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CITY OF SAN BERNARDINO ORIGINAL
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A.Marzullo SUBJECT: Mary Erickson Community Housing-Additional
Interim Executive Director Allocation of Agency's Low and Moderate
Income Housing Set-Aside Funds to continue
acquisition and rehabilitation efforts under the
DATE: October 21,2010 City's Neighborhood Stabilization Program and
--------------------------------------------—---------------------------------------------------- -amend the necessary contract --
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Synopsis of Previous Commission/Council/Committee Action(s):
On October 7, 2010, Redevelopment Committee Members Johnson, Marquez and Brinker unanimously voted to recommend
that the Community Development Commission consider this action for approval.
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ecommended Motion(s):
(Community Development Commission)
Resolution of the Community Development Commission of the City of San Bernardino approving and authorizing the
allocation of $1,600,000 of Low and Moderate Income Housing Set-Aside funds to Mary Erickson Community
Housing,Inc.("MECH")and approving and authorizing the Interim Executive Director of the Redevelopment Agency
of the City of San Bernardino ("Agency") to execute Amendment No. 2 to the 2009 Neighborhood Stabilization
Program Master Agreement by and between the Agency and MECH
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Contact Person(s): Carey K.Jenkins Phone: (909)663-1044
Project Area(s): IVDA Redevelopment Project Area Ward(s): 7
Supporting Data Attached: 0 Staff Report 0 Resolution(s) 0 Agreement(s)/Amendment❑Map(s) ❑Letter(s)
Low and Moderate
FUNDING REQUIREMENTS: Amount: $ 1.6 Million Source: Income Housing Set-Aside funds
Budget Authority: FY 2010-2011
Signature: - _- Fiscal Review:
Emil A.Marzullo,Interim Executive Director Lori Pa ' o-T' ry,Inte ' of Financial Officer
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Commission/Council Notes: _ �s a �����D -S'7
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P:\Agendas\Comm Dev Commission\CDC 2010\11-01-10 MECH-Amendment No.2&Additional Funding Allocation SR.doc COMMISSION MEETING AGENDA
Meeting Date: 11//0j1/2010
Agenda Item Number: /y3
ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
MARY ERICKSON COMMUNITY HOUSING -ADDITIONAL ALLOCATION
OF AGENCY'S LOW AND MODERATE INCOME HOUSING SET-ASIDE FUNDS TO
CONTINUE ACQUISITION AND REHABILITATION EFFORTS UNDER THE CITY'S
NEIGHBORHOOD STABILIZATION PROGRAM AND
AMEND THE NECESSARY CONTRACT
BACKGROUND:
In response to the Neighborhood Stabilization Program ("NSP") enacted by Congress on July 30, 2008, to
address the nationwide residential foreclosure crisis, the City of San Bernardino Economic Development
Agency ("Agency") sought projects that would have a meaningful impact on stemming the tide of
foreclosures in addition to lessening the blighting influences caused by this condition. As a result of the
NSP authorization from Congress, the City of San Bernardino ("City") received $8,408,558, a portion of
which was required to be used to assist households at or below 50% of the area median income for San
Bernardino County ("County"). As a point of reference, in 2010, a family of four residing in the County
earning up to $32,500 per year would qualify under this component of NSP.
During this period, the Agency had identified an area of the City bounded by East 19th Street to the North,
Sunrise Lane to the South, Guthrie to the East and Argyle to the West that was in need of significant
redevelopment intervention. The area in question was later classified as 19th Street and Sunrise Lane Target
Area ("Project"), which had some of the highest crime rates in the City with 356 Part 1 crimes committed
from January 2007 through March 2009. It was the intent of the Agency to focus on this area for targeted
acquisitions with NSP and other housing resources. The Project that was ultimately created included the
acquisition and demolition of existing and blighted foreclosed properties that were predominately four-
plexes. Once the properties were acquired and eventually demolished, a program of single-family homes
and a senior housing facility would be developed. The Project also included the acquisition and
rehabilitation of a select group of 25 existing four-plexes that were seen as viable given the right ownership
structure and the funds to carry forward with their redevelopment. An aerial map identifying the Project
site and its various components are provided as Attachment"A"to this report.
