SR-407-003-01 (4)
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Clty Councll Meeting: 5/14/85
Redevelopment Agency
Santa Monica, California
TO:
Mayor and Clty CouncIl
ChaIrperson and Redevelopment Agency
FROM:
CIty Staff
SUBJECT:
Reconmendatlon to Approve Terms of Grant Deed for
1851-1901 and 1907 Eleventh Street, and to Allocate
Funds for AccesSIbIlIty Improvements and Local DesIgn
Requirements.
INTRODUCTION
ThIS report transmIts the terms of the Grant Deed wh~ch transfers
ownershIp of the property at 1851-1901 and 1907 Eleventh Street
from the CIty to a prIvate developer to develop, on behalf of the
HOUSIng AuthorIty of the County of Los Angeles, HUD-asslsted af-
fordable housing for low and moderate lncome households.
It also
recommends the allocatIon of up to $35,104 in Redevelopment
VItale-GllpIn funds to cover the costs of accessIbIlIty Improve-
ments and CIty deSIgn reqUIrements.
BACKGROUND
On December 13, 1983 the CIty CounCIl approved the use of
$600,000 In Corr~lunlty Development Block Grant funds, and au-
thorIzed the CIty Manager to execute purchase agreements, to ac-
qUIre the SItes at 1851-1901 and 1907 Eleventh Street for the
purpose of developlng affordable hOUSIng. Funds for developing
nIneteen (19) unIts of affordable rental hOUSIng on thIS SIte are
reserved for the HOUSIng Authority of the County of Los
Angeles
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MAY 1 4 t985
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(HACoLA) under the U.S. Department of HousIng and Urban Develop-
ment's (HUD's) "Turnkey" Program. Onder the "Turnkey" Program
developers subnllt proposals In response to a Request for Pro-
posals issued by the Houslng AuthorIty (HACoLA). The proposals
are ranked accordlng to cost, deSIgn, developer qualIfIcations,
and other factors, and the hIghest-ranked developer IS referred
to HUD for approval. Upon approval, the selected developer ac-
qUIres the sItes, bUIlds the proJect, and "turns the keys over"
to the HousIng AuthorIty when constructIon 15 complete. TItle to
the land transfers tWIce, once front the CIty to the developer,
and then from the developer to the HOUSIng Authority. The fol-
lowing WIll descrIbe the developer selectIon, the proJect
descrIptIon and status.
Developer SelectIon
Request for Proposals from developers were Issued by the HACoLA
In November 1983, and the proposals were submItted on December
15, 1983. The developer was selected In January 1984, and HUD
approval was requested and receIved In February 1984. The
developer selected is EAC ConstructIon, a mInority contractor
experIenced in the development of assisted rental hOUSIng.
~roJect DescrIptIon and Status
The proJect WIll contaIn eIghteen (18) famIly townhouses, and one
flat unIt deSIgnated speCIfIcally for the phYSIcally dIsabled.
The unlts wlIl all be two-bedroom. The proJect amenItIes Include
a tot lot, a laundry room, common landscaped areas and under-
ground parkIng. In order to make the entIre slte area acceSSIble
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to the physically disabled a ramp wIll need to be constructed in
the front of the project. The ranlp IS necessary as the sIte IS
steep and gradIng the entIre SIte is not cost-effectIve.
Final detaIled plans have been submItted to the BUIldIng and
Safety DIVISIon, and to the ArchItectural ReVIew Board (ARB).
CIty staff have been working closely WIth the archItect and the
ARB to meet local deSIgn standards, and to submIt an attractIve
deSIgn withIn the constraInts of the HUD cost ceilIngs. The ARB
approval was receIved on May 1, 1985, and prelImInary BUIldIng
and Safety approvals WIll be issued this week. PrIor to con-
struction start, WhIch must occur by May 28, 1985 In order to
meet HUD deadlInes, the Grant Deed, Contract of Sale, and sale
price must be fInalIzed. The following WIll detaIl the terms to
be Included In the Grant Deed, and the status of the sale prIce
negotIatIon.
Grant Deed Terms
The Grant Deed IS a standard mechanIsm used to ensure that prop-
erty transferred from a public entity to a prIvate developer IS
used for the Intended publIC purposes. The covenants In a Grant
Deed can be deSIgned to run WIth the land, and to be bindIng on
all subsequent owners. SlmllIar deeds have been used in other
developments and have been found to be acceptable to the HOUSIng
Authority and to lenders.
As the tItle to the land WIll transfer tWIce, the Grant Deed
needs to Include provisions which secure that (I) the development
IS completed, and (2) the development 15 maintained and operated
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for occupancy exclusively by low and moderate Income families.
The Grant Deed shall include the following basic provisions:
(1) The site and any and all improvements thereon
shall be used for rental housing for low and
moderate income families and disabled persons.
