SR-301-005-04 (4)
Council Meeting: August 12, 2003 Santa Monica, California
SUPPLEMENTAL STAFF REPORT
ITEM 8-A
To: Mayor and City Council
Chairperson and Redevelopment Agency
From: City Staff
Subject: Housing Trust Loan and Grant to Ocean Park Community Center (OPCC)
for Acquisition and Rehabilitation of real property located at 1751
Cloverfield Boulevard and Relocation Agreement between Big Blue Bus
and OPCC; and Discussion of Alternatives, Including Redevelopment
Agency and City Ownership and Other Potential OPCC Locations
INTRODUCTION
This report provides supplemental information to the staff report (item 8A) regarding the
proposed loan and grant to Ocean Park Community Center (OPPC) for the purchase of
the real property located at 1751 Cloverfield Boulevard. This report includes information
regarding location, ownership and financing alternatives for the proposed development.
DISCUSSION
Alternative Locations
As described in Attachment A of the original staff report, OPCC staff evaluated twenty-
two different sites for the proposed new facility in addition to the proposed location.
Suggestions from outreach meetings with Community members have focused largely on
five alternative sites. These sites are evaluated below.
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Existing Santa Monica Police Department Building (City Hall)
The Draft Civic Center Specific Plan (CCSP), which was developed
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following eighteen months of extensive community input, designates the
Police Department building for demolition and replacement with publicly
accessible open space. Therefore, this use would be inconsistent with the
current Draft CCSP. Given limited open space in the City, community
sentiment in the planning process expressed a strong preference for open
space in this location.
Recently completed analysis shows that long-term re-use of the Police
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Department building would require major rehabilitation and seismic
improvements that are estimated to cost $9.6 million.
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Existing RAND Building on Main Street
The Draft CCSP designates the RAND Z Building site for public open
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space and the RAND Waffle Building site for permanent affordable
housing. Therefore, this use would be inconsistent with the current Draft
CCSP. Given limited open space and opportunities for new affordable
housing development in the City, community sentiment in the planning
process expressed a strong preference for open space and housing in this
location.
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The existing RAND building will not be vacated for approximately two
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years, and would then require major rehabilitation for the use associated
with the proposed OPCC development. The cost of any such
rehabilitation is unknown at this time.
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Santa Monica Airport
In order to obtain non-City or non-Agency funding, OPCC ownership or
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long-term lease makes it more likely that major capital fundraising for
facilities would be successful. Nonetheless, it is not possible to provide
either on airport property.
All Airport facilities are under lease agreements at this time.
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Robbin’s Auto Top (Colorado Avenue & 7 Street)
This property is currently owned by the U.S. Postal Service, and, in
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discussion with OPCC, the Postal Service has indicated an unwillingness
to lease or sell the property, due to its current plans for the site.
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Big Blue Bus Site
The Big Blue Bus campus was assembled with transit funds for current
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and eventual expansion needs of the Big Blue Bus. Thus any siting of
OPCC facilities on the property must be considered temporary in nature.
Any lease commitment to OPCC would likely be extendable five-year
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increments and it is highly unlikely that OPCC could remain in place for
the 55 years or more contemplated at 1751 Cloverfield. The short-term
nature of the lease arrangement may affect OPCC fundraising for tenant
improvements.
A fair rental arrangement must be made with OPCC for use of any portion
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of the Big Blue Bus site. This affects the ongoing operational costs of the
programs operated there.
Given the current and proposed uses of the space on the Big Blue Bus
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campus, there is a possibility that OPCC’s Access Center program could
be relocated to the SWASHLOCK location as part of a new integrated
facility, built on the SWASHLOCK footprint, which would incorporate both
SWASHLOCK and the Access Center programs. There is insufficient
space for a housing program.
The real property at 1751 Cloverfield Boulevard could still be acquired and
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used exclusively for temporary housing. Exclusive use of the property for
housing would require preparing new preliminary architectural plans for
the building and new estimated construction costs. Because BBB funds
would be used for the Access Center, the amount of required
City/Redevelopment Agency funds for acquisition of the real property at
1751 Cloverfield would increase.
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Alternative Ownership Structure
On June 20, 2003, OPCC entered into a purchase agreement with the property owner
of 1751 Cloverfield Boulevard. The original staff report (Item 8A) proposes a deal
structure involving a City housing trust fund loan and conditional grant to OPCC to
acquire, rehabilitate, and operate the property. In response to community feedback,
staff has developed an alternative deal structure for consideration by the City
Council/Redevelopment Agency.
