of I he CITY OF LO S AN GEL ES
448 S. Hill Street Suite 1200 F 213 61 7 8233 Los Angeles I California 9001 3 www.crala.org
CRA File No.f2f3b Council District: ~ Contact Person: David Riccitiello Jenny Scanlin (213) 922-7825
Honorable Council of the City of Los Angeles John Ferraro Council Chamber 200 N. Spring Street Room 340, City Hall Los Angeles, CA. 90012
Attention: Sharon Gin, Office of the City Clerk
COUNCIL TRANSMITTAL: Transmitted herewith, is a Board Memorandum adopted by the Agency Board on December 2, 2010 City Council review and approval in accordance with the "Community Redevelopment Agency Oversight Ordinance" entitled:
VARIOUS ACTIONS RELATED TO: Dunbar Village. Exclusive Negotiating Agreement with Thomas Safran & Associates for a mixed-use affordable residential and commercial project located at 4201 -4211, 4225-4233 and 4251 -4261 South Central Avenue in the Council District Nine Corridors South of Santa Monica Freeway Recovery Redevelopment Project Area. DOWNTOWN REGION (CD 9)
RECOMMENDATION That City Council approves recommendations on the attached Board Memorandum.
ENVIRONMENTAL REVIEW The proposed action does not constitute a "project" according to the California Environmental Quality Act (CEQA). If a Disposition and Development Agreement ("DDA") results from the proposed ENA, appropriate site-specific environmental review documents meeting CEQA requirements will be completed for CRA/LA Board of Commissioners action prior to entering into any formal agreements.
FISCAL IMPACT STATEMENT There is no fiscal impact to the City's General Fund, as a result of this action. Page 2 Council Transmittal
cc: Sharon Gin, Office of the City Clerk (Original & 3 Copies on 3-hole punch) Lisa Johnson Smith, Office of the CAO lvania Sobalvarro, Office of the CLA Steve Ongele, Office of the Mayor Noreen Vincent, City Attorney's Office Jan Perry, CD9 THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA MEMORANDUM 3 DATE: DECEMBER 2, 201 0 C91560 100071 TO: CRA/LA BOARD OF COMMISSIONERS
FROM: CHRISTINE ESSEL, CH IEF EXECUTIVE OFFICER
STAFF: DAVID RICC ITIELLO, REGIONAL ADMINISTRATOR JENNY SCANLIN, PROJECT MANAGER WILLIAM CIPES, ASS ISTANT PROJECT MANAGER
SUBJECT: Dunbar Village. Exclusive Negotiating Agreement with Thomas Safran & Associates for a mixed-use affordable residential and commercial project located at 4201-4211, 4225-4233 and 4251-4261 South Central Avenue in th e Counci l District Nin e Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area. DOWNTOWN REGION (CD 9)
RECOMMENDATION(S) That the CRA/LA Board of Commissioners, subject to City Council approval:
Authorize the Chief Executive Officer (CEO) or designee to execute an Exclusive Negotiating Agreement with Thomas Safran & Associates for th e disposition and rehabilitation of a mixed use affordable residential and commercial project located at 4201-4211, 4225-4233 and 4251- 4261 South Central Avenue in the Council District Nine Corri dors South of the Santa Monica Freeway Recovery Redevelopment Project Area.
That the CRA/LA Board of Commissioners request that the City Council:
1. Authori ze the General Manager of the Los Angeles Housing Department or designee to execute an Exclusive Negotiation Agreement with Thomas Safran & Associates for the disposition and rehabil itation of a mixed-use affordable residential and commercial project located at 4201-4211. 4225-4233 and 4251-4261 South Central Avenue, subject to the approval of the City Attorney as to form;
2. Authorize the General Manager of the Los Angeles Housing Department or designee to negotiate and execute a Property Management Agreement with Thomas Safran & Associates for the properties located at 4201-4211, 4225-4233 and 4251 -4261 South Central Avenue.
SUMMARY The recommended actions authorize the execution of an Exclusive Negotiating Agreement ("ENA") with Thomas Safran and As sociates ("TSA") for the redevelopment of the Dunbar Hotel (4225-4233 S. Centra l Avenue), Somerville I (4251-4261 S. Central Avenue), and Somerville II (4201-4209 S. Central Avenue) properties (collectively, the "Site"). The Dunbar Hotel is jointly owned by CRA/LA and the City, acting by and through its Los Angeles Housing Department ("LAHD"), and Somerville I and II are owned by LAHD. All three properties are cu rrently managed by the LAHD, who is also a party to the ENA. The ENA provides for a 180-day exclusive negotiating period, with two 90-day extensions subject to approval of CRA/LA's Chief Executive Officer, and LAHD's General Manager. During the negotiating period, CRA/LA and DUNBAR VILLAGE EN. PAGE 2
LAHD staff wil l negotiate a Disposition and Development Agreement ("DDA") for the disposition and re habili tation of the historic Dunbar Hotel, revitalization of Somerville I and Somervill e II , and long-term preservation of affordable housing (the "Project"). In addition , the ENA provides for the negotiation and execution of a Property Management Agreement between LAHD and TSA for the management of the Site during the negotiating period.
