Loading...
HomeMy WebLinkAbout2002-017 ~ (See Companion Resolution CDC/2002-4) J RESOLUTION NO. 2002-17 2 3 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO (1) ACKNOWLEDGING RECEIPT OF A SUMMARY REPORT RELATING TO THE PROPOSED AMENDMENT NO.2 TO THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT DATED JULY 19, 1999 AND SUBSEQUENTLY AMENDED ON DECEMBER 4, 2000, BY AND BETWEEN THE AGENCY AND CENTURY CROWELL COMMUNITIES, L.P., ("DEVELOPER"), AND (2) AUTHORIZING THE SALE BY THE REDEVELOPMENT AGENCY OF THE 38 PARCELS LOCATED AT THE NORTHEAST CORNER OF CALIFORNIA AND 16TH STREETS TO THE DEVELOPER- NORTHWEST REDEVELOPMENT PROJECT AREA 4 5 6 7 8 9 WHEREAS, the Redevelopment Agency of the City of San Bernardino ( the "Agency") 10 owns or has a beneficial interest in certain subdivided lands referred to in this Resolution 11 collectively as the "Sites" which are situated within the redevelopment project area of the Northwest Redevelopment Project Area described as: Lots No.s I through 38 Subdivision 12 13 Tract Map No. 13822 ( the "Phase II Site") ; and WHEREAS, the City of San Bernardino (the "City") acquired the Phase II Sites from Dukes-Dukes and Associates, which said agreement was cancelled following the approval of an 14 t5 16 "Agreement for Relinquishment of Rights and Forgiveness of Obligations" (the "Relinquishment Agreement") dated as of February 21, 1994 by and between Dukes-Dukes and Associates and the Agency; and WHEREAS, subsequent to the Relinquishment Agreement, the Agency entered into a an Exclusive Right to Negotiate for Property Acquisition and Redevelopment Assistance on February 1, 1999, and thereafter, the Disposition and Development Agreement (the "DDA") with Century Crowell Communities, L. P., a California limited partnership (the "Developer") on July 19, 1999, and as subsequently amended on December 4,2000, (the "Amendment No.1") for development of Phase I consisting of twenty four (24) single family homes under certain terms and conditions, of and said Amendment NO.1 contemplated that the Developer would have an 17 18 19 20 21 22 23 24 25 -1- i : 2002-17 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 option, but under no obligation to purchase the Phase II Sites from the Agency, under certain negotiated terms and conditions between the Agency and Developer; and WHEREAS, the Agency and Developer desire to amend the prior Agreements to include the sale of the Phase II Sites to the Developer and the parties have prepared and agreed upon the amendment to the prior Agreements (the" Amendment No.2"); and WHEREAS, it is appropriate for the Mayor and Common Council to take the actions with respect to the 33433 Report and the Amendment No.2 and to formalize the transfer of the legal title in the Phase II Site from the Agency for disposition and redevelopment pursuant to the DDA, the Amendment No.1 and No.2 subject to the conditions set forth in this Resolution. NOW, THEREFORE, THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO DO HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. On January 7, 2002, the Mayor and Common Council conducted a full and fair joint public hearing with the Community Development Commission of the City of San Bernardino relating to the disposition and redevelopment of the Phase II Sites by the Developer pursuant to the terms and conditions of the Amendment No.2. The minutes of the City Clerk shall include a record of all communication and testimony submitted to the Mayor and Common Council by interested persons relating to the joint public hearing, the 33433 Summary Report and the approval ofthe Amendment No.2. Section 2. This Resolution is adopted in order to satisfy the provisions of Health and Safety Code Section 33433 as it relates to the disposition and sale of the Phase II Sites by the Agency to the Developer on the terms and conditions set forth in the Amendment No.2. A copy of the Amendment No.2 in the form submitted at the joint public hearing is on file with the Agency Secretary. The Mayor and Common Council hereby find and determine as follows: (1) the disposition and redevelopment of the Phase II Sites by the Developer is consistent with the Redevelopment Plan for the Northwest Redevelopment Project Area, the Agency Implementation Plan and the City's Consolidated Plan; -2- .. 