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HomeMy WebLinkAbout01/13/1997 - City Council Special Meeting - Redevelopment AgencySPECIAL JOINT MEETING OF THE CITY COUNCIL AND REDEVELOPMENT AGENCY CITY OF COSTA MESA JANUARY 13, 1997 The City Council and the Redevelopment Agency of the City of Costa Mesa, California, met in special joint session January 13, 1997, at 6:10 p.m., following the regular 5:30 p.m. Agency meeting, in first floor Conference Room A, City Hall, 77 Fair Drive, Costa Mesa. Notice of the special joint meeting was given as required by law. The meeting was called to order by Agency Chairman/Mayor Pro Tem Monahan. ROLL CALL Council/Agency Members Present: Mayor/Agency Member Peter Buffa Mayor Pro Tem/Agency Chairman Gary Monahan Council MemberNice Chairwoman Libby Cowan Council/Agency Member Joe Erickson Council/Agency Member Heather Somers Council/Agency Members Absent None Officials Present: City Manager Allan Roeder City Attorney Thomas Kathe Redevelopment and Housing Manager Muriel Ullman Assistant Finance Director Marc Davis Accounting Supervisor Diane Butler NEW BUSINESS The Redevelopment and Housing Manager reviewed the 1996-97 Agenda Report dated January 10, 1997, and reported the HOME/Redevelop- following: ment Acquisition and Rehabilitation On February 14, 1996, the Redevelopment Agency adopted Housing Project a list of qualified developers for' fiscal year 1996-97 residential projects which consisted of Civic Center Barrio Housing Corporation, Jamboree Housing Corporation, and Habitat for Humanity. In October, 1996, a Notice of Funding Availability (NOFA) was provided to these developers for acquisition and rehabilitation ,of existing units for long-term use, and the Shalimar Drive/James Street neighborhood was targeted. The funding offered includes $483,300.00 in federal HOME Program funds and $150,000.00 in property tax increment housing set-aside funds, for a total of $633,300.00. The HOME Program funds must be committed to a specific project by May 1, 1997. Civic Center Barrio Housing Corporation and Jamboree Housing Corporation submitted proposals. Habitat for Humanity declined because of prior obligations. Both 3 84: applications were evaluated by Keyser Marston Associates for financial feasibility, and applicants were interviewed by the Redevelopment and Residential Rehabilitation (313) Committee in December, 1996. Both are deemed qualified and capable of successfully completing the projects as proposed. The Redevelopment and Housing Manager outlined the two proposals: Civic Center Housing Corporation Acquisition of 4 four-plexes at 783, 787, 791, and 795 Shalimar Drive, and 1 four-plex at 679 West 18th Street, for a total of 20 units at a cost of approximately $1.04 million. The buildings include 9 three-bedroom units and 11 two- bedroom units. Rehabilitation costs are estimated at $875,000.00. Of the total $1.92 million acquisition and rehabilitation costs, $725,000.00 is proposed through conventional long-term financing. Because the remaining $1.19 million exceeds funds offered by the NOFA, two alternatives were'proposed: Alternative 1: , Utilization of $6-33,300.00 NOFA funds plus $26,700.00 in rental rehabilitation funds to undertake 3 buildings for 12 units. Of the $633,300.00, $130,000.00 would.be dedicated to the West 18th Street property, leaving $503,300.00 in assistance for 2 Shalimar Drive buildings. Total assistance is $660,000 ($55,000.00 per unit). Alternative 2: Acquisition of the West 18th Street property plus 3 buildings on Shalimar Drive for a total of 16 units. Total Assistance is $925,000.00 ($57,800.00 per unit). Jamboree Housing Corporation Jamboree Housing Corporation was unable to submit a proposal that complied with NOFA requirements. Since the firm does not own other projects in the immediate vicinity; it believed it would be inefficient to acquire a small project. To acquire at least 50 units would have a major impact on the Shalimar Drive neighborhood. Keyser Marston Associates assumed such a project could be completed for $4.8 million. Four alternatives were proposed for consideration: Alternative 1: The Redevelopment Agency agrees to commit future HOME fund allocations and issue a $4 million tax exempt bond. The $800,000.00 balance could be funded with NOFA, rental rehabilitation funds, and low income housing tax credits. This option was not considered viable