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Home My WebLink AboutR24-Economic Development Agency CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: 5'h Street and Meridian Avenue Project ("Project") Update of Project Activities DATE: June 13,2011 --------------~-----------------------------------------------------------~---------------------------------------------------------------------------------------------------------------------- Synopsis of Previous Commission/Council/Committee Action(s): On June 9, 2011, Redevelopment Committee Members Brinker, Johnson and Marquez unanimously voted to recommend that the Community Development Commission consider this action for approval. ---------------------------------------------------------------------------------------------------------------------------------------------------------------------*------------------------ Recommended Motion(s): (Communitv Development Commission) MOTION: That the Community Develojment Commission of the City of San Bernardino receive and file the annual update of project activities of the 5 Street and Meridian A venue Project for the Redevelopment Agency of the City of San Bernardino --------------------------------------------------------------------------------------------------------------------------------------------------------------------------. Contact Person(s): Carey K. Jenkins Phone: (909) 663-1044 Project Area(s): Supporting Data Attached: Mt. Vernon Corridor Redevelopment Project Area Ward(s): 6th o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s) Budget Authority: N/A N/A FUNDING REQUIREMENTS: Amount: $ -0- Source: Signature: Emil A. Marzullo, ,.J r . Executive Director Chief Financial Officer _n_________________________._____________________________________________________________n___________________----------------------------------------------. Commission/Council Notes: ________________________________________n_____________________________________________________________________--------.----------- P\Agendas\Comm Dev Commission\CDC 2011\07-05-11 5tb Street and Meridian Avenue Project Update SRdoc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: ~ ECONOMIC DEVELOPMENT AGENCY STAFF REPORT ~--------------~----------------------------~---------------------------------------------------------------------------------------------------------------- 5TH STREET AND MERIDIAN AVENUE PROJECT ("PROJECT") UPDATE OF PROJECT ACTIVITIES BACKGROUND: On September 15, 2008, the Community Development Commission of the City of San Bernardino ("Commission") authorized the Redevelopment Agency of the City of San Bernardino ("Agency") to initiate Phase I of the 5th Street and Meridian Avenue Project (the "Project"). The Project includes the acquisition ofa series of four-plex apartment buildings, most of which are currently bank-owned properties. The Project is a priority for the Agency as a result of the blighting effects the current apartment complexes are having on the immediate area which is generally comprised of single-family residences. Given the high number of bank- owned properties and the overall depressed state of the residential housing market, the Agency has a unique opportunity to acquire these properties at drastically reduced prices in order to obtain site control for future development. After the properties are acquired, the Agency will issue request for proposals to the development community in an attempt to seek the best redevelopment solution on an open and competitive basis. On October 6, 2008, the Commission authorized the Agency to execute a Professional Services Agreement by and between the Agency and California Property Specialists, Inc. ("CPSI"), in support of acquisition and relocation services associated with the Project. CURRENT ISSUE: As of today, the Agency has been successful in acquiring all eleven (11) bank-owned properties, and five (5) of the seven (7) privately owned properties. Current appraisals were recently conducted on the remaining properties located at 2618 and 2669 West 5th Street. It is the Agency's intention to use these appraisals to negotiate the purchase of the remaining properties through short sales. Based on Agency staff observations, negotiations over these last two (2) remaining properties may be challenging. The Agency will assess all options and report back to the Commission once a determination on a final acquisition strategy has been identified. Please see Attachment "A" to this Staff Report for a map of