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SR-407-009 (6) e e -~ -- 28 f965--< t/O?-(){)9 C/ED:HSG:AS:wp Redevelopme?t Agency MeetIng 5/28/85 Santa Monlca, CalIfornIa TO: Cha1rperson and Redevelopment Agency FROM: Redevelopment Agency Staff SUBJECT: Request for Cornmi truent of Funds Prom CIty-WIde HousIng AcquisItion and RehabIlitatIon Program INTRODUCTION ThIS report transmits a request for conmltment of deferred loan funds from the City-wIde Housing AcqUisitIon and RehabIlItatIon Program (CHARP) submitted by CommunIty CorporatIon of Santa Monl- ca (CCSM) for the relocation and rehabIlitatIon of thIrty-two hous 1 ng uni ts on scattered si tes In the Mld-C 1 ty and Ocean Park areas. The report reconmlenrls approval of a COmItll tment of program loan funds and requests author I za tl on to enable the Execu tl ve DIrector to release funds upon satIsfactIon of all progranl requIrements. BACKGROUND On September 4, 1984 the Agency approved the allocatlon of FY1984-85 funds from the Downtown, Ocean Park l(a) and l(b) Re- development ProJects to the CIty-wIde HousIng AcquisItlon and ecIR~-=<.. MAY 2 8 1985 - 1 - e e Rehablll ta t 1 on Prog ram (CHARP). The CHARP program gu Idel1 nes re- qUIre that the Redevelopment Agency approve each request for pro- gram loan funds. This report describes the requested loan for the relocatIon and rehabIlItatIon of thIrty-two vacant rental unIts, and analyzes the borrower's proposal relatIve to approved progranl elIgIbIlIty and fundIng crIterIa. DescrIptIon of the ProJect CommunI ty Corporation of Santa MonIca (CCSM) and Santa MonIca Hospital have been workIng together to relocate and rehabilItate th 1 rty-two vacant rental uni ts currently owned by the hOSpl tal, located on 16th Street between Arizona Avenue and Santa Monica Boulevard. The hospItal has agreed to donate these units to Com- munIty CorporatIon, to pay for the archItectural and englneerlng serVIces, and to cover up to $298,090 of the cost of rehabIlItat- Ing the unIts. On December 20, 1984 the Rent Control Board granted a removal permIt for the relocatIon and rehabIlItatIon of these units on other sItes in the City. In accordance wIth the Category "0" re- moval permIt regulatIons, the hospItal IS only requIred to make 15% of the relocated hous1ng unIts affordable to low lnCOme ten- ants. By prOVIding the level of fInancial support indIcated above, WhICh IS over 53% of the SUbSIdy necessary to make the proJect feaSIble, the hOspItal is exceedIng this reqUIrement. The leveragIng of these funds WIth a CHARP loan wlll enable Con~lunlty CorporatIon to develop all of the unIts for occupancy by low and moderate-lncome tenants. - 2 - e e The rehabIlitatIon work proposed for these bUIldIngs Includes repairIng plumbIng, replacing and repairing flooring, cabinets, and walls, and reconflguring the bUIldings to prOVIde a greater number of three and four-bedroom unIts. The rents will be tled to the SectIon 8 Fair Market Rents, WhICh are affordable to low and moderate Income households WIthout addItIonal rent SubsIdIes, and WhiCh make the units affordable even to very-low Income tenants With the Section 8 program certIfIcates. Communi ty Corporation has Identi f led three Sl tes su i table for these mOve-on bUIldIngs. A fourth buildIng will remalO and be rehabIlItated on-sIte. Two of these SItes, 2405-07 4th Street and 1544 Berkeley, are In escrows that must close WithIn thIrty days. CommunIty Corporatlon has applIed for a combined construction and permanent loan from the Bank of AmerIca through the Callfornla Housing FInance Agency (CHFA) MultIfamIly Housing Bond Program. Although thlS proJect meets the Bank's underwrIting crIterIa, the Bank 1 s loan processing tlmellne WIll not approve the loans ln tIme to meet the escrow closing dates. Therefore, CommunIty Cor- poratIon has requested a short-term loan of $5113, rJrJrJ for si te acqul Sl tlon. ThIS loan wi 11 be reduced to a permanent loan of $260,000 when the Bank of America/CHFA loan IS made, and the (31f- ference of $250,000 WIll be