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REDEVELOPMENT AGENCY AGENDA ITEM NO. 4

Meeting Date: January 8, 2002

Subject/Title: Approve a Resolution Authorizing the Appropriation of Low/Moderate Housing Funds for the Sycamore Place II Senior Housing Project and Direct Staff to Commence Preparation of Supporting Agreements

Submitted by: Gina Rozenski, Redevelopment Analyst

Approved by: John Stevenson, Executive Director



RECOMMENDATION
By resolution, authorize appropriation and expenditure of Low/Moderate Housing Funds in the amount of $454,699 for the HUD 202 Senior Housing Development, known as Sycamore Place II and sponsored by Christian Church Homes, to be located at 161 Sycamore Avenue (currently the Public Works Yard). Allocate funds and direct staff to commence preparation of supporting agreements and documents.

PREVIOUS ACTION
In June 2000, the City Manager advised City Council that Christian Church Homes (“CCH”) had proposed development of Sycamore Place II senior apartments, a 40-unit complex for 39 very-low income senior households and 1 unit for on-site property manager. The proposed project will be adjacent and similar to the successful CCH senior apartment project at 1100 Sycamore Court. Council approved the execution of an option to purchase agreement with CCH for the Public Works Yard at 161 Sycamore Avenue, which land value at the time was estimated to be approximately $400,000.

In October 2000, CCH staff advised staff of the proposed financing methods for proposed senior apartment project of $5,076,913. Briefly, the breakdown of requested funds are as follows:
1. HUD 202 funds $4,167,515
2. County HOME funds 454,699
3. City of Brentwood and Redevelopment Agency 454,699

The City and Redevelopment Agency contributions to the project could be a combination of selling the land for less than fair market value, fee subsidies, and using the Agency’s Low/Moderate Housing Fund. Regardless of the combination, the amount of the contribution by the City and Agency needed to match the HOME contribution as a condition of the County’s approval to allocate HOME funds to this project. Also, local matching funds are critical in HUD’s review of an application and funding decision. The City and Agency’s proposed participation of $454,699 consisted of the following components:
1. Value of Land $400,000
2. Title and escrow fees 10,000
3. General project management and overhead costs 44,699


In February 2001, the City Manager reported to the Redevelopment Agency that CCH had requested $17,000 to fund the HUD 202 application costs. The $17,000 would be credited against the proposed $454,699 City/Agency contribution to the project. The Housing Subcommittee later approved CCH’s request for the cost of submitting the HUD 202 application in the amount of $17,000. As of August 2001, CCH has so far drawn down $8,340.

In March 2001, the Contra Costa County Board of Supervisors approved $454,699 of HOME funds to the CCH project at 161 Sycamore Avenue, contingent upon the City/Agency participation in the project and submission of the HUD 202 application.

At the May 22, 2001, the Redevelopment Agency considered two housing proposals: CCH project of 40 units at 161 Sycamore Avenue and the Terra Nova project of 88 units across from the new Post Office. The Agency approved by motion the Housing Subcommittee’s recommendation to obligate the Agency’s Low/Moderate Housing Fund for the CCH Sycamore Place II senior apartment project at 161 Sycamore Avenue.

CCH submitted its application for construction grant monies to the HUD 202 program on May 25, 2001. While the original senior apartment project at 1100 Sycamore Avenue took three separate attempts to finally receive HUD approval, CCH’s application for Sycamore Place II was awarded on its first submittal.

A meeting in San Francisco with HUD staff, CCH and a staff member of the City’s Community Development Department was held in early December 2001, to discuss the project’s next steps. HUD would like to see construction begin with 18 months, and requested that an updated appraisal be prepared to confirm the fair market value. The cost of the updated appraisal is estimated to cost $2,000, to be paid by the Redevelopment Agency and credited against the Agency’s contribution. 

BACKGROUND
Certain actions are required by the City Council and Redevelopment Agency to formalize previous direction to proceed with this project:

1. A purchase agreement for the land must be entered into in order for the City to sell the land to CCH for the project. A public hearing and consideration of a resolution approving the sale of this land will be agendized for the City Council at an upcoming meeting after completion of the appraisal. The 2.57-acre property is zoned R-3, High Density Multi-Residential. 

