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sr-110910-3l__ Redevelopment Agency °~° °r Report Santa ~7lnnica~ Redevelopment Agency Meeting: November 9, 2010 Agenda Item: 3~j- To: Chairperson and Redevelopment Agency From: Andy Agle, Director of Housing and Economic Development Subject: Replacement Housing Plan for 520 Colorado Avenue Recommended Action This report requests that the Redevelopment Agency ("Agency") approve the proposed Resolution adopting the Replacement Housing Plan for 520 Colorado Avenue. Executive Summary Step Up on Second (SUOS) has applied for an acquisition and predevelopment loan from City housing trust funds to finance the acquisition of the property located at 520 Colorado Avenue and to perform predevelopment activities for a future affordable housing development on the site. The property is currently improved with 16 non-rent controlled residential boarding units, all of which are occupied and rented on a weekly basis. Under California Redevelopment Law, Section .33413.5 (Health and Safety Code, Section 33000 et seq.), the Agency must adopt a replacement housing plan when existing units, occupied by low- and moderate-income households, will be removed as a result of ah Agency-assisted project. A replacement housing plan describes the measures the Agency will undertake to provide comparable. replacement housing within four years following removal of the original units. The proposed Replacement Housing Plan for the 520 Colorado Avenue property has been made available to the public for review as required by Community Redevelopment Law. Background The Redevelopment Agency has previously approved replacement housing plans for three Agency-assisted affordable housing developments at 2411 Centinela Avenue (2005), 1943 High Place (2005) and 430 Pico Boulevard (2009). All three developments are in compliance with their replacement housing plans. 1 In 1995, this property was granted a Rent Control Removal Permit and is therefore not subject to Rent Control Discussion In accordance with California Redevelopment Law, Section 33143 (a), the Agency will meet its replacement housing obligation by implementing the following measures: Replacing the removed units with comparable housing within four years of demolition; and ® Ensuring the affordability of the replacement housing units and the occupancy by households whose incomes are commensurate with those households previously occupying the demolished units. Relocation of tenants and demolition of the units at 520 Colorado Avenue is anticipated to commence sometime between April and December 2011. Construction is anticipated to begin in February 2012 and be completed by July 2013, well within the requirement to replace the existing units within four years of removal. The replacement units are to be affordable to households at very low-, low-, or moderate-income levels. Levels shall be commensurate with the current households occupying the units to be removed. Because the income levels of the current households are self-reported and not verified at this time, the assumption has been made that all households in the units to be removed are of the lowest income category. The table below summarizes the sixteen occupied units to be removed. It should be noted that the zero-bedroom units are counted as one-bedroom units, as required by the Health and Safety Code, for the purpose of determining the total number of bedrooms to be removed. Housina Units to be Removed # of existing Totaf # of # of very low ~, units Unit :type bedrooms income bedrooms 16 0-bedroom 16 16 ~ Total 16 '16 ' 16 2 California Redevelopment Law, Section 33413(f), allows the Agency to replace housing units with a fewer number than removed housing units if the total number of bedrooms in the replacement housing units equals or exceeds the number of bedrooms in the removed units. Accordingly, SUOS will be required by the Agency to replace the 16 units containing 16 bedrooms with at (east 16 units containing 16 bedrooms. It is important to note that the future development is anticipated to include 24 very low- income units., which is more than required. The zoning for the site allows for the construction of up to approximately 47 affordable single units. Environmental Analysis No specific project has been submitted to the City for review. However, once a specific project is submitted,. it will be reviewed at that time pursuant to the California Environmental Quality