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Home My WebLink AboutR45-Economic Development CITY OF SAN BERNARDINO ECONOMIC DEVELOPMENT AGENCY FROM: Emil A. Marzullo Interim Executive Director SUBJECT: ORIG\Nf\L Request authority to initiate Redevelopment Activities for the 5th Street and Meridian Avenue Project (Mt. Vernon Corridor Redevelopment Project Area) DATE: September 10,2008 Synopsis of Previous Commission/Council/Committee Action(s): On September 4, 2008, Redevelopment Committee Members Estrada, Johnson and Baxter unanimously voted to recommend that the Community Development Commission consider this action for approval. ____________un____nn__u _______________nn_n_u_ ________________nn_nnn _________________unn____nn_. ______________________n_____n ________________________n__n___nn_".u Recommended Motion(s): (Communitv Develooment Commission) MOTION: That the Community Development Commission of the City of San Bernardino direct Agency Staff to proceed with the preliminary undertaking of Phase I of the Meridian Project as outlined in the Staff Report. Contact Person(s): Carey K. Jenkins Phone: (909) 663-1044 Project Area(s): Mt. Vernon Corridor Redevelopment Project Area Ward(s): 61h Supporting Data Attached: o Staff Report 0 Resolution(s) 0 Agreement(s)/Contract(s) 0 Map(s) 0 Letter(s) FUNDING REQUIREMENTS: Amount: $ 2.9 million Source: Low and Moderate Income Housing Fund Budget Authority: 2008-2009 EDA Budget Signature: ~. ~'.'" Emil A. Marzul 0:' "m Executive Director Fiscal Review: ;)az 0(0 c" ~/,j~/' Barbara Lindseth AdministratIve Services Due tor Commission/Council Notes: P \Agcndas\ColTIm De" Conlmij~i()n\CDC 2008\09-15-08 5th and Meridian Project SR,doc COMMISSION MEETING AGENDA Meeting Date: 09/1512008 Agenda Item Number: Rl/5 '1-15 -ee ECONOMIC DEVELOPMENT AGENCY ST AFF REPORT REQUEST AUTHORITY TO INITIATE REDEVELOPMENT ACTIVITIES FOR THE 5TH STREET AND MERIDIAN AVENUE PROJECT (MT. VERNON CORRIDOR REDEVELOPMENT PROJECT AREA) BACKGROUND: At the April 10, 2008, Redevelopment Committee CRDA") meeting, a staff presentation was delivered regarding the 5th Street and Meridian Avenue Project (the "Project"). The presentation consisted of an overview of the 18 separate four-plex apartments, their ownership status, a review of Part I crimes associated with this location, and a residual land value analysis that contemplated several redevelopment alternatives and an estimate of their respective costs. As a result of the presentation, the RDA Committee requested that Agency Staff return with a specific redevelopment proposal that included not only the residential portions but also the broader area that encompassed the commercial frontage along Foothill Boulevard. The revised Project boundary generally consists of the area bounded by Spruce Street to the north, Foothill Boulevard to the south, Dallas Avenue to the east and Meridian Avenue to the west. The residential component of the Project extends along the 2600 block of 5'h Street and is accessed through Meridian Avenue. The commercial component consists of the street frontage on Foothill Boulevard from Meridian A venue to Dallas Avenue. Please see the attached aerial map for further review. The residential component encompasses properties between 2618 and 2695 West 5th Street. This includes both sides of 5th Street and is approximately 175,285 square feet or 4.024 acres of land, with 18 separate four-plex apartments. Each apartment complex has between 3,555 and 3,894 square feet of building improvements. During the most recent site visit conducted on August 28, 2008, Agency Staff observed that 7 of the buildings were boarded up and appeared unoccupied. All 18 buildings were in a general state of disrepair with broken or missing windows, dead landscaping or no landscaping, signs of graffiti and other tagging, dilapidated fayades and exterior stairs leading to second story units that appeared to be in need of maintenance and improvement. Based on a recent analysis of current ownership, nine of the apartment complexes (street addresses 2624, 2625, 2633, 2639, 2643, 2656, 2657, 2682 and 2695 West 5th Street) have been foreclosed upon and are now owned by their respective creditors. Four of these lender owned properties are currently listed for sale. The majority of the complexes are either renter occupied or vacant with only two of the apartment buildings (II % of the total) appearing to be owner occupied dwellings. The commercial component contains general retail and commercial uses along the northern side of the street on Foothill Boulevard between Meridian Avenue and Dallas Avenue. Specific uses include two motcls, one used car lot, one gas station, three vacant parcels, one remnant parcel and two small retail centers, one of which is a liquor store. During a recent site visit, Agency Staff observed numerous illicit activities including general loitering, open container violations, public intoxication and what appeared to be three separate solicitations for prostitution. P\Agemla,ICumm Dev COIlHni>~ion\CDC 2008\09-15-08 5th and Meridian Project SRdoc COMMISSION MEETING AGENDA Meeting Date: 09/15/2008 Agenda Item Number: 1<-45' q-I5'-"e Economic Development Agency Staff Report 5'h Street and Meridian Avenue Project Page 2 According to interviews with City Code Enforcement staff, the residential properties in question have a history of violations ranging from broken windows, unmaintained landscaping, trash, debris, overgrown vegetation, raw sewage, improper maintenance of apartments and discontinued water usage due to foreclosures and other utility services being disconnected for non-payment by the owners. Recently, there have been five structures that were vacant and unsecured. Within the last week, complaints were filed by concerned residents on two additional structures that were vacant and unsecured. One of the apartment complexes has been vacant for so long that it lost its conforming use status and is scheduled for demolition within the next two weeks. Within the last few