Once the initial plan was set in motion, the Agency sought developers to acquire the 25 properties,
rehabilitate and lease under strict property management guidelines approved by the Agency and the Mayor
and Common Council of the City of San Bernardino ("Council"). Through its procurement process, the
Agency recommended Mary Erickson Community Housing, a non-profit corporation ("MECH") to be the
developer to manage the NSP acquisition and rehabilitation component of the Project. The Agency's
recommendations were subsequently approved on July 20, 2009, with an initial allocation of$2,100,000 in
NSP funds and $1,000,000 in Agency low and moderate income housing set aside funds ("Low-Mod"
funds). A further allocation of $1,520,000 in NSP and Low-Mod funds was approved by Council on
December 21,2009.
As a result of their development activities through August 31, 2010, MECH has been successful in
acquiring and is in the process of rehabilitating 10 of the 25 properties which constitute 40 units of
renovated high quality affordable housing. This has resulted in the leasing of 12 separate units thus far.
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Meeting Date: 11/01/2010
Agenda Item Number:
Economic Development Agency Staff Report
Mary Erickson—Additional Funding Allocation
Page 2
CURRENT ISSUE:
As a result of MECH's initial success, a need has arisen to add additional funds to their current budget of
$4,620,000. At this time MECH has identified three additional properties within their portion of the Project
for possible acquisition. It is further projected that at the current rate of acquisition, two additional
properties could be identified and acquired by June 30, 2011. In order to acquire, rehabilitate and lease as
many as five additional four-plex properties by this projected time frame, an additional $1,600,000 would
be necessary. As a result, the Agency requests authority to add this amount to the MECH budget. By
doing so, this would provide the necessary resources to continue their redevelopment efforts on behalf of
the Agency.
Please refer to Attachment `B" that identifies a summary of all funding requests to date, a detail of the
properties that have been acquired thus far, and a reconciliation that identifies the need for an additional
capital infusion of$1,600,000 in Agency funds.
Separately, the Agency would administratively amend the MECH contract to extend the term of the
agreement by an additional year and add more specific compliance language regarding federal HUD
Section 3 employment and job opportunity guidance.
ENVIRONMENTAL IMPACT:
This request is exempt under the California Environmental Quality Act ("CEQA"), pursuant to Section
15332, Class 32, which consists of projects characterized as in-fill development meeting the following
conditions: (a)the Project is consistent with the applicable general plan, applicable zoning designation and
regulations; (b) the proposed Project is located within city limits and is not more than 5 acres; (c) the
Project site has no value as habitat for endangered, rare or threatened species; (d) the Project would not
result in any significant effects relating to traffic, noise, air quality or water quality; and (e) the Project is
adequately served by all required utilities and public services.
FISCAL IMPACT:
There will be no fiscal impact to the City's General Fund. Funds added to the MECH budget would be
derived from FY2010-2011 Low-Mod housing funds.
RECOMMENDATION:
That the Community Development Commission adopt the attached Resolution.
Emil A. Marzullo,IntWim Executive Director
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P:Agendas\Comm Dev Commission\CDC 2010\11-01-10 MECH-Amendment No.2&Additional Funding Allocation SR.doc COMMISSION MEETING AGENDA
Meeting Date: 11/01/2010
Agenda Item Number:
