SR 09-12-2023 11B
City Council
Report
City Council Meeting: September 12, 2023
Agenda Item: 11.B
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To: Mayor and City Council
From: David Martin, Director, Administration
Subject: Approval of Exclusive Negotiating Agreement with AMCAL Multi -Housing, Inc.
and Gen-Land, LLC
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute an Exclusive
Negotiating Agreement with AMCAL Multi-Housing, Inc. and Gen-Land, LLC, for
the development of affordable and market housing on the assemblage site which
includes City-owned parcels located adjacent to Expo Terminus Station.
2. Adopt a finding of no possibility of significant effect pursuant to Section
15061(b)(3) (Common Sense Exemption) of the California Environmental Quality
Act (CEQA) Guidelines.
Summary
Following Council’s declaration that the approximately 1.85 acres of City-owned
properties located at 1632-1640 5th Street and the Expo Line Kiss & Ride as “surplus
land”, the City issued a Notice of Availability (NOA) to affordable housing developers in
accordance with the State of CA’s Housing and Community Development Surplus Land
Act (SLA) (Gov. Code, §54222). Staff conducted due diligence and analysis of 11 offers
received and completed good faith negotiations in accordance with the SLA. An
exclusive negotiating agreement (ENA) with AMCAL Multi-Housing, Inc. (AMCAL), a
California corporation, and Gen-Land LLC, a Texas limited liability company (also
known as Lincoln Property Company) is recommended at this juncture of the SLA
process to continue good faith negotiations with the City. Under an ENA, the City
agrees to not solicit offers or proposals from other parties for the potential development
of these surplus land parcels. The ENA also establishes the framework between
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AMCAL, Lincoln Property, and the City to negotiate the schedule of performance,
development terms, financing, and the community input process.
Background
On October 11, 2022, Council adopted Resolution 11470 (CCS) declaring the City-
owned parcels located at 1632-40 5th Street (APNs 4290-011-903, 4290-011-904, 4290-
011-905) and Expo Kiss & Ride Lot (APN 4290-011-909, 4290-011-902 and 4290-011-
901) (collectively, “the Property”) to comply with the State’s Surplus Land Act (SLA)
requirements. Under the SLA, the City, before it can initiate negotiations for the long -
term lease or sale of the Property, must first prioritize affordable housing, and issue a
Notice of Availability (NOA) to affordable housing developers, local park and recreation
districts and departments, and school districts about the availability of the City-owned
parcels and to give those entities the opportunity to submit an offer to lease or purchase
the Property for affordable housing or other SLA prioritized purposes (including open
space and recreation).
On November 11, 2022, the City sent an NOA to all affordable housing developers
registered with the State’s Housing and Community Development Department and other
required entities including the Los Angeles County’s Chief Executive Office - Asset
Management Division and the Los Angeles County Metropolitan Transportation
Authority (LA Metro) given the Property’s proximity to public transit. As prescribed by
the SLA, the NOA timeframe is 60-days from the issuance of the notice. Affordable
housing developers were able to submit interest and proposals to the City by
January 13, 2023.
Discussion
In response to the NOA that was issued, the City received inquiries and/or proposals
from 11 housing developers: AMCAL, Bridge Housing, Community Corporation of Santa
Monica (CCSM), Cypress Equity, Dignity Moves, EAH Housing, Menorah Housing
Foundation, Mercy Housing, Novin Development, Olson Company, and West Hollywood
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Community Housing Corporation. Nine of the proposals were structured to develop
affordable housing requiring varying levels of financial assistance from the City in the
form of a partial or full land subsidy, a long-term repayment plan with payback based on
available residual receipts, or a combination of both. Four proposers offered to develop
all seven parcels associated with the Property (shown on Exhibits 1 - 3), however, only
two proposers, AMCAL and Cypress Equity, offered to construct affordable housing
without any financial support or a land subsidy from the City and to purchase all seven
parcels associated with the Property as a bundle for the full appraised fair market value.
