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SR 09-26-2023 8G City Council Report City Council Meeting: September 26, 2023 Agenda Item: 8.G 1 of 7 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 8.G Packet Pg. 1462 2 of 7 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 8.G Packet Pg. 1463 3 of 7 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, 2023, 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 8.G Packet Pg. 1464 4 of 7 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 and 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: 8.G Packet Pg. 1465 5 of 7 • 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 located; 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 8.G Packet Pg. 1466 6 of 7 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 8.G Packet Pg. 1467 7 of 7 C. Attachment C - Adoption of a Resolution Declaring Surplus Properties (10/11/2022) - Web Link D. Written Comments 8.G Packet Pg. 1468 1 Vernice Hankins From:Joe DiRosa <artistseries@icloud.com> Sent:Monday, September 11, 2023 8:06 PM To:councilmtgitems Subject:Public Comment on 11.b EXTERNAL      I think someone should do a study to see what effect the power lines supplying the train will have being that close to a  residential development. Those lines are creating electrical fields which more often than not, cause cancer under  prolonged exposure.               Joe DiRosa Founder, CEO | Seedlings Inc. To help protect your privacy, Microsoft Office prevented automatic download of this picture from the Internet.Photo M: (310) 770-5171 E: joe@seedlings.vc A: Seedlings.vc The content of this email is confidential and intended for the recipient specified in message only. It is strictly forbidden to share any part of this message with any third party, without a written consent of the sender. If you received this message by mistake, please reply to this message and follow with its deletion, so that we can ensure such a mistake does not occur in the future.   8.G.d Packet Pg. 1469 Attachment: Written Comments (6007 : Exclusive Negotiating Agreement with AMCAL Multi-Housing, Inc. (30 min))