites analyzed by staff. This site is a City-owned vacant
parcel of approximately 20,640 square feet located next to the
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pritikin Center at the northwest corner of Ocean Avenue and Bay
street. The site is in a R4 High Density Multiply Family
Residential District and is adjacent to the Beach Promenade and
across Bay street from Crescent Bay Park.
. Development Standards
The development standards for the site would allow for a 4 story
building with a maximum of 35 residential units. Project New
Hope's HUD funding, however, only allows a maximum of 25 units. In
an effort to reduce the per unit land costs a second 10 unit
project, in conjunction with the 25 unit Project New Hope
development, was considered. However, increasing the density in
this manner would add significant cost and timing delays and could
jeopardize Project New Hopes $2.4 million in HUD funding.
. Development Costs
The estimated development cost for the 25 unit Project New Hope on
the Bay street site is as follows:
Estimated Development Cost Cost Per Unit
site Acquisition $2,000,000 $ 80,000
Construction 2,840,000 $113,600
Financing 7,000 $ 280
Indirect costs 923,000 $ 36,920
TOTAL DEVELOPMENT COST $5,770,000 $230,800
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As previously mentioned, Project New Hope has obtained financing
commitments of approximately $2,425,000 from HUD and $500,000 from
HOPWA, leaving a financing gap of approximately $2,800,000 at this
time. Because of the substantial financial gap, Bay street is
considered less feasible as a site by the sponsor and staff.
502 Colorado site
The Colorado site is the third of three sites evaluated by staff.
502 Colorado is a City-owned vacant parcel of approximately 12,525
square feet located on the south east corner of 5th and Colorado
streets. The site is adjacent to Angels Attic on the east and the
Santa Monica Municipal Bus Yard to the south. The site is in the
C3 Downtown Commercial District.
. Replacement Housing Obligation
502 Colorado Avenue was purchased by the city to be utilized to
meet the replacement housing obligations that the City incurred
when it was granted a removal permit from the Rent Control Board
for 505 Olympic Boulevard. More specifically, in obtaining the
removal permit, the City agreed to construct either a 42-bed
homeless shelter or a 42-room single residency occupancy (SRO)
project within seven years from the date that the removal permit
agreement was executed -- June 29, 1993. While the removal permit
pertained specifically to 505 Olympic, the agreement authorizes the
City to meet its replacement housing obligation on that parcel or
any contiguous parcel now owned or subsequently acquired by the
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City. 502 Colorado Avenue satisfies this requirement. This
agreement also authorizes the city to subsequently convert the
shelter or SRO housing to another form of residential rental
housing. The obligations under the agreement last for twenty five
years dating from the time of execution of the agreement.
since the development proposed by Project New Hope is neither a
shelter nor SRO housing, this development would not satisfy the
city's current replacement housing obligation for 505 Olympic.
However, Rent Control Board staff believe that the Rent Control
Board would likely be amenable to amending the Agreement in a way
that would enable Project New Hope to satisfy the City's
replacement housing obligation if this project provides housing for
42 individuals. Project New Hope has indicated that this project
will house at least 42 persons.
. Development Standards
The development standards for the site allow for a 3 story building
with approximately 337,500 square feet, assuming an affordable
housing bonus. Given the current development standards, the site
could accommodate the 25 units proposed by Project New Hope.
. Development Costs
The estimated development cost for the 25 unit Project New Hope is
as follows:
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Estimated Development Cost Cost Per Unit
site Acquisition $ 875,000 $ 35,000
Construction 2,200,000 $ 88,000
Financing 5,000 $ 200
Indirect costs 735,000 $ 29,400
TOTAL DEVELOPMENT COST $3,815,000 $152,600
As mentioned earlier in the report, Project New Hope has financing
commitments of approximately $2,425,000 from HUD and $500,000 from
HOPWA. This leaves a gap for this site of approximately $900,000.
Although this gap is smaller than the gap for 1642 Ocean, the
project sponsor has rejected 502 Colorado for reasons detailed
below.
. Environmental Suitability
The sponsor has rejected 502 Colorado as a site for the Project New
Hope because of environmental concerns. The sponsor's target
population are physically disabled households with an emphasis on
persons with HIV/AIDS. The sponsor also indicated it is likely
there will be households with children living in the project. The
location next to the city Bus Yard, in a commercial district and on
the corner of a busy intersection presents negative environmental
impacts that are unacceptable to the sponsor.
