SR-06-24-1980-11H0
JUN 2 4 1980
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Santa Monica, California, June 20, 1980
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TO: Mayor and City Council
FROM: City Staff
SUBJECT: Selection of Developer for Exclusive Negotiation Agreement -
Fifth Street Low and Moderate Income Housing Development
Background
On April 22, 1980, the Council approved the form of the revised Request For
Proposal (RFP) for the two (2) Fifth Street parcels, and authorized the staff
to distribute the RFP. The two vacant parcels, acquired by the City in January,
1980, are located at 2019 -25 and 2219 -21 Fifth Street. Each parcel comprises
approximately 11,200 square feet.
Notices indicating the availability of the RFP were published in the Evening
Outlook and mailed to approximately 27 minority architects. Proposals were
then sent to those responding to the notices and mailings, as well as to those
who had previously expressed an interest in housing developments of this type.
A total of 42 RFP's were distributed.
Proposals were received from five (5) prospective developers by the June 10,
1980, deadline. These proposals, which have been transmitted to the Council,
are discussed below.
The RFP indicated the developer selection would be based primarily upon:
1. Compliance with City's Development Objectives;
2. Quality of the development concept; and,
3. Financial capability and prior relevant experience.
JUN 2 4 1980
Mayor and City Council -2- June 20, 1980
The stated development objectives were to encourage the development of housing
units which would be available to low and moderate income family households, and
which would be compatible with and sensitive to the surrounding community.
Specifically, the RFP required that at least one -half of the units shall be
available to those earning 800 or less of the Los Angeles County median income,
and indicated a priority for proposals which additionally provided for some house-
holds earning up to 1200 of the median income. A requirement for the use of passive
and active alternative energy sources and energy conservation through design and
use of materials was also stated.
The development guidelines contained an advisory density limit of twelve (12) units
per parcel, based on HUD's preliminary reservation of Section 8 funds; a parking
requirement of 112 parking spaces per family unit; and noted that the current zoning
establishes a 40 foot maximum height.
Additionally, the RFP stated "...the City, as a condition of transferring the
parcels at a below - market rate, desires the option of reacquiring the land within
fifty (50) years of the initial transfer."
The Proposals
A Goldrich, Kest and Associates
Goldrich -Kest, one of the most experienced low and moderate income housing
developers in Southern California (124 HUD projects developed to date), has
proposed a twenty -four unit Section 8 project. The development would consist
of twelve (12) townhouse units on each of the two parcels. The unit breakdown
for both parcels would be ten 2- bedroom units, and two 3- bedroom units.
Mayor and City Council -3° June 20, 1980
The proposal indicates a land price of $213,300 (based on the maximum allowable
HUD rents), and a total development value of $1,505,488 (exclusive of land cost).
The use of an active solar system for domestic hot water, architectural and
landscaping features to control heat gain /loss, and water and energy- saving
fixtures are among the energy conservation features proposed.
The proposal itself does not provide a mechanism for the reversion of the property
to the City, although the developer has stated before the Housing Commission that
they are amenable to the inclusion of a reversionary option which would allow the
City to reacquire the land and improvements at the original mortgage value within
50 years.
B Minority Contractors Association of Los Angeles
Minority Contractors Association of Los Angeles ( MCALA) is a non - profit minority
association established in 1967. The MCALA has proposed a twenty -eight unit
Section 8 project which could also include some moderate income units. The
development would consist of fourteen (14) units on each of the two parcels. The
proposal envisions a combination of townhouses and flats reaching three stories
at maximum. The unit breakdown for both parcels would be three 0- bedroom units,
four I- bedroom units, four 2- bedroom units, and three 3- bedroom units.
The proposal does not suggest a land price (which would be dependent upon the
level of HUD subsidy and the moderate income mix). The revised estimated total
development cost is indicated at $1,108,500 (exclusive of land cost).
The use of an active solar system for domestic hot water and architectural
features to control heat gain /loss are proposed.
The proposal does not provide a mechanism for the reversion of the property
to the City. The developer has stated before the Housing Commission that they
are willing to discuss this issue during the exclusive negotiation period.
C Unitarian Housinq Association of Santa Monica
Unitarian Housing Association of Santa Monica (UHA) is a non - profit association
established in 1978. The UHA has proposed a twenty -four unit limited equity
cooperative, of which 500 of the units would be Section 8 assisted. The
Mayor and City Council -4- June 20, 1980
remaining units would be available to those earning up to 1200 of the median
income. The development would consist of twelve (12) units (two story flats)
on each of the two parcels. The unit breakdown for both parcels would be six
1- bedroom units, four 2- bedroom units, and two 3-bedroom units.
The proposal indicates a land price of $115,930 (based on the maximum allowable
HUD rents), and a total development cost of $1,086,657 (exclusive of land cost).
The possibility of a land lease in lieu of sale is also contained in the proposal.
