SR-301-005-02 (7)
.
3 (/1- C)o~oz.
.
Santa Monica, California, December 6, 1978
1/ ..r
TO: Mayor and City Council
DEe 1 a 1978
FROM
City Staff
SUBJECT
Use of Community Development Block Grant
Funds for Housing
Background
At the November 14, 1978, meeting of the City CounCil, the staff was directed
to explore alternative uses of Community Develorment Block Grant funds for
housing purposes including rehabilitation of apart~ents at 175 Ocean Park
Boulevard; construction of low and moderate Income housing on Barnard Way
(across from the senior housing); and acquisition of sites for hOUSing using
Community Development Block Grant funds.
175 Ocean Park Boulevard
Staff had previously reported to the City Council
that new construction would be a more feasible alternative to on site rehabll-
Itatlon of the apartment buildIngs located on the ParkIng AuthorIty owned land
at 175 Ocean Park Boulevard. Since then, renovation of Main Street has further
accelerated creating additional future demand for parking. On site rehabilitation
and long term comMitment of the Parking Authority land for residential use is,
therefore, more questlOnable under current conditions. The staff is presently
in negotiations With a private developer who proposes to move the buildings off
Site to other locations \.Jithin the coastal zone. If negotiations succeed and
Coastal Commission approval can be obtained, the staff Will submit a relocation
agreement to the City CounCil within 90 days. If negotiations are unsuccessful,
the staff recommends that the City CounCil authorize the staff to acquire
alternative sites uSing CDBG funds and faCilitate construction of 27 units of
Section 8 housing.
/Ir
DEe 1 2 1978
~
.
.
TO' Mayor and City Council
-2-
December 6, 1978
Barnard Way Site HUD approval of funding for senior citizen housing on
the .9 acre strip of Redevelopment Agency owned land located on the south side
of Barnard Way has been requested but denied on two separate occasions during
the past two years. The staff is now seeking funding from Cal ifornia Housing
Finance Agency. Upon approval of such funding, the staff will present a report
to the City Council outlining developer selection criteria.
Site Acquisition Using Community Development Funds
Over the past three
years, the City has accumulated approximately $500,000 in Community Development
Block Grant funds which are earmarked for housing rehabilitatIon. Although the
Rehabilitation Program is making progress, it is unlikely that the entire
$500,000 can be utilized In the near future. Subject to the City Council and
HUD approval, however, the funds could be used for site acquisition for Section
8 housing. Should the City CounCil approve thIS program, the staff recommends
that any new housing developed contain a mix of rental rates and specifically
In no event more than 30% of such housing be occupied by low and moderate Income
persons. The role of the City In implementing this program would be limited
to acquisition of available Sites, write-down of land cost and resale to private
developers. All of the other steps leading to the development of the property
includIng finanCing, design, construction, management, etc., would be the
responsibility of the private sector. This program can be implemented only In
multIple family zoned sections of the community containing vacant lots where the
land costs are more reasonable.
.
.
TO
Mayor and City Council
-3-
December 6, 1978
Other Alternative Uses of Community Development Block Grant Funds The use of
Community Development Block Grant funds as a direct subsidy for rent supplement
purposes, the staff believes, would be the most appropriate program for Santa
Monica. However, HUD regulations specifically forbid the use of such funds for
direct subsidy and the staff has, to date, been unable to obtlan an exception for
Santa Monica. HUD staff, however, has Indicated that they may approve an
experimental program involving acquisition of condominium units by the City and
resale to low and moderate Income persons. ThiS program can be integrated with
the condominium conversion process in order to achieve the greatest leverage for
the use of Community Development Block Grant funds. For example, an applicant
wishing to convert a ten unit apartment complex to condominiums, in order to
mitigate any negative Impact on the tenants, may wish to reduce the market value
of two unIts from 580,000 to 540,000. The City then, using the Community
Development Block Grant funds, would purchase the units, write-down the cost
for example to 520,000, thus reducing monthly payments to a qualified buyer to
as low as 5200 per month. In order to guard against speculation, it would be
necessary to develop procedures whereby the units purchased through this process
can only be resold to other qualified low and moderate Income persons, or
alternatIvely, any profit resulting from resale would be channelled to a special
housing fund to assist other qual ifled persons. Planning Commission approval of
specific procedures for program Implementation would be necessary before this
program can become operational
~
.
.
TO' Mayor and City Council
-4-
December 6, 1978
Recommendation
It is recommended that the City Council direct the staff to implement the
following housing provisions
1. Continue to negotiate for relocation and rehabilitation of the buildings
at 175 Ocean Park Boulevard; and, If the relocation proposal failsJ the
staff be directed to acquire sites and facilitate construction of 27
units of low and ~oderate income housing.
2 Implement an experimental program of acquiring condominiums for low and
moderate persons through the use of Community Development Block Grant
funds.
Prepared by: John Jallli
JJ.mh