Loading...
HomeMy WebLinkAboutRDA 01 MIDTERM REVIEW 12-16-02AGENDA REPORT MEETING DATE: DECEMBER 16, 2002 NO. 1 12-16-02 TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: REDEVELOPMENT AGENCY STAFF SUBJECT: MIDTERM REVIEW AND PUBLIC HEARING ON SECOND FIVE-YEAR IMPLEMENTATION PLAN SUMMARY Redevelopment Law requires a public hearing at least once during the five-year term of the Agency's Second Five-Year Implementation Plan to review the Agency's progress in meeting its defined goals and objectives. RECOMMENDATION It is recommended that the Agency: 1. Open Public Hearing and request a summary staff report from staff on the Agency's Implementation Plan. 2. Receive public testimony. 3. Close hearing. FISCAL IMPACT No fiscal impact. BACKGROUND/DISCUSSION In March, 2000 the' Tustin Community Redevelopment Agency, in accordance with State law, approved the Second Five-Year Implementation Plan for the Redevelopment plans for the Town Center and South Central Redevelopment Project areas for fiscal years 2000-2001 through 2004- 2005 (Resolution RDA 00-3). The Implementation Plan was composed of two parts, a five-year plan for general Redevelopment activities and a five-year plan for housing activities. The Implementation Plan sets forth the Agency's specific goals objectives for each Project Area, the Agency's strategy to achieve these goals, anticipated projects and expenditures. It also included a description of how goals, objectives and anticipated project expenditure would eliminate blight. The Plan also described the statutory requirements for the housing set-aside fund and anticipated expenditures of these funds. The intent of the Plan was not to restrict the Agency's activities since conditions, values, expectations, resources and needs may change over time. Rather, the Plan was intended to outline expectations of the Agency for the five year period (FY 2000-01 through FY 2004-05). William A. Huston Midterm Review of Implementation Plan December 16, 2002 Page 2 Redevelopment Law requires that the Agency conduct a mid-term public hearing to review and hear public testimony from all interested parties at least once during the five-year period of the Second Five-Year Implementation Plan. To comply with this requirement, staff has undertaken a review of the Second Five-Year Implementation Plan for the FY 2001-2002 through FY 2004- 2005 period and has evaluated the Agency's progress toward implementing the redevelopment activities and the affordable housing activities. The review includes how the programs, projects and expenditure of funds identified in the Plan serve to eliminate blight in each redevelopment project area. Attached hereto is a Mid-Term Report on the progress of the Tustin Community Redevelopment Agency since adoption of the Second Five-Year Implementation Plan. This public hearing was duly noticed pursuant to the requirements of Section 6063 of the Government Code as required by Section 33490(d) of the Health and Safety Code. Staff will be available to answer any questions the Agency may have regarding the attached report. Christine A. Shingleton //'// Assistant City Manager James A. Draugh~ Redevelopment Program Manager RDAreport~Dec 16 Midterm 5 Yr Plan.doc Attachments: Midterm Review and Public Hearing on Second Five Year Implementation Plan Attachment A: Second Five-Year Implementation Plan (2000-2001 to 2004-2005) MZDTERM REVTEW AND PUBLZC HEARZNG ON SECOND FZVE-YEAR ZMPLEMENTATZON PLAN for the TOWN CENTER AND THE SOUTH/CENTRAL REDEVELOPMENT PRO3ECTS TUSTTN COMMUNZTY REDEVELOPMENT AGENCY TABLE OF CONTENTS T. INTRODUC'I'ION ................................................................................................ 1 TT. REDEVELOPMENT ACTWTI'IES .......................................................................... 1 Ill. FINANCIAL RESOURCES ........................................................................................... 2 TOWN CENTER PRO]ECl' AREA ................................................................................ 3 Second Five-Year Implementation Plan Summary ............................................ 3 Progress on Implementation Plan Program Activities ........................................ 4 SOUTH CENTRAL REDEVELOPMENT PROJECT AREA ................................................... 5 Second Five-Year Implementation Plan Summary ............................................ 5 Progress on Implementation ....................................... , .................................. 6 SUMMARY OF PROJECTS COMPLETED ....................................................................... 6 SUMMARY AND CONCLUSION ................................................................................... 7 HOUSING ACTIV~ES ...................................................................................... 8 INTRODUCTION AND BACKGROUND ......................................................................... 8 New Legislative Requirements ........................................................................ 8 Second Implementation Plan Summary ............................................... 9 LOW AND MODERATE INCOME HOUSING SET-ASIDE FUND FINANCIAL RESOURCES .... 9 Implementation Plan Housing Programs ........................................................ 11 MID-TERM PROGRESS - DISTRIBUTION OF ASSISTED UNITS .................................. 11 HOUSING PRODUCTION REQUIREMENTS ............................................: ................... 12 REPLACEMENT HOUSING REQUIREMENTS .............................................................. 