SR-407-009 (5)
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Redevelopment Agency MeetIng 12/11/84
Santa Monica, CalIfornIa
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DEe t i 11M
TO:
Chalrperson and Redevelopment Agency
FROM:
Redevelopment Agency Staff
SUBJECT:
Request for Comnn tment of Funds from Cl ty-wlde
HOUSIng AcqUISItIon and RehabIlItatIon Program
INTRODUCTION
ThIS report transmIts a request for commItment of deferred loan
funds from the CIty-wIde HOUSIng AcqUISItIon and RehabilItatIon
Program submItted by CommunIty CorporatIon of Santa MonIca (CCSM)
for property located at 1843-45 17th Street, Santa MonIca. The
report recommends approval of a fInal commitment of program loan
funds in the amount of $20,000, and requests authorIzatIon to
enable the ExecutIve DIrector to release funds upon satIsfactIon
of all program reqUIrements.
BACKGROUND
On September 4, 1984, the Agency approved the allocatIon of FY
1984-85 funds from the Downtown, Ocean Park l(a) and l(b) Re-
development ProJects to the Clty-wlde Housing AcqUISItIon and
RehabIlItatIon Program (CHARP). The CHARP program gUIdelInes
reqUIre that the Redevelopment Agency approve each request for
program loan funds. ThIS report descrIbes the requested loan for
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the acquIstIon and rehabilItatIon of an eIght unIt rental proper-
ty at 1843-45 17th Street, and analyzes the borrower's proposal
relatIve to approved program ellglbllity and fundIng crIterIa.
DescrIptIon of the Project
CommunIty CorporatIon of Santa MonCla (CCSM) has entered into a
Purchase and Sales Agreement for property located at 1843-45 17th
Street. The 17th Street property proposed for acquIsItIon and
rehabIlItatIon has a total of elght units, IncludIng five two-
bedroom unIts, two one-bedroom unlts, and one bachelor unIt,
WhIch are In need of rehabilItatIon, correction of deferred maIn-
tenance Items, and three bedroom addItIons to correct
overcrowdIng.
The rehabllltatlon work Involves repaIrIng the plumbing, and
replacing and repaIrIng damaged and non-secure exterIor doors,
damaged InterIor counters and cabInets, holes and crackIng and
peelIng walls, and damaged floorIng. The proJect also Involves
the addItlon of three bedrooms to eXIstIng unIts, and the en-
largement of the bachelor unit to provIde a kItchen. After
rehabIlItatIon the bUIldIng WIll contain one four-bedroom unIt,
one three-bedroom unIt, four two-bedroom unIt, one one-bedroom,
and one studIO apartment. The cost of rehabIlItatIon IS estI-
mated at $95,000, or approxImately $11,875 per unIt.
The tenants will receIve SectIon 8 Moderate Rehabllltatlon rental
SubsIdIes on SIX out of eIght of the unIts, and these unIts WIll
be assured rental assIstance for a perIod of 15 years. In addi-
tIon the current rent levels for the unassisted unIts WIll not
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exceed CHARP gUIdelInes for low Income households (households
havIng Incomes of less than 80% of the area medIan) WhICh are
based on abIlIty to pay and wIll remain affordable to the eXIst-
ing low and moderate ~ncome tenants.
ThIS proJect wIll provIde signIfIcant benefIt to low and moderate
Income residents In the PICO NeIghborhood. It will also provIde
much needed unIts to accomodate medIum to large families.
ProJect HIstory
CommunIty CorporatIon applIed for a deferred loan from the PICO
NeIghborhood HOUSIng Trust Fund (PNHTF) Program in September
1984. The Pico Nelghborhood AssocIatIon (PNA) approved the al-
locatlon of not more than $110,000 for the 17th Street ProJect.
After carefully revIewIng the proJect's complIance wIth the ap-
proved FICO NeIghborhood HOUSIng Trust Fund gUIdelInes, the city
staff also Issued a prelImlnary commItment for these funds.
CommunIty CorporatIon also applIed to the Bank of AmerIca for
loan funds from the CalIfornIa Houslng FInance Agency (CHFA) bond
program. The Bank of AmerIca issued a prelImInary commItment,
contingent upon CHFA approval, for $315,000. However, due to a
technIcalIty ln the CHFA program gUIdelInes lImitIng loans to the
estlmated amounts publIshed on the Tax EqUIty and Fiscal Respon-
slblllty Act (TEFRA) publIC notIfIcation lISt, the Bank of AmerI-
ca was not able to make a loan In excess of $175,000.
As a result of the lImIt on the PICa NeIghborhood HOUSIng Trust
Funds and the unavailabIlIty of CalIfornIa HOUSIng FInance Agency
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funds, CommunIty CorporatIon has applied for loan funds for ac-
qUlsltlon and constructIon from First Federal SavIngs Bank of
CalIfornIa. FIrst Federal has approved a loan in the amount of
$285,000 at a SlIghtly hIgher Interest rate than the Bank of
AmerIca CHFA loan. However, there IS stIll a need for an addl-
tlonal $20',0'00' In loan funds to assure the fInancial feasIbIlIty
of the proJect. ThIS proJect meets the CHARP program gUIdelInes
and provides speCIal benefIt to low and moderate Income and large
familIes. The folloWIng sectIon WIll detaIl the project
eligIbIlIty analysls.
