SR-407-000-05
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JUl 1 q 1981
CED:HD:CR:jt
City Council Meeting: 7/14/87
Santa M~nica, California
TO:
Mayor and City Council
FROM:
City staff
SUBJECT:
Recommendation to Approve Guidelines for Use of
Funds for Housing Received under Amendment to
Development Agreement between Campeau Corporation of
California and city of Santa Monica
INTRODUCTION
This report transmits recommendations concerning the establish-
ment of development criteria and administrative guidelines for
the use of in-lieu housing funds of $1.5 million.
The report
also recommends that the City Manager be authorized to approve
the use of these funds for the construction of thirty (30) units
of affordable rental housing in projects which meet the specific
development criteria and guidelines detailed herein.
BACKGROUND
On April 16, 1982 the City of Santa Monica approved a Development
Agreement with Colorado Associates for development at 2600
Colorado Boulevard commonly referred to as the Greenwood Project.
Pursuant to the Development Agreement, the developer was obli-
gated to provide thirty (30) units of affordable housing. On
January 27, 1987 the City Council approved by adoption of Or-
dinance No. 1398 an Amendment to the Development Agreement which,
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among other items; provided for the aeveloper to pay a fee to the
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City in-lieu of developing the affordable housing. A per unit
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fee of $50,000 was agreed upon, and the developer has subsequent-
ly paid to the city $1.5 million. In the 1987-88 budget the city
Council appropriated the $1.5 million for use in developing the
required affordable housing. The following discusses the
development criteria established by the Development Agreement and
the recommended guidelines for project approval and use of funds.
DISCUSSION
The Development Agreement establishes the development criteria
for the housing units. The Agreement requires that thirty (30)
units of new rental housing be developed. The housing units are
to be affordable to very low, low, and moderate income house-
holds, for a term of not less than forty (40) years. The rents
are to be set based upon a payment standard of twenty-five per-
cent (25%) of adjusted median income. Also, the Agreement re-
quires that not more than fifteen (15) of units are one-bedroom,
at least eight (8) units are two-bedroom, and at least four (4)
units are three-bedroom. The following describes the recommended
guidelines for project approval and use of funds.
Guidelines for Project Approval
Currently, the city administers two housing trust fund programs,
the City-wide Housing Acquisition and Rehabilitation Program
(CHARP) and the Pica Neighborhood Housing Trust Fund (PNHTF).
Program guidelines have previously been reviewed and adopted for
these programs by the city council. The CHARP Guidelines provide
an "open-windoww-proce55 :Lvi' ~.coject stibioTt-cal. and approy-al, al-
lowing for submittal applications for available program funds
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throughout the fiscal year. Projects are reviewed to determine
if they meet the Program Guidelines and after review and approval
are given loan commitments. It is recommended that the Greenwood
funds be used under the CHARP Guidelines with modifications as
described below. The City is under no time constraint for the
development of the Greenwood units, and an open-windOW process
provides access for a range of competitive and eligible projects.
CHARP Program Guidelines
The CHARP Program provides eligible borrowers with deferred prin-
cipal and interest loans for a term of thirty-five (35) years.
These funds are secured by a deed of trust and regulatory agree-
ment which restricts the occupancy, rent levels, and management
and maintenance of the properties.
Eligible borrowers are non-profit or for-profit developers with
proven capacity to develop, own, and operate affordable rental
housing. Eligible projects may include acquisition and
rehabilitation or new construction, and all the units must be
occupied by low and moderate income households in accordance with
California state Redevelopment Law. proj ects may be developed
anywhere within the City. Project loan requests which are con-
sistent with the Program Guidelines are reviewed and approved
administratively.
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Modifications to CHARP Guidelines for Greenwood Funds
Minor modifications to the CHARP Program Guidelines are needed in
order to comply with the terms of the Agreement. These include:
(1) term of the loan; (2) eligible projects; (3) location of
projects; (4) neighborhood review process; (5) benefit to very
low, low, and moderate income households; and (6) per unit subsi-
dy. Other than these modifications, all other provisions of the
CHARP Guidelines will apply to the use of Greenwood funds.
1.
Term of Loan:
(40) years
Agreement.
The term of the loan will be at least forty
as required by the original Development
2. Eligible Projects: Eligible projects will be restricted to
the development of new rental units to be consistent with
the City's original commitment to construct a minimum of
thirty (30) units, rather than replacement or rehabilitation
of existing rental units. Thus, only new construction, or
conversion from a commercial use to residential use would
constitute eligible projects.
3. Location of Projects: CHARP allows for the development of
units throughout the City. However, the original intent of
the Greenwood affordable housing requirement was to address
the increased demand for housing in the neighborhoods con-
tiguous to the office development. Therefore, projects must
-~~~~E either in the pico Neighborhood, defined as the
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area bounded by Lincoln on the West, pico on the South, San-
ta Monica, on the North, and Centinela on the East; or the
Mid-City Neighborhood, defined as the area bounded by Santa
Monica on the South, Wilshire on the North, Centinela on the
East and Lincoln on the West. The goal is to use the resour-
ces in both neighborhoods.
4. Neighborhood Review: Similar to the provisions in the PNHTF
Guidelines, a neighborhood review process will be required.
The developer must notify the surrounding neighbors and any
neighborhood-based organization of the project. This pro-
cess provides the neighbors with an opportunity to review
and comment to the City on the proposed proj ect, prior to
the release of program funds.
5. Benef it to Very Low, Low, and Moderate Income Households:
proj ects must demonstrate campI iance with the Development
Agreement requirements for affordability to very low, low,
and moderate income households.
6. Per Unit Subsidy: A per unit fee of $50,000 was established
for the Greenwood funds in order to meet the level of affor-
dability to very low and low income households required by
the Development Agreement, and because of the lower rents
allowable under the twenty-five percent (25%) payment stan-
dard. It is anticipated that on average the per unit subsi-
dy amount will be $50,000.
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Procedure for Award of Funds
As with the CHARP Program, a "Notice of Fund Availability" will
be published in the Evening Outlook, and eligible developers may
submi t applications.
Developers will be required to submit a
complete CHARP application package prior to the award of Green-
wood funds.
staff will review proj ects to determine if they
meet the Greenwood development criteria and CHARP Program guide-
lines as detailed herein. Upon administrative review and approv-
al funds will be released in accordance with CHARP Guidelines.
FINANCIAL/BUDGETARY IMPACTS
The 1987-88 budget appropriated $1. 5 million in account number
01-720-264-000-959 for the development of affordable rental
housing.
RECOMMENDATION
It is recommended that the city Council approve the development
guidelines as Set forth in this report and authorize the city
Manager to approve the use of the Greenwood funds for construc-
tion of thirty (30) units in projects which meet these develop-
ment guidelines and which are consistent with the City's original
commitment.
Prepared by: Candy Rupp, Acting Housing Program Manager
Department of Community & Economic Development
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