2002-17 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (2) the terms and conditions of the Amendment No.2 contain sufficient assurances that the Phase II Sites will be redeveloped for affordable single family residential dwelling purposes as permitted under the redevelopment plan; (3) the purchase price for the Phase II Sites payable by the Developer to the Agency, subject to the satisfaction of the terms and conditions of the Amendment No.2, is an amount which the Community Development Commission has determined to be fair market value, and the redevelopment of the Phase II Sites, shall materially benefit and sustain the implementation of the redevelopment plan and assist the community on increasing the supply of affordable single family residential housing for low and moderate income households. Section 3. The Mayor and Common Council hereby find and determine that no further environmental review of the disposition and redevelopment ofthe Phase II Sites pursuant to the Amendment No.2 is necessary at this time under the California Environmental Quality Act (CEQA), as amended, in light of following facts: (1) the final subdivision Tract Map 13822 for the Phase II Sites have been previously recorded and the development contemplated pursuant to Amendment No.2 will not require any major changes in the approved subdivision map (2) the Phase II Sites are situated in the redevelopment project of the Northwest Redevelopment Project and by virtue of the facts set forth in subparagraph (1) above, pursuant to the provisions of Title 14, California Code of regulation Section 15180, no further review of the potential effect of the redevelopment of the Phase II Sites in accordance with the Amendment No.2 is required at this time under CEQA and the final EIR for the Northwest Redevelopment Project Area. Section 4. The Mayor and Common Council hereby approved, receive and file the 33433 Summary Report and the Amendment No.2 in the form as submitted at this joint public hearing. Section 5. The Mayor and Common Council hereby approve the disposition of the Phase II Sites by the Agency to the Developer as set forth in the Amendment No.2. -3- 2002-17 Section 6. Subject to the satisfaction by the Developer and the Agency of the 2 conditions precedent for the close of escrow transaction as set forth in the Amendment No.2, the 3 Mayor and the City Clerk are hereby authorized and directed to executed the appropriate form of 4 a quitclaim deed which transfers all of the right, title and interest of the City in the Phase II Sites 5 to the Agency concurrently upon the close of such escrow transaction, if necessary. 6 IIII 7 IIII 8 IIII 9 IIII 10 IIII 11 IIII 12 IIII 13 IIII 14 IIII 15 IIII 16 IIII 17 IIII 18 IIII 19 IIII 20 IIII 21 IIII 22 IIII 23 IIII 24 IIII 25 -4- 2002-17 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO (1) ACKNOWLEDGING RECEIPT OF A SUMMARY REPORT RELATING TO THE PROPOSED AMENDMENT NO. 2 TO THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT DATED JULY 19, 1999 AND SUBSEQUENTLY AMENDED ON DECEMBER 4, 2000, BY AND BETWEEN THE AGENCY AND CENTURY CROWELL COMMUNITIES, L.P., ("DEVELOPER"), AND (2) AUTHORIZING THE SALE BY THE REDEVELOPMENT AGENCY OF THE 38 PARCELS LOCATED AT THE NORTHEAST CORNER OF CALIFORNIA AND 16TH STREETS TO THE DEVELOPER- NORTHWEST REDEVELOPMENT PROJECT AREA 3 4 5 6 7 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 8 Common Council of the City of San Bernardino at a joint reg. meeting thereof, held on the 9 10 11 12 13 14 15 16 17 18 19 20 The foregoing resolution is hereby approved this (011-1 January ,2002. 21 22 ~ J i Valles, Mayor it of San Bernardino 23 Approved as to form and Legal Content: 24 25 B, ~: 1- () ~"~ ty Attorney -5- 2002-17 SUMMARY REPORT PURSUANT TO HEALTH AND SAFETY CODE SECTION 34333 OF THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW - AMENDMENT NO.2 TO THE DISPOSITION AND DEVELOPMENT AGREEMENT DATED JULY 19, 1999 (THE "DDA") AND AS SUBSEQUENTLY AMENDED ON DECEMBER 4, 2000 (THE "AMENDMENT NO.1") BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (THE "AGENCY") AND CENTURY CROWELL COMMUNITIES, L.P., A CALIFORNIA LIMITED PARTNERSHIP (THE "DEVELOPER") FOR THE DEVELOPMENT OF 38 LOTS LOCATED AT THE NORTHEAST CORNER OF CALIFORNIA AND 16TH STREETS --- NORTHWEST REDEVELOPMENT PROJECT AREA INTRODUCTION: This Summary Report (the "Report") has been prepared by the Redevelopment Agency of the City of San Bernardino (the "Agency") pursuant to Section 33433 of the California Health and Safety Code. This Report sets forth certain details of the proposed Second Amendment ("Amendment No.2") by and between the Agency and Developer with regard to the development of 38 single-family lots located at the northeast corner of California and 16th Streets, (the "Site"), City of San Bernardino. The following describes the provisions, terms and conditions and costs and benefits of the Amendment No.2 to the Agency. A. SALIENT POINTS OF AMENDMENT NO.2: The purpose of the Amendment No.2 is to enable the development of a single-family affordable and market housing development located at the Site (the "Phase II Project") based on the new negotiated terms and conditions as it relates to the Site. The original Disposition and Development Agreement (DDA) was entered into between the parties on July 19, 1999, and was subsequently amended on December 4, 2000 ("Amendment No. I") and for a number of reasons, the Project was delayed, primarily due to the Developer's inability to obtain assessment district financing