MEETING DATE:
SEPTEMBER 9, 2014
SUBJECT:
Title
RESOLUTION NO. SHA 2014-008 - AN EXCLUSIVE NEGOTIATING AGREEMENT AND PREDEVELOPMENT LOAN WITH RICHMAR STATION SAN MARCOS, LP FOR A NEW AFFORDABLE HOUSING COMMUNITY IN THE RICHMAR NEIGHBORHOOD
Body
Recommendation
Recommendation
Staff recommends that the City Council in its capacity as the Successor Housing Agency (SHA) adopt the attached resolution approving the Exclusive Negotiating Agreement (ENA) and predevelopment loan with Richmar Station San Marcos, LP (the Developer) for a new affordable housing community.
Body
Board or Commission Action
N/A
Relevant Council Strategic Theme
Planning for the Future
Relevant Department Goal
Facilitate Affordable Housing Production
Introduction
The Developer has approached the City about building a new mixed-use, mixed-income affordable housing community of up to 120 rental units for seniors and/or veterans. 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 better and will feature a community room. The new development will be built on various vacant, underutilized and 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.
Discussion
The Developer is a partnership between Hitzke Development and National CORE, both affordable housing developers with favorable records of performance in San Marcos and each bringing unique corporate capabilities to the partnership. The Developer proposes to develop a site of up to 4.5 acres which includes twenty-five parcels. Ownership is divided between the City, the SHA, and five different owners, including the VFW post. The City or SHA owns most of the property (see attached map).
The final size and scope of the development is yet to be determined based on available sources of funding, synchronized timing and successful property acquisition. At a minimum, the project's core will be the site of the future mixed-use senior affordable housing project bounded by West Mission Road to the south, Richmar Avenue to the north, Pico Avenue to the west and Firebird Lane to the east. Within this core, the commercial space is already "spoken for" by the VFW Post, San Marcos Market, community room and leasing offices. In addition, a City-owned and operated joint-use commercial kitchen and meeting room is also envisioned at the present time within the project's core. It is envisioned that this project will be completed in multiple phases with the project core being one of those phases.
The Developer intends to apply for the highly competitive 9% low income housing tax credits from the California Tax Credit Allocation Committee (TCAC) as early as reasonably possible and as coordinated with the City. Because of a relatively robust market-rate component requiring conventional financing, TCAC application considerations, and the paucity of affordable housing financing available to the City in the post-RDA era, the new development is planned to be built in two or, perhaps, three separate phases, although the Developer could build it in one phase if additional funding becomes available. In addition, due to the uncertainty of funding sources in the future, the project will be designed with multiple "options" that allow the Developer flexibility while pursuing funding opportunities. We are currently anticipating a Phase I application as early as 2016 although it may be a year or two later depending upon multiple factors in the market and how other City-sponsored projects in the 9% tax credit application queue fare in the intense competition.
In order to move forward with detailed design and application for City entitlements, the SHA is being asked to approve an ENA and predevelopment loan of up to $392,000. The final site plan and design will be presented to the City Council for approval at a later date after property assembly and site design is complete.
Fiscal Impact
The fiscal impact to the SHA is up to $392,500. There is sufficient money in the SHA fund to accommodate this loan. It is anticipated that this loan will be a one-time cost eventually leading to a new project in the foreseeable future. At that time, this loan will be incorporated into the new project's comprehensive funding package.
Attachment(s)
1. Resolution No. SHA 2014-008
2. Exclusive Negotiating Agreement
3. Exhibit identifying the project site
Prepared by: Harry Williams, Housing Programs Manager
Submitted by: Karl Schwarm, Director, Housing & Neighborhood Services Division
Reviewed by: Lydia Romero, Deputy City Manager
Approved by: Jack Griffin, City Manager