(2) Residents of the City of Santa Monica shall have
first preference for occupancy In the
development.
(3) Title to the land and any Improvements thereon
shall revert back to the City during the
development period if the developer IS unable to
complete the proJect. The Cl ty shall have the
right to appoint someone to complete the
development as originally specified.
(4) If at any time the Housing Authority is unable
to continue to operate the development as rental
housing for low and moderate income families and
the disabled, title to the property shall revert
to the City.
It IS recommended that the City Council authorize the City Man-
ager to negotiate the terms of the Grant Deed with HUD, HACoLA,
the construction lender, and execute a Grant Deed with the inclu-
slon of the provIsions stated above.
ProJect Costs and Financing
The report to the City Council on December 13, 1983 Indicated
that the City would acquire the sites for approximately $600,000
and would transfer them to the selected developer for the maximum
affordable cost as determined by the HUD cost analYSIS of the
proJect.
It appears from preliminary reviews by HUD that the
City Will need to transfer the site to the developer for $1.00,
and Will also need to contribute additional funds to cover costs
of items required by the City but not allowed by HUD.
It IS not
uncommon for localities to SUbSidize land costs, and the City has
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made Slmlllar contributions to other assIsted hOUSIng develop-
ments, such as Barnard Park VIllas.
HUD cost containment gUIdelines have set the total cost ceilIng
at $967,860, and HUD's contrIbutIon WIll not exceed thiS amount.
ComplYIng with local deSIgn gUIdelInes and accessIbIlIty reqUIre-
ments IncludIng the constructIon of the ramp, fenCIng, WIndow
treatments, and addItIonal landscapIng have drIven up the cost of
the proJect. Therefore, It IS anticipated that an additIonal
$55,641 may be required to support these costs.
Currently $20,537 In VItale GilpIn funds are approprIated In the
FY 84-85 budget for access Ib III ty Improvements for thI s proJec t.
A request for the appropriatIon of an additIonal $35,104 In
VItale GIlpIn funds WIll be Included In the City's Fiscal Year
1985-86 CapItal Improvement Budget. However, although the funds
WIll not actually be drawn untIl after July 1, 1985, in order to
assure the constructIon lender that suffIcient funds will be
available at the completion of varIOUS constructIon stages, the
CIty must allocate funds at thIS tIme to cover these costs.
The addItIonal $35,104 IS avaIlable from the CItYWIde Housing
Trust Fund, account number 16-720-264-000-942. The Eleventh
Street hOUSIng development is an elIgible use of these funds, and
the fIndings of benefit have been preVIously adopted by the Re-
development Agency. The FIscal Year 85-86 appropriation of
VItale GIlpin funds WIll be used to repay the CItYWIde Housing
Trust Fund.
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The final sale prIce and cost negotIation conference is scheduled
for May 20', 1985.
PartiCIpants will Include the HACoLA, HUD, the
developer, and the CIty. The total amount of the CIty subsidy
WIll not be known untIl thIS negotIation conference IS held;
however, the CIty subsidy WIll not exceed the antIcIpated avall-
able sum of $55,641.
FINANCIAL AND BUDGETARY IMPACTS
A total of $55,641 is needed to writedown the development costs
and is approprIated in FY 1984-85 budget in the folloWIng account
numbers:
Eleventh Street Site Improvements
16-720'-264-731-944
$20',537
CItYWIde Housing Trust Fund
16-720'-264-0'0'0'-942
$35,10'4
$55,641
Although the funds wIll not be needed untIl FY 85-86, the CIty
must conmti t funds 1n th1S fi scal year.
It wIll be recommended In
the FIscal Year 1985-86 Capital Budget that the CIty CounCIl and
Redevelopment Agency commIt up to $35,10'4 In VItale GIlpIn funds
for accessIbIlIty ITIlprOVements and design requirements of the
Eleventh Street Development, to repay the CItYWIde HOUSIng Trust
Fund.
RECOMMENDATIONS
It is recommended that the CIty CounCIl:
1. AuthorIze the CIty Manager to negotIate the terms of, and
execute the Grant Deed, and determIne the sales prIce of the
land, so that the sales prIce shall not be less than the
maXImum affordable cost, as descrl.bed In thIS report.
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2. AuthorIze the CIty Manager to execute an agreement wIth the
developer to pay not more than $55,641 for costs of Improv-
ments to the development not covered by HUD.
It 15 recommended that the Redevelopment Agency:
Allocate $35,104 from the CltY~lde Houslng Trust Fund, ac-
count number 16-720-264-000-942, as described 1n thIS report.
Prepared By: Ann SewIll, Housing Program Manager
Candy Rupp, HOUSIng Analyst
Housing DIVISIon
Department of Con~unlty & EconomiC Development
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