13 PROPORTIONAL EXPENDITURE REQUIREMENTS ..................................................... 14 SUMMARY AND CONCLUSION ................................................................................. 15 MIDTERM REVIEW AND PUBLIC HEARING ON SECOND FIVE-YEAR IMPLEMENTATION PLAN for the TOWN CENTER AND THE SOUTH/CENTRAL REDEVELOPMENT PROJECTS TUSTIN COMMUNITY REDEVELOPMENT AGENCY I. INTRODUCTION In March, 2000 the Tustin Community Redevelopment Agency ("Agency") adopted Resolution RDA 00-3 approving the Second Five-Year Implementation Plan for the Redevelopment Plans for the Town Center and the South/Central Redevelopment Projects. Prepared in accordance with Chapter 4, Article 16.5, Section 33490 of the California Community Redevelopment Law ("Law"), the Second Five-Year Implementation Plan sets forth the Agency's specific goals and objectives for each Project Area, the anticipated programs, projects and expenditures for a five-year period (Fiscal Years 2000-2001 through 2004-2005), and describes how these programs, projects, and expenditures will eliminate blight in the Redevelopment Project Areas. The Implementation Plan also summarizes the Agency's housing activities, identifying programs, projects and expenditures directed towards increasing, improving and preserving the community's supply of low and moderate-income housing. A copy of the Second Five- Year Implementation Plan is attached hereto as Attachment A. Section 33490 of the Law requires redevelopment agencies to conduct a public hearing to review and hear testimony from all interested parties at least once during the five-year term of the Implementation Plan. The purpose of the mid-term public hearing is to review the Redevelopment Plan and the corresponding Implementation Plan for each redevelopment project within the jurisdiction and to evaluate the progress of the redevelopment projects. The mid-term public hearing must take place no earlier than two years and no later than three years following the adoption of the Implementation Plan. Since adoption of the Second Five-Year Implementation Plan, there have been a number of revisions to the Law that will be identified and addressed in this mid-term report. As Provided for under the Law and as in the Implementation Plan, two major components of this mid-term report will address the redevelopment implementation activities in both the Town Center and the south Central Redevelopment Project Areas, as well as the low and moderate-income housing implementation activities in the project areas. II. REDEVELOPMENT ACTIVITIES The Second Five-Year Implementation Plan separately addresses non-housing redevelopment implementation activities and housing activities. This is largely because the legal requirements 'for implementation plans and restrictions on the expenditure of related revenues are significantly different for the two types of activities. This review report follows the same format and reviews the housing component of the plan separately from the other redevelopment activities of the Agency. This section of this review focuses on expenditures, activities and programs of the Agency that are not related to low and moderate-income housing. The housing component of the Implementation Plan is separately reviewed in a subsequent section of this report. FINANCIAL RESOURCES The Agency's implementation activities are based on the availability of funding from existing fund balances, bond proceeds and estimated future tax increment revenues not previously committed to existing financial obligations. While achievement of the Implementation Plan goals and objectives, and implementation of the programs, activities and expenditures will assist in eliminating blight within the Project Areas, private sector investment will additionally contribute to the removal of blight. Non-housing tax increment revenues available to fund the programs, projects and expenditures of the Agency are identified as estimates in the Second Five-Year Implementation Plan. A mid-term review of the actual revenues to-date and an estimate of the revised revenues through the end of the five-year planning period is provided below. Revised Revenue Estimates Resources July 1, 2000 Beginning Fund Balances South Central Project Town Center Project $ 7,118,045 $1,397,434 FY 00-01 (actual) $1,798,135 $ 2,193,407 FY 01-02 (actual) $ 2,121,613 $ 2,359,830 FY 02-03 (est.) $ 2,195,869 $ 2,442,637 FY 03-04 (est.) $ 2,272,725 $ 2,528,130 FY 04-05 (est.) $ 2,352,270 $ 2,616,614 TOTALS: $10,740,612 $12,140,618 Note: All Fund Balances and Actual figures confirmed by the Tustin Finance Department Beginning fund balances are adjusted to reflect final June 30, 2000 audit and the actual revenue numbers reflect the tax increment deposits as reflected in the final audit for the respective years, while the estimated projections now reflect an escalation of 3.5% per year vs. 2.0% used in the Implementation Plan. Actual tax increment revenue for 2000-2001 and 2001-2002 are higher than those projected in the Second Five Year Implementation Plan reflecting a higher level of real estate activity over the past two years due to stronger demand coupled with very low interest rates. The anticipated Town Center revenue is increased to approximately $12.1 million of which $8.3 million will need to be applied to pay debt service (principal and interest). The Anticipated South Central Project revenue is increased to approximately $10.7 million of which $2.0 will need to be applied to debt service (City loans). The increased revenue should positively impact the Agency's plans and programs. The Agency's ability to