the Agency owned properties. The sixteen (16) acquired properties include one (I) vacant lot and fifteen (IS) four-plex apartment buildings. Only eight (8) of the fifteen (15) apartment complexes were tenant occupied, with a total of twenty-six (26) households. Of the twenty-six (26) households, nineteen (19) requested and received voluntary relocation assistance and as of today, have been successfully relocated to decent, safe and sanitary replacement sites and received relocation benefits. In July of 2010, the Council approved a closed session item authorizing the Agency to offer an incentive package to each of the seven (7) remaining property owners. Under the statutes of Redevelopment law, business property owners are entitled to $11,000 in relocation benefits. A further incentive package was offered in the amount of $14,000 to the statutory amount for a total of $25,000 in full relocation benefits. The additional amount was offered to the sellers as incentive to accept the terms of a short sale of their individual properties. To date, five (5) of the property owners have accepted the relocation benefit package. ------------_.._---------------------------~----------------~------------------------_.---------------------------------.------------------ P:\Agendas\Comm Dev CommissionlCDC 2011\07-05-11 5th Street and Meridian Avenue Project Update SRdoc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: _12:tt1 Economic Development Agency Staff Report 5th Street and Meridian Avenue Project Update Page 2 Demolition Activities The following documents the chronology of Agency demolition activities through April 30, 2011: 1. On May 15, 2009, the Commission adopted a Resolution approving and authorizing the Interim Executive Director of the Agency to execute a Demolition Contract by and between the Agency and J&G Industries, Inc., for the demolition of Agency Properties located at 2656, 2695 and 2639 West 5th Street which resulted in the complete demolition and removal of these properties in June of2009. 2. On September 8, 2009, the Commission adopted a Resolution approving and authorizing the Interim Executive Director of the Agency to execute a Demolition Contract by and between the Agency and AON, Inc., for the demolition of Agency Properties located at 2624, 2625, 2633, 2643 and 2657 West 5th Street which resulted in the complete demolition and removal of these properties in September of2009. 3. On April 22, 2010, the Agency executed a Demolition Contract with AON, Inc. in the amount of $19,300 for the demolition of Agency properties located at 2642 and 2670 West 5th Street which resulted in the complete demolition and removal of these properties in May of201O. 4. In February of 2011, the Agency executed Demolition Contracts with AON, Inc. in the amount of $16,350, Dakeno, Inc., in the amount of $21,596.75, Three D Service Company in the amount of $22,480 and Otis Lacy Company in the amount of $22,676 for the demolition and complete removal of Agency properties located at 2683, 2638, 2632 and 2619 West 5th Street (respectively). As a result, demolition of all four properties was completed by March 30, 2011. 5. In March of2011, the Agency executed a Demolition Contract with Dakeno, Inc. in the amount of$14,000 for the demolition and removal of an Agency property located at 2694 West 5th Street. As a result, the property was completely demolished and removed by April 22, 2011. The following chart summarizes the demolition activities that have taken place thus far: Contract Date Site Address(s) Contractor(s) Amount(s) Demo Completion 2639 West 5tn Street May 2009 2656 West 5th Street J&G Industries $58,225 June 2009 2695 West 5th Street 2624 West 5ID Street 2625 West 5th Street Sept. 2009 2633 West 5th Street AON, Inc. $74,500 Sept. 2009 2643 West 5th Street 2657 West 5th Street April 2010 2642 West 5ID Street AON, Inc. $19,300 2670 West 5th Street May 2010 2619 West 5ID Street Otis Lacy Co. $22,676 2632 West 5th Street Three D Service Co. $22,480 Feb. 2011 2638 West 5th Street Dakeno, Inc. $21,596.75 March 2011 2683 West 5th Street AON, Inc. $16,350 March 20 II 2694 West 5th Street Dakeno, Inc. $14,000 April 2011 _____________________________________________________________________~_________________d________.