SR-407-005-02 (7)
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Redevelopment Agency Meeting 5/28/85
Santa MonIca, California
TO:
Chairperson and Redevelopment Agency
FROM:
Redevelopment Agency Staff
SUBJECT:
Recommendation to Authorize the ExecutIve DIrector
to Execute Documents Necessary to Release Funds for
the Purchase of 2323 4th Street on Behalf of Alter-
native Living for the AgIng, and to Allocate Funds
for Necessary Predevelopment Expenses
INTRODUCTION
ThiS report transmIts InformatIon and recorrmendations concerning
the development of property at 2323 4th Street by Alternative
LIVIng for the AgIng (ALA) for senIor congregate hOUSIng. The
report recommends that the Redevelopment Agency authorIze the
ExecutIve DIrector to release funds for the purchase of 2323
Fourth Street, and release funds to Alternative LiVIng for the
AgIng for related predevelopment expenses.
BACKGROUND
In response to the FIscal Year 1984-85 Corrmmnlty Development Pro-
gram Request for Proposals, ALA submitted a proposal and was
awarded a total of $300,000; $285,000 In Redevelopment Tax Incre-
rnent funds, and $15,000 from the VItale GIlpIn Funds. At the
meetIng of September 11, 1984 the Agency and the HOUSIng AuthorI-
ty adopted a resolutIon authorIZing acceptance of $120,000 fronl
the CalIfornia Department of HOUSIng and CommunIty Development
(HCD) Rental Housing ConstructIon Program (RHCP) for the
ALCc(RA_!
tv.'f 2 8 19f.i
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SenIor Development. In addItIon, the Redevelopment Agency af-
fIrmed the condItIons under WhICh the Agency's funds could be
used for thIS proJect. This report describes the use of the Agen-
cy funds to support the SIte acquiSItIon and a portIon of the
development costs of a SIX unIt rental development to house
twelve senIors, and detaIls, for Agency approval, the terms of
the loan documents to secure Agency funds.
ProJect Descri?tlon
The SenIor Shared HOUSIng Development IS targeted to senIors who
are able to lIve Independently but reqUIre a more supportIve en-
VIronment than IS offered In other senior hOUSIng developments.
The senIors WIll benefIt from In-house meals, social serVIces,
and planned recreatIonal events. The proJect WIll contaIn SIX
two bedroom, two bath rental unIts, each of WhICh WIll be shared
by two seniors.
There WIll also be a common kItchen, dInIng and
recreatIon room. The development WIll be structured to maXImIze
avaIlable aSSIstance to the seniors through the SectIon 8 EXISt-
Ing HOUSIng Assistance Program, and rent levels WIll comply WIth
current Department of HOUSIng and Urban Development (HUD) FaIr
Market Rent levels, so that the proJec t may ass 1 st a TIn X of very-
low and low- Income senIors. ALA WIll manage and own the
development.
ProJect HIstory
Throughout thIS fIscal year AlternatIve LiVIng for the AgIng
(ALA) has been workIng with Conrnlunity CorporatIon of Santa MonIca
on the development of this SenIor Shared House to accomodate
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twelve seniors. ALA and Conmrnnlty CorporatIon have examIned
numerous SItes in Santa MonIca for the development and have had
great dIffIculty In locating an affordable and desirable SIte.
At the Redevelopment Agency meetIng of May 14, 1985 the Agency
authorIzed the aSSIgnment of the SIte at 2323 Fourth Street to
AlternatIve LIVIng for the AgIng. Escrow on thIS property IS
scheduled to close on June 7, 1985.
WIth the aSSIstance of CommunIty CorporatIon, ALA WIll be apply-
Ing for both constructIon and permanent fInanCIng through the
CalIfornIa Housing FInance Agency MultIfamIly Bond Program.
However, because of the tlnLe Involved In preparIng fInal plans
and specIfIcatIons, thIS loan WIll not be funded untIl October,
1985. Therefore, In order to meet the escrow closing deadlIne of
June 7, 1985, it IS reconmLended that the Agency purchase the
property at 2323 4th Street on behalf of ALA.
The purchase prIce of this property IS $179,000. In addItIon, ALA
WIll need funds to cover predevelopment costs such as architec-
tural and engIneerIng serVIces, tItle and recording costs, and
some legal fees. It IS recoIT@ended that the Agency make a total
of $20,000 avaIlable to ALA to cover these predevelopnLent costs.
These funds WIll be paId to ALA upon submISSIon of satisfactory
eVIdence that costs have been Incurred. The SIte WIll be trans-
ferred to ALA, and the remaInder of the Agency's funds WIll be
released when the prIvate lender's loan 15 made.
The attached proforma detaIls the estImated development costs and
the sources of funds (ExhIbIt "1"). Also attached is the current
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project development schedule (ExhIbIt 11211). The folloWIng wIll
outlIne the terms to be Included In a Promissory Note, Deed of
Trust and Regulatory Agreement to be executed when the Agency
transfers the sIte to ALA and makes a deferred loan when the pri-
vate lender's loan IS made.