The 90-day good faith negotiations period, as prescribed by the SLA, was in effect from
January 13, 2023 through April 13, 2023. An internal committee comprised of City staff
from the Economic Development, Housing, and Planning divisions as well as the City
Attorney’s Office evaluated the proposals received with consideration given to the
developers’ experience, the total amount of proposed affordable housing production,
and financing strategies. On April 11, 202 3, in closed session, Council reviewed and
considered the offers received for the Property and directed staff to continue
negotiations with AMCAL and Cypress Equity.
On July 25, 2023, staff presented additional information submitted by AMCAL and
Cypress Equity for Council’s consideration. Based on the development parameters and
purchase price proposed from each proposer, Council directed staff to terminate
negotiations with Cypress Equity and initiate the ENA process with AMCAL. Cypress
Equity proposed to increase the number of affordable units to meet the SLA’s minimum
requirement of 25% units for lower income households but reduced their purchase price
by nearly 50%. AMCAL proposed to build additional housing units while maintaining
their original purchase offer. Moreover, AMCAL proposed to acquire the adjacent
commercial building at 1640 5th Street, commonly referred to as the “Comma Building”
(Exhibit 4), from Lincoln Properties, to redevelop the entire assemblage site to produce
additional housing units. The Comma Building is a 27,176 square foot office/commercial
building constructed in 1976 situated on half an acre of land. Because AMCAL’s
proposed acquisition of the Comma Building and the construction of additional housing
by Lincoln Properties relies on the sale of the Comma Building, it is necessary for the
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ENA to be tri-party agreement between the City, AMCAL and Lincoln Properties.
Preliminary design concepts contemplate approximately 570 housing units (the final unit
count is subject to additional feasibility analysis a nd negotiations) on the assemblage
site, with the market rate housing component developed by Lincoln Properties and the
affordable housing component developed by AMCAL.
At this point in the SLA process, an ENA is recommended to establish the framework to
allow staff to negotiate the schedule of performance including length of time to complete
negotiations, development terms, financing, and the community input process. An ENA
does not bind the City to an immediate lease or sale of the Property; it simply provides
the developer assurance that the City will not be negotiating with other developers while
AMCAL performs its due diligence and other responsibilities stipulated in the ENA.
As a condition before the execution of the ENA, AMCAL will remit a good faith deposit.
The City will utilize the funds in the deposit to cover costs including:
• in-house staff time (such as City overhead and administrative costs)
• third-party consultation fees (including, but not limited to, consultants, engineers,
architects, outside counsel, and advisors)
• financial analyses and design review, negotiations, appraisals, and,
• other reasonable services and necessary agreements for the proposed project.
During the ENA term, AMCAL and Lincoln Property (Developer) may conduct
inspections, tests, surveys, and other analysis deemed reasonably necessary to
determine the condition of the Property as well as analysis to determine the feasibility of
designing, developing, financing, and leasing the proposed project. Before a design is
finalized, the development concept would be presented for community and stakeholder
input for a period consistent with the City’s affordable housing notification and
engagement process for affordable housing projects. The community engagement
process, at minimum, unless otherwise agreed to in writing by the City Manager, will
include:
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• Developer conduct one (1) public meeting for the proposed development within 30
days of the delivery of final executed ENA and must provide a written notice which
provides the date, time, and location of the public meeting to the following entities:
1. Housing Division – which will post the notice on its website at least 15 days
prior to the public meeting date.
2. Neighborhood association(s) in which the proposed development is lo cated;
and
3. Local newspaper of general circulation.
• Prior to finalizing design drawings for submittal to review by the Planning and
Community Development Department, Developer will conduct a minimum of two (2)
public workshops with neighbors residing within 500 feet of the Development.
Developer is required to provide the City with an affidavit certifying that written
notices were sent to all neighbors residing within 500 feet of the proposed
development.
Once the community outreach and design process are completed, and all the
requirements of the ENA have been met, staff would return to Council to present the
final proposed development design and financial terms for Council’s consideration and
approval with the request for the City Manager to negotiate and enter into a
Development and Disposition Agreement for the sale of the Property.
