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HomeMy WebLinkAbout04/19/1988, C-5 - 1987 CDBG GRANT PROGRAM IMPLEMENTATION: CITY PURCHASE AND SALE OF LAND ON POINSETTIA DRIVE TO ENABLE THE CONSTRUCTION OF HOUSING FOR LOW-INCOME PEOPLE. III _• .. vGI w = G9 IIIn�I�III�IIIIIIII�iII�pI � MEETING GATE: �� II�4��III o((�� 5a1 l a.�IJ OBISpO APR 1 1988 4-19-88 COUNCIL AGENDA RRT ITEM NUMBE : FROM Terry Sanville, Acting Community Development Director SUBIECT:1987 CDBG Grant Program Implementation: city purchase and sale of land on Poinsettia Drive to enable the construction of housing for low-income people. CAO RECOMMENDATION: Adopt resolution authorizing the CAO to execute the attached housine agreement with the Edna Islay Housing Corporation (EIHC) . DISCUSSION In 1987, the State Department of Housing and Community Development (HCD) approved the city's block grant application. $400,000+ is earmarked for the purchase of a 2.2-acre site in the Edna Area that will enable the construction of housing for lower income people. The city has completed the environmental review process for this program and has requested the funds from the state to purchase the property. To take advantage of favorable costs, in the fall of 1987 the Housing Authority purchased the site with the understanding that it would be reimbursed with CDBG funds. The Housing Authority also established the Edna-Islay Housing Corporation -- a non-profit corporation which will secure construction and permanent financing for the low-income housing project and operate the project. There are significant tax credit and construction cost advantages to this strategy. When the city receives the CDBG funds from the state, they will be used to reimburse the Housing Authority. The title of the property on Poinsettia Drive will go from the Housing Authority to the City and then immediately be transferred to the Edna-Islay Housing Corporation (EIHC). EIHC will be responsible for managing the construction of 20 apartments on the site using funding from California Housing Finance Agency (CHFA) or financing based on the low income housing tax credit program. The project will be maintained as housing for lower income people for a minimum of 50 years. At the end of the fifty year period, the title of the property would revert back to the city. SIGNIFICANT IMPACTS There will be no significant fiscal impacts: CDBG funds ($400,000+) will be used for property acquisition; permanent financing and Housing Authority Funds ($1.1 million) will be used to construct the apartments; the state will reimburse the city for administrative costs; and EIHC will pay all escrow costs and fees. The environmental review process is complete. This project will not cause significant impacts. Also, the project has received final design approval from the ARC. CONSEQUENCES OF NOT TAKING THE RECOMMENDED ACTION Implementation of the block grant program would be delayed. The Housing Authority would continue to incur significant interest payment costs while it holds the property awaiting CDBG reimbursement. Attachments: Draft Housing Agreement with EIHC RESOLUTION NO. (1988 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING AGREEMENT REGARDING THE ACQUISITION AND SALE OF PROPERTY ON POINSETTIA STREET BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: SECTION 1. That the Agreement regarding acquisition and sale of property on Poinsettia Street, attached hereto as Exhibit "A" and by this reference made a part hereof, have been reviewed and are approved and the City Administrative Officer is authorized to execute the same. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing Resolution was passed and adopted this day of , 1987. MAYOR ATTEST: CITY CLERK APPROVED: City A inistrative Officer L-7 17- City tornqk' community, evelopment Director �) 1 C-5-2 CITY OF SAN LUIS OBISPO Housing and Community Development Agreement THIS AGREEMENT is made and entered into this day of , 19 , by and between EDNA-ISLAY HOUSING CORPORATION, a California nonprofit public benefit corporation, hereinafter referred to as "EIHC," and the CITY OF SAN LUIS OBISPO, a charter municipal corporation, hereinafter referred to as "City. WITNESSETH: WHEREAS, ON September 15, 1987, the Council of the City of San Luis Obispo duly adopted Resolution No. 6328 (1987 Series), a copy of which is on file in the office of the City Clerk and is incorporated by reference herein as though set forth in full, wherein the City and the State Department of Housing and Community Development (hereinafter referred to as "HCD") entered into a Grant Agreement for the Distribution and use of Community Development Block Grant (hereinafter referred to as "CDBG") funds awarded to the City, as Grantee, under the provisions of Title I of the Federal Housing and Community Development Act of 1974 (hereinafter referred to as the "Act") under