MEETING DATE:
AUGUST 11, 2015
SUBJECT:
Title
RESOLUTION NO. SHA 2015-014 - DEVELOPMENT AND LOAN AGREEMENT (DLA) WITH RICHMAR STATION SAN MARCOS (DEVELOPER) FOR PROPERTY ACQUISITION AND RELATED COSTS FOR AN AFFORDABLE HOUSING DEVELOPMENT IN THE RICHMAR NEIGHBORHOOD AND APPROVAL OF THE PROPERTY TRANSFER AS REQUIRED BY SECTION 33433 OF THE HEALTH AND SAFETY CODE
Body
Recommendation
Recommendation
ADOPT a resolution of the City Council acting solely in its capacity as the Successor Housing Agency (SHA) approving; (1) DLA; (2) Loan for property acquisition in the amount $1,306,770; (3) Loan for relocation, demolition and related predevelopment costs in the amount $921,100; (4) Section 33433 Report; and (5) Transfer of real property to the Developer in accordance with the terms of the DLA.
Body
Board or Commission Action
City Council as SHA approved the Exclusive Negotiating Agreement and predevelopment loan on September 9, 2014.
City Council as SHA approved the Supplemental Housing Support Agreement on December 9, 2014.
Relevant Council Strategic Theme
Planning for the Future
Relevant Department Goal
Facilitate Affordable Housing Production
Introduction
One of the City’s objectives has been the completion of the revitalization of the Richmar neighborhood, including the area between Mission Road and Richmar Avenue eastward to Firebird Lane. To that end, on September 9, 2014 the City Council as SHA approved an Exclusive Negotiating Agreement (ENA) and related predevelopment loan of $392,500 for the Richmar Station development. The project is currently envisioned as a new construction, mixed-use affordable housing community of up to 120 rental units, possibly to be built in two phases. The commercial component may include up to 22,000 square feet of ground floor space along West Mission Road. The development will be built to LEED Silver or equivalent and will feature a community room. The development may also include a “community kitchen” component within or adjacent to the community room. The new development will be built on various vacant, underutilized and/or commercially active properties in an area defined by West Mission Road to the south, Richmar Avenue to the north, Pleasant Way to the west and Firebird Lane to the east. It may also include adjacent properties immediately across Richmar Avenue to the north.
At its maximum scope, the Richmar Station project site could encompass up to twenty-five separate parcels. Some of the parcels are currently owned by the City as SHA; others are owned by the City itself. Still other parcels are privately owned. Preliminary estimates indicate that the total project cost could be up to $44.6 million, including land costs. The gap financing could approximate up to $13 million.
Due to the paucity of gap funding immediately available to the City as SHA in the financially constrained post-RDA era, the developer is being required to find gap additional project funding from a variety of potential funding sources yet to be determined. Also, property assembly by the developer for this project will be potentially challenging and time-consuming due to the multiple parcels in the maximum scope project footprint. Fortunately, most of the parcels are already owned by the City or SHA. However, some parcels are still under private ownership with disparate owners. For these reasons, the exact configuration of the project is still to be determined. However, enough contiguous parcels are already owned by the City and/or SHA so that a viable project can be built without the participation of the private sector owners, including the VFW Post.
The transfer of the 4-Way Liquor property (APN 220-084-07 and APN 220-084-06) represents the first step in a multi-step property acquisition phase for the Developer. The purpose of the transfer at this time is to allow the Developer to efficiently relocate the 4-Way Liquor business and to subsequently demolish the ramshackle building. Final property assembly could take several years.
Because the 4-Way Liquor property is owned by the City as SHA, Community Redevelopment Law (CRL) still applies. CRL requires that a Section 33433 Report be prepared and approved by the City Council prior to the property transfer. The Section 33433 Report is attached as Exhibit 4. It was prepared by Keyser Marston and Associates. The Report will be updated during the process, as required.
Discussion
For the purposes of the property transfer to the Developer, the value of the 4-Way Liquor property has been established at the same price that the RDA paid in 2010, $1,306,770. Therefore, the property transfer loan is the same amount. Since the property is already owned by the SHA, the money spent several years ago on acquisition represents sunk costs. Therefore, this transfer has no direct fiscal impact.
The Developer has estimated the costs of relocation, demolition and related predevelopment costs to be $921,100. This amount represents the actual cash loan that is being requested from the SHA. The money will be pulled from the 2014 SERAF reimbursement. Sufficient money remains from the reimbursement to fully fund this amount.
Environmental Impact
The City of San Marcos did evaluate and determine that this action (DLA, transfer of real property and associated loans) considered herein is Categorically Exempt pursuant to California Environmental Quality Act (CEQA) Section 15061(b)(3) under the general rule in that the action being taken herein can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment; and future project development shall comply with the City Climate Action Plan pursuant to the 2006 Global Warming Solutions Act of 2006 (Assembly Bill 32) and the CEQA and GHG Emissions bill of 2007 (Senate Bill 97).
Fiscal Impact
Fiscal impact is up to $921,100 from the SHA account. The current remaining balance in the 2014 SERAF reimbursement allows for this without draining money from other SHA sources. The land was purchased several years ago and the negotiated land value of $1,306,770 represents sunk costs. Therefore, only the $921,100 component of the loan package represents an out-of-pocket fiscal impact.
Attachment(s)
1. Resolution No. SHA 2015 - XXX
2. GIS Exhibit depicting the potential project site, including the 4-Way Liquor property
3. Section 33433 Report
4. Development and Loan Agreement
Prepared by: Harry Williams, Housing Programs Manager
Submitted by: Karl Schwarm, Director, Housing & Neighborhood Services Division
Approved by: Lydia Romero, Deputy City Manager
Approved by: Jack Griffin, City Manager