________________------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2011\07-05-11 5th Street and Meridian Avenue Project Update SRdoc COMMISSION MEETING AGENDA Meeting Date: 07105/2011 Agenda Item Nnmber: ~ Economic Development Agency Staff Report 5th Street and Meridian Avenue Project Update Page 3 Upon acquiring the two (2) remaining privately owned properties, the Agency will seek the appropriate demolition authority and advise the Commission as necessary. Please see Attachment "Boo to this Staff Report for a map of the Agency owned properties that have been demolished. Proiect EXDenditures Agency Staff determined initially, based on market values of properties at the time, that the Project would require approximately $6.3 million to acquire, relocate tenants and demolish structures in preparation for redevelopment. When purchasing the 16 properties acquired thus far, the Agency benefitted from a substantial decrease in property values over the amount of time that acquisition occurred. During FY2008-2009, the Agency expended a total of $1,579,252.66 towards all activities associated with the acquisition, relocation and property management of the Project. During FY2009-20 10, the Agency expended a total of $675,954 towards all activities of the Project. Under its FY20 I 0-20 II budget, the Agency has allocated $2,000,000 for Project activities. For the half-year period of July 1,2010 through December 31, 2010, the Agency expended a total of $881,591.42 for a total Project expenditure of$3, 136,798.08. A B C D E Expenditures Total project Amount available Expenditures Expenditures FY 10-11 through expenditures for remainder of FY 08-09 FY 09-10 12/31/10 through 12/31/10 FY 10-11 $1,579,252.66 $675,954 $881,591.42 $3,136,798.08 $1,118,408.59 NOTE: A+B+C=D $2,000,000 - C = E Future DeveloDment Activities Phase 1 - Residential Parcels As a part of the original plan that was presented by Agency Staff, several redevelopment concepts were presented based on certain parameters such as market demand, housing type, current zoning and overall density constraints. The Project site is currently zoned as Commercial General (CG-I), which allows for the following development opportunities: I) retail, 2) personal service, 3) entertainment, 4) office and 5) related commercial uses along major transportation corridors and intersections to service the needs of the residents. At the time of the initial September 15, 2008 Commission approval, several redevelopment scenarios were provided for the housing component once all acquisition, relocation and demolition activities had been completed. Specifically, they included five (5) separate alternatives: 1. Affordable senior rental alternative at 125 units. 2. Affordable family rental alternative at 160 units. 3. Low density single-family residential ownership alternative at 18 units. 4. Medium density single-family residential ownership alternative at 50 units. 5. Higher density single-family residential ownership alternative at 60 units. Currently, the Agency is working with a design and planning firm assigned to create a Conceptual Master Plan !<.>r._!!,1!.!'.~_~~~L~e~__<.>.f~h~l'I!:,j~~t,__:!:~_~_~~~_i~lI.!~~_~_ilLi!.'cJ!1_~~_,:!~~~lopi!1_!L~~~~~~!.2i!~_~J!~~ti,:~~_~!!:J1_-~ P:\Agendas\Comm Dev Commission\CDC 2011\07-05-11 5th Street and Meridian Avenue Project Update SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/05/2011 Agenda Item Number: {11-L/ Economic Development Agency Staff Report 5th Street and Meridian Avenue Project Update Page 4 preferred plan to be presented to a meeting of community residents at a future date. Thus far, initial Agency preferences include a mix of single-family and senior housing opportunities. This will be further refined in advance ofthe proposed community meeting. It's anticipated that once the final acquisition and relocation activities have concluded, Agency Staff will issue a request for proposals to the development community for the future re-development ofthis area. In addition to a preferred Housing Strategy endorsed by the community, this mav include the possible inclusion of the adjacent commercial parcels along the northern portion of Foothill Boulevard between Meridian Avenue and Dallas Street sometime between FY2011-2012 and FY2012-2013. Provisions relating to the Project's funding source require that the Agency use the housing fund monies to increase, improve and preserve housing available to low- and moderate-income persons and families at an affordable cost, as required in sections, 33070, 33071, 33334.2 and 33449 ofthe California Health and Safety Code. In addition, section 33334.2(g) states that the monies may be spent outside a project area if it is determined by the agency and its legislative body to be of