Loading...
HomeMy WebLinkAboutRDA 5 MULTI-FAMILY DEM 03-04-96RDA NO. 5 3-4-96 DATE' March 4, 1996 inter-Com TO: FROM: SUBJECT: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR CHRISTINE SFIlNGLETON, ASSISTANT CITY MANAGER MULTI-FAMILY DEMONSTRATION PROJECT: SOUTItWEST NEIGltBORItOOD RECOMMENDATION Pleasure of the Redevelopmem Agency. FISCAL IMPACT This action will not have a fiscal impact on the Redevelopment Agency at this time. Any follow-up on this action which may have fiscal impact will be brought before the Agency for appropriate actions. DISCUSSION In November, 1993, the Redevelopment Agency adopted the Comprehensive Affordable Housing Strategy, which detailed a ten-year action plan for the expenditure of the City and the Agency housing funds. Among the programs adopted by the Agency was the use of redevelopment housing set-aside funds for the acquisition, substantial rehabilitation and resale or re-rental of triplexes and four-plexes or new construction of units in the Southwest Neighborhood. Subsequently, to implement the Affordable Housing Strategy, staff prepared a Request for Proposals (RFP) to both for-profit and non-profit developers for the development of owner occupied housing in and near the South Central Redevelopment Project Area, either through substantial rehabilitation and conversion of rental units to condominiums or the demolition of rental units and rebuilding of owner occupied residential housing. On October 5, 1995, the Agency staff released the RFP. It called for submittal of proposals by December 6, 1995. The RFP identified six specific target areas for redevelopment, but indicated that the Agency would consider substantial expansion of these areas or other areas, if the respondents felt other areas were better suited to their needs. The target areas identified by Staff were selected alter consultation with the Police Department, Code Enforcement staff and Housing Rehabilitation staff. Staffwas prepared to begin discussions with one or more potential developers for each of the target areas The RFP was sent to thirty-nine (39) potential developers. Included among these were HomeAid, the affordable housing component of the Building Industry Association (BIA)' who distributed RFP's among its members, the Orange County Affor~ble Housing Clearinghouse, which is a consortium of William A. Huston March 4, 1996 Page 2 · lending institutions, for-profit and non-profit developers of affordable housing, and HawkinffMark-Tel which is a newsletter clearinghouse for consultants to the general development industry which notifies all of its clients of any RFP received. Because of the three clearinghouses involved, Staff does not know how many firms ultimately received the RFP. Staff received enough phone call interest regarding the RFP, however, that during the time it was circulating it had to make additional copies twice to meet the requested demand for the RFP. Staff also sent the RFP to all property owners in the target areas, as required by Redevelopment Law. On December 6th, two proposals were submitted. Staff reviewed both Proposals and neither was acceptable as submitted. One indicated the Agency would be responsible for the total acquisition and rehabilitation costs without identifying what the developer would provide, and the other provided no concrete specific proposal. While the RFP requested simple pro-forma's and discussions of proposed improvements, neither proposal was sufficiently detailed for the staff to be able to make a recommendation to the Agency. Due to the interest expressed during the time the RFP was circulating, and the limited response received, Staffhas contacted several developers who expressed interest but did not submit a proposal, to determine why the response was light. A sunuumy of the comments staff'has received are attached as Exhibit A. The Redevelopment Agency has established a policy of seeking competitive proposals for development projects, as well as any other purchase of goods or services. However, based on the response the Agency received from the RFP as well as its follow-up discussions with potential developers, it does not appear that this policy will be successful for as complex a proposal as this. Staffbelieves the Agency may achieve more success by not repeating the RFP process. Rather we would recommend that specific property owners/developers be identified who have the financial and technical ability and experience to achieve what the Agency wants. We would begin staff discussions with these parties, and, if appropriate, prepare and present to the Agency one or more Exclusive Right to Negotiate Agreements, allowing for formal negotiations of Disposition and Development Agreements. Because of the Agency policy for open solicitation, staff requests the Agency provide direction as to how staff should proceed in this matter and would also request that the Agency reconfirm its desire to achieve owner occupancy in the Southwest Neighborhood. Christine Shingleton Assistant City Manager David Gottlieb Redevelopment Project Manager EXHIBIT A Comments Concerning Multi-Family Demonstration Project' The following are the contacts and comment the Staff received from property owners and developers who chose not to respond to the Multi-Family Demonstration Project Request for Proposals Narin Shah Property owner of seventeen (17) units bounded by Bliss Lane, Altadena Drive and Myrtle Avenue Mr. Shah had contracted with a local architect to prepare a proposal to be submitted. Mr. Shah then leit the country. Staffhad several discussions with the architect, but no proposal was submitted. In mid-January, Mr. Shah contacted staffto find out the status of his proposal. He was surprised to find his architect had not submitted a proposal for him. He has indicated a desire to open discussions with the Agency and, possibly, to affiliate with a developer to assist him in converting his units to condominiums. Helen Brown President, Civic Center Group Ms. Brown stated her organization was very interested in the proposed project. However, she has a policy of not entering into competition for projects, because of the cost of preparing proposals and the lack of certainty of getting the project. She has indicated a desire to enter into exclusive negotiations with the staff and then to have both parties mutually agree to a specific project and any terms. Doug Bystry Executive Director, Orange County Affordable Housing