PREVIOUS ACTIONS
June 10, 2010 - Council authorization for LAHD and CRA/LA to issue an RFP to se ll, rehabil itate, and develop mixed-use affordable housing projects on City-owned properties located at 4201-4219, 4225 and 4251-4263 S. Central Avenue (CF#1 0-0920)
November 19, 2009 - Report to CRA/LA Board on intent to issue an RFP for a mixed-use affordable residential and commercial project located at 4201 -421 1, 4225-4233 and 4251-4261 S. Central Avenue.
August 7, 2008 - CRA/LA Board Authorization to enter into a Cooperation Agreement with LAHD to own, manage and dispose of the Dunbar Hotel and provide funds for consultant costs related to th e ownership management and disposition of the Dunbar Hotel. (CF#08-2118)
DISCUSSION & BACKGROUND
Developer Entity
TSA is a Los Angeles-based firm established in 1974 wh ich specializes in development and management of both fa mily and senior affordable housing. TSA has developed over 4,500 units, and currently owns and manages over 3,000 units in Southern Californ ia. CRA/LA-funded projects include Rittenhouse Square (1 00 units), Montecito Apartments (118 units), Hollywood El Centro (88 units), La Brea Franklin (40 units) and Strathern Park Apartments (169 units). CRA/LA's Asset Management department does not show any defaults recorded against loans to TSA, and all ex istin g loans are generating positive residual receipts. Further, LAHD's loans with TSA area al l curre nt.
Selection Process
On June 16, 20 10 CRA/LA and LAHD jointly issued a Council -approved RFP to identify and select a qualified and financially capable developer to rehabil itate the Site. The stated goal of the RFP was to accomplish three objecti ves: 1) maintain th e Site's historic designation, 2) co nti nue to provide affordable housing that meets the needs of low-income seniors and families by adding new 55-year covenants to all three properties, and 3) contribute to the revital ization of the Central Avenue commercial corridor.
CRA/LA received six (6) proposals in response to the RFP, which were reviewed by a five person panel consisting of two CRA/LA staff members, two LAHD staff members, and one community representative (the "Review Panel"). The Review Panel scored all proposals based on the fo llowing criteria: development team qualifications; development concept and its responsiveness to th e objectives outlined in the RFP and the surround ing community; financial analysis, including developer's financial capacity, reasonableness of cost estimates and other economic assumptions; and proposed business terms, including the amount of public financing necessary re lative to the public benefit and risk assumed by CRA/LA and LAHD. DUNBAR VILLAGE ENA PAGE 3
Following this initial review, four (4) development teams were selected for in-person interviews with the Review Panel. Following the interviews, the Review Panel ranked each development team based on their response to the interview questions and proposal as a whole. TSA received the highest overall score, and the Review Panel recommended CRA/LA and LAHD enter into an ENA with TSA for the proposed Project.
Description and Project Context
The Site consists of three separate mixed-use buildings located on the 4200 block of Central Avenue. The Dunbar Hotel was built in 1928 as a luxury hotel for the African American community, at a time when Central Avenue thrived as a mecca for west coast jazz. In its heyday during the 1930s and 1940s, the hotels' guests included W.E.B DuBois, Thurgood Marshall and Louis Armstrong.
In 1988 the Dunbar Hotel was redeveloped as affordable housing, with a scope of work that included a seismic re inforcement, replacement for all major systems, and registration as a historic landmark by the National Park Service and the City of Los Angeles. Since that major rehabilitation, the property has fallen into disrepair and was cited for code violations, wh ich have been corrected. In December 2008, the Dunbar Hotel was foreclosed upon by the City and CRA/LA. The building has 72 SRO units, 20 of wh ich are currently occupied. It is anticipated that the rehabilitation of the building wi ll require a reduction in units and new 55-year covenants wi ll be put in place targeting low-income seniors. The ro les and responsibilities of CRA/LA and LAHD in managing and disposing of the Dunbar Hotel are delineated in a Cooperation Agreement, which was approved by Council and the CRA/LA Board in 2008.
Somerville I (17 units) and Somerville II (24 units) are mixed-use affordable residential properties with ground-floor commercial space fronting on Central Avenue. Both properties were completed in 1996, and are currently fully occupied with income-eligible tenants. In October 2009, the City foreclosed on Somerville I and II, and the bu ildings are currently being managed through the Los Angeles Housing Department. The City still ho lds covenants on the property for affordable family housing, which are expected to be extended for 55-years as part of the proposed Project. It is anticipated that Somervi ll e I and II can be rehabilitated without permanently relocating existing tenants.
Although CRA/LA has no ownership interest in the Somerville properties, once it became clear that Somerville I and II would become the responsibi lity of the City, it was cooperatively decided that these two properties would be added into the RFP originally created just for the disposition and rehabi li tation of the Dunbar Hotel.
TSA has proposed to redevelop the Properties as "Dunbar Village," a mixed-use intergenerational community for seniors and families. The proposed scope includes restoring the Dunbar Hotel and enhancing Somerville I and II, providing quality management to ensure the project quality and ongoing preservation of the Dunbar Hotel, and reactivating street life to revitalize the neighborhood and enhance public safety. Funding for the proposed Project will likely include Low Income Housing Tax Credits, Historic Tax Credits, and some form of assistance from CRA/LA and LAHD, the form and amount of which will be determined during DDA negotiations. It is anticipated that LAHD will contribute a significant portion of Neighborhood Stabilization 2 ("NSP 2") funds to the proposed Project.
The Site is currently be ing managed by LAHD through a receivership contract that predates the Agencies' acquisition of the Dunbar. Transferring management to TSA during the negotiation period will ensure high-quality property management, and allow TSA to become more familiar with current tenants and Site conditions, which are integral to a successful DDA. As noted above, TSA is an experienced property manager with an excellent track record , currently managing over 3,000 units in Southern Cal ifornia. DUNBAR VILLAGE EN. PAGE4
Project History
In 1987, the CRAJLA and the City, thro ugh the Community Development Department, jointly provid ed a loan in the principal amount of $2,900,000 for the rehabilitation of the Dunbar Hotel and covenanted its use for affordable housing and a museum of the African American and Jazz hi story in the Central Avenue area. The CRAJLA provided $1,200,000 and COD provided $1,700,000 of the orig inal principal ba lance in the form of a fu lly amortizing loan (COD transferred their interest in the Loan to LAHD in 1990). The borrower never made a payment on th e loan to either CRA!LA or LAHD. A forbearance agreement executed in 2006 between th e borrower and CRAJLA and LAHD fa iled to remedy the default. CRAJLA and LAHD jointly issued a Notice of Default on the property in 2007, and in December 2008 CRAJLA and LAHD assumed fee ownership of th e Dunbar Hotel fo ll owing a Trustee Sale.
Community Benefits The proposed Project will result in the restoration and rehabilitation of one of Los Angeles' most important historic buildings, preservation of affordable housing that meets community needs, and the revitalization of co mmunity-serving retail along Central Avenue. The proposed Project is also expected to incl ude a pocket park, office space for a local nonprofit organization, and the continued operation of a child care faci lity and computer learnin g center on the Site.
TSA has partnered with the Coalition for Responsible Community Development (CRCD), a nonprofit community development corporation in the Vernon-Central neighborhood that focuses on: community beautification; workforce development for youth and young adults; and housing and economic development. Through its partnership with CRCD, TSA anticipates offering construction training and street beautificati on jobs to local res idents as part of the Project.
ECONOMIC IMPACT
The followi ng table* describes the economic impacts estimated to be created by th is project.
Estimated Economic Impacts Created by this Project*
Estimated Construction Jobs Created 148
Estimated Permanent Jobs Created 28 Estimated Gross Property Tax Increment (TI) Revenue TBD (Year 1 of Tax Increment Generated) Estimated Net Present Value (NPV) of Net Property Tl Generated (Revenue to the CRAILA Project Area through the last Tax Increment TBD Receipt Date) Estimated NPV of Property Tl for Affordable Housing (25% set-aside towards th e CRAILA Low and Moderate Income Housing TBD Fund throug h the last Tax Increment Receipt Date) Estimated NPV of Utility User Tax Revenue TBD (Revenue to City of Los Angeles) Estimated NPV of Sales Tax Revenue TBD ( 1% portion of taxable sa les to City of Los Angeles) Estimated NPV of Business Tax Revenue TBD (Revenue to City of Los Angeles) •The figures provided in the table about are for estimation pu rposes only; actual fiscal impact or job creation may be higher or lower than these estimates. Sta ndardized formulas were used to generate these figures and are based on accepted econometric practices and basic ta x calculations taken from resea rch performed by a variety of sou rces, including the Los Angeles Economic Roundtable, California Redevelopment Association, US Department of Housing and Urban Development, CRAILA, and the City and Co unty of Los Angeles . DUNBAR VILLAGE ENA PAGE 5
In addition to providing jobs and a positive fiscal impact, the proposed project wi ll contribute to the continued revital ization of the Central Avenue, catalyzing additional retail and housing opportunities along the corridor.
SOURCE OF FUNDS
No CRAJLA funds are required for this action.
PROGRAM AND BUDGET IMPACT
There is no impact on the City's General Fu nd as a result of this action.
ENVIRONMENTAL REVIEW
The proposed action does not constitute a "project" according to the Cal iforn ia Enviro nmental Quality Act (CEQA). If a Dispositi on and Development Agreement ("DDA") results from th e proposed ENA, appropriate site-specifi c environmental review documents meeting CEQA req uirements wi ll be completed for CRAJLA Board of Commissioners acti on prior to enteri ng into any formal agreements.
Christine Essel Chief Executive Offi cer
?calvin E. Holli s Chief Operati ng Officer Real Estate and Economic Develop ment
There is no confli ct of interest known to me which exists with regard to any CRAJLA officer or employee conce rni ng thi s acti on.
ATTACHMENTS
Attach ment A: Location/Site Map Attachment B: Project Summary Report ATTACHMENT A
LOCATION I SITE MAP
Dunbar Village 4201-4219, 4225 and 4251-4263 South Central Avenue, Los Angeles, CA 9011 Downtown Region, CD9 Project Area
1. Dunbar Hotel (4225 S. Central Avenue) 2. Somerville I (4251-4263 S. Central Avenue) 3. Somerville II (4201-4219 S. Central Avenue)
Location I Site Map CRA/LA PROJEC1 SUMMARYREPORT BUILDING COMMUN ITIES
DOWNTOWN REGION
COUNCIL DISTRICT 9 DUNBAR HOTEL AND SOMERVILLE PROPERTIES Board Item Number: LEED ®Attainment Level, Type Board Date: 121212010 Silver D Project Location Community Benefits Primary Address: Area Beautification 4201-4219 South Central Avenue, Los Angeles, • Catalytic project CA90011 • Developer contributes to nonprofit organization Secondary Addresses: • Elimination of Blight 4225 South Central Avenue, Los Angeles, CA • Extension of Affordable Housing Covenants ( 90011 • Historic Preservation Maps crealed by CR.NlA GIS Team 4251-4263 South Central Avenue, Los Angeles, • Improve Image of Area ------CA 90011 • Neighborhood serving retail • Neighborhood Stabilization STATISTICS AT A GLANCE Proposed CRAILA Action • Prevailing Wage Jobs Total Project Size (sq ft): 96,190 Exclusive Negotiating Agreement with Thomas • Provides Childcare Safran Commercial -Retail (sq ft): 10,000 • Revitalize key commercial corridor Additional Information • Upgrade I Rehabilitate Existing Housing Units Residential (sq II): 86.190 NIA Strategic Plan Goals Met • 1.1.1 -Create 40,000 construclion career-path Elected Officials jobs. Estimated Jobs Created: • Council District 9, Jan Perry • 2.1.4 - Preserve 100 % of affordability Construction Jobs (est.): 158 • County Supervisor District 2, Mark Ridley- Thomas covenants due to expire on non-profit owned Pe rmanent Jobs (est.) : 3 • State Senate District 22 , Gilbert A. Cedillo units and 20% of... • Congress District 35, Maxine Waters CRA/ LA Policies Applied • Assembly District 52, Isadore Hall • Construction Jobs Local Hiring Program Total Development Costs (TDC}: $24 million • Prevailing Wage Project Description CRJVLAJnvestment TBD CRAJLA and LAHO are currently owners of the CRA/LA Policies Not Applied historic Dunbar Hotel, and Somerville I and II mixed-use affordable housing properties. Total Housing Units: 86 Through a RFP process, a development team Ma r1 HCD Low Income Units: 0 Residential Construction Category: Rehabilitation HCD Moderate Income Units: 0 Type of Housing: Rental Housing Undetermined Affordable Units:85 Project Features: • Affordable Housing • Childcare Facility I Child Development Total Development Cost Per Un it: $284,255 Center • Community Room • Gardening I Landscaping • Playground Developer I Partici pant(s) Developer Partner(s): Coali tion for Responsible Community Development Public Agency Partners: City of Los Angeles Housing Department (LAHD) CRAILA Project Staff • David Riccitiello, Regional Administrator • Jenny Scanlin, Project Manager • William Cipes, Assistant Project Manager Project Activities Completed Activities: • Issue R FP, 06116/1 0 • Commence Negotiation of Deal Points , 11101 11 0 Scheduled Activities: • Board Authorization to Execute Agreement, 12/02/10 Agreement Type(s) • Disposition and Development Agreement (DDA) • Exclusive Negotiation Agreement (ENA) Terms of CRAJLA Investment: To Be Determined Project 10 : 100071 Data Last Updated : 1111512010 Objective Code(s): C91560 Report Gene rated : 1111512010