Terms of the Note and Deed
The amount of the Note WIll be $300,000, WhICh WIll Include the
funds already used to purchase the property and to cover some
predevelopment expenses, as well as the funds to be released at
the start of constructIon. The terms to be Included are as
follows:
(1) The prIncIpal sum of the Note shall be due thIrty years
from the date of the Note subJect to the terms of the
Deed of Trust and Regulatory Agreement.
(2) SImple Interest shall accrue on the prInCIpal balance at
the rate of ten percent (10%) per annunl. The prIncipal
and all accumulated Interest shall be due and payable If
the development ceases to be operated as affordable
housing for senIors. If the owner complies WIth the af-
fordable hOUSIng prOVISIons and other reqUIrements
speCIfIed In the Deed of Trust, the prInCIpal and inter-
est shall be deferred for thirty years. If the owner
extends the term of the Regulatory Agreement and agrees
to contInue to operate the development as affordable
hOUSIng for an addltIonal ten years at the end of the
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thIrty year term, the prIncipal and Interest shall be
forgIven.
(3) Rents on all unIts In the development shall be main-
taIned at rates affordable to persons wIth Incomes at or
below 80% of the HUD defined area medIan Income.
(4) Only low and moderate Income persons SIxty-two (62)
years of age of older shall be elIgIble occupants of the
development, and first prIorIty In selecting tenants
shall be gIven to eligIble Santa MonIca resIdents.
(5) The Borrower shall be requIred to partIcIpate whenever
possIble In the Section 8 HousIng AssIstance Payments
Program, or a sImIlar SUbSIdy program.
(6) Any Increases In rent shall be lImIted to those allow-
able under the Rent Control Charter Amendment.
These terms wIll ensure that the Agency funds are used to support
a long-term affordable hOUSIng development for Santa MonIca
senIors.
FINANCIAL/BUDGETARY IMPACT
A total of $300,000 for thIS AlternatIve LIVIng for the Aging
proJect IS approprIated 10 Account Numbers 16-720-264-126-943 and
16-720-264-731-943. A total of $180,000 ( IncludIng $179,000 for
the purchase prIce plus $1,000 for escrow and clOSIng costs) of
thIS amount WIll be expended by the Agency from account number
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16-720-264-126-943 for the purchase of 2323 4th Street. An addI-
tIonal $20,000 from account number 16-720-264-126-943 wIll be
allocated to reimburse ALA for authorIzed predevelopment costs.
No addItIonal fInanCIal or budgetary actIon IS requIred.
RECOMMENDATION
It IS recommended that the Redevelopment Agency:
(1) AuthorIze the ExecutIve DIrector to purchase the property at
2323 4th Street;
(2) AuthorIze the ExecutIve DIrector to release up to $20,000 to
AlternatIve LIVIng for the Aging to cover predevelopment costs
for the senIor congregate hOUSIng proJect; and
(3) AuthorIze the Executive DIrector to negotIate, accept and
execute a Promissory Note, Deed of Trust and Regulatory Agreement
IncorporatIng the terms descrIbed In thIS report, and to transfer
ownershIp of the property at 2323 4th Street and release the
remaInIng funds upon receIpt of a fIrm fInancing commItment ft"om
a prIvate lender, as descrIbed in thIS report.
Pt"epared by: Ann SewIll, HOUSIng Program Manager
Candy Rupp, Housing Analyst
HOUSIng DIVIsion
Department of Community and EconomIC Development
ExhIbItS: ProJect Proforma
Development Schedule
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EXHIBIT 1
ALA SENIOR DEVELOPMENT
ProJect Proforma
LAND ACQUISITION
CONSTRUCTION COSTS
ARCHITECTURAL
INSURANCE
TITLE AND RECORDING
PROPERTY TAXES
FINANCING FEE
TOTAL DEVELOPMENT COST
SOURCES OF FONDS
Construction Phase:
Construction Loan Bank of America
Redevelopment Agency Loan SIte Acq./Predevelop.
Redevelopment Agency Loan Construction
AlternatIve LIvIng for the AgIng EqUIty
TOTAL
OperatIng Phase:
Permanent Loan Bank of AmerIca
Redevelopment Agency Loan SIte Acq.
Rede~elopment Agency Loan CapItal WrItedown
Rental HousIng ConstructIon Program Loan
AlternatIve LIvIng for the AgIng EqUIty
TOTAL
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173,131313
4113,4130
21,131313
5,131313
1,13813
2,51313
52,131313
664,9813
323,01313
183,91313
116,11313
41,980'
664,980
20'3,1300'
183,91313
116,10'13
1213,01313
41,980'
664,980
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EXHIBIT 2
ALA SENIOR DEVELOPMENT
DEVELOPMENT SCHEDULE
SIte AcquIsitIon
PrelImInary DesIgn
Complete Working Drawings
ObtaIn permIts, ARB approval, request bIds
Apply for Coastal Connlsslon approval
ReceIve contractor bIds
Select contractor
Secure constructIon fInancIng
Issue notIce to proceed
Complete ConstructIon
e
June 1985
June 1985
July 1985
August 1985
August 1985
September 1985
October 1985
October 1985
October 1983
October 1986