Among the energy conservation features proposed are the use of an active solar
system for domestic hot water, architectural and landscaping features, and
insulating materials to control heat gain /loss.
The proposal does not provide a specific mechanism for the reversion of the
property to the City, although the land lease alternative would provide such a
mechanism. Additionally, the developer has expressed a willingness to negotiate
other reversionary options.
D United States Condominium Corporation
United States Condominium Corporation has proposed three alternative Section 8
projects. Each alternative would be developed as three story buildings total,ing
24 or 32 units for the two parcels. The unit breakdown under "Alternative A"
would be four 2- bedroom units, four 3- bedroom units, and eight 4- bedroom units
per parcel. "Alternative B" would consist of six 3- bedroom units, and six
4- bedroom units per parcel. "Alternative C" would consist of six 3-bedroom units,
and six 2- bedroom units per parcel.
The proposal does not indicate a land price. It is stated that the land price
would depend on the development configuration selected and HUD approval. The
total development value (exclusive of land) ranges from $1,157,764 to $1,332,600,
depending on the number and size of the units to be developed.
The use of an active solar system for domestic hot water, subject to financing
availability, architectural, landscaping, and materials use to control heat
gain /loss are among the energy conservation features proposed.
The proposal provides for the reversion of the land and improvements to the
City at no cost at the end of the mortgage period of 50 years, whichever is less.
Mayor and City Council -5- June 20, 1980
E Westgate Development Company
Westgate Development Company, a Santa Monica based minority -owned for profit
organization, proposes to develop a thirty -six unit project, of which
eighteen (18) units (2 and 3 bedroom) would be subsidized under the Section 8
program, and eighteen (18) 1- bedroom units would not be under Section 8 but
would be available to those earning up to 1200 of the County median. The unit
breakdown for each parcel is nine 1-bedroom units, six 2- bedroom units, and
three 3- bedroom units in a three story configuration.
The proposal indicates a land value of $1.00 and total development value of
$1,400,000.
The use of an active solar system for domestic hot water, architectural,
landscaping and materials use to control heat gain /loss are among the energy
conservation features proposed.
The proposal provides for the acquisition of the property by the City at the
market value of the improvements and no cost for the land within a 50 year period.
Housing Commission Review and Findings
The Housing Commission conducted interviews with each of the five developers on
Thursday, June 19, 1980. At the conclusion of the interviews, which included public
input, the Housing Commission voted unanimously to recommend to the Council two of
the five development proposals. The two recommended developers (no Commission
preference expressed) are the Minority Contractors Association of Los Angeles (MCALA)
and the Unitarian Housing Association of Santa Monica.
Although the Housing Commission complimented all of the developers for their
respective proposals, the two recommended proposals were singled out primarily due
to their mixed income, multigenerational, and unit size variety approach; and the
physical design of the proposals which were deemed superior with respect to
neighborhood compatibility, density, and general aesthetic features.
Mayor and City Council -6- June 20, 1980
In addition to their action regarding the two developers, the Housing Commission
also voted the following recommendations:
1. That the selected developer be obligated to select initial and subsequent
occupants by supervised lottery or some other equitable method developed by
the Housing Commission and approved by the City.
2. That the selected developer commit to an aggressive affirmative action program
with respect to all parties of the development team and with respect to all
phases of the development process.
3. That the selected developer commit to a specific mechanism which would allow
the City to reacquire the land and improvements within a fifty (50) year period.
4. That the selected developer be obligated to record a deed restriction and
other appropriate instruments which would insure that no less than one -half
of the units shall be continuously available to households earning no more
than 800 of the Los Angeles County median income.
5• That the City encourage the selected developer to seek community participation
in the finalization of the proposed development.
Summary and Conclusion
While recognizing that each of the five proposals comply with the development
objectives and guidelines of the RFP, the staff concurs with the Housing Commission
developer recommendation regarding the Minority Contractors Association of Los Angeles
and the Unitarian Housing Association of Santa Monica. Each of these two proposals
embody a design which is compatible with the surrounding neighborhood and a program
which integrates incomes, ages, and family composition which is also characteristic
of the community in which the housing is to be developed.
Mayor and City Council -7- June 20, 1980
The staff also concurs with the five additional recommendations of the Housing
Commission regarding specific conditions to be addressed during the exclusive
negotiation period. With the added emphasis of these five additional recommendations,
and because the Unitarian Housing Association is locally based and will consequently
have a strong motivation to develop and maintain a good development, it is the staff
opinion that the Unitarian Housing Association would be the superior developer.
Recommendation
It is recommended that the Council approve the "Agreement to Negotiate Exclusively"
with the Unitarian Housing Association of Santa Monica, subject to the inclusion of
the five recommendations of the Housing Commission, and authorize the City Manager
to execute the Agreement.
Prepared by: John Hemer
JH:mh
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