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HomeMy WebLinkAboutR10-Economic Development Agency o o o .' 4. - - - - - J o o DBVILOPIIBBr DEPARIluutJ: OF TIlB CITY OF SAB R1l1I1I&llnIltO REOUEST FOR cmMISSIOB/ComrCIL ACTIOB From: KENNETH J. HENDERSON Executive Director Subject: SEBIOR BOUSIllG PROPOSAL FROM BALe IIIVBSTKDT ROLDIllG CORPORATIOB ABD BIGIILABD ImIIBRAB CBDRCB Date: August 14, 1991 ------------------------------------------------------------------------------- Synopsis of Previous Commission/Counci1/Cu.aittee Action: On August 14, 1991 the Housing Committee considered this motion and recommended to the Community Development Commission approval of the financing for this project. ------------------------------------------------------------------------------- RecaBDended Motion(s): (Communitv Deve10nment Commission) That the Housing Committee recommend to the Community Development Commission approval of the HALC request for assistance in an amount not to exceed $2,149,091 based upon the information and recommendations set forth in the staff report. rp J. OR Executive Dir ctor Administrator ------------------------------------------------------------------------------- Contact Person(s): Ken Henderson/Doris Daniels 5081 Phone: Project Area(s): Ward(s): 7 Supporting Data Attached: Staff ReDort: FUNDING REQUIREMENTS: Amount: $2.149.091 Source: Budget Authority: ------------------------------------------------------------------------------- Commission/Council Rotes: KJH:DAD:ELF:paw:0035q COIMISSIOR AGERDA Meeting Date: 08/19/91 Aaenda Item Bo: / tJ o o DEVELOPIIUT DBP~~ STAFF UPOR'l; o ------------------------------------------------------------------------------- Senior HousinR Pro no sa 1 From HALC Investment HoldinR Cornoration and HiRhland Lutheran Church B.,.1r_ronnd On July 25, 1991, staff received a proposal from Highland Lutheran Church (See Attachment I) for the development of senior housing units. The Church has established a for-profit entity (HALC) to develop the project on a 2.6 acre site next to the Lutheran Church. The project is to be constructed by Dukes-Dukes and Associates, Inc. development company. The fifty (50) unit project is to be located at 1829 East Highland Avenue. Based upon the proposal received, the following are indicated as costs of the project: Land Construction Cost Construction Fees Interest 151,200 Development and Financing Cost $ 563,000 $1,694,192 347,638 166.606 o Total $2,922,636 Staff's analysis of the proposal raised certain concerns regarding deal points that govern the financial asaistance for the project as follows: 1. The total amount requested for financial assistance is $2,937,100. The land cost on this proposal is $563,000. The preliminary title report reflects a first Trust Deed totalling $100,000, giving the corporation $463,000 equity in the land. The land cost of $563,000 is included as part of the total amount requested from the City. 2. Program guidelines of the California Housing Finance Agency (CHFA) require a minimum of ten percent (lOX) cash equity for a f2[-profit entity. However, this proposal reflects a minimum equity requirement of $146,132 or (5X) as required for a D2n-profit entity. This amount is included as part of the total financial assistance requested by the City. I I I 10 i ! 3. In addition, HALC Investment Holding Corporation (a for-profit entity) which is sponsoring the project will be required to collateralize a Projected Operating Expense Reserve in the amount of $32,747, equivalent to 110X of the projected negative income. This amount is also included as part of the financial assistance to be provided by the City. ------------------------------------------------------------------------------- KJH:DAD:ELF:paw:0036q ClMfiSSIOR AGERDA MeetiDg Date: 08/19/1991 /0 ",,' - JIJ - iii - o o o DBVELOPIIEBT DEPAR'nm1n STAFF UPORT BALC Date Prepared: August 14, 1991 Paae 2 -------------------------------- ----------------------------------- . Cone1usion Overall, staff believes that the eombined total of $778,009, whic:h refleets land eost, eash equity (for a for-profit entity) eontribution, and projeeted negative ineome should be subtracted from $837,100 being requested from the City. The secondary finaneing for this project should be $49,091. Ilec~endations The secondary