SR-301-005-04 (5)
Council Meeting: September 23, 2003 Santa Monica, California
TO: Mayor and City Council Members
Chairperson and Redevelopment Agency Members
FROM: City and Agency Staff
SUBJECT: 55-Year Lease of the Real Property at 1751 Cloverfield Boulevard
to Ocean Park Community Center for a Congregate Housing and
Homeless Shelter Facility
INTRODUCTION
This report recommends that the City Council and Redevelopment Agency
(Agency): 1) hold a public hearing to review the terms of a 55-year lease of the
real property at 1751 Cloverfield Boulevard to the Ocean Park Community Center
(OPCC); 2) adopt the attached Resolutions that make specific findings and
approve the lease between the Agency and OPCC; 3) authorize the City
Manager and Executive Director, respectively, to execute a Cooperation
Agreement between the City and the Agency regarding the City’s option to
acquire the real property at 1751 Cloverfield Boulevard from the Agency at no
cost upon expiration of the 55-year lease term; and 4) approve specific loan and
grant terms regarding the $7,397,112 in housing trust funds approved for the
development by Council/Agency at the August 12, 2003 meeting.
BACKGROUND
OPCC has site control of the real property located at 1751 Cloverfield Boulevard
(Attachment A) via a purchase agreement with the current owner. OPCC
originally proposed rehabilitating the existing building on the property for use as
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congregate housing, emergency shelter, and an access center that would
provide daytime services to homeless persons. To accomplish the housing
component of this goal, OPCC requested funding assistance from the City.
At its August 12, 2003 meeting, the City Council approved the use of $7,397,112
of housing trust funds for the acquisition and rehabilitation of the 1751 Cloverfield
Boulevard site, exclusively for congregate housing and emergency shelter uses,
and directed staff to find an alternative location for the access center. The
sources and amounts of housing trust funds approved include redevelopment
($6,197,112), HOME ($800,000), and TORCA ($400,000) trust funds. HOME
funds require a formal release of funds by the federal Department of Housing and
Urban Development, following a public noticing and comment period, which may
not be completed by the escrow closing date of October 3, 2003. Staff
requested, and Council approved, the replacement of the $800,000 in HOME
funds with redevelopment funds, if necessary. The total amount of housing trust
funds approved is $7,397,112, in any event.
Council conditioned the provision of housing trust funds to OPCC on a
transaction structure that requires OPCC, upon its acquisition of the property, to
immediately convey title to the site to the Agency. The Agency would
subsequently provide a 55-year lease of the property to OPCC for its use as
congregate and shelter housing for very low income persons. Further, Council
directed staff to undertake the required public noticing and return to Council to
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hold a public hearing with regard to the proposed 55-year lease between the
Agency and OPCC. Finally, Council directed staff to analyze the feasibility of
including permanent affordable rental housing in the proposed Cloverfield
development, such as housing for young adults.
DISCUSSION
OPCC will purchase the 1751 Cloverfield Boulevard property with proceeds from
a conditional grant of redevelopment housing trust funds and immediately convey
title to the property to the Agency. Upon conveyance, the Agency will forgive that
portion of the conditional grant used by OPCC for acquisition ($5.0 million and
approved closing costs). The Agency will immediately lease the property to
OPCC for a term of 55 years. In exchange for providing a 55-year lease, OPCC
will covenant to use the property solely for affordable housing. In summary, the
lease terms include a 55 year term; payments of one dollar per year from OPCC
to the Agency; and a requirement that the facility be used by OPCC solely as
congregate housing and emergency shelter for very low income persons. When
the 55-year lease term has elapsed, the Agency is required to offer the City the
option of taking title to the property at no cost.
Redevelopment funding requires that the property be restricted to affordable
housing uses for a minimum of 55 years. In the event OPCC does not comply
with the terms of the lease during the 55-year period to the Agency’s satisfaction,
the Agency will terminate the lease with OPCC, and either replace OPCC with
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another qualified nonprofit affordable housing provider or sell the property. The
proceeds of any such sale will be deposited proportionately in the HOME and/or
redevelopment affordable housing trust fund accounts as required by law.
At the August 12, 2003 meeting, the City Council and Redevelopment Agency
approved a $7,397,112 housing trust fund loan and grant to OPCC. Staff has
finalized the specific loan and grant terms that reflect Council/Agency direction
from the August 12, 2003 meeting regarding the transaction structure. These
specific loan and grant terms are noted in the table below:
HOUSING LOAN and GRANT TERMS
Loan Terms Grant Terms
Amount
$1,200,000 $6,197,112
Source of
HOME Trust Fund ($800,000)
Redevelopment Housing Trust
and TORCA Trust Fund
Funds
Fund
($400,000)
Interest
Equal to Federal Home Loan
Mortgage Corporation rate for
Not applicable
Rate
30-year fixed-rate
Term
55-years 55-years
Promissory Note, Deed of
Conditional Grant, Deed of Trust,
Security
Trust, and Regulatory
and Regulatory Agreement
Agreement
Eligible occupants will be very Eligible occupants will be very low
Affordability
low income (at or below 50% income (at or below 50% of
of median income) median income)
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Payments made annually
from net income from the
Repayment
Not applicable
operation of the facility, if any
(“residual receipts”).