intended to augment Developer's private financing and financially allow the development of the Phase I and Phase II Project to materialize. The Developer intended to use the assessment district to finance the necessary infrastructure for the Phase I and II Project and thus, such financing was a critical condition of the DDA and without this financing the Project was economically unachievable. Thus, one of the fundamental reasons for Amendment No. I and Amendment No. 2 modifications to the DDA. Below are the major Amendment No. 2 business points: . Developer will repay the Agency the two outstanding promissory notes in the total sum of $114,000 for the Phase I Site (24 single-family lots) and $115,000 for the 1584 Susie Lane Single-family Home sold to Developer; . Agency will allow the Developer to use any unexpended Mortgage Assistance Program (MAP) funds from the Phase I development for the Phase II development, which is estimated at $166,000. 1 P:\Clerical Services Depl\Stephanie\Maggie's Work\Summary Report-Amendment No 2-DDA-Centul)' Crowells.doc 2002-17 . Although in 1993, the Agency expended over $720,000 for the Site, the current AS IS fair market value of the Site is $100,000 (approximately $2,632 per lot). The reason for the low value is because the lots, or the Site lacks the necessary infrastructure needed for development of the Site. Infrastructure costs alone are estimated at $850,000. The sale prices for the 38 homes (1300-2000 sq. ft.), when completed, will range between $118,000 to $161,000 for a total net sales value of $5.4 million, with a projected development cost of about $6 million. The transfer of the Site to Developer and the private development will place the 38 Parcels back on the tax rolls and based on the valuation of the Project, it is estimated that the Project will generate approximately $40,000 in net new tax increment revenue annually to the Agency. . Developer will provide the financing necessary to develop 38 single-family homes ranging in square footage of 1300 to 2000 and all necessary infrastructure improvements such as streets, sewers, gutters, etc. The Phase II, 38 single-family homes will be developed consistent and compatible with the Phase 1, 24 single-family homes as approved by the City of San Bernardino Planning Commission. . Developer will be financially responsible for insuring that all infrastructure is development in accordance with City standards and requirements such as sewer, storm drains, streets, gutters, sidewalks, paving, etc. The estimated costs for such infrastructure is $850,000. Per the Amendment No.2 the Agency will contribute $710,400 towards the infrastructure costs for the Project. The Agency's financial contribution may include the granting of Agency Sewer Capacity credits previously purchased by the Agency from City Water Department. The value of the sewer capacity rates is approximately $144,400. . Based on the current development pro-forma and the Agency's financial contribution to the Project of $710,400, it is anticipated that the project cash flow will yield a positive cash flow of about 4%. This is still well below the industry standard of between 8% to 10% on housing projects. Although such is the case, the Developer has agreed to accept a 3% as their base profit, and share equally with the Agency any cash flow about the 3% of the gross revenues in order to off-set some ofthe Agency's financial contribution to the Project. . The Developer is expected to close escrow within 60 days from approval of Amendment No. 2. Should they fail to close within the prescribed timeframe, the Agency will retain the sum of $25,000 as liquidated damages. B. COST OF THE AMENDMENT NO.2 TO THE AGENCY: This Section outlines the total costs of the Agreement to the Agency, including, but not limited to land acquisition costs, clearance costs, relocation costs, the costs of any improvements to be Amendment No.2, if applicable. As stated in "A" above, the Agency intends to sell the Phase II, 38 lots to the Developer at the current AS IS fair market value of$100,000. The Agency will be obligated under the Amendment No.2 to contribute the sum of $710,400 to offset Developer infrastructure requirements in order to facilitate the development of the 38 single-family homes. However, the Agency's financial contribution to the Project will be offset 2 P:\Clerical Services Dept\Stephanie\Maggie's Work\Summary Report-Amendment No 2-DDA-Century Crowells.doc 2002-17 to some degree by the potential direct and indirect financial benefits that come with development of the Site. Said benefits of the Amendment No.2 will be further discussed in item C and D of this Report. C. ESTIMATED VALUE OF THE INTEREST TO BE CONVEYED DETERMINED AT THE HIGHEST AND BEST USES PERMITTED UNDER THE REDEVELOPMENT PLAN; AND ESTIMA TED VALUE OF THE INTEREST TO BE CONVEYED BASED ON THE REQUIRED REUSE AND WITH THE CONDITIONS. COVENANTS AND