Act. Further, the typical .100 percent affordable housing projects submitted to the City for entitlements are approved as ministerial actions. Financial Impacts & Budget Actions The recommendation does not have any budgetary or financial impacts to the City. Prepared by: Lisa Luboff, Senior Development Analyst d: Forwarded to Council: Andy Agle, Director Housing and Econ evelopment Attachments: ~~~ Rod Gould ~ City Manager A: Replacement Housing Plan for 520 Colorado Avenue B: Agency Resolution Approving the Replacement Housing Plan for 520 Colorado Avenue 3 Attachment A REPLACEMENT HOUSING PLAN For the 520 Colorado Avenue Project INTRODUCTION AND STATEMENT OF PURPOSE The City of Santa Monica Redevelopment Agency (the "Agency") is considering providing financial assistance to Step Up On Second ("SUOS") for the acquisition and predevelopment costs associated with 520 Colorado Avenue. SUOS is currently exploring the options for development of the site, which would entail the demolition of 16 existing non-rent controlled residential boarding units. New construction on the site is expected to include approximately 24 affordable efficiency housing units, but at this time the exact number and type of units is not known. Section 33413.5 of California's Community Redevelopment Law (Health and Safety Code, Section 33000 et seq.) requires the Agency to adopt a Replacement Housing Plan when it enters into certain agreements that would lead to the destruction or removal of dwelling units from the low and moderate income housing market. Section 33413(a) requires that whenever dwelling units occupied by low and moderate income households are destroyed or removed from the low and moderate income housing market as part of a redevelopment project, the Agency shall within four years of the destruction or removal, rehabilitate, develop, construct or cause to be rehabilitated, developed or constructed, for rental or sale to persons and families of low or moderate income at an affordable housing cost an equal number of replacement dwelling units containing an equal or greater number of bedrooms as the destroyed units. Section 33413(f) permits the Agency to satisfy its replacement housing obligation with fewer units so long as (i) the total number of bedrooms in the replacement units equals or exceeds the number of bedrooms in the destroyed units, and (ii) the replacement units are affordable to and occupied by the same income level of households as the destroyed units. Replacement housing units can be developed anywhere within the Agency's jurisdiction. Per Section 33413(f)(1) of the California Community Redevelopment Law, "destroyed or removed units having one or no bedroom are deemed for this purpose to have one bedroom. This Plan has been prepared to satisfy the requirements for replacement housing under California Health and Safety Code Sections 33413 and 33413.5 This Plan describes the following 1 Site location 2. Development of the replacement housing 3. Financing the replacement housing 4. Schedule for the construction of the replacement housing Attachment A 5. Period for which the replacement units will remain affordable 6. Article 34 Compliance 7. Availability of the Plan for public review DEFINITIONS Very-Low-Income Household Persons and families whose gross household income does not exceed the qualifying limits for very low income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. Very Low income generally is 50 percent of the area median income adjusted for family size, as more specifically defined in Section 50105 of the California Health and Safety Code. Low-Income Household Persons and families whose gross household income does not exceed the qualifying limits for lower income families as established and amended from time to time pursuant to Section 8 of the United States Housing Act of 1937. The low income limit generally is 80 percent of the area median income adjusted for family size, as more specifically defined in Section 50079.5 of the California Health and Safety Code. UNITS TO BE REMOVED If the site is developed with affordable housing, one multi-unit housing structure containing 16 zero-bedroom (studio) weekly rental units would be demolished. For purposes of the bedroom count, each studio is deemed as one (1) bedroom; therefore sixteen (16) bedrooms are needed for replacement purposes. In 1995 this property was granted a Rent Control Removal Permit and is therefore not subject to Rent Control. SITE