Grant No. 87-STSG-233; and WHEREAS, pursuant to and as more fully described in the Grant Agreement, the grant funds to be received by the City are to be used and expended for (1) the acquisition of a 2.2 acre site on which 20 units of low and very-low income family housing are to be developed, and (2) general administration; and WHEREAS, the City has need for special services for the development and management of 20 units of low and very-low income family housing; and WHEREAS, EIHC represents itself as being qualified to provide such special services needed by City. NOW, THEREFORE, IT IS AGREED by and between the parties hereto as follows: I. EIHC Agrees: A. To purchase from the City the 2.2 acre site mentioned herein, and described in. Attachment "A", for the amount of one dollar plus any and all escrow costs and fees. EIHC shall also pay any and all escrow costs and fees related to the City's purchase of the subject site from the Housing Authority of the City of San Luis Obispo. B. To secure construction and permanent financing for the development of 20 units of low and very-low income family housing consisting of 13 two-bedroom and 7 three-bedroom units. C. To develop the project in accordance with the approvals granted by the Architectural Review Commission of the City of San Luis Obispo as item ARC 87-137. 1 D. To complete the development of the project within the timetables outlined in the agreement between the City and HCD as Contract No. 87-STSG-233. c-5' 3 E. To operate t..e project for a minimum of thirty years either: 1) In accordance with the requirements of the California Housing Finance Agency's 80/20 State-Local Rental Housing Finance Program wherein 80% of the units are rented to households with incomes between 50% and 80% of the median income and 20% of the units are rented to households with incomes below 50% of median income. Rents shall be calculated in accordance with the program regulations. 2) In accordance with the Low Income Housing Tax. Credits Program as established in the Federal Tax Reform Act of 1986 and defined in Section 42 of the Internal Revenue Code, whereby 95Z of the units will be rented to households with an income at or below 60% of the county median household income, as adjusted for household size under Section 8 of the United States Housing Act of 1937, and 5% of the units will be rented to households with an income at or below 50% of the county median household income, adjusted for household size, as above. Rents shall not exceed 30% of the applicable income ceiling, including the utility allowance. The utility allowance shall be as established for comparable units under the Section 8 program. An annual report shall be submitted to the City to facilitate an annual evaluation by the City to insure that the provisions of this agreement are complied with. The lease for the units shall be as approved, in writing, by HCD. No changes to the approved lease may be made without prior written approval of HCD. F. To contract with the Housing Authority of the City of San Luis Obispo for the management of the project. G. To retain all records, accounts, documentation and all other material relevant to a fiscal audit or examination, as specified by the HCD, for a period of not less than three (3) years from the date of termin- ation of the City's Grant Agreement with the HCD. H. In the event that the project does not proceed to completion after the City has expended grant funds, EIHC agrees to indemnify City for any and all repayments to HCD which may be required by HCD due to a failure to meet the City's contractural commitments to HCD. II. City Agrees: A. To utilize $401,500 of the awarded Community Development Block Grant Funds for the purchase of the site at 4035 Poinsettia Street, as described in attachment "A", from the Housing Authority of the City of San Luis Obispo. Immediately upon purchase of the property, the City will sell the site to EIHC pursuant to Section I A of this agreement. B. To be responsible for administering the fiscal and programmatic aspects of the subject grant. In the event the City determines that EIHC has not adequately complied with the terms of the grant, the City shall notify, in writing, EIHC and HCD. III. General: A. Transfer of the Development. Express prior written approval of both the City Council and HCD is required for the sale, transfer or conveyance of the project by EIHC. Such approval shall be given provided that the following terms are incorporated into any transfer agreement: �' S��- 1. That EIHC successor in interest agrees to assume the obligations of EIHC relating to this agreement for the duration of this agreement. 