HomeMy WebLinkAboutR10-Redevelopment Agency
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REDEVB.OPMENT AQDCY.RlQUBST FOR Q..SSION/COUNCIL ABa.
om:
Dept:
Glenda Saul, Executive Director
Redevelopment Agency
Subject:
DOlUIL DEVELOPMENT - 19TH &
CALIFORNIA, PHASE 11
Date:
September 2, 1986
Synopsis of Previous Commission/Council action:
6/20/83
11/8/84
4/21/86
5/19/86
Resolution No. 4474 autborizing OPA with Dorjil, Ltd.
Resolution No. 4676 authorizing First Amendment to OPA
Resolution No. 4871 authorizing Second Amendment to OPA.
Resolution No. 4871 authorizing Second Amendment to OPA and repealing
Resolution No. 4871.
Recommended motion:
(COMMUNITY DBVILOPIIENT COMMISSION)
a)
Move authorization for Agency to subordinate its *232,162 loan to First
Interstate's *600,000 loan for tbe Dorji1 Project and to execute any and all
documents approved by Agency COUDse1 to aBSure that such subordination is
maintained if and when such Trust Deed is assigned to MCP.
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b) Move approval of the elimination of the Prevailing Wage Rate requirement for
Phase II of the Dorji1 Affordable Housing Development and direct the preparation
and execution ofFourth Amendment thereof providing for same.
(MAYOR AND COMKON COUNCIL)
c) Move authorization for Director of Finance to establish a fund for the purpose
of debiting City-based fees relating to the Dorji1 Project which will be
refunded to Dorji1 in connection with their Dorji1 Affordable hOusing Project,
Phase II. 4~ ~
r Signature
Supporting date mached:
FUNDING REQUIREMENTS:
YES
Phone: 383-5081
Ward: 6
Contact penon:
Glenda Saul
Amount: $
Pro~: Northwest
No edvene Impact on City:
Cuneil Notes:
Date:
Seutember 8. 1986
1491S/llL
09/08/86-KfO
Agenda Item No.
'CIT~ OF SAN BERNARDIA6 - REQUEa FOR COUNCIL AC,QN
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75-0264
STAFF REPORT
HISTORY
In June of 1983, the Redevelopment Agency entered into an Owner's Participation
Agreement with Dorjil Ltd., for the construction of a 115 unit housing project.
To date, Pbase I, 36 units, in complete. Under the terms of the OPA, the Agency
is committed to lend $232,162 for tbe construction of off site and utility
1mprov...nts. To date, the Agency has reimbursed Dorjil $161,956. The off site
illproveaents in Phase II are substantially cOllp1ete and ready for construction of
the housing units to begin. The $232,162 loan will be repaid by the tax
increments generated by this development.
By letter of March 27, 1986, staff has been advised that developer had secured a
commitment for financing Phase II from First Interstate Mortgage utilizing CHFA
(California Housing Finance Agency) resources. Developer has also requested
$600,000 in feasibility funds from RHCP (State Rental Housing Construction
Progr8ll).
As a condition of their loan, RHCP and First Interstate requested that the Agency
loan for $232, 162 be subordinated to their new Deeds of Trust.
a)
SUBORDINATION AGREEMENT
On April 21, 1986, the Commission approved a Second Amendment to the
Dorji1 Owner Participation Agre...nt. The Second Amendment changed the
cOllp1etion date of Phase II to March 31, 1987. This amendment also
authorized subordination of our Trust Deed in tbe amount of $232,162 to
First Interstate's construction loan of $3.5 ail1ion and RHCD's loan of
$600,000. The subordinations were executed as provided for in the
amendment.
Dorjil's loan is scheduled to close Tuesday, September 9, 1986. They
have been notified by First Interstate that both of the subordination
agreements should have been to First Interstate Bank. First Interstate
will be fronting $3,500,000 plus $600,000 for construction. At the time
of completion, RHCP (State Rental Housing Construction Program) will
take out the $600,000 note.
Staff is seeking your approval to substitute First Interstate in place
of RHCP on the $600,000 subordination, until such time as construction
is complete. At that time, the subordination to RHCP in the amount of
$600,000 will replace First Interstate's $600,000 subordination.
