HomeMy WebLinkAbout07/17/1990, 6 - REVISIONS TO AN AGREEMENT WITH THE OWNERS OF THE BUILDING AT 697 HIGUERA STREET (THE OLD SAN LUIS H Original Agenda Report from 7/10/90 meeting.
A�J�tii city of San IDIS OBIspo MF'cTING DATE: -
COUNCIL AGENDA REPORT ME11"YER:
FROM: Arnold Jonas, Community Development Director
PREPARED BY: Terry Sanville, Principal Planner
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SUBJECT: Revisions to an agreement with the owners of
the building at 697 Higuera Street (the old San
Luis Hotel building) to provide housing at
below-market rental rates.
CAO RECOMMENDATION: Adopt the attached resolution authorizing the
City Administrative Officer to negotiate and
execute an amended agreement for the provision
of housing at below-market rental rates with
the owners of the San Luis Hotel, subject to
the provisions outlined in the resolution.
DISCUSSION
1* Background
In November, 1988, the owners of the building at 697 Higuera Street
(Crown Properties) entered into an agreement with the City. The
agreement stipulates that:
* The City would loan Crown Properties $60,000 at 3% interest
and a term of 15 years with principal payments deferred for
five years.
* Crown Properties would build four apartments on the second
story of their building and make them available to the Housing
Authority as part of the Federal Section 8 Assisted Housing
Program.
Under the current agreement, the Housing Authority would refer
prospective tenants to the property owner, drawing from the
Authority's established listing of eligible tenants.
In June 1989, the city dispersed the funds, and two one-bedroom and
two studio apartments have been constructed. Occupancy awaits
compliance with building permit requirements.
Mr. and Mrs. Terry Davies want to buy the building from Crown
Properties (the property is now in escrow) . The Davies own the
Earthling Book Shop across the street and want to expand their
business. They would like to make the upstairs apartments
available to their bookstore employees and do not want to be
subject to the Section 8 "referral process" embodied in the current
agreement. The Davies are asking that the existing agreement be
amended to accommodate their objectives.
A I city of san lui s oBi spo
COUNCIL AGENDA REPORT
Page 2 -- Housing Agreement
2. Proposed Terms of the Amended Agreement
To achieve their objective and to address the city's desire for
maintaining housing in the downtown for low income people, the
Davies have suggested that the amended housing agreement stipulate
the following:
A. The $60,000 loan would be immediately repaid in addition to a
3% interest charge.
Comment: This provision would allow the city to use the funds
for other types of housing rehabilitation programs.
B. The Davies would send all prospective tenants to the Housing
Authority to be qualified from an income standpoint. Tenants would
have to meet income criteria of "Lower income" households -- which
is 80% of the county median income ($19,150 for a one-person
household in 1990) .
Comment: This provision would ensure that the housing is
available to lower income people. The main difference being
proposed here is that the property owner would select the
tenants and refer them to the Housing Authority for
qualification, rather than the other way around.
C. The apartments would be rented at below market rates -- at 80%
of the "Fair Market Rates" published by HUD for various sizes of
apartments ($430.00 for a one-bedroom apartment in 1990) .
Comments: The units would continue to be affordable and would
compare favorably to the housing costs stipulated by the
Section 8 program.
D. The housing would be available to Lower Income households for
a period no less than 15 years -- beginning with the execution of
the amended agreement.
Comments: The apartments would be available as below-market
rate housing for the same time period as stipulated by the
original housing agreement.
E. The Housing Authority would conduct an annual program audit
(for a fee paid by the property owner) to ensure that tenants have
complied with income screening and to verify income status. The
proposed amended agreement would contain enforcement provisions to
ensure that all occupancy standards are met.
Comments: The program audit provisions are needed to ensure
that the apartments are being occupied by lower income people.
If a tenant's income rose over time to more than 120% of the
6S - 0"11.
�1�I &WjI city of San lues OBISPO
COUNCIL AGENDA REPORT
Page 3 -- Housing Agreement
county median income (moderate levels) , that tenant would be given
one year to relocate to market-rate housing.
EVALUATION OF THE PROPOSAL
3. Project Clientele
A principle difference between the existing and proposed programs
is the clientele that would be served. The following chart
identifies some of the potential differences:
Project clientele characteristics
ZzistLng Program Proposed Program
Clientele Characteristics Clieatale Characteristics
Income: 50$ of county median or "very low 80% of county median income
or "lower"
Age: Seniors, 62 years or older. No age stipulation but
most book store employees
are younger than senior
status.