2. That EIHC's successor in interest is an eligible sponsor and demonstrates to the satisfaction of both the City and HCD that it can successfully own and operate the project in accordance with the terms of the agreement and the HCD Grant. B. Violation of Grant Agreement by EIHC. In the event of the violation of any of the fiscal provisions of the grant by EIHC, the City shall give written notice thereof to HCD and EIHC by registered or certified mail. If such violation is not corrected to the satisfaction of the City within thirty (30) days after the date such notice is mailed (or within such further time as the City, in its sole discretion, may permit), the City may, without further prior notice, declare in writing a default under this Agreement effective on the date of such declaration of default. Upon any such declaration of default the City or HCD may apply to any court, State or Federal, for specific performance of this Agreement; for an injunction against any violation of this Agreement by EIHC; requiring repayment of excess rentals to tenants; requesting judicial appointment of a receiver to take over and operate the property in accordance with the terms of the Agreement; or for such other relief as may be appropriate, it being_ agreed by EIHC that the injury to the City arising from a default under any of the terms of this Agreement would be irreparable and. that it would be extremely difficult to ascertain the amount of compensation to the City which would afford adequate relief in light of the purposes and policies of the Program. C. Amendment. This Agreement shall not be altered or amended except in writing. No such amendment shall be effective without the prior approval of BCD and City and without meeting the requirements of the Community Development Block Grant Program. D. Partial Invalidity. If any provisions of this agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired. E. Binding on Successors. This Agreement shall .bind the respective parties heret , their legal representatives, executors, administrators, successors in office or interest; provided, however, that EIHC may not assign this Agreement or any of its obligations hereunder, voluntarily or by operation of law, without the prior approval of the City and HCD. F. Recording Agreement. This Agreement shall be acknowledged by each of the parties and recorded in the official records of the County of San Luis Obispo. This Agreement shall be indexed in the grantee index to the name of EIHC and in the grantor index to the name of the City. G. Governing Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of California, unless otherwise governed by Federal Law. H. Hold Harmlee*. Neither the City nor any officer nor employee thereof shall be responsible for any damage or liability occuring by reason of any action or omission of EIHC or its agents, associates, contractors, sub-contractors, materialmen., laborers or any other persons, firms or corporations furnishing or supplying work, service, materials or supplies in connection with EIHC's performance of this agreement. EIHC agrees to fully indemnify, defend and hold the City harmless from any liability imposed for injury occuring by reason of any action or omission of EIHC. I. Attorneys Fees. In the event of any controversy, claim or dispute between the parties or third party beneficiaries hereto, arising out of or relating to this Agreement or breach thereof, the prevailing party shall be entitled to recover from the losing party reasonable expenses, attorneys fees and costs. J. Reversion of Title. The 2.2 acres of real property shall revert in fee simple absolute to grantor, City of San Luis Obispo, after a period of fifty (50) years from the initial date of sale or transfer to EIHC. .City agrees to negotiate in good faith the possibility of an extension of this agreement with EIHC. The sole purpose of an extension under this agreement shall be to provide for a continuation of providing affordable housing for lower income families. EIHC acknowledges that upon reversion of the property or termination of the project, all improvements to the real property shall become the sole property of the City. The Citr has no legal obligation for reimbursement or compensation of any kind to EIHC. THESE CONDITIONS and restrictions shall expire on 50 years following the execution of this agreement. The parties agree that this agreement is entered into as part of and in consideration of a Community Development Block Grant, administered by the City of San Luis Obispo and shall be recorded. CITY OF SAH LOIS OBISPO By City Administrative Officer Community Development Director EDHA--ISIAY HOUSING CORPORATION By Chairman Treasurer ATTACHMENT A That real property situated in the City of San Luis Obispo, County of San Luis Obispo, State of California, described as: Lot 110 as shown on the certain map entitled "Units 3 and 4, Tract 929", in the County of San Luis Obispo, State of California, according to map recorded September 18, 1984 in Book 11, Page 97 of Maps. (4035 Poinsettia Street; APN 53-083-02) � 5-7 -