2. The Redevelopment Agency needs to adopt a resolution authorizing a reservation of funds from the Low/Moderate Housing Fund to participate at the requested level of $454,699. Of this amount, $400,000 will be used to pay the City for the land, $10,000 for title and escrow fees, and $44,699 for general project management and overhead costs. The application cost of $17,000 and the appraisal cost of $2,000 will be credited against the Agency’s contribution in the general management and overhead category. 

It should be noted the City’s Right of Way Department performed an appraisal that resulted in a land value of $530,722 for City’s Public Works Yard at 161 Sycamore Avenue. Upon completion of the updated appraisal, the City and Agency must determine whether the City will write down the land value to the original $400,000, thereby the City will also be contributing to the project, or if the Agency will reserve additional funds from its Low/Moderate Housing Fund to fund the difference. Such a consideration and action is not before the Agency at this time.

CCH has advised Redevelopment Staff that their original estimate of $30,000/unit, or $1,200,000, for local agency permits and fees may not be adequate, and could ultimately be higher than originally anticipated. CCH has assured staff that they will look to other funding sources to bridge this gap, including but not limited to the County CDBG and HOME programs. However, should alternate funding sources not be available, CCH reserves the opportunity to return to the Redevelopment Agency with this request.

3. The Redevelopment Agency should appropriate $25,000 of Low/Moderate Housing Funds to cover certain professional and legal expenses associated with proposed senior housing project. 

4. The Redevelopment Agency needs to direct staff to commence preparation of the necessary documents to support this project such as a Disposition and Development Agreement, Affordability Agreement, Grant Deeds, Promissory Notes, etc. 

ANALYSIS
Since the Redevelopment Agency is directly contributing to the development of these units, a maximum 30% inclusionary housing obligation of 12 units is triggered, per Health & Safety Code Section 33413(b)(1). But this project itself is adding 39 very-low income dwelling units to the Agency’s inventory of inclusionary housing, essentially meeting the 12-unit obligation and adding a surplus of 27 units. The units will be deed- and rent-restricted for a period of 40 years. 

At this time, the Agency’s estimated participation costs for this project have not changed since last considered by the Agency (refer to attached Development Budget from the 4/25/01 RFP). However, the Agency may be requested at a later date to possibly consider funding the increased costs associated with the result of the updated land appraisal and any increase in local fees. 

Proceeding with this project is consistent with the Redevelopment Plan and the Five-Year Implementation Plan to provide affordable housing, while also complying with inclusionary housing requirements and removing obstacles to infill residential development. The project integrates the proposed residential use with the surrounding existing uses, which, in turn, strengthens the immediate neighborhood and the community in general. Furthermore, the proceeds from the sale of the City’s Public Works Yard can subsidize the costs associated with moving the Public Works Yard to the Sunset Industrial Park. 

The need for senior housing is critical in our community, as evidenced by a waiting list of 70 applicants for Sycamore Place, the existing senior apartment complex at 1100 Sycamore Avenue. While HUD 202 program forbids the establishment of a local preference to serve primarily Brentwood seniors, the percentage of Sycamore Place residents who came from Brentwood or have family living in the immediate surrounding area, and those on the waiting list, is above 75%. 

Development of the property will require the submittal of a development application, and may include a land use permit, preparation of a parcel map, architectural design and environmental review of the project by the Planning Commission. 

FISCAL IMPACT
This project commits $454,699 and $25,000 from the Low/Moderate Housing Fund 302. The Low/Moderate Housing Fund has a fund balance of $1,033,000 as of November 30, 2001, with the following budgeted revenues and committed expenses:

Fund Balance 11/30/01 $1,033,000
K&B Meadows Annual Contribution to City (100,000)
Bentwood Blvd./Lone Tree Way Wastewater 
Project #592-5910 (79,808)
County Transitional Center Housing Project (30,000)
Sycamore Senior Community Center (74,000)
Utility Connection Assistance Program (104,333)
Utility Connection Grant Program (50,000) 
Orchard Drive Water Line (73,672)
Projected Tax Increment Revenue 2001-02 500,000
Estimated Balance at 6/30/02 $1,021,187

The Agency’s Low/Moderate Housing Fund is stable and healthy, and can financially support the Christian Church Homes Sycamore Place II project.