financing for the project should be adjusted to reflect actual needs required to complete the development. Terms and conditions on the secondary loan in the amount of $49,091 would be a four year deferred loan and interest, with a recapture clause for payments to begin when the housing complex achieves a positive cash flow. The balance would be due and payable within ten (10) years. o On August 14, 1991, the Housing Committee considered this matter. There was extensive discussion about the structure of the proposal as it related to land costs, developer equity and collateralization of the Projected Operating Expense Reserve. There was also some question as to the profit or non-profit status of the proponent. Information available to staff indicate BALC Investment Holding Corporation is a for-profit entity (staff of Dukes-Dukes and Associates have subsequently indicated BALC is in the process of obtaining its non-profit status). Staff recommends adoption of the form motion. UlUll5YIl J. OB, Bzec:utive Direetor Development Dep rtaent o ------------------------------------------------------------------------------- KJH:DAD:ELF:paw:0036q COIIUSSIOB AGBIDA Meeting Date: 08/19/1991 /6 o o I I I I I i I i i I 8 o , .--. l ~ - - - - ~ 1IL o o COJI8DVCTIOJI LOU UI'LICATIOJI for BaLC DlVUTKD'l' BOLDDG C01l1'. TBIl LOU This application is request for a construction loan in the total U10unt of $2, t37 , 100. The loan would be advanced to the sponsor, HALe Investment Holding corporation and will be used to construct a senior citizen apartment complex consisting of 50 units. Permanent financing in the amount of $2,100,000 will be provided by the California Housing Finance Agency (CHFA) from the sale of tax exempt mortgage revenue bonds. The city will be repaid $2,100,000 .atthe loan closing for the CHFA permanent financing. The balance of the construction loan ($837,100) will be a deferred no interest, no principal note due and payable in thirty years. 81'0N80R HALe Investment Holding corporation 1S a for-profit entity establbhed by Highland Avenue Lutheran Church for development of the housing project. The church is governed by a Board of Directors who assist the pastor in the operation of the church and its progralllS. The church also provides counseling programs for fUlilies and individuals, as well as charitable activities for senior citizens and the poor. CON8VLTART/DBVBLOI'D The consultant/developer is DUKES-DUKES , ASSOCIATES, INC. (DDA) a local cOllllllunity development corporation which was established in 1971. Prior to 1978, DDA was involved in providing a diverse range of services to Federal, state and local governments. since 1978 the firm has focused primarily in the development and redevelopment of affordable housing. As a developer, DDA has sponsored eight (8) Limited Partnerships consisting primarily of large mUlti-family projects for low and moderate income fUlilies. The firm manages the construction of all its development projects and currently manages its rental developments which consist of four syndicated Limited Partnerships which consist of over 300 rental units. Among the current activities of DtJXES- DUKES , ASSOCIATES include the construction of 114 single family homes in San Bernardino. (0 o o o . . o o PROJBCT DBSCRIP'1'ION Tbe 50 unit project will be located on a 2.6 acre site in northeast San Bernardino. There will be thirty-eigbt (38) one-bedroom units, wbicb include three (3) handicapped units; and twelve (12) two-bedroom units. The project will also feature a 2,080 sf community building with laundry room. The one-bedroom units are 643 sf in size and the two- bedroom units are 828 sf. The bandicapped units are the same size as the standard one-bedroom units and bave specially equipped bathrooms and kitchens. Tbe project is designed to provide a sense of security to residents and to encourage social interaction in the courtyards and open areas througbout the project. Tenants will also enjoy the feeling of privacy as a result of effective clustering and orientation of individual views. Vehicular access is provided from Osbun Road and from a secondary entrance from tbe church parking lot. Tbe parking will consist of fifty (50) covered spaces and twenty-five (25) uncovered spaces with four (4) bandicapped accessible parking