SR-407-005-01 (3)
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APR 1 1 1989
C/ED:HD:CR
parking Authority
city council Meeting:
4/11/89
Santa Monica, california
TO:
chairperson and Parking Authority Members
Mayor and City Council
FROM:
City Staff
SUBJECT:
Reco~endation to Approve the Selection
Development Team and Authorize city Manager
Negotiate and Execute option Agreement for
Fourth and Wilshire Senior Housing Project
of
to
the
INTRODUCTION
This report transmits recommendations regarding the proposed
senior housing development on Parking Authority Lot 4, located at
Fourth and Wilshire. It is recommended that the city Council and
Parking Authority:
1) approve the selection of a development
team to prepare and submit an application for U.s. Department of
Housing and Urban Development (HUD) Section 202 Loan Program
funds for the proposed development; 2) authorize the City Manager
to negotiate and execute an Agreement with the non-profit
developer for the preparation of the HUD application i and 3)
direct the Authority Attorney to prepare the necessary Parking
Authority Resolutions, and notice of intent to sell the
air-rights over Parking Lot Four to Retirement Housing Foundation
(RHF) contingent on receipt of a funding commitment from HUD
under the Section 202 Loan program. The report also describes
the selection process and the next steps required by the city
Council for submission of the application to HOD.
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demand analysis set by Kaku Associates, the parking consultant
for this study.
1) April 11, 1989 - Recommendation to City Council and
Parking Authority to approve selection of development
team and to authorize City Manager to negotiate and
execute Option Agreement.
2) May 23, 1989 - Recommendations to City Council and
Parking Authority to: 1) adopt resolutions regarding
the transfer of the Fourth Street property to the city
and the sale of the air-rights to RHF subject to
conditions; 2) hold a public hearing regarding the
proposed sale of air-rights~ and 3) authorize the City
Manager to execute an option Agreement for the purchase
of the air-rights, contingent upon receipt of a Section
202 loan commitment. Information regarding the amount
of City funds which may be needed for project amenities
not covered by the HUD loan will also be presented at
this meeting.
3) June 15, 1989 Development team submits loan
application to HUD for Section 202 loan funds.
4) July 25, 1989 - Information and recommendations to city
Council regarding the need for additional public
parking.
5) september 30, 1989 - BUD Notice of Award of Section 202
loan funds.
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BACKGROUND
In the FY1988-89 Community and Economic Development performance
objectives, the City Council directed staff to analyze the
feasibility of an affordable housing project utilizing the
air-rights over Parking Authority Lot Four, located at Fourth and
Wilshire. At their joint February 28, 1989 meeting, the parking
Authority and city council approved in concept the development of
sixty-seven (67) units of affordable senior housing at the site
and authorized City staff to prepare and issue a Request for
statement of Qualifications to select a project development team.
The City Council directed staff to prepare a parking demand
analysis of the site and return with recommendations regarding
the need and feasibility of providing additional pUblic parking
spaces prior to a commitment of funds by HUD to the project. All
development teams were informed of the city council request for
information and recommendations regarding public parking needs at
the site, and that the Council may ultimately choose not to make
the site available for a Section 202 project.
The City Council also requested an estimate of the amount, and
uses of City funds which may be necessary for project amenities
not covered by the Section 202 loan.
The fOllowing timeline outlines the next steps and points at
which the City Council will have the opportunity to take action
on the project prior to award of Section 202 funds. This
timeline reflects the schedule for completion of the parking
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The following describes the process and
selecting a development team and the steps
regarding the Council's additional requests.
criteria used in
staff is taking
DISCUSSION
section 202 loans are awarded to non-profit developers with an
experienced team in providing housing for seniors or the
disabled. A development team generally consists of a non-profit
developer, property manager, a housing consultant and architect.
The non-profit developer is responsible for the overall
development and management of the senior housing project. The
consultant prepares the HOD loan application, develops the
financing package, coordinates the team's activities and acts as
liaison to HOD staff. The architect performs all design
functions, and is involved in construction supervision.
Request for Statements of Qualifications
City staff issued a Request for statement of Qualifications (RFQ)
March 1, 1989. Copies were sent directly to thirty-one (31)
local and national non-profit developers, consultants and
architects. In addition, a notice was published in the outlook,
March 3, 1989 and project information was distributed to
consultants in the real estate field by a marketing service firm.
The RFQ outlined the rating criteria City staff would use to
select a development team. This rating criteria was based on the
criteria HOD uses when evaluating 202 loan applications. These
include:
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1. Demonstrated ability and experience of all members of
the development team in successfully receiving and
undertaking in a timely manner HUD Section 202 projects:
2. Financial capacity of developer, including past
financial history and current outlook, developer's
ability to commit financial resources to the project,
and the scope of the project in relationship to the
financial capacity of the developer;
3. Scope, extent and quality of developer's experience in
managing housing for lower-income elderly persons or
families;
4. Architect's proven ability to design a building concept
which is modest and will be economical to construct and
efficient to operate; and
5. Demonstrated experience of developer in serving the area
where the proj ect is to be located, and demonstrated
ability to work with and be responsive to local
neighborhood groups, low income tenants, and interested
citizens.
