Community Redevelopment Agency of the CITY OF LOS ANGELES MAR 1 7 2005 DATE/ FILE CODE I 354 South Spring Street I Suite 800 T 213 977 1600 I F 213 977 1665 Los Angeles I California 90013-1258 www.crala.org CRA File No. PC 1060 Council District: 7 /' Co!ltact Person: David Riccitiello (213) 977-1794 M. de Escontrfas (213) 977-1724 Honorable Council of the City of Los Angeles John Ferraro Councii Chamber 200 N. Spring Street Room 340, City Hall Los Angeles, CA 90013 Attention: John White, Office of the City Clerk COUNCIL TRANSMin"AL: Transmitted herewith, is a Board Memorandum adopted by the Agency Board on Mar:h '17, 2005, for City Council review and approval in accordance with the "CorT.munity Redevelopment Agency Oversight Ordinance" entitled: VARIOUS ACTIONS RELATED TO THE EXECUTION OF AN ACQUISITION AND ?REDEVELOPMENT LOAN AGREEMENT IN AN AMOUNT NOT TO EXCEED ($2,400,000) WITH DECRO OSBORNE APARTMENTS, L.P. FOR THE DEVELOPMENT OF A 51-UNIT FAMILY APARTMENT COMPLEX AT 12360 OSBORNE STREET IN THE EARTHQUAKE DiSASTER ASSISTANCE PROJECT AREA FOR PORTIONS OF COUNCIL DISTRICT 7 (CD7) (EAST VALLEY REGION) RECOMMENDATION That the City Council approves the recommendat;ons on the dtt2ched Board Memorandum. ENVIRONMENTAL REVIEW The recommended action is statutorily exempt from the California Environmental Quality Act (CEQA), per paragraph 15280 "Lower-Income Housing Projects" of the State CEQA Guidelines. Council Transmittal Page 2 FISCAL IMPACT STATEMENT There is no fiscal impact to the City's General Fund, as a result of this action. ~hie{~ Executive Officer cc: John White, Office of the City dlerk (1 0 copies- three-hole punched) Lisa Johnson, Scott Eritano, Office of the CAO Paul Smith, lvania Sobalvarro, Office of the CLA Renata Simril, Office of the Mayor Neil Blumenkopf, Office of the City Attorney ' ' THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA MEMORANDUM 9 DATE: MARCH 17, 2005 PC1060 TO: AGENCY COMMISSIONERS FROM: ROBERT R. OVROM, CHIEF EXECUTIVE OFFICER RESPONSIBLE PARTY: MARGARITA H. DE ESCONTRIAS, HOUSING MANAGER MICHAEL CRACRAFT, SENIOR HOUSING FINANCE OFFICER SUBJECT: VARIOUS ACTIONS RELATED TO THE EXECUTION OF AN ACQUISITION AND PREDEVELOPMENT LOAN AGREEMENT IN AN AMOUNT NOT TO EXCEED ($2,400,000) WITH DECRO OSBORNE APARTMENTS, L.P. FOR THE DEVELOPMENT OF A 51-UNIT FAMILY APARTMENT COMPLEX AT 12360 OSBORNE STREET IN THE EARTHQUAKE DISASTER ASSISTANCE PROJECT AREA FOR PORTIONS OF COUNCIL DISTRICT 7 (CD7) (EAST VALLEY REGION) COMMITTEE REVIEW: PROJECT REVIEW, MARCH 10,2005 RECOMMENDATIONS That the Agency: 1. Approve the Conceptual Design (Attachment A) and Site Plan (Attachment A-1 ), as submitted for the proposed construction of a 51-unit family apartment complex and associated community space. That the Agency, subject to City Council review and approval: 2. Authorize the CEO or designee to execute an Acquisition and Predevelopment Loan Agreement for an amount not to exceed ($2,400,000) and any other related loan documents with Decro Osborne Apartments, L.P., a California limited partnership for an affordable housing project for families located at 12360 Osborne Street, Pacoima, CA.; and 3. Adopt the attached Resolution (Attachment B) making the finding that an economically feasible alternative of financing on substantially comparable terms but without subordination of the Agency Deed of Trust and Covenant is not reasonably available. SUMMARY The recommended actions are needed to execute an Acquisition and Predevelopment Loan Agreement in an amount not to exceed $2,400,000 for acquisition and predevelopment costs Osborne Gardens 2 associated with the Osborne Gardens. The project will be located at 12360 Osborne Street, which is located in the Earthquake Disaster Assistance Project Area for portions of Council District 7. (Attachment C). It should be noted that this project was presented to the Project Review Committee on February 10 and the Committee made several requests from staff which included revising the site plan to relocate the Community Building to a more centralized location on the site and to eliminate a proposed use of the open space as a soccer field. Additionally, Committee members received a draft copy of the proposed Acquisition and Predevelopment Loan Agreement prior to scheduling the project for Board action. Another item of note is that the developer is submitting an application under the MHP program which is due on April 5, 2095. The apartment complex will provide 51 family units. The proposed unit mix of this complex is as follows: (14) 1 BR, (15) 2 BR's; (21) 3 BR's; and a 2 BR- Mgr unit. All of the units will be rented to extremely low, very low and low income households at the following income levels (24) units at 40% of median income, (14) units at 50% of median income, (13) units at 60% of median income. Agency funds will be used for various predevelopment related costs, including land acquisition, architectural and engineering, city permits and fees and project financing fees. The preliminary development costs for the housing, community space and parking is estimated at approximately $14,409,000 (Attachment D is the Proposed Predevelopment Budget and Attachment E is the Preliminary Project Proforma). The following terms and conditions will be included in the Acquisition and Predevelopment Loan Agreement as conditions precedent to the disbursement of any Agency Loan funds associated with acquisition: 1. Developer must provide staff with a market land appraisal from a qualified MAl appraiser which demonstrates (and supports) the market value of the site is at least equal to the proposed purchase price. 