spaces. Tbe entire project will be secured by a wrougbt-iron fence wbich will permit access thru electronically controlled gates. ' lOllING/LAND VSE Existing zoning for the subject property and those parcels to the immediate east and west is CG1 (General Commercial). The parcels to tbe northwest and north of the property are zoned RH (Residential High). A zone change has been requested for a change from CG1 to RH wbich would be consistent with the neighboring multifamily properties. The commercial land use include a church, carpet store, fast food restaurant. The residential land uses are two multifamily housing projects, one being a condominium complex. EllVIROHMDITAL SETTING The project site is relatively flat vacant land. There is little vegetation other than common varieties of weeds. The flora are typical urban varieties of trees and shrubs common to the area. The soil type consist of surface silty sands underlain by sandy silt, poorly graded sands and more silty sand. Tbe silty sands and the poorly graded sands were relatively granular and are considered not to be critically expansive. /0 o o o I o o LOCATIOnL I'BAT1JRB8 The project is located within reasonable proximity to major cOJDlllunity facilities. 'lbe following information shows the approximate distance from the proposed project to major facilities and public transportation: Civic Center 4.0 miles Fire Station .3 .. Police Station 4.0 .. Shopping Mall .5 .. Hospital 2.0 .. Elementary School .8 .. Jr High School .5 .. Sr High School 1.0 .. Community College 7.0 " University 5.0 II COHMtDlITY IMPACTS All the major services are available to the site (i.e, fire, police, utilities, etc). There are several parks and major shopping within one mile of the project. 'lbe hospital is approximately two miles from the project. Traffic impacts should be minimal due to the fact that seniors tend to make less trips than families. DIUtIl'1' DATA According to the San Bernardino County General Plan, female- headed households and senior citizens should be targeted for affordable housing and/or housing assistance. Although only 13' of all households in the market area had incomes below poverty level, approximately 48' were female-headed households and 10' were senior citizens. Census data also indicated that the proportion of senior citizens 65 years and older had increased throughout the market area and the county. A recent survey conducted by Casa Ramona noted that a number of the seniors in the area have expressed an interest in the proposed senior housing project. They expressed a willingness to sell their homes and continue to live in the neighborhood in the proposed senior housing project. The chances of these seniors finding an apartment complex which can accOJDlllodate non-English speaking individuals are less' likely outside the general area of the proposed senior housing project. /0 o o o . -."".. o n. r"A~ cu.:r~DIUID. BOU8D1Q rilJBCB AQBRClr . J'IDL C!OIDU~ 8tDllmRY' Name: BrmrT.1lWft Lu:a;.......... IILDBllLY CHFA Number: ., 02'.. S Location: San Bernardino" san Bernardino . Developer: ~JQ"'.~ HALC Investment Holding Corp. Description: Fifty (50) unit, elderly development to be ~inanced under the Aqency's Rental Rousing Loan Program maT SIZE NtlMBER RENT HAXIMDK INCOME 8 very low income @ 329 $14,400 2 very low income @ 365 16,200 30 market rate @ 535 10 market rate @ 600 lbr/lba 2br/lba 1br/lba 2br/lba TOTAL NUMBER 50 (3 handicapPed) :mITIAL FINAL PER UNIT $ 2,100,000 $ 2,100,000 $ 42,000 676,504 676,504 13,530 146,132 146,132 2,923 2,95:1.,636 2,951,636 59,033 LTC 71.15% LTV 77.78 % 1st Mortgage Requested 2nd Mortgage Requested Other Financing Equity Total Development Cost Other/Locality Involvement $ 676,504 $ 676,504 City o~ San Bernardino subordinated secondary financing City of San Bernardino will be the construction lender. $ 13,530 Index: Narrative Project Features and Appraisal InCOlle Analysis (rents) Income Analysis (expenses) Cost Analysis cOIIDIi tment Terms cash Flow Projections Fees, surveys and Permits Location Haps (site and area) June 12, 1991, J04044 Page 2, 3, 3a , 3b 4 5 6 7 8 9 10 11 , 11a /0 . . o o o o o ~IFODTXA BOUSDfG FIDBCE AGENCY Filla1 C~tIleDt Mortgage Commita_t aequest Highland Lutheran Elderly CHFA. 89 26 S The cODlllibent requested is an DlITIAL _4 FIDL Loan C~ bent for a first mortgage loan in the amount of $2,100,000 to assist in the development of a fifty (50) unit elderly housing complex in the City of San Bernardino. It is currently anticipated the loan will be funded with the proceeds from a 501 (c) (3) tax exempt bond. SITE UD PROJECT The 2.6 acre site is located at 1829 E. Highland Ave. in the City of San Bernardino, County of .San Bernardino. The site is accessible to shopping, commercial services, schools, recreational facilities, employment, health facilities, and transportation. The complex will consist of twelve (12) dwelling structures one and two stories in height containing thirty eight lbr/lba and twelve 2 br/lba units. Project amenities include community laundry facilities, community room, courtyards, private balconies or patios, and parking. JD~1tBT . San Bernardino and Riverside Counties, the "Inland Empire" grew by a higher percentage from 1980 to 1990 than any other counties in the state, according to figures released by the U. S. Census Bureau. The two-county area took the building permits lead in 1989 and 90 for single family building permits. The strong demand in housing is predicated upon strong growth, a .4iminishing supply of available land in the surrounding counties, lower prices and a large price spread differential between surrounding counties. San Bernardino is the largest city in the county with 164,164 residents according to the 1990 U. S. Census. This represents a 36% percent increase over the 1980 population and a numeric increase in population of 43,831. Approximately 12% of all San Bernardino County residents reside in the City of San Bernardino. The recent population projections estimate the 2010 population of San Bernardino to be 261,523. The proposed development will be located in an older area of the city where many of the residential structures are more than 30 years old.. Highland Lutheran Apartments will be constructed on land contiguous to Highland Lutheran Church and in an area of older multifamily structures. June 12, 1991, J04044 page 2 of 11 10 . . , o o o - - - - . - o . 0 :In addition to the .U))ject development, tJje Agency is currently proce.sing for loan c01llJllit:ment two additional proposed/planned senior apartment complexes, Highland ~theran (CBPA 89 026 S) ~d victoria Woods (CBPA 91 026 S). Bach of the development&. will be located in different market ereas of San Bernardino. Highland Lutheran and -ltaJIIon& Senior ere geared to _ seniors 62 years of age and older; victoria Woods is oriented to seniors 55 years and older. '!'he city of san Bernardino Planning Depart:ll8nt has -- indicated, at the present tille, they arta not aware of any additional proposed/planed senior rental housing COIIIplexes. 8BCOJIDDY nDIICDlGl '!'he city of San Bernardino has agreed to provide both the construction financing and sU))ordinated aecondary financing in a minimum amount of $676,504. The sponsor and the city have not finalized the negotiations with respect to the terms and conditions of the financing. . However, the sU))ordinated financing will be equivalent to or exceed the term of the Agency's financing; payments, if any, for the sU))ordinated financing will be payable out of res"idual receipts; and, the interest rate will not exceed n. BQUITY COJIT1l:IBU'lZOR Program guidelines require a minimum of 10' cash equity. However, when a government entity is providing secondary financing and the sponsor is a nonprofit entity, the guidelin.. provide for a - minimum equity contribution of 5'. '!'he minimum equity requirement for the sponsor will be $146,132 or 5' of the projected replacaent cost.' In addition, the sponsor will be required to ,:_ collateralize a Projected Operating Expense Reserve in an amount of $32,747, equivalent to 110' of the projected negative incOllle str8Ul reflected on the cash flow statement. . OCCUPDCY UftllJ:~Z0JI8 occupancy of ten (10) units will be restricted to tenants whose income does not exceed fifty (50') percent of median incOllle for san Bernardino County. 'l'he low income occupancy requirements will be maintained for thirty (30) years as the sponsor will be required to execute a regulatory agreement which will be recorded and in full force and effect for a period of thirty (30) years. June 12, 1991, J04044 page 3 of 11 10 O' o o - . .