Since the Redevelopment Agency loan ($232,l62) is repaid by tax
increments at completion of the project and the concept of subordination
has previously been approved, staff is seeking your approval.
b)
PREVAILING WAGE RATES
Attached is a letter from Dorji1 requesting that the Prevailing Wage
Rate requirement for Phase II be eliainated from their OPA. Your
determination is sought.
1491G/SL
09/08/86
CIT~ OF SAN BERNARDlio - REQUE9r FOR COUNCIL AC~N
o STAFF REPDRT
c) REFUND OF CITY FEES
In 1980, the Council authorized an application to the State for Rental
Housing Construction (RHCP) funds for tbe Dorjil Development to consist
of 115 affordable units. The application was approved by the State on
March 2, 1981 and executed in June of that year.
On December 21, 1981, the City Council approved refunding Dorji1 of all
City related fees. A copy of the December agenda item and Council
action is attached.
At the time of the actions, it was contemplated that the entire project
(115 units) would be completed by 1984. Phase I (36 units) was
COlDp1eted in 1984. Phase II is scheduled to start within the month and
will be completed by early 1987.
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Dorji1 has had discussions with the City Finance Department relating to
rebate of fees for Phase II. Agency Counsel has advised tbat Council
determination should be sought as to the intention of their previous
motion. The motion itself does not address whether the rebate is for
the entire project or merely Phase II. In reviewing the staff report
presented on December 21, 1981, it is staff's feeling that the intent of
the motion was for the entire 115 unit project. Staff seeks your
concurrence.
For your easy review, below is a summary of the Dorjil Development.
Location:
19th Street and California
Phase I:
36 multifamily units completed 1984
$1,636,000 85/86 tax roll
Phase II:
79 multifamily units
RHCP-Ca1ifornia Rental Housing
Construction Program financing
obtained 6/86
Start: 8-1-86
Complete: 3-1-87
Estimated Value: $4,910,000
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l491G/SL
09/08/86
75-02"
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DUKES-DUKES AND ASSOCIATES, INC.
1247 FIFTH AVENUE · OAKLAND CALIFORNIA 94606 · TElEPHONE 415/839.8633
1875 WEST HIGHLAND AVE. · SAN BERNARDINO, CALIFORNIA 92405 · TELEPHONE 714/887-6491
September 2, 1986
Ms. Glenda Saul, Executive Director
Redevelopment Agency of the
City of San Bernardino
300 N. "D" Street
San Bernardino, CA 92418
RE: Dorjil II - Subordination Agreement
Dear Glenda:
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This le~ter is being written to clarify the need for the revision
to the suborjination documents which were previously approved by
the RDA Boarj.
As you know, there are two subordination agreements. One is
in favor of First Interstate Mortgage for $ 3,500,000.00 and the
other is in favor of the State of California's RHCP for $ 600,000.00.
We are requesting that the $ 600,000 subordination be revised to
read in favor of First Interstate Mortgage. The reason for this
is that First Interstate is providing both the first and second. At
the completion of construction, RHCP will take First Interstate
out of the second for the $ 600,000.00.
Thank you for your assistance.
Sincerely.
1IltM~ 1l~.
Vivian Nash
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1247 FIFTH AVENUE ·
1875 WEST HIGHLAND AVE. ·
AND ASSOCIATES, INC.
OAKlAND CALIFORNIA 94606 · TELEPHONE ..15/839-8633
SAN BERNARDINO, CALIFORNIA 92405 · TELEPHONE 71"/887~91
September 3, 1986
Ms. Glenda Saul
Redevelopment Agency
300 N. "D" Street
San Bernardino, CA 9240l
RE: Dorjil Company - Ammendment to OWner Participation
Agreement
Dear Glenda:
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Per our recent discussions, this letter is a request to amend
the Dorjil OPA to delete the requirement to pay prevailinq wa,es
on all aspects of-the development. Dorjil II, consisting of ~ units,
is the second phase of a l15 unit apartment complex. The OPA was
entered into to assist in the provisions of off-site improvements.
Financing for Dorjil II is being provided by First Interstate
Mortgage in the amount of $ 4,120,000.00. The total development
cost is approximately $ 5,000,000. OUr financing and subsequent
rent schedule was not based on paying prevailing wages, which would
add at least 25% to the development cost. In doing so the project
would not be economically feasible and we would be unable to proceed.
Thank you for your assistance and cooperation.
Sincerely
J:::D~~
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To 11'1111.... R. McGuire, Director of
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COUNCIL ACTION CORRESPONDENCE
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Sub/let Est:a!:lliah I'tmc1 f= s.:cviClt-aaa-.!
h.. - ~lJ. COopeuUva Devel-
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Det. t:!tc:nrbezo 23, \981
Mooting Dete
DeCel:'MZ' 21, 1981
Agende Item No.
~ %t:eta
Action
'ftla D1r..dlOC of 1'4.....",__ iDaUUc:t:ec! to enablltth . fund 'to be known
.. 'the ~i1 QoOperad.~ DrMl~ hII4 ~ the pupo.. of t1ebit:lft9
puai't, iMpecU'llD M4 ~Z' MZV1ce-~ r- 1D ~ct:iOft wit" 'the
~los--1: of 'the ~i1 Aff~le 1IOae!nq 11:0_ .. ou1:l1nea 11'
t:he --a- i_ .IIxHIlU_ Du.atm: of the bd...1oJlMll1: Jlqency
_tea 1l'1C' L_~ 16, 1N1.
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SHAUNA CLARK
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10-19-76
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llDllILIPIUT nun
OJ tHE CIlY Of san 8ERDRRDIDO. tRUfORDlR
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, MEfl\ORANDUM
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DATE
TO
fROM
December 16, 1981
Honorable Mayor and Members of the Common Council
Gary Van Os del
SUBJECT Establish Fund for Service-Based Fees - Dorji1 Cooperative Development
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PROPOSED ACTION:
Instruct the Director of Finance to e~tablish, a fund to be known as the
Dorjil Cooperative Development Fund for the purpose of debiting permits,
inspection and other service-based fees in connection with the development
of the Dorjil Cooperative Affordable Housing Project.
BACKGROUND INFORMATION:
On November 17, 1980, the Council authorized submission of an application
to the State for Rental Housing Construction Program funds to assist in the
f the to be located at the southeast
corner of an a fom a. ubseqaent y, the application was approved
and on June 10, 1981, an agreement executed with the State for a loan
COlll1litment of $2,096,195 to assist in the project development.
As presently planned the Dorji1 Project will provide affordable homes
utilizing a cooperative form of ownership. Development plans include
townshouse design units consisting of three (3) to six (6) units per building.
h dr. The sizes range
rom 50 to'13~square feet. Each un t 'as an attac ed garage. Overall density
is approximately 12 units per acre.
The State funds are to be used to assure affordability of 301 of these units to
lower income families. achieve ff 11i of the balance of the units
to moderate income famil es, t e yan eve oper (Dukes-Dukes and Associates)
have been investigating various means of reducing development costs.
.. MOMENTUM MAKES THE OIFFERENCE
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Page two
December 16, 1981
In reviewin9 potential means of reducing the costs of development and
ultimately the cost to the residents, it has become apparent that the
imposition of various City permit and inspection fees will have the net
effect of increasing the proposed unit costs and monthly payments beyond
affordable limits.
To offset this problem it is recommended that the City commit funds to the
development of the Dorjil Project in an amount equal to the development fees
to be collected by the City ~he oroposed proj~t.
In considering this recommendation it is important to keep the following
facts in mi nd.
1. As applicant for State funds on this project, the City is in
effect a partner with the developer (Dukes-Dukes and Associates).
2. Cost reductions resulting from I I'bate of fles will result 1D
lowl!r unit n..f,...c and monthly Davments. not in increased proflts
to the developer.
3. Through legal covenants and ongoing monitoring the City must
assure continued affordability of the units.
4. The fees recommended for rebate to the development are collateral
for City services on private developments and do not represent a
cost to the general fund.
5. The fees recommended for rebate to the development cover the
following City services.
Improvement Plan
Grading Permit
Construction Permit
Storm Drain
Landscaping
Electrical Energy
,~;i4'!
GARY I' AN OSDEL
Executive Director
Sewer
Conditional Development Permit
Tentative Tract Map
Environmental Review
Plan Check
Bun ding Permit
Mechanical Permit
Grading Plan Check
FORM MOTION:
Move that the Director of Finance be instructed to establish a fund to
be known IS the Dorjil Cooperative Development Fund for the purpose of
debiting permit. inspection and other service-based fees in ~nnect~n
of he Dor u ined
in the~~ran um from executive Director of the Redevelopment gency
crated cembe r 16, I 981 .