HomeMy WebLinkAboutR37- Economic Development CITY OF SAN BERNARDINO ORIGINAL
ECONOMIC DEVELOPMENT AGENCY
FROM: Emil A.Marzullo SUBJECT: Neighborhood Stabilization Program("NSP")
Interim Executive Director Quarterly Report for the period ending June 30,
2010
DATE: October 1,2010
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Synopsis of Previous Commission/Council/Committee Action(s):
On September 23, 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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Recommended Motion(s):
(Community Development Commission)
MOTION: That the Community Development Commission of the City of San Bernardino receive and file the quarterly
report of the Neighborhood Stabilization Program for the period ending June 30, 2010, for the
Redevelopment Agency of the City of San Bernardino
Contact Person(s): Carey K.Jenkins Phone: (909)663-1044
Project Area(s): N/A Ward(s): All
Supporting Data Attached: Q Staff Report❑Resolution(s)❑Agreement(s)/Contract(s)❑Map(s)❑Letter(s)
FUNDING REQUIREMENTS: Amount: $ N/A Source: N/A
Budget Authority: N/A
Signature: Fiscal Review:
Emil A.Marzullo,Interim Executive Director Lori P -Til Interi inancial Officer
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Commission/Council Notes:
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P:\Agendas\CommDevCommission\CDC 2010\10-18-10 NSP Quarterly Update-Ending June 30,2010 SR.doe COMMISSION MEETING AGENDA
Meeting Date: 10/18/2010
Agenda Item Number: P;7
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M ECONOMIC DEVELOPMENT AGENCY
STAFF REPORT
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NEIGHBORHOOD STABILIZATION PROGRAM ("NSP") QUARTERLY REPORT FOR
THE PERIOD ENDING JUNE 30,2010
BACKGROUND:
In August of 2008, the City of San Bernardino ("City" or"San Bernardino") received a funding allocation
of$8,408,558 from the United States Department of Housing and Urban Development ("HUD") under the
Neighborhood Stabilization Program ("NSP")to address the City's foreclosure problem. On November 17,
2008, the Mayor and Common Council of the City of San Bernardino ("Council") and the Community
Development Commission of the City of San Bernardino ("Commission")jointly approved the proposal of
the Redevelopment Agency of the City of San Bernardino (the "Agency") and submission to HUD for its
NSP allocation.
Finally, on March 3, 2009,HUD approved the City's application which was followed by an April 23, 2009,
City Council action to formally accept the funds.
The City's existing plan with HUD consists of the following three Program activities plus an administrative
line item:
1. Acquisition, Rehabilitation and Resale of single-family residences - $3,700,000 (the "Rehabilitation
and Resale Program");
2. Acquisition and Demolition for future development- $1,320,000(the"Demolition Program");
3. Housing Opportunities for households at or below 50% of AMI-HUD Requirement - $2,620,000 (the
"Rehabilitation and Rental Program); and
4. Administration($768,558).
The Program funding was based on an amendment that reallocated funds within existing activities. This re-
allocation was approved by the Council on December 21,2009.
CURRENT ISSUE:
For the quarter ending June 30, 2010, the Agency either acquired or placed in escrow 17 properties. These
properties constituted a total of 35 dwelling units. Since the inception of the Program a total of 55
properties have been acquired or placed in escrow which represents a total of 103 dwelling units that have
been positively impacted with NSP funds.
From a budgetary standpoint, the Agency has successfully committed 100% of its original NSP funding
allocation a full quarter ahead of the HUD imposed deadline of September 30, 2010. This was a
management imposed Program goal which was successfully met by Agency Staff. For the reporting period,
the Agency obligated $2,740,191 in NSP funds which brought the total in committed funds to the
$8,408,558 threshold.
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Agenda Item Number:
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Economic Development Agency Staff Report
NSP Quarterly Updated–Ending June 30, 2010
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The table below details the number of properties acquired or placed in escrow("Encumbered"),the number
of units, levels of funds committed and the percent to the proposed goal for NSP (as of June 30, 2010) by
Program type.
Quarter E ding June 30,2010 NSP-to-Date
Properties Number NSP Properties NSP % of
Program Component Encumbered of Units Funds Encumbered Funds Goal
Obligated Obli ated
Resale
Rehabilitation and 9 9 $807,268 33 $2,919,268 100.0%
Demolition 7 22 $682,751 16 $1,651,905 100.0%
Rehabilitation and 1 4 $481,614 6 $3,068,827 100.0%
Rental
Program Administration N/AP N/AP $768,558 N/AP $768,558 100.0%
TOTAL 17 35 $2,740,191 55 $8,408,558 100.0%
The difference between the NSP funds obligated to date category above and the amounts initially budgeted
and approved by Council are due largely to the initial success of the Rehabilitation and Rental Program
Category associated with the 19th and Sunrise Project.
Program Detail:
Rehabilitation and Resale - The Agency obligated $807,268 for its Acquisition, Rehabilitation, and
Resale Program, otherwise known as the Intermediary Services Program, during the quarter ending June
30, 2010. This additional amount increased the total funding obligated for this program to $2,919,268 and
represents 100.0% of the total NSP funding allocated for this activity. In addition to properties actually
purchased, the total obligated amount stated in this narrative includes commitments made by the Agency
for properties that are in escrow or in some other stage of acquisition. The Agency utilized these funds to
acquire and/or place into escrow nine foreclosed single-family homes during the quarter and funded the
rehabilitation costs for one additional home (1605 Guthrie Avenue). As they are acquired, these homes
will be rehabilitated and sold to low- and moderate-income households. The final disposition of this
current batch of properties should occur prior to December 31, 2010.
It has been the policy of the Agency to use NSP funds primarily for acquisition purposes, thereby
maximizing the number of properties acquired with rehabilitation costs eventually being paid from final
sales proceeds or the Agency's housing redevelopment funds, should it be necessary. When appropriate,
and as the funding source remains available,NSP funds are also allocated directly to rehabilitation. This is
the case with 1605 Guthrie Street which was sold to an eligible home buyer during the June 30th reporting
period. This would also be the case where the Agency employs a locally based non-profit 501(c)(3)
housing development organization in an intermediary capacity to manage the redevelopment of some NSP
properties during the rehabilitation and resale period.
Thus far, the Intermediary Services Program activity has increased the total number of foreclosed, single-
family homes either acquired by the Agency or placed in some form of acquisition escrow to 33 properties.
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PAAgendas\Comm Dev CommissionTDC 2010\10-18-10 NSP Quarterly Update-Ending June 30,2010 SR.doe COMMISSION MEETING AGENDA
Meeting Date: 10/18/2010
Agenda Item Number:
Economic Development Agency Staff Report
NSP Quarterly Updated—Ending June 30, 2010
Page 3
During the reporting period, the Agency successfully sold its first NSP home (1605 Guthrie Street). It is
anticipated that a number of properties presently in escrow will be sold during the current quarter and will
be reported upon in the September 30,2010 report.
Demolition - The Agency obligated $682,751 for its Acquisition and Demolition Program during the
quarter ending June 30, 2010. This amount increased the total funding obligated for this program to
$1,651,905, representing 100.0% of the total NSP funding allocated for this activity. In addition to
properties actually purchased, the obligated amount includes commitments made by the Agency for
properties that are in escrow or in some other stage of acquisition. The Agency utilized these funds to
acquire or place into escrow seven foreclosed properties during the quarter. This total was comprised of
two single-family homes, four 4-unit apartment buildings and a 4-unit property that was destroyed by fire
prior to acquisition which was scraped, cleaned of debris and included in the inventory. As properties
under this category are acquired and eventually demolished, the Agency will seek future residential
development opportunities for low-and moderate-income households.
Much of the NSP funding allocated to the Agency's Demolition Program is being used to leverage funds
from other sources to make a significant redevelopment impact in some of the most blighted areas in the
City. In the case of the Acquisition and Demolition Program, the Agency is combining these funds with
NSP funds for the Rental Housing Opportunities for 50% AMI Household Program, Tax Increment
Housing Funds and funds from private lenders to redevelop the 19th Street and Sunrise Lane Project.
During the reporting period three of the four 4-plex apartment buildings and the 4-unit property that was
destroyed by fire prior to Agency acquisition were acquired in support of the 19th and Sunrise Project.
During the most recent quarter, the Agency had made significant progress in drafting a development
agreement with Time for Change Foundation, Inc. ("TFC"), to acquire the 10-unit property initially
designated for demolition and located at 657 North "F" Street. TFC specializes in providing re-entry and
sober living services to women with the goal of graduating their clients into self-sufficiency, employment,
and the ability for these clients to be re-united with their minor children. It is the intention of the Agency
and TFC to complete negotiations and execute a development agreement wherein the 10-unit single and
one-bedroom apartment building will be reconfigured into seven larger one-bedroom and two-bedroom
units. The agreement between both parties should be completed by the end of 2010. As a result, 657 North
"F" Street will most likely be re-allocated to the Rental Housing Opportunities category in an upcoming
reporting period. This will also require a shift of funds in an amount anticipated to be approximately
$232,900 to account for the property acquisition which was originally accounted for in the Demolition
category.
Similarly,the 1464 West Victoria Street property is still under negotiations for a possible transfer to Mary's
Mercy Center, a local non-profit housing provider. Should negotiations move forward successfully, the
reallocation of this property to another Program category will be reported in a subsequent quarter. As for
the current reporting period, it too will remain in the Demolition category.
Rehabilitation and Rental - Through the development agreement with Mary Erickson Community
Housing ("MECH"), the Agency obligated $481,614 for its Rental Housing Opportunities Program that
targets households at or below 50% of AMI during the quarter ending June 30, 2010. This additional
amount increased the total funding obligated for the Program component to $3,068,827 and represents
100.0%of the total NSP funding allocated for this activity. In addition to properties actually purchased,the
--------------------------------------------------------------- --------------------—--------------------P:Wgendas\Comm Dev Commission\CDC 2010\10-18-10 NSP Quarterly Update-Ending June 30,2010 SR.doc COMMISSION MEETING AGENDA
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Agenda Item Number: 01
Economic Development Agency Staff Report
NSP Quarterly Updated—Ending June 30, 2010
Page 4
total obligated amount stated in this report includes commitments made by the Agency for properties that
are in escrow or in some other stage of acquisition.
MECH utilized the Agency NSP funds to acquire or place into escrow one additional foreclosed four-plex
property during the quarter ending June 30, 2010. This represents the 6h four-plex acquired with NSP funds
by Mary Erickson since the inception of the Program. In addition to NSP acquired properties, MECH has
been successful in acquiring four additional four-plexes utilizing Agency redevelopment housing set-aside
funds. This is part of an overall Agency strategy of using its NSP funds to leverage other resources to make
a significant redevelopment impact in some of the most blighted areas of the City.
In the case of the Rental Housing Opportunities for 50% AMI Households Program, the Agency is
combining this source with NSP funds from the Acquisition and Demolition Program, tax increment
housing set-aside funds and funds from private lenders to redevelop a highly blighted section of the City
that has a history of high crime rates and absorbs significant city tax revenues and other resources due to
the higher level of attention from police,code enforcement and other City departments required in this area.
It is the Agency's intent to assist MECH with the purchase and rehabilitation of up to 25 separate four-plex
properties within this targeted neighborhood known as the 19th Street and Sunrise Project.
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. The services provided under the NSP Program and the
associated administration costs will be funded either with NSP funds derived from HUD or funds from the
Agency's Tax Increment Housing Set-Aside.
RECOMMENDATION:
That the Community Development Commission adopt the Motion.
Emil A. Marzullo, Interim Executive Director
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PAAgendasTornna Dev Commission\CDC 2010\10-18-10 NSP Quarterly Update-Ending June 30,2010 SR.doc COMMISSION MEETING AGENDA
Meeting Date: 10//118///2,010
Agenda Item Number: 01