~ . o .',0 DVDOHIDDl'BL 8ID U8B8811JD1T Alaska Petroleum Environmental Engineering (ftAPEEft), pt;'epared a Phase I Environmental Ass_SJUmt for the subject site, dated March 6, 1991. The research conducted by APEE does not reveal the occurrence of a direct past environmental impact, or a present potential environmental problem with the site. . DTICLB ~y Article XXXIV Referendum Authority is not required in this instance as only twenty percent of the units will be restricted to low income households. DBVBLOPIIDl'l' TDK DALY8I8 DBVBLOPBR TBB )'uTUKIft COIIPUY The Futurity Company, whose major stockholder is the Highland Lutheran Church, is a nonprofit (501(C)3) corporation established to develop a housing complex on land acijacent to the church facilities. The sponsor has no previous experience in the development of housing. Highland Lutheran Church founded in the late 1950's serves a congregation of over 2000 people. The church is governed by a Board of Directors who assist the pastor in the operation of the church and its programs. In addition to the sanctuary, the church maintains facilities for sunday school services and sponsors a variety of social and cultural activities. Additionally, the church provides counseling programs for individuals and families, as well as, charitable activities for senior citizens and the poor. COB8ULTAII'1' DUD8-DUKE8 . UD U8OCUDS, DC Dukes-Dukes and Associates, Inc., (DD&A) is a community development corporation formed in 1971. The corporation's major activities have been in the development of affordable housing. DD&A has developed Little Zion Manor, CHFA 78 40 S; Villa Mirage Phases I and II, CHFA 83 12 S and 81 26 S; and Dorjil Estates, CHFA 85 30 S; utilizing a blend of private and public financing. They are currently developing twenty-seven (27) units of single family housinq in the City of San Bernardino. June 12, 1991, J04044 page 3a of 11 /0 o o o -..'; - - JlI o o Mr. John Dukes, founder and president of DDU is responsible for the general operations and directiop of the company. Be received his formal education in BwIiness .-inistration, Management and Law from Golden state university and Bastings COlleg~. of Law in Northern california. Prior to founding DDU, Mr. Dukes was Executive Director for the San Francisco Office of Economic Opportunity. . CON'1'IlA~ . A licensed california general contractor has not, as of this date, been selected. DCB%'lBCT Kodama Associate. steve Kodama, principal of the fi.rJI of Kodua Associates, has been in the practice of architecture and planning for over 25 years after receiving his formal education in Architecture from the University of california at Berkeley. Be is licensed to practice in the state of california and is certified with the Hational council of Architectural Registrations Boards. Mr. Kodama's planning and architectural experience covers a very broad range, from housing and education to COIIIlIIercial and recreational resort projects. Mr. Kodama is involved with cOlDlllunity and use-oriented projects such as the University' Center projects and cOIDIIlUDity housing projects. Be is the architect of record for cupertino Bousing, CBFA 83.40 Hi Village Oduduwa, CBFA 85 21 Hi Olive Tree Plaza, CHFA 90 13 Hi Little Zion Manor, CBFA 78 40 Si and Villa Mirage Phases 1 " 2, CBFA 83 12 S and CBFA 81 26 S. DDGBIIBNT AGBft !'our S..sou Four Seasons Management Company, a california Licensed Real Estate Broker, currently provides full property IIlUUlgement services for four (4) rental housing complexes (Little Zion, Dorjil-Phase 2, Villa Mirage Phases I and II) financed by the Agency. Four seasons is a wholly owned subsidiary of Dukes and Dukes. June 12, 1991, J04044 Page 3b of 11 }O o o s ~ e I i i ~ .. .. ~ Ii! ... ! 5 2 ~ o 9 I 3: Ill... o ..... Ill. ~ I ~ g~~ ...~ ."! o. o ... ... B .... .... ... . . ~ ... . ~ ~ a ...., ... ; G :I .. ..; ~.3 . ..... ~ .... . ... Ao oo~oo o .... ... .....~ ~ ~.s:i & :i ~ ... ...... ... ... i o ~ lIIlI I ~ a a I I ~ ... .. III . .... ~ o 0"0 8~'" o. o ... ... .... .... . .... ~ ... . ! e e e '0 . . .. .. ..a !" . ~.3 . .... .00 ... OO~ ... .... ..... ~ ..ao ~...:c :i' i I IOl ~ . ~ ~ i ~ ._..a · !!1 ! ~ e ell · i ~ 3 ':;' :5 a .... "". .... . . ...... ...... gg ""11\ "'''' ...... 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