2. Developer must provide staff with copies of a preliminary soils investigation from a qualified engineer to demonstrate that the site is not subject to a significant amount of soil exportation and/or infill or seismic conditions. 3. Developer must provide staff with copies of a Phase One Environmental Assessment from a qualified environmental consulting firm to demonstrate that the site is not subject to any significant remediation measures. 4. Developer must provide staff with copies of a preliminary geological report to demonstrate that the site is not subject to significant seismic problems. 5. Developer must provide staff with copies of signed escrow instructions demonstrating that a time extension to close escrow has been obtained. In addition, the following terms and conditions will be included in the Acquisition and Predevelopment Loan Agreement as conditions precedent to the disbursement of any Agency Loan funds associated with predevelopment costs excluding land acquisition costs: Osborne Gardens 3 6. The developer shall start construction by July 2006, which will be specified in the Schedule of Performance included as an attachment to the predevelopment loan agreement. Noncompliance with the Schedule of Performance will be subject to the remedies described in the loan agreement. 7. The developer will provide evidence of all construction and permanent financing commitments by start of construction, which will occur on or before June 2006. 8. The Agency shall commit no more than ($2,400,000) for development of the Osborne Gardens. 9. The developer shall submit to staff a monthly status report on the status of obtaining additional public funding, progress of architectural plans, etc. 10. Developer must provide staff with copies of its tax returns for the last three years prepared by a qualified CPA firm. 11. Developer's pending Credit Report must reflect that the proposed borrower is not in default of any of its existing loans. 12. Developer must provide staff with evidence of any city entitlement required to build the proposed project. 13. Developer must provide the Agency with all of the standard insurance required for an Agency Loan. Initial actions. SOURCE OF FUNDS The Earthquake Disaster Assistance Project Area for portions of Council District 7 Housing Trust Funds. PROGRAM AND BUDGET IMPACT The recommended action will amend the Agency's FY05 Work Program and Budget to create a revised Work Objective PC1060 (Osborne Gardens) for this project. The proposed funding will not impact other existing work objective for the Earthquake Disaster Assistance Project Area for portions of Council District 7. The funds for this project represent using funds that are currently allocated for the Osborne and Foothill housing projects (PC 1060 and PC 1050, respectively). ENVIRONMENTAL REVIEW The recommended action is statutorily exempt from the California Environmental Quality Act (CEQA), per paragraph 15280 "Lower-Income Housing Projects" of the State CEQA Guidelines. Osborne Gardens 4 BACKGROUND The project site is located on the 12000 block of Osborne Street in Pacoima. The total area of the site is 56,913 square feet (1.30 acres). The site has a condominium development to the Northeast, which wraps around it on the Southeast side, a multi-family development to the West across the Osborne Street and relatively under-developed multi-family zoned land with a few single story structures to the Southwest side. The developer proposes constructing a building along Osborne Street that is a two-story residential structure and blends into its surroundings. The three story structures are situated at the center and rear of the lot away from the street view. Additionally, the site slopes down as it moves further away from Osborne Street. The intent is to completely separate pedestrian and vehicular traffic. A driveway runs along the southwest property line to a parking garage at the rear of the site. The community room opens up to a garden courtyard that provides an opportunity for indoor­ outdoor use for community and social activities. The complex also has a tot-lot area between the two residential buildings adjacent to the main garden courtyard. The project is designed with priority given to green building principles. Following is a list of sustainable features which would be considered/used: 1. Pervious driveway paving and vegetated swales for better storm water management (the goal would be for all site rain water to percolate into the ground so that no water runs in to the public storm system).