Four teams submitted responses to the RFQ. The following
outlines the experience of each team, including the non-prOfit's
financial capacity to undertake this project, and n~~~er of 202
projects awarded to each member of the team.
1) Team members include Catholic Charities, non-prOfit
developer; Nancy Lewis Associates, housing consultant;
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Falkenberg/Gilliam, management agent; and Flewelling &
Moody , architect. Cathol ic Chari ties is based in Los
Angeles and has received two (2) section 202 loan
commitments. Catholic Charities's financial statements
as of December 31, 1988 show $2.6 million in cash and
short term investments. Nancy Lewis has received two
(2) Section 202 funding reservations and Flewelling &
Moody have received 20 Section 202 commitments.
Falkenberg/Gilliam have 4,438 units under management.
2) Team members include Jewish Federation council (JFC),
non-prof it developer: Howard Katz, housing consultant;
Menorah Housing, management agent; and Associated
Architects, architect. The Jewish Federation Council
has received three (3) HUD Section 202 awards,
Associated Architects has received two (2) 202 project
commitments, and Howard Katz has received four (4)
Section 202 commitments. JFC's financial statements as
of August 31, 1988, indicate $14.3 million in cash and
cash equivalents available. Menorah Housing Foundation
currently manages 291 units.
3) Team members include Cooperative Services Inc. (CSI),
non-profit developer and management agent; Housing
Development Services, Inc. (HDSI), housing consultant;
and Kurt Meyer Partners, architect. CSI is based in
Detroit, Michigan and has received eighteen (18) HUD
Section 202 proj ect commi tments . The consultant has
received seven (7) HUD Section 202 awards, and Kurt
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Meyer Partners has received four (4) HUD section 202
awards. CSI has $2.9 million in cash resources as
indicated on their June 30, 1988 balance sheet. CSI
currently manages 3,430 units.
4) Team members include Retirement Housing Foundation
(RHF), non-profit developer; Foundation Property
Management (a RHF subsidiary), management agent; Don
Phillips Housing Consultants, housing consultant; and
Bahr Vermeer & Haecker Architects, architect.
Retirement Housing Foundation is based in Los Angeles
and has received fifty-six (56) Section 202 commitments.
Don Phillips Housing Consultants has received
twenty-eight (28) 202 funding commitments, and Bahr
Vermeer & Haecker has participated in the successful
application of twenty-two (22) Section 202 projects.
RHF and Foundation Property Management currently manages
a total of 8,248 units. As indicated on their November
30, 1988 financial statements, REF has $2.3 million in
cash resources.
Evaluation Process
Staff conducted an extensive evaluation of each team including
review of the statement of qualifications, an interview with key
members of each development team and follOW-Up with references.
Interviews covered organizational capacity and qualifications of
staff to be assigned to the project, recent history in meeting
HUD 202 timelines and success of each project, management
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approach and experience, architectural experience including the
abil i ty to comply with the city t s publ ic review process and
experience with mixed use projects, familiarity with air-rights
development and local capacity.
Developer Selection
Based on this extensive review, the development team of
Retirement Housing Foundation, Don Phillips Consultants and Bahr
Vermeer & Haecker has the superior experience and qualifications
to successfully apply for a section 202 fund reservation for the
proposed project. The experience and effectiveness of this team
in all aspects of senior housing will provide the City with the
best chance of receiving a section 202 commitment for the Fourth
and Wilshire project. The following describes the teamts
qualifications with respect to the selection criteria established
in the RFQ.
1) Experience
Retirement Housing Foundation has provided affordable
housing and health care services for 28 years and has
sponsored fifty-six (56) section 202 projects, including the
air-rights project at Third and Wilshire in Santa Monica.
Don Phillips Consultants have provided housing consulting
services for nine (9) years and have worked with RHF for
seven (7) of these years. The consultants have received a
total of twenty-six (26) 202 commitments, seven (7) of which
have been with RHF. Phillips Consulting received nearly all
of their 18 project approvals from the HUO Los Angeles Area
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Office, and have strong relationships with key members of
the HUD staff.
The sponsor and consultant's depth of experience working
together enhance their chances of successfully completing
this project. In addition, RHF' s experience with Santa
Monica's Third street project including HUD's specific
concerns regarding an air-rights project, increases the
chances of this project receiving a funding commitment.
Bahr Vermeer & Haecker have received 22 projects, and have
worked with RHF on seven (7) of them.