complete projects and programs, however, remains about the same as it was envisioned at the time the Second Five-Year Implementation Plan was prepared due to commensurate increases in costs associated with the proposed projects and programs. Tustin Redevelopment Agency 12/11/2002 2 TOWN CENTER PROJECT AREA Second Five-Year Implementation Plan Summary The major focus areas for Town Center Project Area during the 2000 to 2005 time period, as outlined in the Implementation Plan, are on Agency program activities that will facilitate economic development, improve community facilities and improve public infrastructure. The four main programs to support the major focus areas are included in the Implementation Plan and are listed below. Economic Development Program Activities · Developer/Property Owner Assistance Program · Owner Assistance/Commercial Rehabilitation Program · Business Assistance and Outreach Program Community Facilities Program Activities · Pepper Tree Park Renovations · Tustin Senior Center Improvements · Stevens Square Parking Structure Pedestrian Access Improvements · Tustin Library Expansion and/or Renovation Improvements Public Infrastructure/Street Improvement Program Activities · E1 Camino Real Streetscape Enhancement Program · Water Yard · Holt Avenue/State Route 55 · Lighting and Traffic Control Projects · Utilities Improvement Program Administrative Program Support/Indirect Costs · Direct and indirect administrative program costs to support the Agency's major focus areas programs and activities. As identified in the Second Implementation Plan, these programs and activities often must coincide and be overlapped to produce successful projects. A complete description of these programs, activities and expenditures is included in the Second Five-Year Implementation Plan. The progress the Agency has made in implementing these programs and activities since the adoption of the Implementation Plan is discussed below. Tustin Redevelopment Agency 12/11/2002 3 Progress on Implementation Plan Program Activities Economic Development Activities & Projects · Utt Juice Property - the Agency has entered into an Exclusive Agreement to Negotiate for redevelopment of an approximate one acre site owned by the Agency to support the revitalization of the historic Old Town district. The project proposes construction of a mixed- use retail, office and live/work residential development and is anticipated to start construction in 2003. · Ford Retail Center Rehabilitation Project - Completed in May 2000, this project was funded by a $190,000 Agency loan along with $120,068 in private investment to facilitate substantial renovation and facade improvements to an older commercial strip center. · Old Town Plaza Rehabilitation Project - Completed in August 2002 this project was funded by a $87,500 Agency loan along with $36,250 in private investment to facilitate substantial renovation and facade improvements of this site at E1 Camino and Third Street. · Business Resource Guide - Preparation and production of a comprehensive, 59-page 2002 guide to support retention of existing businesses and attraction of new businesses as part of the Agency's Business Assistance and Outreach Program. Community Facilities Activities & Projects · Pepper Tree Park - $350,000 in renovation and improvements completed in 2000. · Tustin Area Senior Center - $204,100 in expansion and renovation improvements are under construction and are anticipated to be completed December 2002 · Radan Property - Redevelopment design studies are in progress. The studies are being prepared as requested by the property owner to identify a mixed use redevelopment project in conjunction with additional and enhanced pedestrian access for the Stevens Square Parking facility with linkage to Main Street and E1 Camino Real. · Tustin Library - Design studies, building programming and State funding assistance applications are in progress to support library redevelopment and expansion. In addition, the Agency secured options to purchase seven properties to facilitate development of the site. · Public Parking- An additional public parking facility is under construction as part of the Tustin Water Yard public infrastructure improvements identified below. Public Infrastructure/Street Improvement Activities & Projects · Old Town Tustin Streetscape Improvement- The project is under construction on E1 Camino Real and Main Street in the historic commercial district. The improvements provides for implementation of diagonal parking and includes the installation of landscape, street furnishing, signage and lighting in the district. Improvements are anticipated to be completed in December 2002. · Tustin Water Yard - Improvements are under construction, and include the installation of new reservoir and facility improvements to benefit the Project Area. All improvements are scheduled for a December 2002 completion. Tustin Redevelopment Agency 12/11/2002 4 · Holt Avenue to SR 55 Freeway Storm Drain Improvements-Engineering plans are 100% complete; construction is anticipated to start in the Spring 2003. · Lighting and Traffic Control Improvements- Improvements including installation of new street lights on E1 Camino Real, Main Street and the public alleys as part of the Old Town Tustin streetscape improvements have been completed. · Utility Under Grounding - Undergrounding of utilities in Old Town Tustin is underway in conjunction with the Water Yard Project on Prospect Avenue and the public alley improvements. Administrative Program Support/Indirect Costs SOUTH CENTRAL REDEVELOPMENT PROJECT AREA Second Five-Year Implementation Plan Summary The focus for the South Central Redevelopment Project Area during the 2000 to 2005 time period, as outlined in the Second Five-Year Implementation Plan, is on economic development, public infrastructure/street improvement and community facilities programs. The identified Agency program activities will facilitate implementation of the Pacific Center East Specific Plan and to alleviate traffic congestion and facilitate infrastructure improvements throughout the Project Area. Specific programs and activities to accomplish those objectives are included in the Implementation Plan and are listed below. Economic Development Program Activities · Developer/Property Owner Assistance Program · Business Assistance and Outreach Program CommuniW Facilities Program Activities · Recreational Facilities Program · Tustin Family and Youth Center Expansion · Frontier Park (Phase II) Public Infrastructure/Street Improvement Program Activities · Newport Avenue/State Route 55 Northbound Ramp Reconfiguration · Newport Avenue Extension North of Edinger Avenue · Edinger Avenue Widening · Valencia Avenue Widening · Red Hill Avenue Widening · Lighting and Traffic Control Projects Tustin Redevelopment Agency 12/11/2002 5 Administrative Program Support/Indirect Costs · The Agency has spent considerably less than budgeted for these expenses due in part to unfilled staff vacancies. A complete description of these programs is included in the Second Five-Year Implementation Plan, which is included herein as Attachment A. The progress the Agency has made in implementing these programs is discussed below. Progress on Implementation Plan Activities Economic Development Activities & Projects The Owner Participation Process was initiated within the project area to explore land assembly and redevelopment opportunities for Planning Area 2 in the Pacific Center East Specific Plan Area to support revitalization with the Project Area. Public Infrastructure/Street Improvement Activities & Projects · Newport Avenue/SR55 Freeway Northbound Ramp Reconfiguration - Engineering plans are at 90% with completion anticipated in December 2002. The improvement will provide for relocation of existing ramps including construction of new ramps and extension of Newport Avenue between Edinger Avenue and Valencia Avenue, and realignment and construction of Del Amo between Edinger Avenue and the newly constructed ramps. Negotiations for right-of-way acquisitions are in progress. · Newport Avenue extension north of Edinger Avenue - Engineering Plans are in preparation construction of the project will proceed upon completion of Newport Avenue/Ramp Reconfiguration project · Edinger Avenue Widening - Engineering plans are at 90% completion with right-of-way acquisitions currently under negotiations. Administrative Program Support/Indirect Costs · The Agency has spent considerably less than budgeted for these expenses due in part to unfilled staff vacancies. SUMMARY OF PROJECTS COMPLETED Major redevelopment activities and projects completed in the Project Areas have reduced blight and provided for the revitalization of the Project Areas. A detailed summary of the major development projects that have been completed in each of the project areas is included in the Second Five-Year Implementation Plan, which is included herein as Attachment A. In addition to the Agency's activities identified above, the table below summarizes the recent private sector redevelopment activities in the Project Areas since the adoption of the Second Five-Year Implementation Plan. Tustin Redevelopment Agency 12/11/2002 6 Summary of Recent Private Sector Projects Project Area / Project Date New / Bldg. Building Est. Private Est. Major Permit Activity Rehab Sq. Ft. Valuation Permanent /Public Sales Jobs Inv. Tax Created Ratio Town Center Project Vons SuperMarket 12/01 Rehab 41,426 $1.200,00 119 1/0 $148,000 550 E. 1 st Street 0 Auto Wash/Retail Ctr. 10/02 New 5,741 $440,429 20 1/0 N/A 535 E. Main Street Acorn Naturalists 10/02 New 10,694 $1.200,00 30 1/0 $30,000 155 E1 Carnino Real 0 Abertsons Super Market Under New 54,153 $2,826,78 155 1/0 $193,400 13270 Newport Avenue Const. 6 Ford Retail Center 5/00 Rehab NA $310,068 NA 1/3 NA Old Town Plaza Center 8/02 Rehab NA $123,750 NA 1/3 NA South Central Project NA SUMMARY AND CONCLUSION Since the adoption of the Second Five Year Implementation Plan the Agency's actions coupled with a favorable economic environment have served to stimulate redevelopment and economic revitalization in the Project Areas. This is evidenced by the progress in implementing the programs and projects identified and in the increasing tax increment base over the estimates provided in the Implementation Plan. The Town Center Project has experience to most non-housing activity, ' which reflects the substantial portion of retail and commercial uses that comprise the project area. Private investment in the Town Center has made significant contributions toward eliminating blighting conditions and stimulating economic revitalization in the project area. The Agency activities have been primarily focused in the Historic Old Town commercial district where private investment alone is more difficult. The long-term benefits of the streetscape improvement project should become more evident as both public and private projects currently in the planning stages come along. The Agency has a number of large-scale public improvement projects in the planning and engineering stages for the South Central Project Area. These activities are typically longer-term and require considerably more money and Agency participation than individual development projects. The Tustin Redevelopment Agency 12/11/2002 7 construction start dates for these public improvement projects are subject project funding being available. Both the Agency's and private sector redevelopment activities have continued to contribute to reducing the prevalence of blighting conditions in the Project Areas during this period. While significant progress towards achieving the Agency's Goals and Objectives is expected to continue during the remaining period, financial resources are still expected to be insufficient to complete all of the implementation activities within the five-year time period. III. HOUSING ACTIVITIES INTRODUCTION AND BACKGROUND In January, 2000, the Agency adopted a Comprehensive Affordable Housing Strategy for the 2000/2001 to 2009/2010 period to direct and focus the City's and Agency's efforts to produce and maintain affordable housing within the community. That Strategy formulated the basis of the Second Five-Year Implementation Plan. In addition to the Affordable Housing Strategy, the housing component of the Second Five-Year Implementation Plan is guided by the numerous provisions of the Law that regulate low and moderate- income housing activities. As a result, the Housing Section of the Implementation Plan is more comprehensive than the section for non-housing redevelopment activities. Along with outlining the programs, activities and expenditures the Agency intends undertaking, the housing component also evaluates the Agency's compliance with the many laws and regulations governing the Low and Moderate-Income Housing Set-Aside Fund. Implementation of the Housing Strategy and Implementation Plan will also ensure consistency and achievement of the goals and objectives of the City's Housing Element and other housing related requirements under the law. The goal of the Housing Program are to increase the quantity and improve the quality of housing stock in the City of Tustin and provide new and rehabilitated affordable housing opportunities throughout the community. To accomplish the goals and objectives of the Housing Program, the Agency adopted a Finding of Benefit as allowed under the law, which determined that the use of Housing Set-Aside Fund outside of the Project Areas and throughout the City is of a direct benefit to the Project Area. In addition, the Implementation Plan anticipated leveraging its Housing Fund resources with additional state and federal financial assistance, including Home Funds and CDBG Funds. New Legislative Requirements Recently enacted legislation, AB 637, effective as of January 1, 2002, places additional restrictions on Agency's expenditures from the Low and Moderate Income Housing Fund. Subsequently, SB 701 was enacted in September 2002 to clarify some the unclear provisions of AB 637. Some of the additional restrictions included in the legislation may affect the goals and objectives included in the Second Five- Year Implementation Plan. Two of the major changes imposed by AB 637 are discussed below. Tustin Redevelopment Agency 12/11/2002 8 The first major legislative change imposed by AB 637 is the lengthening of affordability covenants. In order to be eligible housing fund expenditures, units assisted by the Agency must have long-term restrictive affordable covenants. As of January 1, 2002, the restrictive covenants must be for at least 45 years for owner occupied units and 55 years for rental units. The Law provides that such owner occupied units can be sold prior to the end of the 45 year period or other applicable restricted period, however, provided that there was equity sharing, and that the resulting monies are re-deposited into the Housing Fund. If the restricted owner-occupied unit was counted as meeting the Agency's replacement housing or housing production requirements, the sold unit must be replaced within 3 years of it being sold without using additional housing fund monies. The second major change invoked by AB 637 involves the targeting of expenditures from the Housing Fund proportionately with the determined need. Under the law, assistance was previously recommended to be provided in at least the same proportion, or percentage, that the number of housing units needed for very low-, low- and moderate-income categories bears to the total number of units needed for all three income categories. AB 637 changed this policy statement into a mandatory requirement and adds an age dimension. In addition to targeting expenditures according to the regional need for low versus moderate income households, expenditures must also be targeted by age. Specifically, an agency must provide family housing in at least the same proportion as the non-senior population of the city bears to the total population. There is some ambiguity and inconsistency created by the AB 637 identification of age 65 being senior citizen, while the nearly all state and federal programs use age 62. This inconsistency may be addressed in additional clean-up legislation in the future. While these new targeting requirements take effect as of January 1, 2002, SB 701 allows that the requirements do not have to be included as a part of this mid-term review. Rather, strategies for compliance with the new requirements should be addressed in the Implementation Plan the Agency will adopt in 2004. Second Implementation Plan Summary The Second Five-Year Implementation Plan covers the following aspects of the Agency's Housing Requirements: · Low and Moderate Income Housing Set-Aside Fund · Housing Production