HomeMy WebLinkAboutR5-Economic Development Agency
.
.
.
.
.
ECONOMIC DEVELOPMENT AGENCY
OF THE CITY OF SAN BERNARDINO
~CQ)~W
REOUEST FOR COMMISSION/COUNCIL ACTION
FROM: RONALD E. WINKLER
Development Director
SUBJECT: ARDEN-GUTHRIE FOURPLEX
ACQUlSITIONIREHABILlTA TION
DATE: July 29,1997
--------------------------------------------------..-------------------------------------------------------------------------------------
Svnopsis of Previous Commission/CouncWCommittee Action(s):
On July 28, 1997, the Redevelopment Committee considered the proposed acquisition and rehabilitation program and
forwarded the recommended motions for Council/Commission action.
------------------------------------------------------------------------------------------------------------------------------------
Recommended Motion(s):
(Community Development Commission)
MOTION A: That the Community Development Commission authorize staff to rehabilitate and rent to Section 8
tenants, seven units to be acquired from the U.S. Department of Housing and Community
Development (HUD) south of 20th Street in the Arden-Guthrie area. Further, that HOME funds be
programmed for rehabilitation work. That a budget ofS 150,000 including contingency be authorize
for rehabilitation work.
MOTION B: That the Community Development Commission adopt a policy not to rehabilitate units acquired from
HUD north of 20th Street. Also, that staff be authorized to use any cash flow after debt service and
expenses from units rented in the area to demolish or remove units acquired from HUD north of 20th
Street.
Recommended Motion(s) Continued to Next Pan...
--------------------------------------------------------------------------------------------------------------------------------------
Contact Person(s): Ronald E. Winkler/
Phone:
5081
Project Area(s):
N/A
Ward(s): Seven (7)
Supporting Data Attached: Illl Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 181 Map(s) 0 LtrlMemo
FUNDING REQUIREMENTS: Amount: $150.000
Source:
HOME Funds
SIGNATURE:
Budget Authority:
199711998
/
Adminis
-..-..-----....---......-----..----....--..-----......----..--------.....--------....----......---......--....-..----..----..--..-....--....----..-----..--..----....---....
Commission/Council Notes:
------------------------------------------------------------------------------------------------------------------
REW:lag:08-01-0t.CDC
Continued to Od'/I&/'il
COMMISSIO~.. ING AGENDA
MEETING D .
Agenda Item NumberA
~1'/o'l/9 7
,
.
.
.
Request for Commission/Council Action
Arden/Guthrie Fourplex
July 29, 1997
Page Number -2-
..---------------------------------------------------------------------------------------------------------------------------------------
Recommended Motionls) Continued:
IMavor and Common Council)
MOTION C:
That the Mayor and Common Council direct Planning and Agency s!atrto initiate a General Plan
Amendment and evaluate alternate future land uses, including commercial and industrial for the
area bounded by 20th Street, Guthrie Street, Highland and Arden Avenues.
------------------------------------------------------------------------------------------------------------------
REW:Iag:08-01-01.CDC
COMMISSION MEETING AGENDA
MEETING DATE: 08/0411997
S-
Agenda Item Number:
,
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
.
------------------------------------------------------------------------------------------------------------------
Arden-Guthrie Fourplex ACQuisitionlRehabilitation
As you know, the Agency is currently in escrow to acquire 20 fourplex buildings and one severely
damaged structure in the Arden-Guthrie area owned by the U.S. Department of Housing and
Urban Development (RUD). The damaged structure is being purchased for one doUar ($1.00)
and each fourplex unit for $25,000. Under terms of the purchase agreement, RUD is financing
Agency acquisition through a Purchase Money Mortgage (PMM). The PMM requires 15% down
payment and monthly payments amortized over 15 years with remaining principal due and payable
in 5 years. Interest is set at 7.5 annually.
Simultaneously with this acquisition effort, staff has been in negotiation with the County Housing
Authority regarding reintroduction of Section 8 Certificate holders in the area. Authority officials
have agreed to provide 28, Section 8 Certificates for Agency-owned units in the area. Staff: in
conjunction with Equity Management, have reviewed the RUD units to determine which would be
most suited for use with the Section 8 program. Consideration was given to unit condition,
location, operating expense and potential benefit to the newly activated owners association.
Based upon these factors, it is recommended the seven buildings to be acquired south of 20th
Street (see attached map) be filled with Section 8 tenants.
. Implementing this effort will require an additional expenditure of funds. It is estimated the $5,000
per unit or $140,000 for all 28 units will be required. However, active use of the units will
generate income over and above expenses that will assist in debt servicing the PMM. A swnmary
of projected income and expenses is as follows:
Annual Unit Income (28 units @ $400/mo)
Annual PMM Debt Service (all 20 buildings)
Annual Unit Operating Expense (@$445/building/mo)
$134,400
<$47,280>
<$37.380>
Net Cash Flow to Agency
$49,740
It should be noted, that the additional $5000 per unit rehabilitation investment will result in a total
Agency investment of $45,000 per building ($25,000 purchase price + $20,000 rehabilitation
cost). Based upon recent sales information, we believe the market value of each building would
exceed $75,000 conservatively. llitimate sale of these seven units could pay off the PMM on all
20 parcels and reimburse the Agency for the rehabilitation cost. Finally, we believe the
rehabilitation costs to be eligible under the federal HOME program. Thus, it is staffs
recommendation to pursue reprogranuning HOME funds for this purpose.
.
------------------------------------------------------------------------------------------------------------------
REW:lag:08-01-01.CDC
COMMISSION MEETING AGENDA
MEETING DATE: 08AA/19:S-
Agenda Item Number:
.
.
.
.
Economic Development Agency Staff Report
Arden-Guthrie Fourplex Acquisition/Rehabilitation
July 29, 1997
Page Number -2-
------------------------------------------------------------------------------------------------------------------
Upon review of the above, the Redevelopment Committee became concerned that repopulating
the area could resuh in a reoccurrence of past problems. However, the need to implement efforts
to make Agency acquired parcels economically self-sufficient was also recognized. In order to
reconcile these issues the Committee decide the best course of action would be to; (1), rehabilitate
and rent only the Agency units south of 20th Street as proposed by staff, (2), adopt a policy of
demolishing or removing the HUD units acquired north of 20th Street as cash flow permits from
rented units and request the Council to direct the Planning Department staff to initiate a General
Plan Amendment and evaluate land use alternatives including commercial or industrial for the area
between 20th Street, Guthrie Street, Highland and Arden Avenues.
As a resuh, the form motions are recommended for adoption by the Redevelopment Committee.
RONALD . WINKLER, Director
Development Department
------------------------------------------------------------------------------------------------------------------
REW:lag:08-01-0 l.CDC
COMMISSION MEETING AGENDA
MEETING DATE: 08/04-/1997
t:'
Agenda Item Number: