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Home My WebLink About1982-02-16; City Council; 6716-1; Jefferson Senior Housing Project. . 8 02 Q. % . . p Y d Y ii 0 1 C& OF CARLSBAD - AGENO;; BILL iB# &‘6 --I TITLE: HTG 2/ 16/82 . REPORT ON JEFFERSON SENIOR HOUSING PROJECT )EpT,hil ding CITY MGR.& RECOMMENDED ACTION: Council consider the utilization of Block Grant monies, deferment of fees, and the issuance of mortgage revenue bonds in order to provide financing for this project. Direct the Director of Building and the City Attorney to proceed with the actions necessary to accomplish the project as recommended in the staff report. STATEMENT OF THE MATTER: The Jefferson Senior Housing Project is a 48 unit low-income senior housing rental project located at the intersection of Jefferson and Oak. Over the past several months staff has been meeting with the applicant, the County Housing and Community Development Department, the officers of San Diego Federal Bank, and a financial consultant. On August 18, 1981, Council authorized the Mayor to forward a letter to the County Board of Supervisors requesting that they set aside $300,000 for the purpose of this project. As proposed, the project will generate 48 seniors-only housing units for rent to low income tenants, 62 years of age or older. These 48 units will count toward the City's good-faith housing effort. The applicant proposes that it is feasible for him to produce the 48 units at the low-income rent levels provided that fi- nancial assistance is provided in several ways. (See attachment) In return for this assistance, the City will benefit by a long-term low rent project. Addition- ally, the City will hold title to the land and eventually ownership of the entire project will revert to the City. Staff is requesting Council direction in order to establish the basic terms for the agreements with the developer, the development agency and the County necessary to accomplish the project. FISCAL IMPACT: The final agreement could include all of the following: 1 2. $300,000 of Community Development Block Grant funds for . Deferment of City fees. i: Deferment or waiver of school fees. Issuance of approximately $1 million in mortgage revenue Redevelopment Agency. 5. No increase in staff; approximate EXHIBITS: A. Report -from Building Official B. Jefferson House Proforma C. Staff-County Work Sheet land acqu isition. bonds by the ly $13,000 in initial adm i nistrative cost. dated February 10, 1982. / STAFF REPORT EXHIBIT A DATE: February 10, 1982 TO: FRANKAL@HIRE, CityI%m.ager FROM: MARTIN OREHi, Building Official SUBJECT: JEFFERSON SENIOR HOUSING PROJECT The Jefferson House Senior Project is a proposal for 48 low-income senior rental units that would be located at the northeast corner of Jefferson Street and Oak Avenue. The parties involved in negotiations are the City, the County of San Diego, and the applicant. After many months of negotiations, all parties are now ready to begin the final stages of agreement. The developer has requested that the City Council participate in the project by providing a density bonus, parking requirement reduction, tax free financing (mortgage revenue bond) free lease of the land and fee waivers. Staff will provide a full report on the project at the Council meeting. BENEFITS: There are several benefits that accrue to all parties involved: the benefits to the County of San Diego are that through the disposition of $280,000 of Housing Development funds the County'will be meeting their goal of providing low-income housing within the San Diego County area. The benefit the developer and the investors will receive is a profitable investment and tax shelter. Benefits to the City are twofold. First, there is a social benefit that the City will be providing housing opportunities to a segment of population in Carlsbad that is currently not being met by other developments. Second, if the staff recommendations are approved, the City of Carlsbad will hold title to the land* and at the end of the lease period will take title to the land and improvements. *We do not have a conittment from County staff on the terms. However, we expect that the County will convey (give) the land to the City of Carlsbad at no cost to the City. The City would acquire a $280,000 piece of property with no pay back provisions to the County provided that the units stay affordable to senior citizens for the life of the lease. These conditions, obvisously, are subject to approval by the County Board of Supervisors. Page 2 The developer has given staff a written proposal. We agree on the basic concept and are prepared to recommend city participation in the project on the following terms: TERMS: 1. 2. The units will be offered to low income persons 62 years of age and older. The rent increase will be limited to not more than 8 percent per year or a percentage increase in the HUD, Section 8, market rents whichever is less or some other limitation which will insure the units remain below market and affordable to low income senior citizens. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. The County will deed the land to the City, the City will lease the land to the developer for 55 years at one-dollar ($1.00) per year. 100 percent of the units will be for low income senior housing for the duration of the lease. At the end of the lease period the buildings become City property. (the City would own land and improvements free and clear). Plan check, building and sewer fees would be paid. Other fees would be deferred and paid from the project's cash flow. We recommend waiving school fees on this project. All conditions under the conditional use permit for senior housing be met. The initial rents will be based on actual development costs subject to audit by the City of Carlsbad's Redevelopment Agency, however, the base rents shall not exceed $280.00 per month. If rents are lower than their estimates, rents may be lowered or the deferred fees could be paid as Council determines. The starting proforma will presume zero cash flow for year one. The project may not be converted. It may be sold if the City dpproves, provided all conditions in the lease are agreed to by the buyer. The lessee and developer will be Jefferson House, a general partnership. Rick Engineering Company will accept the County of San Diego offer to purchase the project site. We are prepared to accept this offer as pre- sented once the City of Carlsbad takes positive action on the project. San Diego Federal Savings and Loan Association will be able to provide financing at 11 percent for 30 years through the Redevelopment Agency. Page 3 14. The Jefferson House Partnership will provide equity of $180,000. 15. Carlsbad Housing Authority will certify eligibility of all tenants. If, on initial rent-up the Housing Authority cannot provide eligible tenants within 90 days, the Jefferson House Partnership will be permitted to rent to age-qualified tenants from any source. There- after, any announced vacancies will be held open for Housing Authority certified tenants for a maximum 30-day period. This is a complex transaction with approximately 40 different documents necessary to complete it. The list of terms is not complete - much remaining to be negotiated and resolved, but they outline what staff considers to be an appropriate level of City participation. If approved, we will negotiate further with the developer within the basic guidelines. ADMINISTRATION COSTS: Staff has calculated the cost associated with administering this project. In order to insure developer compliance, the City will certify the age and eligibility of all tenants. The City's performance of this task will cost approximately $13,000. This figure is based on HUD's $275/unit per year cost for administration of the Section 8 Program. The County of San Diego may consider paying the $13,000 ad- ministrative costs associated with the project. If so, there would be no out of pocket costs to the City to certify the age of eligibility of the tenants. If the County does not pay, we recommend includinq the costs with the other fees to be deferred and recovered from the project cash flow. Financial and bond consultants will be necessary to complete cost for financial consultants and bond counsel would be paid The arrangement discussed with the lender institution is that bonds are granted to the City's Redevelopment Agency, that ne Agency will assume any liability for the pr0jec.t. RECOMMENDATION: this transaction. The from the bond proceeds. the proceeds from the ither the City or the After analyzing the applicant's proforma and weighing the City's desire to achieve low-cost housing, it appears that an agreement involving the Jefferson House partnership for the construction of 48 units is achievable providing that staff has the authorization to negotiate as outlined in this report. In conclusion, staff is recommending that if the Council concurs they approve.this report and direct the Director of Building and Housing and the City Attorney to proceed with the steps necessary to accomplish the project including land acquisition, tax free bond financing, retention of bond and financial consultants and negotiation of all necessary agreements. - i;:H:3;: L-, 0 JEFFERSON HOUSE PROFORMA JEFFERSON HOUSE CONSTRUCTION 864000 SITE DEVELOPMENT/LANDSCAPE 480QQ LAND (1) 0 SEWER FEE t 1) Q BLDE PERMIT/PLAN CHECK (1) 0 PUBLIC FACILITIES CHARGE(l) 0 SCHOOL FEE (1) 0 ARCHITECT/ENGINEER 40000 INSURANCE/TAXES/ADMIN 1 QOQQ RENTAL COMMISSIONS I 1 oocm LEGAL 3QQQQ INTEREST DURING CONST 30000 LOAN FEES 22cmo CONTINGENCY 115OC~O P==E=======E=B==EP’P9E=r=e===EEE3=I==Z==========~===== TOTAL PROJECT COST 1169000 ASSUME CASH 175cmo eBI=P=e=====X=I=~=I1=~~=== -r==P==~====a=EP==38==l=E======~ LOAN 994000 OPERATIONS: PER MONTH PER ANNUM GARDEN 150 1800 ELEVATOR b PHONE 70 840 TRASH 60 720 INSURANCE 150 1800 MAINTENANCE 6QQ 7200 ACCOUNTING n, LEGAL 150 1 mr., ELECTRIC POWER 300 3600 MANAGEMENT 400 4800 WATER 1 cm 1200 SEWER 100 1200 ----- --I-- ------ ~=========P===E=r==9========-----~======~=~==*=== TOTAL 2080 24960 REAL ESTATE TAXES 116s 14014 DEBT SERVICE 11%,30 YEARS 9466 113593 RETURN ON INVESTMENT YEAR 1 0 0 LOSSES 3 5% 636 7628 ---- ---.-- E====II=====E===B====~==-==---I-E-----====~==== TOTAL COST 13350 160195 REQUIRED MONTHLY RENT 13350148 APTS= 276 (1) PROPOSED CITY PARTICIPATION LAND SEWER/WATER FEES FLDG PERM I ‘T/PLAN CHECK PLM..IC FACILITIES CHARGE SCHOOL FEE 280000 55500 5500 2UBQO 4GOOO a c-3 h CJ . ..*. 2:: . --I cc Ln 2 - ‘< e:- 0 r- LD ccl *a;--.- ,: c 4. m --c-3 d- ‘.e.‘ ,_ D-- fc I i 3 a--- z a--- .‘.- _. w -w+ & _ & . . u h 0 P * l- s-4 m 8-4 52 w a m h d^ 6