SR-407-000-05 (11)
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DEe 9 1986
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City Council: 12/9/86
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Santa Monica, California
TO: City Council
FROM: City Staff
SUBJECT: Request for Approval of an Agreement with Santa Monica
Hospital Medical Center, et.al., Concerning Partial
Compliance with the Office Project Mitigation
Requirements of Ordinance 1367(CCS)
INTRODUCTION
This report transmits information concerning the work undertaken
by Santa Monica Hospital Medical Center (SMHMC) with Community
Corporation of Santa Monica (CCSM) in providing affordable
housing over the past eighteen months, for which the Hospital has
requested credit against the in-lieu project mitigation fees due
from the Hospital's Medical Office building.
The report
recommends that the City Council authorize the City Manager to
negotiate and execute an Agreement providing these credits.
BACKGROUND
In April, 1985 Santa Monica Hospital Medical Center (SMHMC) and
Community Corporation of Santa Monica (CCSM) applied to the
Redevelopment Agency of the City of Santa Monica for financial
assistance in developing affordable housing. At that time, SMHMC
and CCSM had received a Removal Permit from the Rent Control
Board allowing SMHMC to relocate three buildings at 1325, 1327,
and 1331 16th Street to new sites in the city. SMHMC proposed to
contribute the buildings and $280,000 in financial assistance to
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DEe -- 9 1986
CCSM to relocate and rehabilitate the housing units. CCSM and
SMHMC requested a deferred loan from the Citywide Housing
Acquisition and Rehabilitation Program to assist in making the
units more affordable to low income households, and in providing
necessary interim financing for site acquisition. On May 14, 1986
the Redevelopment Agency authorized the Executive Director to
make CHARP loans for the purchase of two properties, 2407 4th
street and 1544 Berkeley, for this project.
The Agency made a CHARP loan of $290,000 to CCSM to purchase the
first property, 2407 4th street, in June, 1985. In July, 1985,
shortly before the Agency was to make the loan for the purchase
of the second property, SMHMC filed a request for an exemption
from the Rent Control Board for the sixteenth street properties.
In order to decide whether it was prudent to proceed with the
purchase of the second property, City staff met with SMHMC and
agreed to the following:
1. The City would make the interim loans for the purchase of
the two properties.
2. SMHMC would donate the buildings to CCSM to be moved and
rehabilitated.
3. SMHMC would cover the costs of archi tectural and
engineering services reasonably necessary to rehabilitate
the units, which were estimated at $24,000.
4. SMHMC would also provide a cash contribution of $200,000
to the project.
5. CCSM and SMHMC would work together to obtain other subsidy
sources for the projects.
6. As part of the City's effort to assist SMHMC in recouping
the cost of participating in this project, the cash value
of the contributions of SMHMC towards the project, over
and above the amount that would have been required by the
terms of a Rent Control removal permit, if applicable, may
be considered as a credit against the in-lieu fees
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required by the Office Project Mitigation program. This
provision was considered to be similiar to the interim
agreements for payment of fees to non-profit developers
that were used by other office developers required to
comply with the Office Project Mitigation measures
described in the Land Use Element.
On September 12, 1985 SMHMC was granted an exemption from rent
control for the sixteenth street properties. Therefore, SMHMC no
longer had any obligation under the Rent Control Removal Permit
terms to provide affordable replacement housing. CCSM and SMHMC
continued to work on the projects, however, in anticipation of
receiving credits against the in-lieu fees required by the Office
Project Mitigation Program from the SMHMC Medical Office
Building.
DISCUSSION
At this time, SMHMC, et. ale has requested City approval of an
Agreement granting SMHMC certain credits towards the housing
mitigation fees required to be paid by the Medical Office
Building to be developed at 1245 16th Street. A draft of the
proposed Agreement is attached. This medical office building will
have 40,000 square feet of office space, and will therefore be
required to pay a fee of $158,750. Ordinance 1367 (CCS) requires
that 45% of the fee be paid to a housing reserve fund, 45% of the
fee be paid to a parks reserve fund, and 10% be paid to a fund
for either housing or parks. In this case, $71,437 is due to the
housing and parks funds, and $15,875 is due to the fund for
either housing or parks.
The key components of this Agreement are outlined below.
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(1) Credit for Costs Incurred by SMHMC
SMHMC has incurred a total of $119,000 in architectural and
engineering fees on the 4th street and Berkeley projects. SMHMC
used an architectural firm that was under contract to the
Hospital, Pacific Health Resources. While this exceeds the amount
that CCSM would normally spend for architectural and engineering
services, the projects did require some reconfiguration in order
to meet current codes. Therefore, staff has recommended that
SMHMC be reimbursed directly from CCSM for $40,000 in
architectural work on the 4th street project, and that SMHMC
receive a credit of $60,000 against the office mitigation fees
due from the Medical Office Building for architectural work done
on the Berkeley project.
(2) Donation of Buildings
SMHMC has agreed to donate the buildings if they are moved off
the Sixteenth street sites by February 15, 1986. The project at
2407 4th street will start construction in December, and the
contractor should be ready to move the building to the site when
the subterranean parking structure is completed in early
February. However, due to difficulties in negotiating with
contractors, and in identifying financing and subsidy
sources,CCSM estimates that it will not be able to start
construction on the 1544 Berkeley project until late January, and
the site will not be ready for the building to be moved until
mid-March. Therefore, CCSM is working on a temporary relocation
plan to store the building off-site until it can be moved.
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(3) Payment of Remainder of Fees
After receiving a credit of $60,000 for architectural fees on the
Berkeley project, which will be credited towards the fees that
would have been paid to the housing reserve fund, the Medical
Office Building project will owe $98,750. $71,437 of this will be
paid to the parks reserve fund; $11,437 of it will be paid to the
housing reserve fund; and $15,876 will be paid to the housing or
parks reserve fund. These fees will be paid according to the
timelines specified in Ordinance 1367 (CCS).
FINANCIAL / BUDGETARY IMPACT
There are no financial or budgetary actions required by the
recommendations in this report.
RECOMMENDATION
It is recommended that the City Council authorize the City
Attorney and City Manager to negotiate and execute an Agreement
granting credits towards the Office Mitigation Fees to Santa
Monica Hospital Medical Center.
Prepared By: Ann Sewill, Housing Program Manager
Department of Community and Economic Development
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