Clearinghouse. Mr. Bystry indicated that he was very surprised that none of the members that use his organization responded to the RFP. He said there was such a significant interest on the part of his membership in this project; he had to reproduce the RFP document for a number of the members use. He personally thought it was a good project and really could not understand why we only received two responses. Mr. Bystry said that sometimes the smaller non-profit organizations do not respond to an RFP due to their small staff size, limited budget and the feeling that they can not compete on an equal basis with the larger profit oriented development finns. Exhibit A Page 2 Mr. Chuck Fry President, Vista'Equities. Mr. Fry indicated that he typically does not respond to an RFP, especially for the smaller development projeCts such as those contained in our RFP. The cost to prepare a response to the RFP for a smaller project is just as much as for a larger project, and the return to the fu~ is less. Mr. Fry indicated that he · prefers to evaluate a city's Housing Element,. the housing market, properties that are available and then make a proposal through the City. Eventually, Mr. Fry hopes that his proposals mature into an exclusive right to negotiate agreement with the city. Mr. Fry has subsequently submitted a proposal for theLaguna Gardens Project, north of the I-5 freeway. Ms. Lila Lieberthal Executive Director, Jamboree Housing Corporation Ms. Lieberthal's organization did not respond to the RFP because they typically participate in project that preserve affordable rental units. The Agency's RFP requested the conversion of existing apartment units to condominiums or new construction of owner occupied units. They feel that by keeping the units as apartments there is a greater chance that the unit will remain affordable, and thus be used as a housing resource by the low to moderate income level tenant. Ms. Lieberthal also indicated that it was difficult to tell from the RFP exactly how much of a contribution the City would be making as part of this project. She felt that it would have been helpful to understand exactly how much the City was willing to contribute in order to structure a development deal. Ron Metzler Vice President, Shea Homes Mr. Metzler indicated Shea Homes did not respond because they felt that substantial acquisition costs' would result in the potential size of the project being below what his company normally seeks for development projects. Frank De Santis ' Partnership Housing Corporation In May 1995, before the issuance of the Request for Proposals, Mr. De Santis had previously submitted a proposal to revitalize 32 units along Myrtle Avenue and Pasadena Avenue. Staff reviewed the proposals and retained a consultant to provide expert comments about the proposal. At the time, the consultant indicated Partnership Housing Corporation was too new as a non-profit and. did not Exhibit A Page 3 have the financial strength to undertake a project of the type they proposed. Staff rejected the proposal at the time due to that. However, recognizing his. organizational strength might have grown, staff sent Mr. De Santis a copy of the RFP. - Mr. De Santis indicated he did not respond to the RFP because the staff found deficiencies in his earlier proposal. He stated the cost of preparing a proposal was too high for him to compete for projects. . . David Chen ' Owner of 16 units on Carfax Drive and Del Amo Avenue, adjacent to Sycamore Avenue When Mr. Chen received the RFP, he did not understand the process and did not respond. However he indicated he is interested in selling his property and would be willing to work with a developer and/or the Agency to accomplish this. Steve Holgate President, Rivco Communities Incorporated Mr. Holgate received the RFP and, because it was a competitive process, did not respond. Like others, the cost to do so with no assurance of success prohibits him from submitting on requests for proposals. He is prepared to meet with the City, develop a specific project, and enter into an exclusive right to negotiate, and then move forward with the project. Kerry Choppin Acquisition Manager, The Olson Company The Olson Company reviewed the RFP closely and decided not to submit for two basic reasons. They felt that creating a small enclave of owner occupancy within an area which is predominantly rental was not viable in the market. They felt they would not be able to sell the units. Secondly, they see the process as too complex and too unsure of their own success in being selected that they were not' prepared to enter into a competition to be selected as the developer. They would be prepared to enter into discussions with the Agency, but would want a much larger area carved out for development. Conrad Sick Vice President, Akins Communities, Inc. Akins reviewed the RFP and did not respond because of the problem of iand assembly and the size of the proposed target areas. They are prepared to work with the Agency to develop a business plan for the development of a much larger area, preferably the entire Southwest Exhibit A Page 4 Neighborhood, but needs to have assurances that the Agency will use'its eminent domain authority to acquire and assemble to property. Michael Lennon Executive Director, ltomeAid, Building Industry Association Mr. Lennon indicated that HomeAid is currently dealing only with on-going projects because they do not have the staff to develop new projects. He stated he receives many RFP's and unless they are tied to a project HomeAid is currently working on, they generally do not review them or respond to them. Michael Goodman Affordable Housing Equity and Development Inc. Mr. Goodman stated there were two reasons they did not respond. The first was internal; they were at crucial phases with other projects gnd did not have the time to respond. The second dealt with the size of the project and the problem of land assembly. He indicated the amount of time land assembly would take would preclude a for-profit developer from participating. He stated he would enter into negotiations with the Agency on a specific project. Rex Swanson Metropolitan Development Mr. Swanson stated that his firm has a policy not to respond to competitive Request for Proposals because of the cost and uncertainty of the process. They are prepared to meet with the Agency, outline a strategy and specific project, and then enter into an exclusive fight to negotiate.