Requirements · Replacement Housing Requirements · Proportional Expenditure Requirements Based on Community Need Reviews of each of the sections, as outlined above, of the housing component of the Second Five-Year Implementation Plan are included below, including other changes, if any, to the housing requirements necessitated by AB 637. LOW AND MODERATE INCOME HOUSING SET-ASIDE FUND FINANCIAL RESOURCES This Second Five-Year Implementation Plan provides an estimate of the annual revenues and expenditures for the Housing Fund over the five year period covered by the Implementation Plan. Tustin Redevelopment Agency 12/11/2002 9 Identification of housing programs and projects which the Agency anticipated completing in the five- year time frame are also included in this section. Redevelopment agencies are required to set aside not less than 20 percent of the tax increment revenue generated by their redevelopment projects into special Low and Moderate Income Housing Funds. These funds are to be used for increasing, improving, and preserving the supply of low and moderate income housing in their communities. In addition, these funds may be utilized for the implementation of a replacement program that would be triggered if any existing low and moderate-income housing units were removed by proposed development. The twenty percent tax increment revenues to the low and moderate-income set-aside fund the programs, projects and expenditures of the Agency are identified as estimates in the Second Five-Year Implementation Plan. These deposits, together with certain other monies, provide the resources for the Agency to fund its low and moderate-income housing programs, projects and expenditures. A mid-term review of the actual deposits to-date and a revised estimate of the revenues through the end of the five- year planning period is provided below. Revised 20% Housing Set Aside Tax Increment Deposits By Project Area Resources South Central Town Center Combined July 1, 2000 Beginning Fund Balances $3,423,643 $1,716,702 $5,140,345 FY00-01 (actual) $ 449,534 $ 548,352 $ 997,886 FY 01-02 (actual) $ 530,403 $ 590,215 $1,120,618 FY 02-03 (est.) $ 548,967 $ 610,659 $1,159,627 FY 03-04 (est.) $ 568,181 $ 632,032 $1,200,214 FY 04-05 (est.) $ 588,068 $ 654,154 $1,242,221 $2,685,153 $3,035,412 $5,720,565 Note: All Fund Balances and Actual figures confirmed by the Tustin Finance Department The estimated tax increment deposits and combined fund amounts remain close to those estimated in the Second Five-Year Implementation Plan. In addition to the tax increment revenue, the Implementation Plan included estimates of other resources available to fund housing programs. Those resources included fund balances, interest earnings and bond proceeds. Based on current economic environment, however, interest earnings have dropped significantly from the Plan's estimated 7.5% to the low 4% range. The drop in interest earning may be offset to a degree by other income sources, primarily the early repayment of Agency Housing Rehabilitation and First Time Homebuyer loans. The repayment of these loans is accelerating due to increased sales of properties with Agency loans and high levels of cash-out refinancing caused by the very low interests rated. In addition, the Agency was successful in obtaining a $1,150,000 California Housing Finance Authority HELP Loan secured by set-aside fund deposits. The HELP Loan funds will be used to provide short-term bridge loans to leverage its resources and assist in implementing lower income housing development and substantial rehabilitation programs. Tustin Redevelopment Agency 12/11/2002 10 ' The Plan's assumption that bond finance proceeds would be realized last year did not occur and may not occur, at least in the near future. Delays in issuing bonds are due to the difficulty in assembling properties to form larger scaled redevelopment project opportunities in which to invest the proceeds in a timely manner. When and if such opportunities are identified, bond financing can be secured as the Agency has sufficient tax increment revenues to secure such bonds. Implementation Plan Housing Programs The affordable housing programs and projects identified in the Implementation Plan are listed below. A complete description of those projects can be found in the Second Five-Year Implementation Plan, which is attached hereto as Attachment A. First Time Homebuyers Program · Low Interest Mortgage Loans · Down Payment Assistance · Mortgage Credit Certificate Program (MCC) Preservation of Existing Housing Stock · Tustin Gardens Senior Apartments Rehabilitation of Existing Housing S7tock · Owner Occupied Rehabilitation Loans and Grants · Rental Rehabilitation Loans and Grants · Multifamily Condo Conversions/Small Projects · Multifamily Acquisition, Rehabilitation and Rental New Housing Construction · New Owner Housing Construction · New Senior Rental Construction Support and Ancillary Services (non-local resources) Administrative Program Support/Indirect Costs · The Agency has spent considerably less than budgeted for these expenses due in part to unfilled staff vacancies. MID-TERM PROGRESS - DISTIBUTION OF ASSISTED UNITS The Second Five-Year Implementation Plan identified the Agency's estimated the number of units under each type of housing program activities that the Agency estimated would be provided over the time Tustin Redevelopment Agency 12/11/2002 11 period covered by the Implementation Plan. The following table summarizes the mid-term progress, comparing the number of units developed to date with the Second Five-Year Implementation Plan estimate. 