Att. Resolution No. RA-___
Site Map
Development Budget from 4/25/01 RFP


grozenski\wpfiles\reservation of funds str


RESOLUTION NO. RA-


A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD AUTHORIZING THE APPROPRIATION AND EXPENDITURE OF LOW/MODERATE HOUSING FUNDS IN AN AMOUNT NOT TO EXCEED $454,699 FOR THE DEVELOPMENT OF SYCAMORE PLACE II, A SENIOR HOUSING PROJECT, AND AUTHORIZING THE APPROPRIATION AND EXPENDITURE OF FUNDS IN AN AMOUNT OF $25,000 FOR CERTAIN PROJECT COSTS 


WHEREAS, California Community Redevelopment Law provides that a redevelopment agency shall establish a Low/Moderate Housing Fund (“Housing Fund”) and deposit a portion of tax increment revenues annually into the Housing Fund for the purpose of increasing, improving and preserving the supply of low and moderate income housing available at affordable housing cots; and

WHEREAS, the Brentwood Redevelopment Agency (“Agency”) desires to support the availability of housing opportunities for low and moderate income residents within the community; and

WHEREAS, the Agency has previously supported the application of funding for the development of Sycamore Place II, a 40-unit senior housing project sponsored by Christian Church Homes (“CCH”), from the Department of Housing and Urban Development (“HUD”) under the 202 Grant Program; and 

WHEREAS, CCH possesses the qualifications and management resources necessary to insure the development of the Sycamore Place II Senior Housing Project in accordance with the purposes and objectives of the Agency’s Redevelopment Plan; and 

WHEREAS, HUD has approved funding for the Sycamore Place II Senior Housing Project submitted by CCH; and 

WHEREAS, Contra Costa County has approved $454,699 of HOME funds for the Sycamore Place II Senior Housing as a matching contribution to the Agency’s participation; and

WHEREAS, the Agency has funds available in the Housing Fund to contribute to the site acquisition and general management costs for the Sycamore Place II Senior Housing Project; and

WHEREAS, CCH has requested funding from the Agency in the amount of $454,699 in support of the Sycamore Place II Senior Housing Project to combine with HOME and HUD grants; and

WHEREAS, the Agency recognizes that additional budgetary funding in an amount of $25,000 is necessary to provide certain professional and legal services associated with and in support of this project.


NOW, THEREFORE BE IT RESOLVED that the Redevelopment Agency of the City of Brentwood hereby authorizes:

1. The appropriation and expenditure of Housing Funds in an amount not to exceed $454,699 to assist Christian Church Homes in funding the site acquisition and general management costs associated with the development of Sycamore Place II Senior Housing Project, subject to the preparation and approval by the Agency of an agreement specifying the specific terms and condition of participation with Christian Church Homes relating to the development of the project.

2. The appropriation and expenditure of Housing Funds in an amount not to exceed $25,000 to provide certain professional and legal services associated with preparing necessary agreements and documents in support of the Sycamore Place II Senior Housing Project.

3. Staff to commence preparation of the necessary agreements and documents to support the Sycamore Place II Senior Housing Project such as, but not limited to, a Disposition and Development Agreement, Affordability Agreement, and Promissory Note. Final agreements and notes shall be returned to the Agency for their review and approval.

PASSED, APPROVED AND ADOPTED by the Redevelopment Agency of the City of Brentwood at a regular meeting held on the _____ day of ____________ , 2002, by the following vote:

AYES: Members
NOES: 
ABSENT: 




_____________________________
Michael A. McPoland, Sr.
Agency Chairman


ATTEST:



__________________________________
Karen Diaz, CMC
Agency Secretary


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