Physical: Could include disabled people who No limitation.
could live in a second-story walkup
apartment.
Referral: Tenants would be drawn from Housing Tenants would be selected
Authority county-wide listing by the property owner.
of eligible people.
4. Factors That Favor the Proposal
The following are factors that might favor the city's approval of
the proposed changes to the housing agreement:
* Housing continues to be made available at below market
rates to lower income people.
* The housing would be provided for downtown employees which
may address an objective of providing housing in close
proximity to employment -- thereby incrementally reducing
traffic impacts.
* The apartment second-story location may not be as
appropriate for Section 8 program participants (seniors and
the disabled) .
* The city gets it's loan ($60,000) paid back early with
interest and can use the money for other housing
rehabilitation programs (reference Housing Element programs
#7 & #13, p 41 & 43) .
l i city of san Luis oBispo
COUNCIL AGENDA REPORT
Page a -- Housing Agreement
* The project will have a better chance of remaining filled
because it addresses a broader segment of the housing market
("lower" income people vs. only the "very low" income people) .
S. Factors That Argue Against the Proposal
The following are factors that might argue against the city's
approval of the proposed changes the housing agreement:
* If the city's objective is to provide housing for
ambulatory seniors, then the proposed program will not as
directly address this objective.
* Automobile ownership for non-seniors (eg. book store
employees) is probably higher than for seniors (Section 8
eligible people) . The project has no on-site parking.
* The apartments would not be available to Section 8 eligible
people who may be on the Housing Authority's waiting list for
some time.
CONCURRENCES
i
Mr. and Mrs. Davis have discussed their proposal with the Housing
Authority Staff and Board of Commissioners. On March 22, 1990,
the Board approved the concept as described in the attached letter
from George Moylan (dated March 8, 1990) .
FISCAL IMPACT
Under the amended agreement, the property owner would immediately
repay the city's loan ($60,000) . A 3% interest charge would also
be paid.
ALTERNATIVES
The City Council can:
1. Take no action and retain the current housing agreement
which runs with the property.
2. Pursue some other amendments to the agreement or abandon
the program.
ATTACHMENTS
Location map of the property.
Exhibit A: Draft Resolution authorizing the CAO to negotiate
and execute an amended Housing Agreement.
Letter from George Moylan, Director of the Housing Authority
ORESOLUTION NO. (1990 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
AUTHORIZING AMENDMENTS TO THE AGREEMENT BETWEEN THE CITY AND THE OWNERS
OF PROPERTY AT 647 HIGUERA STREET CONCERNING THE USE OF FOUR
APARTMENTS FOR BELOW MARKET RATE HOUSING.
WHEREAS, on November 22, 1988 the City entered into an
agreement with owners of property at 647 Hiquera Street which
provided that the city would loan owner $60,000 in return for an
agreement to construct and rent four apartments to Section 8
eligible tenants as referred to owner by the Housing Authority; and
WHEREAS, new owners of the property at 647 Higuera Street wish
to rent the apartments to employees of their near by commercial
establishment and seek relief from the provisions of the city/owner
housing agreement which require occupancy by Section 8 eligible
tenants; and
WHEREAS, the owners have proposed amendments to the city/owner
housing agreement which would meet the owners objectives and
continue to maintain housing for lower income people in the
downtown; and
WHEREP.S, the owners suggested revisions have been reviewed
recommended for approval by the Housing Authority Board of
Commissioners.
NOW THEREFORE BE IT RESOLVED AS FELLOWS:
SECTION 1. The City Council hereby authorizes amending the
agreement dated November 22, 1988 between City and Crown
Properties. The amended agreement shall incorporate at least
the following provisions:
(1) Within 30 days of transfer of title of property from
Crown Properties to Mr. and Mrs. Terry Davies, the property
owner shall repay the $60,000 loan to the city. A 3% interest
payment shall also be made.
(2) The property owners shall be required to refer all
prospective tenants to the Housing Authority to be qualified
from an income standpoint. Tenants shall meet income criteria
of "Lower income" households (80% of the county . median) as
defined by. the U.S. Department of Housing and Urban
Development (HUD) .
(3) The four apartments shall be rented at below market rates
-- at 80% of the "Fair Market Rates" published by HUD for
various sizes of apartments.
(4) The housing would be restricted to occupancy by lower
income households for a period no less than 15 years --
beginning with the execution of the amended agreement.
d �-s
Resolution No. (1990 Series)
Page 2
(5) The Housing Authority shall conduct an annual program
audit (for a fee paid by the property owner) to ensure that
tenants have complied with income screening and to verify
income status. The proposed amended agreement shall contain
enforcement provisions to ensure that all occupancy standards
are met.
SECTION 2. The City Administrative Officer is authorized to
negotiate final terms of the amended agreement consistent with
this resolution and execute the agreement. Agreement shall
be notarized and recorded.
On motion of Councilperson , seconded by
Councilperson and on the following roll
call vote:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this day of
July, 1990.
Mayor Ron Dunin
ATTEST:
CITY CLERKT 0 E
Pamela Voges Je r orq sen
APPROVED: �.
1
CITY' ADM N STRA IVE OF CER COMMUNITY DEVbPMENT
John Dunn DIRECTOR
Arnold Jonas
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"' j•=0F:SHE . IZjY-OF BAN.,LUIS- OBI$PO
487 Leff Street • P.O.Box 888 • San Luis.Obispo,CA 98406 (806)548.4478
E ucwtive Director-Secretary
George J. Moy1azi
March 8, 1990
Atty. Roger Picquet
Lyon b Picquet, Attorneys-At-Law
1104 Palm Street
San Luis Obispo, CA 93401
Dear Roger:
As per our telephone conversations of this afternoon please be advised we would
be willing to recommend to the Board of Commissioners and the City Council
a revised agreement on the San Luis Hotel as per the following:
1. The amount already loaned to the development is to be returned to the
C City. As per our discussion there is a 3% interest charge on this
money which should be the responsibility of the present owner.
2. The new owner will agree to maintain the rents on the unit at 80% of
the U.S. Department of Housing and Urban Davalopment's published Pair
Market Rents. The present FMR's are $441 on an efficiency unit and
$536 on a 1-BR unit. Published FM's are to include all utilities. By
establishing these rents at 80% of the FMR we eliminate the need for
deducting and monitoring utility allowances. Thus the owner can
simply make the tenants responsible for all utilities that are
Individually motored.
3. All tenants are to have gross family incomes which are at or below
80% of the County's median family income. Income limits are published
annually by the U. S. Department of Housing and Urban Development.
All four units are to be occupied by such qualified tenants. None of
the units are to be used for residential purposes by the owner. No
Section 8 subsidies will be made available to employees of the
owner.
4. The Housing Authority will verify incomes of all tenants. A fee of
$50 each will be charged for all initial occupancy verifications. The
fee for annual re-examinations will be $25 per examination. If at any
time the owner agrees to take Section 8 qualified applicants from our
waiting list the fees will be waived.
5. We will ask that some type of enforcement provision be Included
in Lhe agreement. The attached, as used by the. County, is submitted
for your consideration.
C OW
6
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If the owner is agreeable to the above the next step in the process Would be to
submit a revision to our Commissioners for their consideration. The Commission_
would then recommend approval or disapproval to the City Council. The next
Board of Commissioner's meeting is scheduled for 4 PM on Thursday, March 22.
Typically agenda and supporting documentation will go to the Commission
on the 15th. I hope if we can't have the agreement drafted for that date
we can at least have an agreement to the basic provisfons by then.
Sincerely,
,gQ4 OqA
George J. Moylan
Executive Director
Enclosure
21000,
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' 11. Effect of waiver. County's waiver of the breach of any
one term, covenant or provision of this agreement shall not be a
waiver of a subsequent breach of the same term, covenant or
provision of this agreement or of- the breach of any other term,
covenant or provision of this agreement.
12. Enforcement of provisions.
(a) In the event of a violation or an attempted
violation of any of the terms, covenants, or restrictions of this
agreement by Developer, the County shall give written notice
thereof to Developer by United States first class mail.
(b) If such violation or attempted violation is not
corrected to the satisfaction of the County within fifteen (15)
days after the date such notice is mailed, or within additional
Otime approved by the Planning Director, the County may, without
further prior notice, declare in writing a default under this
agreement effective on the date 'of such declaration of default. .
(c) Any such declaration of default may be cause for
appropriate action to be taken by the County including, but not
limited to, requiring repayment of excess rents to tenants,
seeking an injunction against any violation or attempted
violation of this agreement, requesting judicial appointment of a
receiver to take over and operate Developer's Property in
accordance with the terms, covenants, and restrictions of this
agreement, or seeking such other relief as may be appropriate.
13. Law governing and .venue. This agreement has been
executed and delivered in, and, shall be interpreted, construed ,
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