months, four separate warrants have been issued by City Code Enforcement for various non-compliance violations. During the first eight months of 2008, the Police Department reported 723 calls for service directly related to incidents in the immediate vicinity of the Project site. Both the residential and commercial components have a zoning designation of General Commercial (CG I) and are located in the Sixth Ward. However, only the commercial component is located in one of the Agency's II redevelopment project areas (Mount Vernon Corridor). CURRENT ISSUE: As a result of recent discussions with the RDA Committee, Agency Staff undertook the task of identifying a comprehensive redevelopment proposal that encompassed both the residential and commercial components of the proposed Project. After thorough analysis and discussions with members of the development community, local residents, appraisers and real estate brokers, Agency Staff recommends a phased strategy starting with the residential component (Phase I) and transitioning to the commercial component (Phase II) as resources become available for acquisition and related activities. Under this strategy, Phase I would entail the acquisition of all 18 four-plex apartments, relocating existing tenants and demolishing these structures in anticipation of issuing a request for proposals (RFP) to the development community at a later date. Given that Agency Low- and Moderate-Income Housing Funds would be used for these activities, the Project would require an affordable housing component. The estimated direct cost for Phase I is approximately $6,140,000, which includes acquisition of all 18 complexes, permanent relocation of applicable tenants and demolition of all structures. The indirect cost, which is primarily associated with the acquisition and relocation consultant fee, is approximately $226,000 and will be submitted to the Community Development Commission of the City of San Bernardino ("Commission") at a later date. This item was submitted to the RDA Committee on September 4, 2008, as RDA Committee agenda Item # 4. Phase II, which is the commercial component, is a much larger, more complicated and presumably more expensive undertaking than is Phase I. Based on Agency Staff analysis, the land comprising Phase II is approximately 415,000 square feet or 9.5 acres. The total amount of building improvements on the site is 30,003 square feet and consists of two motels, one used car lot, one gas station and two small retail centers comprising of at least one adult use (liquor store). P\Agcndas\Comm Dc\! CommissionlCDC 2008\09-15-08 5th and Meridian Project SRdoc COMMISSION MEETING AGENDA Meeting Date: 09/1512008 Agenda Item Number: ~ q-I"5~oe Economic Development Agency Staff Report 5'h Street and Meridian Avenue Project Page 3 Current acquisition costs for all parcels within Phase II are approximately $10.5 million. Subsequent relocation and demolition costs are approximately $877,000 and $268,000, respectively, for an estimated total direct cost of $11. 7 million. Included in this figure are the predevelopment costs associated with acquisition and relocation activities and are approximately $51,000. Phase II will be the subject of the separate requested action to the Commission at a later date. Due to the significant cost as well as other factors, Agency Staff recommends that Phase II occur after initial Phase I activities have taken place and upon identifying a development partner with a strategy for both Phases that are complimentary and would provide the greatest chance for revitalization of the surrounding community. The following table represents the estimated costs for acquiring the land, relocating applicable residents and demolishing those structures associated within both Phases I and II of the Project. Proiect Component Acquisition Relocation Demolition Consultant Total Phase I - Residential $4,950,000 $465,000 $625,000 $225,900 $6,265,900 Phase II - Commercial $10,500,000 $877,000 $268,000 $50,800 $11,695,800 Total $15,450,000 $1,342,000 $893,000 $276,700 $17 ,961,700 ENVIRONMENTAL IMP ACT: None. FISCAL IMP ACT: The costs for the stated activities will be paid from the Agency's Low- and Moderate-Income Housing Fund. This would start with the acquisition, relocation and demolition costs for Phase I of the Project which is currently estimated at $6,265,900, and would be followed by the same process for Phase II which is currently estimated at $11,695,800. There are approximately $2,900,000 in Agency Housing Funds that could be re-appropriated for this Project if the Commission determines that these funds would not be spent on other projects for which they were initially intended. This amount is a result of a review of existing projects that have been allocated funds in the FY2008-2009 Budget but are not moving forward or can be financed with other Agency resources. In addition, the Agency is currently in direct negotiations with Fannie Mae for a credit line facility to be uscd to fund the completion of Phase I. It is anticipated that an award of such funds would be available in October 2008 and would then be submitted to the Commission for acceptance. However, if the credit line is not awarded, the Agency's alternative plan is to utilize the existing funds available and spread the cost of the Project over two funding cycles through FY2009-2010. Based on current estimates, if the Agency P\Ag:tnda~\Comm De" Cotnmission\CDC 2008\O<J-l:i-08 Sth and Meridian f'rojed SR doc COMMISSION MEETING AGENDA Meeting Date: 09/15/2008 Agenda Item Nnmber: -B!!.2- q~(~-oe Economic Development Agency Staff Report 5fh Street and Meridian Avenue Project Page 4 were required to use only those funds presently available, it would be able to acquire approximately one- half of the existing residential structures, leaving the remainder to be acquired as funds become available. RECOMMENDATION: That the Community Development Commission adopt the Motion. ~~ 2: Emil A. Marzu, '&. 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