SR-407-005-02 (8)
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Redevelopment Agency Meeting 9/11/84
Housing Authority
City CouncIl
Santa Monica, CalIfornia
11-1/
SE' 11 1914
TO:
Redevelopment Agency
HOUSIng AuthorIty
CIty CounCIl
FROM:
City Staff
SUBJECT:
RecommendatIon to Adopt a ResolutIon AuthorIzing Ac-
ceptance of CalifornIa Department of Housing and Com-
munIty Development Rental HOUSIng Const~uction Funds,
(RHCP), and to Affirm the Proposed Deferred Loan Con-
ditIons for the SenIor Congregate House
INTRODUCTION
This report transmits for adoption a ResolutIon authoriZIng the
acceptance of Rental HOUSI ng Constructlon Program (RHCP) funds
from the CalIfornIa Department of Housing and Community Develop-
ment, for use in developing the senior congregate housing project
by AlternatIve LiVIng for the AgIng (ALA).
The report also pro-
poses that the Redevelopment Agency affirm the terms and condi-
tIons for the use of preVIously approprIated Redevelopment funds
In support of thIS proJect.
BACKGROUND
In response to the Fiscal Year 1984-85 CommunIty Development Pro-
gram Request for Proposals, Alternative LIVIng for the Aglng
(ALA) subm1tted a proposal for approXImately $424,000 to develop
a twelve bedroom shared reSIdentIal faCIlIty In Santa MonIca for
senIor reSIdents of Santa MonIca. In response to thIS proposal,
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.the City Counc 11 awarded a total of $300,000; $285,003 In Re-
development tax Increment funds, and $15,000 from the VItale GIl-
pIn Fund as part of the FY 84-85 budget actIons. Also, In May of
1984 the CIty and ALA applIed for fundIng under the CalIfornia
Department of HousIng and CommunIty Development's Rental HousIng
ConstructIon Program. The CI ty was successful in obtainIng a
fundIng commItment of $120,000 for the senior congregate house.
In addI tIon to the fInancIng commI tments from the Agency and
RHCP, ALA will pursue prIvate sources of finanCIng to the cover
the remaInder of the development costs.
The senIor congregate hOUSIng proJect WIll be developed by ALA
WI th technical assistance from CommunI ty Corpora tion of Santa
Monica (CCSM). CCSM WIll adVIse ALA durIng the plannIng and
development phases of thIS proJect, but WIll have no ownerShIp
pOSItIon In thIS development. ALA will be wholly responsIble for
operatIng and managing the development upon completIon.
The reSIdents of the proJect will benefIt from In-house serVIces
Including, fIve evenIng meals per week, SOCIal serVIces and
planned actIVItIes; in addItIon to affordable hOUSIng. All ten-
ant screenIng and placement, property management and operatIons
WIll be handled by ALA.
The follOWIng sections will descrIbe (1) the fundIng commItment,
through the Rental HOUSIng ConstructIon Program; (2) the proposed
terms and condItIons of the Agency's fundIng, and (3) a brIef
summary of the proJect's current status.
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1. Rental HousIng ConstructIon Program FundIng (RHCP)
As mentioned earlier, durIng the reVIew of ALA's proposal for
Ci ty fundIng staff recommended that ALA prepare an appl icatlon
for the Rental Housing ConstructIon Program for addItional funds.
The Welton Becket development had also used the RHCP program to
assIst In project financIng.
The RHCP program provIdes deferred payment loans for 30 years at
no Interest to elIgIble borrowers.
A local government agency
must act as the Local Finance Entity and submIt the applicatIon
for funding on the borrower's behalf. The local government enti-
ty IS requIred by the RHCP program to execute a Resolution to
accept the funds and to authorIze the Agency Executive DIrector
to execute all necessary program documents. The applicatIon was
submltted under the "tights of occupancy" component of this pro-
gram, WhICh reqUlres that a local HOUSIng Authority adminIster
the program.
Under the "rlghts of occupancy" component HCD uses
RHCP funds to obtain a deed restrIctIon ensurIng affordabllity to
low income households for thIrty years.
ThIS reqUIres the
resolutIon and all subsequent documents to be executed by the
HOUSIng AuthorIty of the CIty of Santa Monica. The RHCP funas
under thIS program may only be used for permanent fInancing.
2. Recommended Terms and Condltlons of Local Funds
Staff recommends USIng the $300,000 of Redevelopment funds as a
deferred loan to the ALA senior congregate hOUSIng project. In
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.desIgnIng other housing programs the Cl ty found a deferred pay-
ment loan to be the most effective and prudent fundIng vehIcle as
It maxlmizes both affordabillty and contract compliance.
The condltlons of the deferred
loan recommended are
the
followIng:
1. A maXImum of $ 300,990 wIll be a va llable to subs id I ze
acquisi tion and development costs for a newly con-
structed or substantially rehabilItated shared housing
facIlIty.