LOCATION The site is located at 520 Colorado Avenue in the City of Santa Monica. Exhibit 1 provides a map of the project location. REPLACEMENT HOUSING UNITS This Replacement Housing Plan describes the measures that the Agency will take to ensure the production of 16 replacement bedrooms within four years of the removal of those bedrooms from the low and moderate income housing market. One hundred percent (100%) of the replacement bedrooms must be available at affordable housing cost to, and occupied by, persons in the same or lower income category as the very low and low income persons displaced from the 16 original bedrooms. Attachment A If the existing units on the site are demolished it is expected that the site will be developed with affordable housing consisting of a sufficient number of units to replace the 16 bedrooms demolished. Per section 33413(f)(1) as noted above, the new project will include 26 efficiency housing units with a minimum of 26 bedrooms, 24 of which will be provided to very low income families and two of which will be set aside as manager units. Any development on the site will be required to include affordable housing restricted in accordance with Health and Safety Code Section 33413 in order to meet the obligation to provide replacement housing, including units affordable at the income levels of the households displaced. Construction of housing on the site will occur within four years of the demolition of any existing units. The replacement housing units will provide affordable units to meet the replacement obligations triggered by the demolition activity, if any. FUNDING SOURCES The financing for the replacement housing units may include Redevelopment Housing Trust Funds, Tax Credit Equity, Project-Based Shelter Plus Care, Project-Based Section 8, private donations and a conventional bank loan. The Agency will require that SUOS may not proceed with demolition of the existing units until it has secured the necessary funding for development of the replacement units. TIMELINE FOR REPLACEMENT HOUSING Relocation of tenants and demolition of the units at 520 Colorado Avenue is anticipated to commence sometime between April and December 2011. Construction is anticipated to begin in February 2012 and to be completed by July 2013, well within the requirement to replace the existing units within four years of removal. LOW/MODERATE INCOME ASSURANCE The Agency will require the recordation of a covenant against any replacement housing units requiring at least 55 years of very low and low income affordability, as required by Community Redevelopment Law. Moreover, the Agency, in accordance with California Health and Safety Code Section 33418, monitors on an ongoing basis, any housing affordable to persons and families of low or moderate income developed or otherwise made available pursuant to agreements with the Agency. ARTICLE 34 COMPLIANCE Authority to develop new affordable housing units under Article XXXIV is found in a 3 Attachment A Santa Monica voter-approved initiative adopted on November 3, 1998 known as Proposition I which grants annual (fiscal year) authority to the City to develop, construct or acquire low rent housing projects. AVAILABILITY OF PLAN FOR REVIEW In accordance with Community Redevelopment Law, a copy of this Replacement Housing Plan will be available for review and comment by other public agencies and the general public at the City of Santa. Monica Redevelopment Agency, 1901 Main Street, Suite D, Santa Monica, CA 90405. Notice of the Plan's availability will be published in a newspaper of general circulation a reasonable time prior to the Redevelopment Agency's adoption of the Plan. 4 Attachment A EXHIBIT 1 Map - __ ,~ .; ': ~., Ci a'"ai ~gd ~ /~Z ay~ ~J ~ ~ s~~ ~~ ~ ~0 #s ~' : ~ cds br` r ~ r '~,s O , ~ ~ ~ i. P ~9 . ry G ~ ~ . ~ : v' da ~; a°~ wy ~ a €.,,"'. ms's a r$ s aa S ~ , ry id r a 5~. , ~ ,. ~ , : sS" ~ m ~ ~~ , ~~ ~ ~ c b, ~ .. ~~ ~ lk' i i ~ ~• ~ fi ~U`m a ~~ Sa at usr ~ ~t ~ 520 Colorad o s ~ Avenue ~ ^ ~Q 7 { ~.» s~° 5 ~yd . , ~: ~ s .. :~ x'O ,u J S hs Qa,~ ,~Rlc ~ ty ~~ r O "" w Santa ~~ 0~ `°o~ Menica 35tace ~c ~ 9~ x 9~ P .. Shopping '~P di~ ~ n CCt>t2f ~i~ ~ ~ . G _ Q 9Q Z /~ ~, U ~ ~ O / tdsm D '- ~ CR H au ex f t ~ .~ ju25 ~ P + r c ~~ ~ 12ulb' :apen co Q ' n e tI S G ~ yz :.r . e+'re y .. r: ~ - 5 S . p. ¢° Ey 3 - - ` ,~? li S ~ i ~ 8 '~' . _~ _,- a N ,ne~ae.7i ., ~o `t '4i. , . ^.. iia ~' \ R ~ a 6 Q,~ Reference Resolution No. 528 (RAS).