P~ogram ElIgIbIlIty
The approved CHARP gUldellnes contaIn a number of crIterIa for
proJect evaluatIon. CCSM's proposal for fundIng to acqulre and
rehabIlItate property located at 1843-45 17th Street meets the
program standards as follows:
o FInancial FeasibilIty
The CHARP gUIdelInes suggest three crIterIa for deter-
ml n i ng the ma x Imum loan amount, (I) the defer red loan
per un! t should not exceed $15,00'0, (2) the loan amount
should not exceed 33% of total development costs and (3)
that the loan should not exceed the amount necessary to
make the project feasIble. However, these Ilmlts may be
waIved by the Agency If there wlll be a slgnflcant bene-
fit to low Income tenants or the affordable housIng
stock.
The program loan requested for this proJect is $20',0'0'0'
from CHARP and $110',0'0'0' from PNHTF, WhICh brIngs the
total CIty/Agency partICIpation to $130',0'00 for acqUIsi-
tIon and rehabllltatlon, or $16,259 per unIt. ThIS rep-
resents approxImately 30% percent of the total develop-
ment costs. The per unIt cost lS hIgher than the
$15,0'00' specIfIed In the gUIdelInes. However the 17th
Street proJect wIll provIde speCIal benefIt to low and
moderate Income households, as seven out of eIght house-
holds are low Income, and therefore qualifIes for an
exemptIon. The loan amount requested, does not exceed
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the mInImum amount necessary to make the project
feasible, and lS conSIstent WIth CHARP gUIdelInes.
o Low and Moderate Income BenefIt
The CHARP gUIdelines reqUIre that at least eIghty-fIve
(85) percent of the tenants have low or moderate In-
comes. EIghty-seven (87) percent of the tenant house-
holds have low incomes, and the remainIng thIrteen (13)
percent are moderate income.
CHARP gUIdelInes reqUIre that proJects are structured to
create or maIntaIn affordable rent levels. Proposed
after-rehabIlItatIon rent levels meet thIS reqUIrement.
o ProJect LocatIon
The property is comprIsed of eIght unIts and IS free
from adverse envIronmental Impacts, conSIstent WIth
CHARP gUIdelInes.
CCSM proposes to brlng the structure up to SectIon 8
HOUSIng Quality Standards. The Items proposed for re-
paIr and replacement, as well as the bedroom addItIons,
are ellglble under CHARP gUIdelInes.
o Tenant PartICIpatIon
Seventy-fIve percent of the tenants have affIrmed theIr
deSIre to partICIpate In the program by completing and
SUbmIttIng SectIon 8 Moderate Rehabllltatlon appllca-
tlons WhICh 15 conSIstent WIth the CHARP gUIdelines.
In addition the proJect also successfully meets the competItIve
selectIon crIterIa specIfIed 10 the program gUIdelInes. Speclfl-
cally, the proJect provIdes: a signIfIcant Increase 10 afford-
able hOUSIng opportunltltes for famIlIes; signIfIcant improvement
of the hOUSIng stock through rehabIlItatIng bUIldlngs WIth health
and safety problems; the leveragIng of other SUbSIdy programs;
and the provlslon of SIgnIfIcant benefIt to low Income
households.
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Proposed FInanCIal Package
The project proforma, presented In Attachment 1, IndIcates that
the total development cost after rehabIlItatIon IS $415,000. A
fIrst mortgage In the amount of $285,0@0 IS antIcIpated, and a
combIned PNHTF and CHARP loan In the amount of $130,000 wlll be
used to brIdge the gap between the total development cost and the
fIrst mortgage.
FINANCIAL/BUDGETARY IMPACT
The approprlatlon authorIty to fund the requested loan eXIsts ln
the Clty-wlde HousIng AcqUIsItIon and Rehabllltatlon Program Ac-
count, WhICh IS funded from the folloWIng account numbers:
$ 9,782 (18-720-264-128-942)
$ 3,618 (18-720-264-129-942)
$13,400 (16-720-264-126-942)
$20,000 Total
No addItIonal budgetary actIon IS reqUIred.
RECOMMENDATION
It IS recommended that the Agency approve the use of CIty-wide
HousIng AcquIsltlon and RehabIlItation Program funds for the
1843-45 17th Street ProJect and authorIze the ExecutIve Dlrector
to release funds upon satisfaction of all program requirements,
not to exceed $20,000.
Prepared by: Ann Sewi11, HousIng Program Manager
Candy Rupp, HousIng Analyst
HousIng DIvisIon
Department of CommunIty and EconomIC Development
Attachment: ProJect Proforma
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Attachment 1
1843-45 17th STREET
PROJECT PROFORMA
AcqUIsItion Costs
ConstructIon Costs
ArchItectural Design
Insurance
TItle and Recordlng
Property Taxes
AppraIsal
Operating Expenses
FInancIng Fee
$375,000
95,375
3,80'0
1,0'00
2,500
750
600
3,850
7,125
Total Development Cost
$415,000
SOURCES OF FUNDS
Permanent Loan FIrst Federal
SubordInate Deferred Loan PNHTF
SubordInate Deferred Loan CHARP
$285,000
lHJ,000
20',000
TOTAL
$415,000
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