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city administrative costs. Interest earned has subsequently
increased the amount to $218,085.82.
According to the agreement between the ci ty and the proj ect
developer, the City's use of these funds and any interest earned
is restricted exclusively to making grants for the provision of
lower cost visitor and overnight facilities, including, but not
limited to, a hostel. The agreement precludes the City from using
the mitigation fees and any interest earned for other activities
or other types of housing projects. As approved by the Coastal
commission, the agreement defines lower cost as a cost of not
more than $15.00 per person per night or $30.00 per room. The
Agreement also permits the City to retain $6,000 for
administrative expenses associated with the disposition of the
mitigation fee.
REQUEST FOR QUALIFICATIONS
On February 24, 1989, staff issued a Request for Qualifications
(RFQ) (see Exhibit 2) to organizations with the relevant
experience and financial resources to develop low cost visitor
and overnight facilities. In response to the RFQ, the city
received one proposal from American Youth Hostels, Inc.
EVALUATION OF THE PROPOSAL
The proposal submitted by American Youth Hostel, Inc. meets all
the requirements set forth in the RFQ. The project will provide
inexpensive overnight lodging for $12.00 per person per night.
As required by the RFQ, American Youth Hostels, Inc. possesses
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considerable experience in developing and managing hostel
facilities. The project principals have equally extensive
experience in developing and managing youth hostels. American
Youth Hostel, Inc. owns the proposed site at 1438 Second Street.
Both the Planning commission and the city council have approved
the Development Review applications for the hostel project, and
the California Coastal Commission has also approved the project,
which is now under construction. This project would provide
affordable overnight accommodations for visitors to Santa Monica.
Given the economic and development trends in coastal areas of Los
Angeles, the youth hostel project will likely be one of the few
facilities in the Santa Monica area affordable to low- and
moderate-income travelers.
NEED FOR FUNDING
other funding sources for the project include a California
Coastal Commission grant ($730,000), a California Conservancy
Loan ($300,000), a commercial loan ($2,700,000), and a
no-interest loan from the City of Santa Monica ($500,000). AYH
has provided the City with evidence that despite these revenues
it still has a funding shortfall of $259,130 (see Exhibit 3).
AYH hopes to obtain the $212,085.82 from this source; the
remaining balance will be collected through fund-raising events
sponsored by American Youth Hostels Inc. In order to insure
compliance with the State's prevailing wage regulations, the
applicant has contacted the Department of Industrial Relations
and received oral assurance that the awarding of this grant would
not require AYH to pay the prevailing wage.
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staff recommends that the City Council authorize the City Manager
to negotiate and execute an agreement with American Youth Hostels
to provide that $212,085.82 in mitigation funds be utilized
towards development of the youth hostel facility at 1438 Second
Street. This agreement would include specific provisions
protecting the city's interests, and restricting use of the funds
solely to the hostel project.
BUDGET/FINANCIAL IMPACT
The recommendations of this staff report would allocate
$212,085.82 in mitigation funds from Account Number
80-000-000-00000-9750-04320 to the youth hostel project and
$6,000 of earned interest to the City for the administrative
costs associated with processing the agreement. Since use of
these funds is restricted, award of the funds does not impact the
City's general budget.
RECOMMENDATION
It is recommended that the City Council:
1. Authorize the City manager to enter into negotiations and
execute an agreement with American Youth Hostels, Inc. to
provide that $212,085.82 in mitigation funds be utilized
towards the development of the youth hostel facility
at 1438 Second Street;
2. Appropriate $212,085.82 from Account Number 80-000-00000-
9750-04320 for disbursement to American Youth Hostels,
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Inc. to be utilized towards the development of the
youth hostel facility at 1438 Second Street;
3. Appropriate $6,000 from Account Number 80-000-00000-
9750-04320 to the City for administrative costs
associated with processing the agreement.
Prepared by: Peggy Curran, Director, C/ED
Suzanne Frick, Principal Planner
Peter Mezza, Assistant to the Director of C/ED
John Read, Associate Planner
Attachments: Exhibit 1: Affordable Overnight Accommodation
Mitigation Agreement
Exhibit 2: Request for statement of Qualifications
Exhibit 3: Santa Monica International AYH-Hostel
Development Budget
w/ccyhrp
12/07/89
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