Environmental Review
The negotiation and execution of an ENA does not have the potential for creating a
significant effect on the environment and is therefore exempt from further review under
CEQA pursuant to State CEQA Guidelines Section 15061(b)(3), which states that
CEQA does not apply where it can be seen with certainty that there is no possibility that
the activity in question may have a significant effect on the environment. The ENA
establishes the agreement framework to negotiate the schedule of performance,
development terms, financing, and the community input process of the Property. The
ENA does not have the potential for resulting in either a direct physical change in the
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environment or a reasonably foreseeable indirect physical change in the environment,
as no development is authorized by the recommendation in this staff report and any
future disposition will require separate environmental analysis if and when the details of
such disposition are known.
Past Council Actions
Meeting Date Description
10/24/2006
(Attachment A)
Authorization to Acquire Properties at 1632-1636 5th Street
3/23/2021
(Attachment B)
Adoption of a Resolution of Inventory of City-Owned
Properties Subject to the Surplus Lands Act
10/11/2022
(Attachment C)
Adoption of a Resolution Declaring Surplus Properties
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the
recommended action. Staff will return to Council if specific budget actions are required
in the future. The proposed ENA would include a deposit from AMCAL Multi-Housing,
Inc. to cover City costs associated with negotiations. Financial impacts related to
business terms associated with the proposed development will be brought back to
Council for consideration.
Prepared By: Nia Tang, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. Attachment A - Authorization to Acquire Properties at 1632-1636 5th Street
(10/24/2006) - Web Link
B. Attachment B - Adoption of a Resolution of Inventory of City-Owned Properties
Subject to the Surplus Lands Act (3/23/2021) - Web Link
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C. Attachment C - Adoption of a Resolution Declaring Surplus Properties
(10/11/2022) - Web Link
D. Attachment D - Exhibits 1 through 4
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EXHIBIT 1
APN: 4290-013-906
Address: 1636 5th Street (Apple Building)
Legal Description:
TR=974 EX OF ALLEY LOTS 20 AND 21
11.B.d
Packet Pg. 359 Attachment: Attachment D - Exhibits 1 through 4 (5979 : Exclusive Negotiating Agreement with AMCAL Multi-Housing, Inc. (30 min))
EXHIBIT 2
APNs: 4290-011-903, 4290-011-904, and 4290-011-905
Address: 1636 5th Street (Parking Lot 29)
Legal Descriptions:
4290-011-903: TR=974 EX OF ST AND ALLEY LOT 17
4290-011-904: TR=974 EX OF ST AND ALLEY LOT 18
4290-011-905: TR=974 EX OF ALLEY LOT 19
11.B.d
Packet Pg. 360 Attachment: Attachment D - Exhibits 1 through 4 (5979 : Exclusive Negotiating Agreement with AMCAL Multi-Housing, Inc. (30 min))
EXHIBIT 3
APN: 4290-011-909, 901-011-901, 901-011-902
Address: Expo Line Kiss and Ride Lot (KNR)
Legal Description:
4290-011-909: TR=15603 FOR DESC SEE ASSESSOR'S MAPS POR OF LOT 1
4290-011-901: ELLIOTT"S ADDITION TO SANTA MONICA 1/2 VAC ALLEY ADJ ON
SW AND LOT 9
4290-011-902: 1/2 VAC ALLEY ADJ ON NE AND POR OF LOT 8 M R 22-11 AND POR
P. 3-30-31
11.B.d
Packet Pg. 361 Attachment: Attachment D - Exhibits 1 through 4 (5979 : Exclusive Negotiating Agreement with AMCAL Multi-Housing, Inc. (30 min))
EXHIBIT 4
APN: 4290-011-017
Address: 1640 5th Street (Comma Building)
Legal Description:
LOT COM AT MOST N COR OF LOT 22 TR NO 974 TH SE ON SW LINE OF PALMS CT TO
NW LINE OF OLYMPIC BLVD TH SW THEREON 292.21 FT TH NE ON A CURVE CONCAVE
TO NW (R=666.78 FT) TO NE LINE OF ALLEY TH NW THEREON TO NW LINE OF SD LOT
TH NE THEREON TO BEG POR OF LOTS 22, 23 TR NO 974 AND POR OF RANCHO SAN
VICENTE Y SANTA MONICA
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Packet Pg. 362 Attachment: Attachment D - Exhibits 1 through 4 (5979 : Exclusive Negotiating Agreement with AMCAL Multi-Housing, Inc. (30 min))