5-Year Progress Description Projected to Date Comments First Time Homebuyer Program · Down Payment 2nd TD Loans 40 5 2nd TD Loan program suspended · MCC Program 7 pending AB 637 revisions. Preservation of Existing Units · Tustin Gardens Senior 100 0 At-Risk Project subject to annual "opt-out" from HUD Section 8 project-based certificate program. Rehab of Existing Housing Stock · Owner Occupied Grants/Loans 40 15 All activity under grant program. · Rental Rehab Grants/Loans 120 52 All activity under grant program. · Multifamily Acq~ehab/Conversion 45 0 · Multifamily Acq/Rehab/Rental 118 111 Kenyon Drive Under Owner- Participation Negotiations New Housing Construction · New Owner Housing 26 0 · New Senior Rental 60 54 Heritage Place Under Construction The Agency's progress identified in the table above indicates that most of the goals and objectives in the Implementation Plan will likely be achieved with the exception of the Agency's First Time Homebuyer Loan Program and the Acquisition/Rehabilitation/Conversion programs. Provisions under AB 637 extending the restrictive covenant period to 45 years coupled with an extremely favorable home financing market tend to make the First Time Homebuyer 2dn TD Loan program less competitive with market rate program and less desirable. The same favorable financing market and shortage of rental properties has served to substantially increase the values of existing rental properties while making it extremely difficult to assemble properties that were formerly considered for rehabilitation and conversion. The Agency intends to increase its new housing construction activities on underutilized properties and its acquisition/rehab for rental properties as a means toward achieving its five-year goals and objectives. HOUSING PRODUCTION REQUIREMENTS Per Section 33413 of the CRL, fifteen percent of units produced in the Project Areas are required to be affordable to low- to moderate-income households and 40 percent of such units (6% of all units) are to be made available for occupancy by very low-income persons/households. This section of the Implementation Plan summarizes the number of units which have already been built, estimates the Tustin Redevelopment Agency 12/11/2002 12 number which will be built through Fiscal Year 2004-2005 and evaluates whether the Agency is in compliance with meeting its requirements under the law. Historically, the Agency has produced many more housing units available to low to moderate income households than is required. The follow table summarizes the affordable housing unit produced, units required and the production balances for the beginning of the cycle for the Second Implementation Plan and the period covered by this Mid-Term Report. Updated Housing Production Summary Second Five-Year Mid-Term TOTALS Implementation Plan Period Affordable Units Produced thru 1999-00 333 27* 360 Affordable Units Required per the Law 81 0 81 Surplus/(Deficit) 252 27* 279 * Reflect 50% of Very Low and Low Income Heritage Place Senior Project under construction outside project area. See Second Five_Year Implementation Plan - Appendix A for detailed housing production figures by project. As can be seen, both past and recent performance has resulted in the Agency having a surplus in its housing production requirement. AB 637 made a substantial change to the requirements of this section. Under prior law, units produced pursuant to Section 33413 must remain affordable for the longest feasible time, as determined by the Agency, but not less than the period of the land use controls established in the redevelopment plan. After January 1, 2002, however, affordable units provided by the Agency will be required to have affordability covenants for additional time periods: 45 years for homeownership and 55 years for rental units. These requirements are not retroactive and the Agency's current affordable housing production surplus can be carried forward to apply to future housing produced in the Project Area. As a result, the lengthening of the affordability period will likely make it more difficult and/or costly to produce affordable unit but Agency staff does not anticipate any problem in the Agency continuing to meet its housing production requirements. REPLACEMENT HOUSING REQUIREMENTS The Replacement Housing Section of the Implementation Plan summarized the number of units which have already been destroyed, estimates the number which may be destroyed through Fiscal Year 2004- 05 and evaluates whether the Agency appeared to be in compliance with meeting its replacement housing requirement. As stated above, all units removed as a result of direct or indirect Agency action must be replaced. Under prior law, 75 percent of the replacement units had to be for the same income level as the unit destroyed. As of January 1, 2002, that requirement increases to 100 percent. Historically, the Agency has produced many more replacement housing units than required. The Agency's balance as of the beginning of the cycle for the Second Five-Year Implementation Plan is updated to reflect the 54-unit Heritage Place Senior Project and summarized in the table below. Tustin Redevelopment Agency 12/11/2002 13 Updated Replacement Housing Summary Description Very Low Moderate Non- Total Low Restricted Unit Removed 34 11 10 1 56 Replacement Units Required 25 8 8 15 56 Replacement Units Available 140 436 16 590 1,182 Surplus/Deficit 115 428 8 575 1,126 See Second Five-Year Implementation Plan - Appendix B for detailed Replacement Housing figures by project. Since the Second Five-Year Implementation Plan was