2) Financial Capacity
RHF has $2.3 million cash on hand according to their
November 30, 1988 financial statements. If necessary, RHF
is prepared to commit up to $10,000 per unit for unexpected
project costs not covered by the Section 202 loan to
maintain feasibility.
3) Management
RHF has a total of 8,248 units under management, including
53 projects located in California. On-site resident
managers are responsible for the day-to-day maintenance and
rent-up of the units, while a local Project Advisory Board
comprised of representatives of Santa Monica organizations
and RHF board members monitor the proj ect' s financial and
social activities. RHF buildings have active tenant
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organizations which develop newsletters
recreational and social activities.
and organize
4) Architectrs Ability
Bahr Vermeer & Haecker have twenty-one years of experience
and have designed twenty-two (22) Section 202 projects, six
(6) of which are in California. In addition, the firm has
designed five (5) parking garages, including a six-story 420
car parking garage in Los Angeles. They have had extensive
experience developing design solutions sensitive to the
concerns of community groups and local design review boards.
5) Local Experience
Retirement Housing Foundation has been effective in its
sponsorship of Santa Monica's current section 202 project at
Third and Wilshire. RHF established a local Project
Advisory Board to promote the project during predevelopment
and development stages and to monitor the projectrs
financial and operational activities on an on-going basis.
A similar board will be established for the Fourth and
Wilshire project.
RHF and Phillips Consulting have working knowledge of the
city development review process, concerns, and political
environment. Because of the sensitivity required of all
developers to meet the concerns of neighbors, merchants and
other local agencies to gain support of the project, RHF is
qualified to respond to their concerns.
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Based on their depth of experience and effectiveness, staff
recommends the selection of Retirement Housing Foundation,
Phillips consulting, and Bahr Vermeer & Haecker for the
development of an application to HUD for loan funds under the
Section 202 program.
The following describes the next steps required to submi t an
application for section 202 loan funds to HUO and steps staff is
taking to address city Council concerns.
NEXT STEPS
City staff will negotiate an option Agreement with RHF to prepare
and submit an application to HUD for Section 202 loan funds.
Loan applications are expected to be due to HUD June 15, 1989.
Upon execution of the Agreement with RHF, city staff will work
wi th the architect to determine the cost and design of the
project including the amount of City funds which may be necessary
to cover costs, such as the public parking component, HUD will
not fund. Staff will return to the Ci ty Council and Parking
Authority at the May 23, 1989 meeting with an estimate of the
amount and uses of the contribution which may be required from
the city.
HUD requires the sponsor to demonstrate site control as part of
their application. The City council and Parking Authority will
need to take the following actions at the May 23, 1989 meeting,
to provide RHF with the level of site control satisfactory to
HUD: 1) adopt a resolution which authorizes the transfer of the
Fourth street property to the City, subject to RHF's receipt of a
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section 202 loan commitment; 2) hold a public hearing on the
proposed sale of the air-rights over Parking Lot Four to RHF; 3)
adopt a resolution authorizing the sale of the air-rights,
subject to RHF's receipt of a Section 202 loan commitment,
completion of an environmental analyses in compliance with the
provisions of the California Environmental Quality Act, and
execution of a Development and Disposition Agreement; and 4)
authorize the City Manager to execute an Option Agreement for the
purchase of the air-rights, contingent upon receipt of a section
202 loan commitment.
General Services and Community and Economic Development staff is
working with Kaku Associates, a parking consultant on a parking
demand study of Lot 4 to determine the need for additional
parking at this site. staff will analyze the economic
feasibility and site constraints of adding any spaces that may be
needed according to the parking demand study. This analysis is
expected to be complete in mid-June and staff will provide the
City Council with information including the number of spaces
needed and the feasibility of meeting the demand with and without
the housing component. Staff recommendations regarding the
parking facility will be presented to the city Council in late
June. This time line will allow the Council to make a decision
regarding proceding with the project prior to an award of HUD
Section 202 funds.
FINANCIAL/BUDGETARY IMPACT
No financial or budgetary actions are required at this time.
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RECOMMENDATIONS
It is recommended that the City council:
1. Approve the development team
of Retirement Housing
Foundation, Don Phillips Housing Consultants, and Bahr
Vermeer & Haecker as described in this report.
2. Authorize the City Manager to negotiate and execute an
Option Agreement with Retirement Housing Foundation for
the preparation of an application for a HUD Section 202
loan for the site at Fourth and Wilshire.
It is recommended that the Parking Authority:
1. Direct the Authority Attorney to prepare the necessary
Parking Authority Resolutions, and notice of intent to
sell the air-rights over Parking Lot Four to RHF
contingent on receipt of a funding commitment from HOD
under the section 202 program, completion of required
environmental analyses, and execution of a Development
and Disposition Agreement.
Prepared by: Carol Anderson, Housing Analyst
Candy RUpp, Housing Program Manager
Community and Economic Development Department
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