C (OPY
1 RESOLUTION NO.
2
3 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
4 THE ALLOCATION OF $1,600,000 OF LOW AND MODERATE INCOME
HOUSING SET-ASIDE FUNDS TO MARY ERICKSON COMMUNITY
5 HOUSING, INC. ("MECH") AND APPROVING AND AUTHORIZING THE
INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY
6 OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE
7 AMENDMENT NO. 2 TO THE 2009 NEIGHBORHOOD STABILIZATION
PROGRAM MASTER AGREEMENT BY AND BETWEEN THE AGENCY
8 AND MECH
9
10 WHEREAS, on July 20, 2009, the Community Development Commission of the City of San
11 Bernardino ("Commission") approved the 2009 Neighborhood Stabilization Program Developer
12 Master Agreement ("Master Agreement") between the Agency and the Mary Erickson Community
13 Housing, Inc., ("MECH"), through which MECH was charged to implement the Neighborhood
14 Stabilization Program ("NSP") activity known as the Housing Opportunities for Households at or
15 below 50% of AMI (the "Rehabilitation and Rental Program"); and
16 WHEREAS, on December 21, 2009, the Commission approved Amendment No. 1 to the
17 Master Agreement between the Agency and MECH which allocated additional funds to MECH in
18 furtherance of the Rehabilitation and Rental Program; and
19 WHEREAS, the Agency now deems it desirable to enter into Amendment No. 2 to the
20 Master Agreement ("Amendment No. 2") in the form as attached hereto as Exhibit"A" with MECH
21 to provide an additional $1,600,000 in Tax Increment Housing Set-Aside Funds ("Low and
22 Moderate Income Funds") for the purpose of acquiring, rehabilitating and operating identified 4-
23 plex, multi-family, residential properties within the City of San Bernardino ("City") in furtherance
24 of the Rehabilitation and Rental Program as defined in the Master Agreement; and
25 WHEREAS, the Agency is desirous of assisting MECH in implementing the Rehabilitation
26 and Rental Program and has previously provided $2,620,000 in NSP funding and $2,000,000 in
27 Low and Moderate Income Funds in furtherance of MECH's NSP efforts; and
28 WHEREAS, MECH has obligated as of the effective date of this Resolution 95.3% of the
1
1 aggregate funding provided by the Agency after having acquired ten (10) of twenty-five (25)
2 targeted properties as identified in the Master Agreement; and
3 WHEREAS, the expenditure rate for the Rehabilitation and Rental Program as described
4 above indicates that MECH will need additional funding in order to complete its assigned NSP
5 activities; and
6 WHEREAS, the Agency has determined that the execution of the Rehabilitation and Rental
7 Program pursuant to the Master Agreement and Amendment No. 2 and the fulfillment generally of
8 the purposes of the Master Agreement are in the vital and best interests of the City and the Agency.
9 NOW, THEREFORE, THE COMMUNITY DEVELOPMENT COMMISSION OF THE
10 CITY OF SAN BERNARDINO DOES HEREBY RESOLVE, DETERMINE AND ORDER, AS
11 FOLLOWS:
12 Section 1. The facts set forth in the Recitals to this Resolution are accurate and correct in all
,g
13 respects.
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14 Section 2. The Commission hereby approves Amendment No. 2 and hereby authorizes the
15 Interim Executive Director of the Agency to execute Amendment No. 2 on behalf of
the Agency
16 together with such technical and conforming changes as may be recommended by the Executive
17 Director, or Interim Executive Director, as applicable, of the Agency and approved by the Agency
18 Counsel.
19 Section 3. This Resolution shall take effect from and after its date of adoption by this
20 Commission.
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1 RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF
THE CITY OF SAN BERNARDINO APPROVING AND AUTHORIZING
2 THE ALLOCATION OF $1,600,000 OF LOW AND MODERATE INCOME
HOUSING SET-ASIDE FUNDS TO MARY ERICKSON COMMUNITY
3 HOUSING, INC. ("MECH") AND APPROVING AND AUTHORIZING THE
INTERIM EXECUTIVE DIRECTOR OF THE REDEVELOPMENT AGENCY
4 OF THE CITY OF SAN BERNARDINO ("AGENCY") TO EXECUTE
5 AMENDMENT NO. 2 TO THE 2009 NEIGHBORHOOD STABILIZATION
PROGRAM MASTER AGREEMENT BY AND BETWEEN THE AGENCY
6 AND MECH
7
8 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Community
9 Development Commission of the City of San Bernardino at a meeting thereof, held on the
10 day of , 2010, by the following vote to wit:
11 Commission Members: Ayes Nays Abstain Absent
MARQUEZ
12
DES JARDINS
13
BRINKER
14 SHORETT
15 KELLEY
16 JOHNSON
17 MC CAMMACK
18
19
Secretary
20
21 The foregoing Resolution is hereby approved this day of , 2010.
22
23
Patrick J. Morris, Chairperson
24 Community Development Commission
25 of the City of San Bernardino
26 Approved as to Form:
27 By:—FU er
A ency Counsel
28
3
I EXHIBIT "A"
2
Amendment No. 2 to the
3 2009 Neighborhood Stabilization Program Master Agreement
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a
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a
AMENDMENT NO. 2
TO THE
NEIGHBORHOOD STABILIZATION PROGRAM
DEVELOPER MASTER AGREEMENT
BY AND BETWEEN
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AND
MARY ERICKSON COMMUNITY HOUSING, INC.
YThis Amendment No. 2 to the Neighborhood Stabilization Program Master Agreement (this
"Amendment No. 2") is entered into on November 1, 2010, by and between the Redevelopment
Agency of the City of San Bernardino (the "Agency"), a public body, corporate and politic, and Mary
Erickson Community Housing, Inc., a nonprofit corporation (the "Developer"), and is entered into in
consideration of the facts set forth in the following Recital paragraphs:
-RECITALS-
A. The Developer and the Agency have previously entered into an agreement entitled
"Neighborhood Stabilization Program Developer Master Agreement", dated as of July 20, 2009 (the
"Master Agreement"), through which the Developer was charged to implement the Neighborhood
Stabilization Program ("NSP") activity known as the Housing Opportunities for Households at or
below 50% of AMI (the "Rehabilitation and Rental Program").
5
B. On December 21, 2009, the Community Development Commission of the City of San
Bernardino (the "Commission") approved Amendment No. 1 to the Master Agreement between the
Agency and the Developer which allocated additional funds to the Developer in furtherance of the
Rehabilitation and Rental Program.
C. The Agency now deems it desirable to enter into Amendment No. 2 to the Master
Agreement ("Master Amendment No. 2") with the Developer to provide an additional $1,600,000 in
Tax Increment Housing Set-Aside Funds ("Low and Moderate Income Funds") for the purpose of
acquiring, rehabilitating and operating identified 4-plex, multi-family, residential properties within the
City in furtherance of the Rehabilitation and Rental Program as defined in the Master Agreement.
D. The Agency is desirous of assisting the Developer in implementing the Rehabilitation
and Rental Program and has previously provided $2,620,000 in NSP funding and $2,000,000 in Low
and Moderate Income Funds in furtherance of the Developer's NSP efforts.
E. The Developer has obligated as of the effective date of this Amendment No. 2 ninety
five percent (95%) of the aggregate funding provided by the Agency after having acquired ten (10) of
twenty-five (25)targeted properties as identified in the Master Agreement.
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F. The expenditure rate for the Rehabilitation and Rental Program as described above
indicates that the Developer will need additional funding in order to complete its assigned NSP
activities.
G. The Agency has determined that the execution of the Rehabilitation and Rental Program
pursuant to the Master Agreement and Master Amendment No. 2 and the fulfillment generally of the
purposes of the Master Agreement are in the vital and best interests of the City and the Agency.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS AND
CONDITIONS CONTAINED HEREIN, THE AGENCY AND THE DEVELOPER AGREE AS
FOLLOWS:
Section 1. References to the Master Agreement; Defined Terms. (a)Unless the context
of the usage of a term or phrase in this Amendment No. 2 may otherwise require, the meaning of
words and phrases as contained in this Amendment No. 2, which are indicated by an initially
capitalized letter, shall be the same as set forth in the Master Agreement.