$5,000,000 + closing costs (for
site acquisition) of the $6,197,112
grant will be immediately forgiven
If the programs are
when OPCC conveys site to the
th
satisfactorily operated for 55 Agency; then, 1/55 of the
Forgiveness
years, the loan balance is
balance of the grant amount is
forgiven. forgiven on an annual basis if the
programs are satisfactorily
operated during the previous
year.
Not permissible without prior
Not permissible without prior
Resale of
written approval of the
written approval of the City
Redevelopment Agency during
Property
during the term of the
the term of the Regulatory
Regulatory Agreement.
Agreement.
Finally, as mentioned earlier in this report, Council directed staff to analyze the
feasibility of incorporating permanent affordable rental housing in the proposed
Cloverfield development. Staff has begun to explore the feasibility of this, and,
when completed, will provide a report of its findings to Council.
FINANCIAL/BUDGETARY IMPACT
There is no budgetary impact for leasing the 1751 Cloverfield Boulevard property
to OPCC. The following two tables summarize the housing trust funds and
source accounts for this development, including funds approved administratively
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by staff and those approved by the City Council/Agency at its meeting of August
12, 2003:
HOUSING TRUST FUND ACCOUNTS – TABLE ONE
Account # Amount Notes
TORCA [staff approved]
C14037700.589000 $ 306,090
TORCA [staff approved]
C14037701.589000 $ 55,968
TORCA [staff approved]
C14037702.589000 $ 37,942
Predevelopment Loan
Subtotal: $ 400,000
subtotal
C15068202.589000 $ 4,703,405 Redevelopment funds
C18068202.589000 $ 1,493,707 Redevelopment funds
C20005001.589000$ 298,901 HOME funds
C20005002.589000$ 29,000 HOME funds
C20005003.589000$ 29,000 HOME funds
C20034499.589000$ 46,593 HOME funds
C20034402.589000$ 396,506 HOME funds
[Redevelopment = $6,197,112
Subtotal: $ 6,997,112
and HOME = $800,000]
GRAND TOTAL: $ 7,397,112
The amount of housing trust funds approved is $7,397,112 as listed above.
HOME funds require a formal release of funds by the federal Department of
Housing and Urban Development, following a public noticing and comment
period, which may not be completed by the escrow closing date of October 3,
2003. Due to this possibility and its interest in ensuring that the development
move forward expeditiously, Council/Agency provided the authority to staff to
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replace $800,000 in HOME funds with redevelopment funds, if necessary. In
this scenario, the $800,000 in RDA funds would be available in the following two
accounts:
HOUSING TRUST FUND ACCOUNTS – TABLE TWO
Account # Amount Notes
C18068202.589000 $ 408,689 Redevelopment funds
C15004902.589000.18800 $ 391,311 Redevelopment funds
TOTAL: $ 800,000
RECOMMENDATION
This report recommends that the City Council and Redevelopment Agency:
1) Hold a public hearing to review the terms of a 55-year lease of the real
property at 1751 Cloverfield Boulevard to the Ocean Park Community
Center (OPCC);
2) Adopt the attached Resolutions (Attachments B & C) that make
specific findings and approve the lease between the Agency and
OPCC;
3) Authorize the City Manager and Executive Director, respectively, to
execute a Cooperation Agreement between the City and the Agency
regarding the City’s option to acquire the real property at 1751
Cloverfield Boulevard from the Agency at no cost upon expiration of
the 55-year lease term; and
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4) Approve specific loan and grant terms regarding the $7,397,112 in
housing trust funds approved for the development by Council/Agency
at the August 12, 2003 meeting.
Attachments:
A - Site Map
B - Resolution by the City Council (See Adopted Resolution No. 9895 (CCS))
C - Resolution by the Redevelopment Agency (See Adopted Resolution No.
485(RAS))
Prepared by:
Jeff Mathieu, Director, Resource Management Department
Bob Moncrief, Housing and Redevelopment Manager
Tina Rodriguez, Redevelopment Administrator
Ron Barefield, Housing Administrator
Jim Kemper, Senior Administrative Analyst
Ryan Moore, Senior Administrative Analyst
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ATTACHMENT A
ATTACHMENT A
Site Map
The following depicts the real property:
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