adopted, Agency redevelopment activities have resulted in no additional housing units being destroyed or removed. With the number of units available to serve as replacement housing, it is expected that the Agency may easily meet its future replacement housing needs, including the new restriction to replace all units at the same income level as those destroyed. Effective January 1, 2002, any new replacement housing units developed by the Agency will also need to contain the additional affordability covenants required by AB 637 (45 or 55 years). PROPORTIONAL EXPENDITURE REQUIREMENTS Effective as of January 1, 2002, the Agency is required to spend its housing set-aside monies to improve and increase low and moderate-income housing on a proportional basis with the need for very low-, low- and moderate-income housing as specified in the City's Housing Element. Previously, this type of targeting was required only to be a goal of the Agency; this requirement is now mandatory for funds spent after the effective date of the legislation. In accordance with applicable requirements in 1999, the Agency established low to moderate-income housing goals reflected in the Agency's Affordable Housing Strategy, which were based on the draft 1998-2000 Regional Housing Needs Assessment (RHNA). While the number of total units increased in the final 1998-2000 RHNA, the proportional percentages remain unchanged. The final 1998-2000 RHNA numbers are reflected in the City's adopted Housing Element and are reflected in the updated table below. Revised Fair Share Affordable Housing Allocation Goal Description Very Low Low Moderate Total Number of Units 694 498 778 1,970 Proportion Goal 35% 25% 40% 100% The revised fair share affordable housing allocation goal indicates that at least 35 percent of the housing provided with Housing Fund monies should be for very low-income households and that at least 25 percent should be for low-income households. While the Affordable Housing Strategy also established a 40 percent goal for moderate income households, the Law would allow that the remaining 40 percent of the units assisted by means of the Housing Fund may be affordable to any of the three income Tustin Redevelopment Agency 12/11/2002 14 categories. In addition to targeting expenditures by income, Housing Fund expenditures are now. required to be targeted by age as well. AB 637 requires that family ho.using be developed in proportion to the population of non-senior population bears to the total population in the community per Census data. These additional requirements affect housing completed after January 1, 2002. The 2000 Census Bureau data for the City Tustin reflects approximately 7.1% of the total population in the City is over age 65, thus indicating that 92.9% of the Agency's targeted expenditures be directed to family housing activities. AB 637 does not, however, require the balance of the agency expenditures be limited to senior housing. The Implementation Plan reflected 94.1% of the total estimated expenditures were directed to family housing activities. Agency expenditures from January 1, 2002 and thereafter have to be in compliance with the new targeting requirements income and age by 2012. To date, the Agency has met the new targeting requirements and will take the new requirements into account in the programming of its housing set- aside funds between now and 2004 when the new Plan will be adopted. The Agency's Third Annual Implementation Plan, which is to be adopted by the Agency in 2004, will be required to address these requirements and present a plan for achieving compliance in future years. SUMMARY AND CONCLUSION Since the adoption of the Second Five-Year Implementation Plan for Housing Activities the Agency's progress has been slowed and impeded by a combination of changes in California Redevelopment Law, escalating property values, lowered interest rates and increasing market demand. Nevertheless, the Agency is continuing to aggressively pursue every affordable housing opportunity within the project areas and outside the project areas. Based on the Agency mid-term progress, projects currently in the pipeline, and shifting focus and priorities it is expected that Agency will be in a better position to achieve its five-year goals and objectives. JD\Second Imp Plan~DH Draft Mid Term Rpt.doc Tustin Redevelopment Agency 12/11/2002 15 ATTACHMENT A SECOND FIVE-YEAR IMPLEMENTATION PLAN For the TOWN CENTER AND SOUTH CENTRAL REDEVELOPMENT PROJECTS (FY 2000-2001 TO 2004-2005) Tustin Redevelopment Agency 12/11/2002 16 ATTACHMENT A SECOND FIVE-YEAR IMPLEMENTATION PLAN For the TOWN CENTER AND SOUTH CENTRAL REDEVELOPMENT PROJECTS (FY 2000-2001 TO 2004-2005) Tustin Redevelopment Agency 12/10/2002 16 0 '-J 0 -- 0 8.,.. ~ 0 o ._.m I-- Z EZZ[ o -- o ~ 0 i i iii I ill i CZ) .ffi ~ 0 Z go° I 0 o~ >- ._ i > -r. 0 .j:: e- o -- 0 ~ 0 -08 EQ.. ~ o 13. a~ 1:::: ~ 0 o - :=_'~o~'g ~ ,.,, , ,~ > ~ ~"~ <-.='~'-._ ~ "~ ,-.. ,~,.,.v. '"d ~ ,- a::: -..--_ ~ = ~ .- I--~ - · ~= = ~ = 8g~-~.°= o = ~'~ t/~ C/) o r- ._ ~ =g -- o o o E u. (0 I-- Z LL! ~Z <~<< Z 1.1_ cO I-- Z LIJ 0 LU o~_~ ~ --- ~- cD. (%) · -- 0 o~'~2 E E Z o °o~ .~ '- o 0 =o~ E L,U Z LU t- i E ~ ~ X 0 -- 0 0 0 -- 0 n, 0 0 X ~J 0 · · · · · =~ I C) C) E 0 "=' ---- E rw o~. gg ~E 80© ~E E gg .=_ = ~ 0 o~,~ °[:::EL. ~o ~-8-~.~>~ =._ . -- E~.o '- =~ 8o© o -- LL! o -- o E Z E ~ o CL 0 o -- .-- Ooc~ I--Oeo <c '5 .- o- o =~ -- o E =~, go° A A ~ 0 ~ 0 ~0- ~0- t~O- ~- ~J- ~ 0 (CZ) 0 ~' 0 CD =~ uJ o o o ~ o cz~ 0 0 o o o 0 0 E .=_ = ~ o Z U.I Z Z =g -- ;I =o~ 8~ ~E o. Z I-- Z LIJ Z Z LU Q. Z =~ 88 >.. ._ ~ 0