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(b) The information contained in the Recitals as set forth in this Amendment No. 2 is true and
correct in all respects.
!. Section 2. Specific Amendments to the Master Agreement.
(a) The Master Agreement is hereby amended by this Amendment No. 2 in the manner as
indicated in this Section 2 and which changes and amendments shall be effective from and after the
date of approval of this Amendment No. 2 by the Developer and the Agency and execution hereof by
j the parties.
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j (b) Section 4.C. of the Master Agreement is hereby amended by adding the following
paragraph at the end of said Section:
I
j "If deemed necessary for the continuation of the Project, the Agency may, in its sole discretion,
provide additional Low and Moderate Income Funds equal to $1,600,000 to the Developer pursuant to
this Agreement."
I
(c) Section 13 of the Master Agreement is hereby amended by adding the following paragraphs
at the end of said Section:
Section 3 Requirements. Because the amount of this contract exceeds $100,000 and is funded
partially with NSP funds, Developer and Agency agree to the following provisions:
(i) The work to be performed under this contract is subject to the requirements of
Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 17018
(Section 3). The purpose of Section 3 is to ensure that employment and other economic or
HUD-assisted projects covered by Section 3 shall, to the greatest extent feasible, be directed to
low-and very low-income person, particularly persons who are recipients of HUD assistance
for housing.
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(ii) The Agency and Contractor agree to comply with HUD's regulations in 24 CFR
part 135, which implement Section 3. As evidenced by their execution of this contract, Agency
and Contractor certify that they are under no contractual or other impediment that would
prevent them from complying with the part 135 regulations.
(iii) The Contractor agrees to send to each labor organization or representative of
workers with which the contractor has a collective bargaining agreement or other
understanding, if any, a notice advising the labor organization or workers' representative of the
contractor's commitments under this Section 3 clause, and will post copies of the notice in
conspicuous places at the work site where both employees and applicants for training and
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employment positions can see the notice. The notice shall describe the Section 3 preference,
shall set forth minimum number and job titles subject to hire, availability of apprenticeship and
training positions, the qualifications for each; and the name and location of the person(s) taking
applications for each of the positions; and the anticipated date the work will begin.
(iv) The Contractor aggress to include this Section 3 clause in every subcontract
subject to compliance with regulations in 24 CFR part 135 (i.e. for over $100,000) and agrees
to take appropriate action, as provided in an applicable provision of the subcontract or in this
s Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24
I CFR part 135. The Contractor will not subcontract with any subcontractor where the
Contractor has notice or knowledge that the subcontractor has been found in violation of the
regulations in 24 CFR part 135.
(v) The Contractor will certify that any vacant employment positions, including
training positions, that are filled (i) after the contractor is selected but before the contract is
executed; and (ii) with persons other than those to whom the regulations of 24 CFR part 135
require employment opportunities to be directed, were not filled to circumvent the Contractor's
obligations under 24 CFR part 135.
(vi) Noncompliance with HUD's regulations in 24 CFR part 135 may result in
sanctions, termination of this contract for default, and debarment or suspension from future
HUD assisted contracts.
Section 3. Effect of Amendment No. 2. Except as modified or amended by this
Amendment No. 2, all of the provisions of the Master Agreement shall remain in full force and effect
following the effective date of this Amendment No. 2.
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IN WITNESS WHEREOF, the parties hereto have accepted and made and executed this
Amendment No. 2 upon the terms and conditions and with the provisions as set forth above and as of
the date first written above.
AGENCY
Redevelopment Agency of the City of San Bernardino,
a public body, corporate and politic
Date: By:
Emil A. Marzullo, Interim Executive Director
Approved as to Form and Legal Content:
By:
Agency Counsel
DEVELOPER
Mary Erickson Community Housing, Inc.,
a California nonprofit public benefit corporation
Date: By:
Title:
4
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