2. Funds are contIngent on the sponsor/developer obtaln-
ing all necessary permIts and licenses, IncludIng, any
necessary Rent Control Board permIts, Planning CommIs-
sion approval, and any other applicable City board or
commIsSIon approvals.
3. The project loan shall not exceed the total amount of
the gap between the maximum affordable mortgage amount
available from prIvate sources and the total develop-
ment costs.
4. The Sponsor/Developer, and the proJect si te must be
acceptable to the CalifornIa Department of HOUSIng and
CommunI ty Development IS, Rental HOUSIng Constructlon
Program.
5. The proJect is to be structured to maXImIze the bene-
fit to low and moderate Income seniors In Santa MonI-
ca; 190% of the tenants OccupYIng the proJect must
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have Incomes at or below 80% of medIan, and at least
51% of the tenants must have incomes at or below 50%
of median.
6. The Agency's loan may be subordl nated to that of a
private lender and that of the CalifornIa Department
of HousIng and CommunIty Development.
7. The project is to be structured to maXImIze avallable
aSSIstance through the section 8 EXIsting or Moderate
RehabIlitation programs, rent levels should comply to
current HUD Fair Market Rents for these programs.
8. EligIble Santa Monica residents 62 years of age or
older WIll be gi ven preference for tenancy In the
project, sponsor to submi t a marketIng plan to Ci ty
staff by December 1, 1984.
9. The funding level WIll take into account the prOVISIon
of speCIal serVIces as proposed by ALA, Including eve-
nlng meals, In-house socIal serVIces, and planned 50-
clal actIvIties.
The condItIons noted above WIll assure that the Cltyls SUbSIdy IS
no greater than necessary whIle provIdIng a substantial funding
commItment with whIch to secure prIvate funding commItments. The
loan term, payment schedule and Interest rate WIll be specIfied
In the Promissory Note and Deed of Trust securing the loan. The
Ci ty CounCIl/Redevelopment Agency WIll have the opportunl ty to
review these documents prlor to release of any funds.
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3. Project Status
The project lS currently in the predevelopment stage.
Over the
past four months ALA, wi th technlcal asslstance from CCSM, has
conducted an extensive search for a Sl te that lS accessIble to
serVlces, shopping, and transportat1on for seniors.
In order to
comm1t RHCP funds by the end of the program's fund1ng cycle a
site must be identifIed In a Standard Agreement executed by the
Housing Authority.
ALA I S Board of 01 rector S have approved a
sIte at 6~9 Broadway due to Its proxlmity to downtown, major bus
llnes, medlcal serVlces, and shopplng.
The senlor congregate
house wlll be part of a larger mlxed use development Including
offlce, retaIl and parking. There are currently three rental
unlts on the SIte.
Normally, requests for any ci ty action would be deferred untIl
the necessary Rent Control Board and Clty permits and approvals
had been obtaIned.
However, ln order to meet the RHCP fundlng
deadline, the 609 Broadway SIte IS included In the attached Stan-
dard Agreement for executlon by the HOUSIng AuthorIty.
I n the
event that the necessary perml ts and approvals are not granted
the State Department of HOUSIng and CommunIty Development will
consider a request for a change of site.
The Redevelopment
Agency/Houslng Authority will also reVIew and approve any SIte
change, as well as the final development plans and costs prior to
release of any funds.
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FINANCIAL BUDGETARY IMPACT
The Housing AuthorIty WIll be the entIty desIgnated to receIve
the RHCP deferred loan funds from the CalIfornIa Department of
Housing and Community Development which, in turn, WIll be dIS-
bursed to ALA.
SInce the Housing Authority is a separate legal
government entity It is necessary to establish a Housing Authori-
ty Fund wIth an appropriate revenue account.
Prior to dIsbursal
of the RHCP funds to ALA, staff WIll return to the HOUSIng Au-
thOtlty for approval of necessary documents and request necessary
approprIatIon authorIty.
RECOMMENDATION
It is recommended that the HOUSIng Authority:
1. Adopt the Resolution of the Housing Authority authorIZIng the
executIon of a Standard Agreement and any related documents
with the State of CalIfornIa for the ImplementatIon and par-
tIcipation in the Rental HOUSIng Construction Program.
It IS recommended that the Redevelopment Agency:
2. AffIrm the condl tlons of the deferred loan recommended In
thIS report.
It is recommended that the CIty Council:
3. AuthorIze the establishment of a HOUSIng AuthorIty Fund and
an approprIate revenue account to receive the Rental HOUSIng
ConstructIon deferred loan funds.
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. Prepared by: Ann Sewlll, Acting Housing Program Manager
Candy Rupp, Housing Analyst
Housing Division
Department of CommunIty and Economic Development
Attachments: (1) Housing Authority Resolution Authorizing
Acceptance of Rental Housing Constructln Program
Funds.
(2) Call fornla Department of HOUSI ng and Com-
munIty Development, RHCP Standard Agreement.
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