RESTRICTIONS REOUlRED UNDER THE FIRST AMENDMENT: The estimated AS IS value of the interested to be conveyed, 38 unimproved single-family lots, to Developer at the highest and best uses permitted under the Redevelopment Plan is $100,000. This value is determined to be fair market value given the development constraints associated with the Site, such as, the lack of infrastructure improvements. Moreover, the financial contribution to the Project by the Agency was determined by reviewing the Developer's total development costs in relation to what the Developer is expected to generate upon the resale of the Site. Based on the development pro-forma, the total Project costs are estimated at $6 million and the resale price of the total Project are estimated at $5.4 million. Without Agency financial assistance the Project could not be developed, nor with the negative cash flow as depicted in the development pro-forma, of 0.14%, no Developer could be expected to develop the Project at a loss. Thus, justifying the need for public assistance, one of the fundamental purposes of redevelopment agencies. Assuming the Agency contributes the sum of $710,4000 to the Project, the pro-forma, shows a 4% return to the Developer. Therefore, the estimated profit to the Developer is 4%. This profit margin is less than the standard profit or going rate for developments analogous to the proposed housing development which ranges between eight (8%) to ten (10%) percent; in light of the Agency's financial contribution to the Project, the Developer has agreed to accept 3% as their base profit, and share equally with the Agency any cash flow above the 3% of gross revenues. Moreover, previous economic reports commissioned by the Agency indicated that the Project as proposed under the July 19, 2000 DDA was economically unfeasible if an assessment district financing did not occur to help off-set Developer's up-front Project costs. In fact, based on this report, it is unlikely that investors would be willing to contribute sufficient capital to undertake any housing project given its limited return and the cost associated with the overall Project. However, the low AS IS fair market value and the Agency's financial contribution to the Project is intended to minimize the financial risks to the Developer. In conclusion, the interest to be conveyed to Developer has been determined to be fair market value based on the reuse and development of the Project subject to conditions, covenants and restrictions place by the Agency under the original DDA, Amendment No. 1 and Amendment No.2 and the conditions of the Site, and the evidence contained in this Report. Moreover, the purchase price and development of the Project has been determined at the highest and best use consistent with the permitted uses under the Redevelopment Plan for the Northwest Redevelopment Project Area. 3 P:\Clerical Services Dept\Stephanie\Maggie's Work\Summary Report-Amendment No 2-DDA-Century Crowclls.doc 2002-17 Furthermore, the interest in the Project to be conveyed to the Developer will be developed in conformance with the City's General Plan and Housing Element, Municipal Development Code, and Agency's AB 1290 Implementation Plan. D. EXPLANATION OF WHY THE SALE OF THE SITE AND THE PROPERTY WILL ASSIST IN THE ELIMINATION OF BLIGHT WITH REFERENCE TO ALL SUPPORTING FACTS AND MATERIALS RELIED UPON IN MAKING SUCH EXPLANATION: The development proposed under the Amendment No.2 will reduce blight, create replacement housing units for the Agency and City, provide homeownership opportunities, temporary construction jobs for area residents; improve the image and enhance neighborhood conditions; increase property taxes and property values, thus improving the quality of life for residents within the Northwest Project Area. In addition to blight eradication, the proposed Project is consistent with the adopted Agency Five-Year Implementation Plan, which sets forth the following goals and objectives. . Creation of viable housing options within the redevelopment project area that span a range of incomes, including housing for the indigent; . Creative implementation of catalyst projects which spur reinvestment on surrounding blocks. . Improvements or construction of new water and sewer lines, streets, sidewalks, parkways, and lighting in the public right of way. . Continued participation in the enhancement of the public infrastructure system. . Acquisition and development of property to abate nuisance uses and provide for future development. The Amendment No.2 will assist the Agency in meeting several of its objectives and goals set forth above, specifically, by encouraging reinvestment and revitalization in blighted neighborhoods and provide decent, up-scale housing for area residents at affordable and market housing prices. 4 P:\Clerical Services Dept\Stephanie\Maggie's Work\Summary Report-Amendment No 2-DDA-Ccntury Crowells.doc