The URL can be used to link to this page

Home My WebLink AboutR6-Economic Development Agency . .. .. ECONOMIC DEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO (g(Q)~W REOUEST FOR COMMISSION/COUNCIL ACTION FROM: RONALD E. WINKLER Development Director SUBJECT: ARDEN-GUTHRIE FOURPLEX ACQUISITIONIREHABILlTATION - SETTING PUBLIC HEARING TO AMEND THIRD YEAR ACTION PLAN DATE: August 27, 1997 Synopsis of Previous Commission/Conncil/Committee Action(s): On August 19, 1997, the Community Development Citizen Advisory Committee metto consider amending the Third Year Action Plan to provide HOME funding for the rehabilitation ofthe 28 units under acquisition from HUD. SvnopsisContinued to Next Paee... Recommended Motion(s): (Communitv Development Commission) MOTION A: That the Community Development Commission authorize staff to rehabilitate and rent to Section 8 tenants, seven buildings (total of28 units) to be acquired from the U.S. Department of Housing and Community Development (HUD) south of20" Street in the Arden-Guthrie area. Further, that HOME funds be considered for rehabilitation work. That a budget of $200,000 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 of20" Street. Recommended Motion(s) Continued to Next Paee... Contact Person(s): Ronald E. Winklerl Phone: 5081 Project Area(s): N/A Ward(s): Seven (7) Supporting Data Attached:" Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) Ii9 Map(s) 0 LtrlMemo FUNDING REQUIREMENTS: Amount: $200.000 Source: HOME Funds Budget Authority: 1997/1998 SIGNATURE: <[~ Administrator ------------------------------------------------------------------------------------------------------------------------------------------- Commission/Conncil Notes: --------------------------------------------------------------.--------------------------------------------------- REW:lag:09-02-02.CDC COMMISSION MEETING AGENDA MEETING DAT Agenda Item Number:- RiP . . . , Request for Commission/Council Action Arden/Guthrie Fourplex July 29,1997 Page Nwnber -2- Synopsis of Previous Commission/Council/Committee Action(s): On August 4, 1997, this item was considered by the Community Development Commission and the recommended actions were not adopted. 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) Continued: (Mavor and Common Council) MOTION C: That the Mayor and Common Council establish September 15, 1997, at 2:00 p.m., as the date and time for a public hearing to solicit citizen comments on the first amendment to the 1997/1998 FY Third Year Action Plan MOTION D: That the Mayor and Common Council direct Planning and Agency staff to 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:lag:09-02-02.CDC COMMISSION MEETING AGENDA MEETING DATE: G'J 102/1997 ~ 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 (HUD). The damaged structure is being purchased for one dollar ($1.00) and each fourplex unit for $25,000. Under terms of the purchase agreement, HUD 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, staffhas 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 HUD 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 of201h 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 summary 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/buildinglmo) $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. Ultimate 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 staff's recommendation to pursue reprogrannning HOME funds for this purpose. However, use of HOME funds would require an amendment to the Third Year Action Plan for the modification of the use offunds on file with HUD. REW:lag:09-02-02.CDC COMMISSION MEETING AGENDA MEETING DATE: 0'f/02/1997 to Agenda Item Number: . . . E,conomic Development Agency Staff Report Arden-Guthrie Fourplex AcquisitionlRehabilitation July 29,1997 Page Number -2- ------------------------------------------------------------------------------------------------------------------ To meet the amendment requirement, a meeting was held with the Community Development Citizen Advisory Committee (CDCAC) on August 13, and 19, 1997. The amendment was initially discussed on August 13, 1997, but the Committee requested additional time to consider reducing the Mobilehome Park Purchase Program from $574,500 to $374,500 and creating a Multi-family Rehabilitation Program - Arden/Guthrie HOD units with the $200,000 difference. The CDCAC met again on August 19, 1997, and although a quorum was not present, the Committee asked that a summary of the meeting be presented to the Council at the time the item is to be considered for a public hearing. A copy of the minutes of the meeting is attached as requested by the CDCAC. Upon review of the above, the Redevelopment Committee became concerned that repopulating the area could result 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 HOD 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 result, the form motions are recommended for adoption. RONAL E. WINKLER, Director Development Department REW:lag:09-02-02.CDC COMMISSION MEETING AGENDA MEETING DATE: tj(}/02/1997w ~ Agenda Item Number: . . . COMMUNITY DEVELOPMENT CITIZENS ADVISORY COMMITTEE OF THE CITY OF SAN BERNARDINO MINUTES REGULAR MEETING August 19, 1997 3:30 p.m. Due to the lack of a quorum, the Regular Meeting of the Community Development Citizens Advisory Committee scheduled in the Board Room of the Economic Development Agency, 201 North "E" Street, San Bernardino, California, was unable to be called to order. At 3:45 p.m., Chairwoman Susan Lien announced to the audience that there was a lack of a quorum and that no formal action could be taken; however the Committee Members allowed time for General Public Comments. ROLL CAT.I. Roll Call was taken with the following members present: Chairwoman Susan Lien; Committee Members Judith Valles; Richard Abraham; Barbara Hensley; Lenore