FINANCIAL/BUDGETARY IMPACTS
No budgetary action is required at this time. Upon conclusion of
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lease negotiations, staff anticipates a future City loan to the
project of up to $900,000 from housing trust funds. This figure is
within the loan limit of housing trust fund guidelines.
RECOMMENDATIONS
staff recommends that the city council authorize staff to enter
into an option agreement with Project New Hope for a long term
ground lease at 1642 Ocean Avenue.
Prepared by:
Howard Robinson, Real Estate Manager
Paula Burrier, Housing & Redevelopment Manager
Mike Strader, Senior Development Analyst
Attachment
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II:xH[BIT A
SANTA MONICA CITY ATTORNEY'S OFFICE
STAFF REPORT
DATE:
July 6, 1994
Mayor and city Council
TO:
FROM:
Marsha Jones Moutrie, City Attorney
Barry Rosenbaum, Deputy City Attorney
Eriko Matsumoto, Deputy City Attorney
RE:
1642 Ocean Avenue
Pursuant to the request of the city council, this memorandum
responds to three legal issues arising from the city's possible
use of 1642 Ocean Avenue as a site for a 25 unit low-income
housing project sponsored by Project New Hope: (1) whether the
City is obligated to provide replacement housing at 1642 Ocean
Avenue pursuant to the removal permit issued by the Rent Control
Board for this property and 1616 Ocean Avenue; (2) whether the
city can remove this property from the rental housing market
pursuant to the Ellis Act; and (3) whether and to what extent the
City would be obligated to reimburse the Gas Tax Fund since the
City utilized revenues from this fund to acquire 1642 Ocean
Avenue.
CONCLUSION
The City is required to provide replacement housing at 1642
Ocean Avenue pursuant to the removal permit issued for this
property since after the city obtained the removal permit, and
pursuant to the authority of the permit, the City entered into
relocation agreements with the tenants at 1642 Ocean Avenue and
relocated these tenants to other housing in the City.
The City can utilize the Ellis Act to withdraw rental
property from the housing market just as any other landlord can.
However, since the city has already obtained a removal permit
from the Rent Control Board which achieves the same result, and
the City is obligated to meet the conditions attached to that
permit, resort to the Ellis Act would be of no utility.
The City is obligated to reimburse the Gas Tax Fund at the
fair market value for any portion of 1642 Ocean Avenue not used
for a permissible street or highway purpose but instead used for
the provision of housing.
ANALYSIS OF ISSUE ONE
To answer the first inquiry, it is necessary to examine the
City's actions leading up to and following the issuance of the
removal permit by the Rent Control Board.
On or about July 1, 1988, the City submitted removal permit
applications for 1616 and 1642 Ocean Avenue. See Applications
for Removal Permit, No. 246R-D (Exhibits A and B).1 These
properties contain a total of twenty-eight (28) housing units.
As reflected in these applications, the City intended to
redevelop these properties, and adjoining properties, with a
parking structure to serve the pier and nearby beaches. The
applications provided that twenty-nine (29) units of replacement
housing would be developed at City-owned property located on Bay
street. No on-site housing was contemplated.
On or about October 6, 1988, the City submitted an
alternative plan which provided for the construction of thirty
(30) residential housing units on-site in the parking structure.
See October 6, 1988 letter from John Jalili to Mary Ann Yurkonis
(Exhibit C). Twenty-eight (28) of the replacement units would be
subject to rent control and be deed-restricted to be permanently
affordable to low income persons. Current tenants of the
property would have the right of first refusal to occupy the
replacement units. Given the nature of the redevelopment, it was
envisioned that the temporary relocation of the tenants at 1642
Ocean Avenue would be necessary. However, the city intended to
develop the replacement housing before relocating the tenants at
1616 Ocean Avenue and demolishing that building.
Rent Control Board staff issued its staff report in late
October 1988. See Santa Monica Rent Control Board Staff Report
on Removal Permit Application (Exhibit D). Staff recommended
that the City's request to build off-site replacement housing be
denied since it was not permitted by the Rent Control Law. Staff
also recommended that the City's alternative removal permit
request conditioned upon an on-site housing replacement
requirement be approved.
On or about January 3, 1989, the city formally withdrew its
off-site replacement housing proposal, seeking instead to proceed
solely with its second proposal. See January 3, 1989 letter from
John Jalili to Mary Ann Yurkonis (Exhibit E). The City
reiterated that all twenty-eight units would be replaced on-site
All exhibits referenced in this memorandum will be
available for review at the July 12, 1994 City Council meeting on
this matter.
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in the proposed parking structure. The tenants who were
temporarily relocated from this property would be guaranteed
interim housing in the city. The displaced tenants would also be
provided moving and storage expenses, utility hook-up fees, rent
differential payments, and relocation payments of at least
$1,000.00 per unit.
On or about January 27, 1989, the city provided the Rent
Control Board with supplemental information regarding its removal
permit application. See January 27, 1989 letter from Peggy
Curran to Mary Ann Yurkonis (Exhibit F). In this correspondence,
the City guaranteed that the 1616 Ocean Avenue property would not
be demolished until replacement housing was built. The City
further detailed the relocation assistance benefits that would be
provided the tenants at 1642 Ocean Avenue and the meetings that
had been held with tenants concerning the City's latest proposal.
The City stated that the relocation assistance benefits would be
guaranteed through binding agreements between the tenants and the
City.
In a supplemental staff report issued by the Rent Control
Board, the staff recommended approval of the City's removal
application request based on the city's proposal reflected in the
January 27, 1989 letter. See Santa Monica Rent Control Board
Supplemental Staff Report on Removal Permit Application (Exhibit
G). This recommendation was based on the understanding that the
City would build on-site replacement housing.
On February 9, 1989, the Rent Control Board granted the
removal permit application. See Removal Permit Application --
Notice of Decision of Rent Control Board (Exhibit H).
On or about February 1989, the City mailed the residents of
1642 Ocean Avenue a letter informing them of the Board's
decision, setting forth the relocation benefits that would be
provided by the City, and committing the City to enter into
individual agreements with each tenant detailing these relocation
benefits. See February 28, 1989 letter from Candy Rupp to
Residents of 1642 Ocean Avenue (Exhibit I). The right of first
refusal of an on-site replacement unit was expressly stated as
one of the relocation benefits.
On or about March 1, 1989, the City entered into an
agreement entitled "Relocation Planll with Sandra Leet, a tenant
at 1642 Ocean Avenue. See Leet's Relocation Plan (Exhibit J).
This agreement specifically outlined the relocation benefits that
the City would provide Ms. Leet as required by the removal permit
including: the right of first refusal to occupy the replacement
housing that would be constructed, interim housing, moving and
storage costs, and relocation counseling. Ms. Leet subsequently
vacated her unit and the City made payments to Ms. Leet as
required by this agreement.
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Later in March 1989, the City entered into a similar
agreement with Nancy Safonov. See Safonov's Relocation Plan
(Exhibit K). Ms. Safonov also vacated her unit in accordance
with this agreement and City payments were made.
Relocation Plans were subsequently prepared for Peter Woods
and Milton & Aldona stark. See Wood's and Starks' Relocation
Plans (Exhibits Land M). Although these agreements were never
formally executed, these tenants moved in accordance with the
provisions of the agreements and the city made certain payments
to these tenants as required by the agreements' terms.
The last remaining tenant at the property, Ida Porterfield,
was relocated after the Northridge Earthquake. A Relocation Plan
was also prepared for Ms. Porterfield. See Porterfield's
Relocation Plan (Exhibit N). Although not executed, she also
received payments in accordance with the terms of the relocation
agreements.