because of the complications arising from the funding structure. Alternative 2: The Redevelopment Agency agrees to a long-term debt, service guarantee. Again, this was not considered viable because of many "unknowns" in the funding structure. Alternative 3: The Redevelopment Agency invests $1.5 million; Jamboree Housing Corporation applies for a 9 percent tax credit. Approximately 40 units could be completed. Alternative 4: The City provides $1.27 million by omitting 100 percent of acquisition and rehabilitation project funding in 1998 through 2001, to undertake 12 units per year. The City would acquire a debt service obligation of 5290,000 annually for 10 years which could be paid out. Another NOFA could not be distributed until fiscal year 2001-2002. The 313 Committee selected Jamboree Housing Corporation as its first choice, and Civic Center Barrio Housing Corporation second. ISa +.o Council/Agency Member Erickson expressed surprise at the 313 Committee recommendation. Lila Lieberthal, Jamboree Housing Corporation, stated that since Shalimar Drive has deteriorated, a larger project would have greater impact, and the firm has an excellent management company. Mayor/Agency Member- Buffa asked about the deadline for action by the Redevelopment Agency. The Redevelopment and Housing Manager responded that escrow must close by May, 1997, but an intensive process will follow. Mayor/Agency Member Buffa agreed with Jamboree Housing Corporation as far as a larger project having more impact; nevertheless, he felt it was merely a "drop in the bucket". He was also concerned about the options since some of the commitments extend over five years. The Assistant Finance- Director reported that the Downtown Project Fund does not have the capacity to take on such a large project, and the Low -Mod Fund is the only untapped area not considered as yet. Council Member/Agency Vice Chairperson Cowan• agreed. with Mayor/Agency Member Buffa that in attempting to accomplish a long-term vision for this area,. it would .make sense to go with a broader scale; however, since she is unfamiliar with the funding formulas, she would like further exploration of the alternatives with recommendations to be presented by the next Redevelopment Agency meeting. Council/Agency Member Erickson was opposed to using any public funds and, therefore, favored the smaller project. He encouraged private property owners to improve their properties. Council/Agency.. Member Somers agreed with Council/Agency Member Erickson, and was uncomfortable with the City's being overcommitted. She encouraged private investment and ownership. Mayor Pro Tem/Agency Chairperson Monahan agreed with Council/Agency Members Erickson and Somers, and thought that neither project would solve the problems in the Shalimar Drive area. He was concerned about extension of the financing over four to five years. The Redevelopment and Housing Manager confirmed that a final decision was not necessary this evening. "N.6 MOTION On motion by Council/Agency Member Erickson, seconded Continued to by Mayor Pro Tem/Agency Chairperson Monahan, and carried February 10, 1997 4-1, Council Member/Agency Vice Chairperson Cowan voting no, staff was directed to return with additional information for Civic Center Barrio Housing Corporation's Alternatives 1 and 2 on February 10, 1997. Mayor/Agency Member Buffa stated that he would support the motion but that this would be the last year he would vote for additional units on Shalimar Drive. It was his opinion that the focus on Shalimar Drive has become obsessive and he would be open to looking at other areas. He recalled that former Agency Vice Chairperson Genis and he discussed this concern at the Redevelopment Agency meeting in February, 1996. Mayor Pro Tem/Agency Chairperson Monahan responded that if the City Council/Redevelopment Agency were not comfortable with the funding options, smaller projects might make more of an impact in other areas. Ms. Lieberthal, Jamboree Housing Corporation, suggested that the best alternative for both the City and Jamboree Housing would be Alternative 3 which would prevent a long- term financing commitment for the Redevelopment Agency. ADJOURNMENT There being no further business, Mayor Pro Tem/Agency Chairperson Monahan adjourned the special joint meeting at 6:45 p.m. Mayor of the City ofs a Mesa ATTEST: i. Deputy City Cork of the City of Costa Mesa 11 I.