SR-09-23-1986-11D
C/ED:HSG:AS:wp
City Council: 9/23/86
\ \-D
.".
Santa Monica, California t//~/2f/ /1'8
TO: City Council
FROM: City Staff
SUBJECT: Request for Authorization to Negotiate and Execute an
Agreement Imposing Restrictions on Real Property and a
Compliance Agreement with Colorado Place Limited
Acknowledging Compliance with Affordable Housing
Obligations Under Development Agreement Between Colorado
Place Limited and City of Santa Monica
INTRODUCTION
This report transmits information concerning the development of
the fifty affordable housing units required for Phase I of the
Colorado Place project under the terms of the Development
Agreement between the ci ty of Santa Monica and Colorado Place
Limited. The report recommends that the city Council authorize
the City Manager and the city Attorney to negotiate and execute a
Compliance Agreement and Agreement Imposing Restrictions on Real
Property, recognizing the participation of Colorado Place Limited
with Community Corporation of Santa Monica in the development of
ten affordable units at 2405-07 4th Street to be in partial
fulfillment of the housing conditions required by the Development
Agreement.
DISCUSSION
# :31/Cf
On October 27, 1981, Colorado Place, Limited, Welton Becket
~c--""".,.,...---
Associates, and the City entered into a Development Agreement
governing the development of the Colorado Place pr?ject. section
- 1 -
\ \- D
SEPI a lB
14 (a) of this Agreement requires the developer to provide 100
units of affordable housing to address housing demand generated
by the Colorado Place project. Fifty of these units were required
to be completed in conjunction with Phase I of the Colorado Place
development, and the remaining fifty were to be completed after
the completion of Phase II. On June 29, 1982, Colorado Place,
.-:/;1: '3 '1Q 0
Limited and the City signed a Compliance Agreement acknowledging
that the development of the forty-one units at 1450 14th street,
1855 9th street, and 2006 20th street partially satisfied this
requirement.
The certificate of Occupancy for Colorado Place Phase I was
issued on April 8, 1984. Therefore, the remaining nine units
required as part of Phase I must be completed by April 8, 1987.
In order to meet this requirement, the Colorado Place Limited
(CPL) Partnership proposes to work with Community Corporation of
Santa Monica as a joint venture partner on the development of ten
affordable units at 2405-07 4th Street.
In May 1985 the Redevelopment Agency approved a loan of $290,000
to CCSM to purchase the property at 2405-07 4th Street. At that
time, CCSM intended to move-on and rehabilitate a ten unit
building donated by Santa Monica Hospital, with a combination of
citywide Housing Acquisition and Rehabilitation Program (CHARP)
funds and funds to be provided by the hospital as part of it's
obligation to satisfy a Rent Control removal permit. The hospital
subsequently received an exemption from the Rent Control Board
for this property, and therefore will not be providing the same
level of funds that had been anticipated. Therefore, in order to
- 2 -
make the use of this site for affordable housing feasible CCSM
has requested that the City approve the development of this
project in partnership with CPL as satisfying the requirement for
the remaining nine units of Phase I housing, and one unit of
Phase II housing.
Under the terms of the proposed partnership agreement Colorado
Place Limited will provide up to $550,000 to the project. This
amount exceeds $50,000 per unit, and is considered to be the
amount necessary to subsidize an affordable housing project such
that the rents are affordable to low income households. A brief
pro forma, outlining the proposed sources and uses of project
funds is attached to this report. As this pro forma shows, the
proj ect will be developed using a combination of CPL funds,
private mortgage funds supported by the rents, and $75,000 in
Citywide Rental Rehabilitation funds. The use of HUD Rental
Rehabilitation funds is recommended in order to support the
extensive level of rehabilitation required in this project, and
to deepen the level of affordability for very-low income
households.
Community Corporation has received all necessary planning and
zoning approvals, and Coastal Commission approvals for the
development of this project. At this time, CCSM is analyzing the
construction bids on the project in order to finalize the
financing plans for the project. Upon completion of this analysis
and receipt of a firm commitment from a private lender, CCSM and
CPL will finalize a joint venture partnership agree~ent, and will
work with the city staff and City Attorney's office to execute an
- 3 -
"Agreement Imposing Restrictions on Real Property" . This
Agreement will ensure that the requirements of the Development
Agreement are met in this project. The City and CPL will then
also execute a Compliance Agreement indicating that CPL has met
these housing requirements of the Development Agreement.
In consideration of the extensive amount of time and negotiation
involved in finalizing the project agreements, CCSM and Colorado
Place Limited have requested that this project be presented for
City Council approval and authorization at this time in order to
provide CPL and CCSM with assurances that this project as
proposed will meet the Development Agreement requirements.
Therefore, it is recommended that the City Council authorize the
City Manager and the City Attorney to negotiate and execute an
- Agreement Imposing Restrictions on Real Property for a ten unit
project at 2405-07 4th street, and Compliance Agreement with the
following terms:
(1) CCSM and CPL must submit adequate documentation, including a
signed construction contract and a firm commitment from a
lender so that the City may make a determination that the
project will be feasible to develop at the proposed level of
support from CPL.
(2) CCSM and CPL must submit a project operating budget for
approval by the City that demonstrates that the project can
be operated for the forty year term required by the Colorado
Place Development Agreement as affordable housing.
- 4 -
(3) CCSM must submit a management plan and tenant selection
policies that will be incorporated in the Agreement Imposing
Restrictions on Real
Property that ensure that the
Development Agreement requirements in these areas are met.
( 4) Prior to the start of construction the CHARP loan on the
project must be repaid.
Upon satisfaction of these terms and conditions the City will be
assured that CPL' s participation in this proj ect will provide
long-term affordable housing as required by the Development
Agreement.
FINANCIAL / BUDGETARY IMPACT
There are no financial or budgetary actions required by the
recommendations in this report.
RECOMMENDATION
It is recommended that the City Council authorize the City
Manager and the city Attorney to negotiate and execute an
Agreement Imposing Restrictions on Real Property and a Compliance
Agreement with Colorado Place, Limited, as described in this
report.
Prepared By: Ann Sewill, Housing Program Manager
Department of community and Economic Development
- 5 -