benefit to the project area. The housing-related component is outside any of the Agency's current Redevelopment Project Areas. Section 3334.16 of the Health and Safety Code requires agencies to commence actions leading to the development of property acquired with monies from the housing fund within five (5) years after acquiring the property. Therefore, it is incumbent upon the Agency to start redeveloping this (residential) area by November 17,2013, which would be five (5) years after the purchase of the first property utilizing housing set-aside funds located at 2656 West 5th Street. Phase 2 - Commercial Parcels Backl!round: Based on a previous authorization of the Redevelopment Committee, on April 8, 2010, the Agency sought proposals from four (4) qualified land use economic firms to conduct an analysis of the market opportunities to acquire commercial properties along the northern portion of Foothill Boulevard between Meridian Avenue and Dallas Street in support of the 5th and Meridian Project (the "Corridor"). Candidates were identified through the Agency's list of firms who have recently provided the same types of services on past projects. On April, 26, 20 I 0, four (4) responses were received and reviewed by Agency Staff and a contract was awarded to Keyser Marston Associates "(KMA"). The decision was based on KMA's competitive bid relative to their competition as well as their quick turn-around time and proven technical proficiency with the assignment. On July 22, 2010, KMA provided the Agency with a market analysis and economic study of the Corridor. A detailed description of the analysis and findings are provided in Attachment "C" to this Staff Report. At this point in time, Agency staff is providing the following three recommended alternatives based on an analysis of the information contained within KMA's report. 1. Not pursue any development opportunities and leave the Corridor as it is and actively complete the residential component. _~_______________d_____________________________.______------------------.--------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2011\07-05-11 5th Street and Meridian Avenue Project Update SR.do~ COMMISSION MEETING AGENDA Meeting Date: 07/05/201 t Agenda Item Number: /22.-lL Economic Development Agency Staff Report 5th Street and Meridian Avenue Project Update Page 5 2. Moderate Development - The current market conditions reflect limited to no demand for retail along the Corridor. However, if conditions improve and the credit situation eases, the opportunity may exist for smaller in-fill projects in the form of a small retail project on the northeast comer of Meridian Avenue and Foothill Boulevard. 3. Large Scale Development - The current market conditions don't reflect demand for a large scale community shopping center along the Corridor. However, if conditions improve dramatically, the available land area between Meridian A venue and Dallas Street provides an ideal site for a community serving retail center. A potential development of this magnitude could include a big box tenant, a mini- anchor (e.g. Ross, Marshalls) and in-line retail/restaurants. At the request of the Redevelopment Committee during the June 9, 2011 Redevelopment Committee meeting, Agency Staff is currently gathering additional financial information for options 2 and 3 to bring back to the Redevelopment Committee at a later date for further direction. ENVIRONMENTAL IMPACT: This item does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act (CEQA). FISCAL IMPACT: There is no General Fund impact to the City. Funds used to pay for this Project are derived from the Agency's Low and Moderate Income Housing Set Aside Funds identified in the FY2008-2009, FY2009-2010 and FY20 10-20 II Budgets. RECOMMENDATION: That the Community Development Commission adopt the Motion. -/ rim Executive Director --------------------------.--------------------------------~-------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2011\07-05-1\ 5tb Street and Meridian Avenue Project Update SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/0S/20ll Agenda Item Number: tl-zl{ n N (C r x 3 CL a M c ^ca , } Af JAI-, 'oc&2683 � 268 ry'r ', +f+� 1 Y j V 669 26�J s i t - 2657 ° 265 . E � < F a fAW r 3 ` 264 wr- ° P 2638 lw { :r u 2625. 2624 o t Fes' ♦ � W O m � t a it, f- ° ' I y. t y p N � nn k oho - o m use n S 3� .0 7 g , v. ^ C qs � w Jt A; all e• «,s Gt ` Poo ^► a .r s , x* dyy IMF x r 3 ^{v • w �c s 'Pr 'eaw.• e. r CD CD ro m JI► � c r w K „ m m lot CD. . .. } r