Schon; Clara O'Campo; John Pierce. STAFF PRESENT Norma Owens, Community Development Specialist; Tamara Torres, Community Development Analyst; Angie Salas-Dark, Rehabilitation Inspector, Development Department; La Vonda M-Pearson, Clerk to the Commission. OTHERSJNATTENDANCE Jim Mulbihill, League of Women Voters; Lynn Anderson, The Sun; Maria Vasquez, Equity Management. GENERAL PUBUC COMMENTS Jim Mulbihill, commented on the changes that have taken place in the Arden Guthrie community within the last 8 years. He showed pictures of various areas in the community and commented on the number of units that are privately-owned and boarded-up. He spoke very highly against the approval of the renovation of Arden Guthrie. REGULAR MEETING Imp:cdmn8r2.97 1 COMMITTEE MINUTES August 19, 1997 lti I . . . Mr. Mulbihill also spoke about the vast amount of weeds, broken windows and unkept property in the area. He stated that it complete comprehensive plan needs to be made in order to revive this area. Committee Member Valles expressed concern regarding the request from staff to place additional funding into the community. She also reiterated her previous comments from the last meeting regarding the Commission's decision to purchase additional units in the area before review by the CDCAC. Committee Member Schon also expressed concern regarding placing Section 8 tenants into a centralized area. She felt the area should be demolished and re-built. Committee Member Abraham questioned the value of the property after rehabilitation. Mr. Mulbihill stated that he did not believe the value of any given property would exceed $75,000. Angie Salas-Dark spoke on her previous work within the community and the assistance she has received from Code Enforcement and the Police Department. She also commented on the strike force effort that has taken place in the area. Chairwoman Lien asked questions regarding the recent lawsuit that was awarded to residents/owners of property in the Arden-Guthrie area. Ms. Dark stated that crime in the area had decreased by 48% and she believed that very soon, blight also would be eliminated in the area. She also commented on the property owned by private owners and stated that the City could not control how the individuals maintain their property; however, Code Enforcement was presently sending out notices to owners regarding the need to maintain their property. Ms. Dark indicated that the City as well as other owners hope that this action will set a precedence as to the intent to maintain the property. She noted that no dollars will be placed in the northern portion of the community. Committee Member Pierce asked questions regarding the occupancy rate within the community. Maria Vasquez, Equity Management, answered questions regarding the number of units that are currently being rehabilitated and/or purchased by outside investors. Ms. Dark made comments regarding the renovation and rehabilitation of an apartment complex near the Arden Guthrie area. She stated that the complex had increased its occupancy rate from approximately 40% to 98%. REGULAR MEETING Imp:cdmn8r2.97 COMMITTEE MINUTES August 19,1997 2 (;; . . . Committee Member Schon questioned why outside owners could not purchase the units. She questioned why the City has chosen to purchase additional units. Committee Member Abraham questioned the mathematics that were listed in the information packet. He stated that in the event the tenants did not pay their portion of rent as listed, the amounts would not be accurate. Chairwoman Lien indicated that she did not believe that rehabilitation of the units was a long- term solution for this project and indicated that she could not recommend approval of this item. Mr. Mulbihill commented on the need for various clean-up activities to take place in the area. He believed the City was not actively trying to rehabilitate the community nor was Code Enforcement doing its job. Ms. Dark commented on the due-process that must take place before the City can take any action. She stated that the due-process could take approximately six (6) months. Committee Member Pierce questioned whether or not there was a need for the $200,000 in other areas of the City. The Committee believed, at this time, that there was no other alternative plan to use the funding for another project. Committee Member Valles expressed concern regarding the amount of blight in the area and the need to work to rehabilitate the community as a whole and not portion by portion. She felt that the City should not be in the business of purchasing units and being landlords. She believed that this type of effort is basically a band-aid approach and that it would not resolve the problem. Ms. Vasquez commented on the success of other units that are in the community. She felt disturbed about the stereotyping that has taken place regarding the number of units that are blighted, vacant and boarded-up. She stated that there are long-term tenants in the community. Committee Member Abraham requested a memorandum be sent out expressing the views of the Committee on this item. Although there was not a quorum, Chairwoman Lien requested that each Committee Member announce their individual position on this item for the public record. The 5-2 vote was as follows: REGULAR MEETING Imp:cdmn8r2.97 3 COMMIlTEE MINUTES August 19, 1997 c, . . . . . Committee Member Valles Committee Member Abraham Committee Member Hensley Committee Member Schon Committee Member O'Campo Committee Member Pierce Chairwoman Lie!) NO NO YES NO NO YES NO DISMISSAl, There being no further discussions, the meeting of the Community Development Citizens Advisory Committee was dismissed at 4:55 p.m. Respectfully Submitted: LA VONDA M-PEARSON Clerk to the Commission REGULAR MEETING Imp:cdmn8r2.97 COMMITTEE MINUTES August 19, 1997 4 lt7