In entering into relocation plans with the tenants at 1642
Ocean Avenue and relocating these tenants from the property, the
C1ty proceeded in reliance on the removal permit issued by the
Board and in accordance with the commitments that the City made
to the Board. The removal permit established the underlying
authority for the actions the city undertook after the permit was
issued. Having utilized certain of the benefits of the permit,
i.e., obtaining the authority to relocate tenants from the
property, the city must also accept the burdens of the permit --
provision of replacement housing on the site. See Sports Arenas
Properties, Inc. v. San Dieqo, 40 Cal. 3d 808, 815, 710 P.2d 338,
341-42, 221 Cal. Rptr. 538, 541-42 (1985) (if permittee has
exercised its authority pursuant to a permit, "it must accept the
burdens with the benefits of the permit"). Accord City of Santee
v. Superior Court, 228 Cal. App. 3d 713, 718, 279 Cal. Rptr. 22,
25 (1991) (landowner who specifically agreed to permit condition
and accepted benefits afforded by permit cannot later challenge
condition imposed in granting permit). Further, failure to build
the replacement housing would directly contravene the agreements
which the City entered into with each tenant at 1642 Ocean Avenue
and which it agreed would be binding on the City. We are unaware
of any authority which would justify such action.2
2 As a condition of the grant1ng of the removal permit, the
City is required to enter into a removal permit agreement with
the Rent Control Board which embodies the terms and conditions of
the removal permit approval. As of this date, the city has not
entered into this agreement. However, this factor does not alter
the above analysis given the precise factual circumstances of
this case.
4
It should be noted that although the removal permit was
granted for both 1616 and 1642 Ocean Avenue, the City has only
relocated tenants at the latter property. Further, the city has
not entered into relocation plans with any tenant at 1616 Ocean
Avenue. Given these circumstances, the City is not obligated to
proceed with the removal of 1616 Ocean Avenue from the rental
market as originally contemplated when the City obtained the
removal permit from the Board.3
ANALYSIS OF ISSUE TWO
The Ellis Act, Government Code Section 7060 et seq.,
authorizes a landlord to cease operating property as rental
property and evict all the tenants thereon without obtaining a
removal permit from the Rent Control Board. A public entity,
such as the City, is entitled to utilize the Act in the same
manner as any other landlord. While the City could have
withdrawn the 1616-1642 Ocean Avenue properties from the rental
market pursuant to the Ellis Act, there would be no utility in
doing so now. As discussed above, the city has already obtained
a removal permit from the Rent Control Board which authorizes the
City to undertake the very actions that an Ellis Act withdrawal
would authorize and the city is obligated to comply with the
permit's terms and conditions. In short, resort to the Ellis Act
would be redundant and have no practical effect or benefit.
ANALYSIS OF ISSUE THREE
In or around 1975, the City acquired 1642 Ocean Avenue for
proposed highway improvements with revenues from the Gas Tax
Fund. (The other contiguous parcels adjacent to 1642 Ocean
Avenue, which are collectively being examined as the site of
Project New Hope, are not the subject of this analysis since
these other parcels were apparently purchased with funds other
than the Gas Tax Fund.) Subsequent to the purchase and up until
demolition early this year, the rental revenue from 1642 Ocean
Avenue was placed into the Gas Tax Fund in compliance with state
3Since the City's possible use of 1642 Ocean Avenue as the
site for Project New Hope is quite distinct from the proposal
before the Rent Control Board in 1989, and does not include the
removal of 1616 Ocean Avenue, this proposed use will have to be
reviewed by the Rent Control Board to assure conformity with the
Rent Control Law and the replacement housing requirements
thereunder.
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guidelines pending a final decision on the use of the subject
parcel.
The use of revenues from the Gas Tax Fund is specifically
limited by the California Constitution and applicable state
guidelines to street and highway purposes. See California
Constitution, Article 19, section Ii state Controller,
uGuidelines Relating to Gas Tax Expenditures" ("state
Controller's Guidelines"), Chapter I, Section II. Where, such as
here, revenues from the Gas Tax Fund are used to purchase real
property initially slated for a street or highway use, but is no
longer required for such purpose, the City must reimburse the Gas
Tax Fund in an amount equivalent to the current fair market value
of the parcel. See California Constitution, Art. 19, sections 8
& 9.
However, if a portion of the parcel purchased with Gas Tax
Funds is used for housing and the other portion used for a
related street or highway purpose such as street widening, the
city's obligation to reimburse is limited to just that portion of
the parcel used for housing. The city's use of a portion of the
parcel for street widening, street betterments, or any other
permissible street or highway purpose is not subject to
reimbursement. See generally, State Controller's Guidelines,
Chapter 2 et seq.
memos\bar\removal.ct2
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