In the alternative structure, OPCC would purchase the property with redevelopment
funding assistance from the City, and immediately convey the property to the
Redevelopment Agency. The Redevelopment Agency would then immediately lease
the property back to OPCC for a term of 55 years, and the City/Redevelopment Agency
would provide additional funds to OPCC for the costs of renovating the facility. When
55 years have elapsed, the Redevelopment Agency would convey the property to the
City at no cost.
The benefit of this alternative deal structure is that the Redevelopment Agency would
retain title to the property for 55 years, and, because of Redevelopment Law provisions,
would be permitted to lease the property to OPCC at minimal or no cost. An additional
benefit is that the City of Santa Monica would receive title to the property at the end of
55 years at no cost and unfettered by funding related restrictions.
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It is important to note that should OPCC discontinue operations before 55 years have
elapsed, the Redevelopment Agency would be required to find either a replacement for
OPCC that would continue to use the facility for low and moderate income housing
purposes, or sell the property and deposit the proceeds in the appropriate City housing
trust funds.
This alternative deal structure requires public noticing and a public hearing with regard
to the long-term lease between the Redevelopment Agency and OPCC. Noticing could
be accomplished in time for a public hearing to be held by the City Council and
Redevelopment Agency on September 23, 2003, and, importantly, prior to the October
3, 2003 escrow closing date for the acquisition of the real property at 1751 Cloverfield
Boulevard.
Potential Changes to Funding Amount
As currently proposed, staff has recommended that the City Council approve funds in
an amount that will pay for the costs of property acquisition and estimated housing
renovation costs of the development as currently proposed. Should the City
Council/Redevelopment Agency direct staff to make development location changes that
would impact the scope of housing related construction, it will be necessary for staff to
return with new estimates of the construction costs and an adjusted funding request.
This will be accomplished by September 23, 2003.
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Funding Source Considerations for the Housing Component
In response to public feedback, staff has developed an alternative housing funding
structure for consideration that could apply equally to the currently recommended
development or the alternative deal structure.
The amount of required housing funds for this development is $7,397,112, per the
original and alternative deal structures. The City has previously made a loan of
$400,000 to OPCC for predevelopment expenses from the TORCA Housing Trust Fund.
An additional $800,000 in HOME funds will be invested so that the City meets its federal
funding commitment deadline, bringing the total to $1,200,000. An option for the City
Council/Redevelopment Agency to consider is funding the entire balance of required
funds, $6,197,112, from available redevelopment housing funds. The commitment and
spending of redevelopment funds are time sensitive, and the use of these funds for this
development would be helpful in that regard.
Decision Timing
OPCC opened escrow with a $100,000 deposit, and must deposit an additional
$100,000 by August 18, 2003. If escrow is canceled by August 18, the original
$100,000 deposit will be returned. Should the City/Redevelopment Agency decide to
delay a decision on providing funds for property acquisition beyond August 18, OPCC
must either cancel the escrow or risk forfeiting the entire $200,000.
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Restrictions on the Use of Funds
The proposed City loan and grant funds are housing trust funds that are restricted to
housing-related purposes. There are sufficient housing trust funds available for other
housing developments. Big Blue Bus funds are restricted to transportation-related
purposes. No funds dedicated to the project could be used for general government
purposes or to support public schools.
Commission Actions
OPCC staff presented the development to the Housing, Disabilities, and Social Services
Commissions. At its July 17, 2003 meeting, the Housing Commission acted to support
the use of housing trust funds for eligible housing costs in a new facility for OPCC,
remaining silent on the location. On August 4, 2003, the Disabilities Commission took
action to register its strong support for the critical services provided by OPCC, and
acknowledged that the need is currently unmet. However, the Disabilities Commission
stated that it does not have the experience to take a position on the specific location of
OPCC's proposed development. One Commissioner argued that there was sufficient
information to take a position and voiced support for the development at the proposed
location.
At a special meeting on August 5, 2003, the Social Services Commission acted to: 1)
Support the OPCC development in general; 2) Oppose approval of the loan for the
development at the Cloverfield location; and 3) Request Council to direct staff to seek
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an alternative location. Two Commissioners supported the development and the
proposed location, and opposed the motion.
RECOMMENDATION
It is recommended that Council consider this supplemental information, including the
alternative locations, ownership structure and financing in making its determination on
an acquisition of 1751 Cloverfield Boulevard.
Prepared by:
Jeff Mathieu, Director of Resource Management
Stephanie Negriff, Director of Transit Services, Big Blue Bus
Barbara Stinchfield, Director of Community & Cultural Services
Bob Moncrief, Housing & Redevelopment Manager
Julie Rusk, Human Services Manager
Tina Rodriguez, Redevelopment Administrator
Ron Barefield, Housing Administrator
Jim Kemper, Senior Administrative Analyst
Gigi Decavalles-Hughes, Senior Administrative Analyst
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