returned to the CItYWIde HOUSIng Ac- qUISItIon and RehabIlItation Program account to be used on other elIgIble proJects. The proJect proforma analysis, presented In Attachment "Alt summarIzes the SIte locations, development costs and fund sources. - 3 - e e ProJect ElIgIbIlIty Under CHARP GuidelInes The approved CHARP gUldellnes contaIn a number of crIteria for proJect evaluation. CCSM's proposal for fundIng to relocate and rehabIlItate these unIts meets the program standards as follows: - FInancIal FeasIbIllty The CHARP gUIdelInes establIsh three crIterIa for determIning the maXlInum loan amount: (1) The deferred loan should not exceed $15,000 per unit. (2) The loan amount should not exceed thirty-three percent (33%) of the total development costs. (3) The loan shall not exceed the amount necessary to make the proJect feasIble. The $260,000 permanent loan requested for thIS project IS equal to $8,125 per unl t, and represents fIfteen percent (15%) of the total development costs. - BenefIt to Low and Moderate Income Households The CHARP gUIdelInes reqUIre that at least elghty-f 1 ve percent (85%) of the tenants have low or moderate Incomes. One hundred percent (100%) of the tenants In these bUIldings wIll have low or moderate Incomes. - ProJect LocatIon and RehabIlItation Standards ConSIstent WIth the CHARP gUIdelInes, the proposed proJect loca- tIons are free from adverse envIronmental condl tlons. CCSM pro- poses to brIng the properties up to the Sectlon 8 Housing Quality - 4 - e e Standards. The rehabIlItatIon work Items are elIgIble under the CHARP gUIdelInes. - Tenant PartIcIpatIon The CHARP gUIdelInes requIre that at least seventy-fIve percent (75%) of the eXIstIng tenants affIrm their deSIre to particIpate in the program. Sloce there are no eXIstIng tenants In these bUIldIngs, thIS crIterIa does not apply to thlS loan request. In addltlon, the proJect also successfully meets the competltlve selectIon criterla specifIed In the program gUIdelines. The proJ- ect provIdes a sIgnIfIcant Increase in affordable housing oppor- tunl tIes for famIlIes, sIgnIfIcant Improvement to the houslng stock through rehabIlItatIng buildings wIth health and safety problems, the leveragIng of other subSIdy programs, and the pro- VISIon of SIgnIfIcant beneflt to low and moderate Income households. FINANCIAL / BUDGETARY IMPACT The approprIatIon authorIty to fund the requested loan lS 10 the CltY-Wlde HOUSIng Acqulsltlon and RehabIlItatIon Program ac- counts, 10 the following account numbers: $255,000 (16-720-264-000-942) $186,150 (18-720-264-128-942) $ 68,850 (18-720-264-129-942) $510,00'0' Total No addItIonal budgetary actIon IS reqUIred. - 5 - " e e RECOMMENDATION It IS reconmlended that the Redevelopment Agency approve the use of CIty-wIde HousIng AcqUIsItIon and RehabIlitatIon Program funds for the relocat lon and rehablll ta ti on of th 1 rty-two unl ts as descrIbed In thIS report, and authorlze the ExecutIve DIrector to execute all necessary loan documents and to release loan funds of $510,000. Prepared By: Ann Sewlll, Houslng Program Manager Houslng DIVIsIon Department of CorrmlUnlty and ECOnOITlIC Development Attachment: "A" - ProJect Proforma - 6 - ~ e ., Slte and UnIt Dlstrlbutlon Unlts 10 8 8 6 ProJect Proforma Development Costs: Land AcquIsItIon RehabIlItatIon ArchItectural Insurance/Taxes Title and RecordIng Bond Fees TOTAL DEVELOPMENT COSTS Sources of Funds: EXlstln9 SIte 1327 16th st. 1325 16th St. 1331 16th st. 1336 16th St. CombIned ConstructIon and Permanent Loan - Bank of AmerIca / CHFA Santa MonIca HospItal Loan CHARP Loan TOTAL SOURCES e Attachment lIAIl New Slte 2405-07 HollIster 1544 Berkeley Under NegotIatIon Same Slte $ 709,500 $ 953,168 $ 0 $ 36,0010 $ 12,000 $ 810,132 $1,7910,80'10 $1,232,800 $ 298,0'I.HJ $ 260,0100' $1,790,800' Note: CHARP wlll make an short-term loan of $510,01010 to purchase the 4th Street and HollIster sltes. $250,1000 of thIS loan wIll be pre-paId when the Bank of America / CHFA loan IS made; the remaInder of $260,00'0 wIll be a twenty-fIve year loan.