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HomeMy WebLinkAboutRDA 03 HSNG STRATEGY 10-07-96 RDA NO. 3 , 10L. 7-96 Inter-Com DATE: OCTOBER 7, 1996 TO: FROM: SUBJECT: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR REDEVELOPMENT AGENCY STAFF HOUSING STRATEGY FOR HOME OWNERSHIP; SOUTHWEST NEIGHBORHOOD RECOMMENDATION It is recommended the Redevelopmem Agency: 1. Authorize the execution of a contract with California Housing Partners, LLC. to develop a housing strategy for home ownership in a portion of the Southwest Neighborhood; and 2. Appropriate $128,195 from the South Central Project Area Housing Set-Aside Fund to finance the study. FISCAL IMPACT This amount of this comract is $128,195, to be appropriated from the South Central Project Area Housing Set-Aside Fund. BACKGROUND 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 fundSfor the acquisition, substantial rehabilitation and resale or re-rental of triplexes and four-plexes or new construction of units in the Southwest Neighborhood. William A. Huston, Executive Director October 7, 1996 Page 2 In implementing the Affordable Housing Strategy, staff subsequently 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. 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 staffwere selected after consultation with the Police Department, Code Enforcement staff and Housing Rehabilitation staff Staff was prepared to begin discussions with one or more potential developers for each of the target areas. The RFP was sent to thirty-me (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 Affordable Housing Clearinghouse, which is a consortium of lending institutions, for-profit and non-profit developers of affordable housing and Hawkins/Mark-Tel which is a newsletter clearinghouse for consultants to the general development industry which notifies all of its clients of any RFP received. 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 ckculating, and the limited response received, Staff contacted several developers who expressed interest but did not submit a proposal, to determine why the response was light. For the most part, the non-submittors indicated the Agency's areas were too small, and the project too complicated for such small areas. On March 4, 1996, staff reported back to the Council on its efforts and indicated its belief'that an open solicitation as had previously been done, might not be the most effective manner of obtaining developer interest in the area. Staff requested direction fi.om the Agency as to which course to pursue. The Agency authorized staff to enter into discussions with developers who had previously expressed interest and to remm with either a contract and/or an exclusive right to negotiate agreement with one or more developers. William A. Huston, Executive Director October 7, 1996 Page 3 DISCUSSION Staff met with the development team who had responded through the RFP process with the proposal which spoke of potential costs and activities, but which at that time did not provide adequate detail to be selected for an exclusive right to negotiate. Through several meetings, staff and the development team derided that the potential issues are many and complex. For this reason, staffasked the team to focus its efforts and compile a consulting team to analyze the various issues and propose a specific strategy to the Agency to create home ownership oppommifies. The proposal attached as Exhibit 1 is the result of this effort by the development team. Initially, the study will focus on the area bounded on the west by the SR 55 Freeway, on the north by McFadden Avenue, on the east by Newport Avenue and on the south by the Kenyon Drive complex. The purpose of the StUdy is threefold: 1. To clearly define the boundaries of the possible planning area as well as the nature of the existing improvements in the area; 2. To identify any existing or potential regulatory issues which could impact the viability of future redevelopment, whether positively or negatively; and 3. To develop a conceptual plan to redevelop the area, including time line and cost/benefit analysis. In order to develop the conceptual plan, the consulting team will: 1. Identify the type of appropriate residential products within the area that are marketable in today's market, including the number of units by type of approximate age. 2. Estimate the cost to devdop new units and/or renovate existing units. 3. Provide a conceptual site plan, phasing schedule for implementation activities, a development proforma and a sales proforma. 4. Identify financing options for the implementation activities 5. Identify any other issues that need to be addressed in implementation of the proposed strategy. William A. Huston, Executive Director October 7, 1996 Page 4 The consulting team includes the following companies: California Housing Partners, LLC J&M Realty Company Mallon Development Paone, Callahan, McHolm and Winton CDC Engineering Darryl Miller and Associates Templeton Planning Group Gladstone International/Schroeder Consulting Peyton Reed and Company CYP International Aegis Capital Fidelity National Title Project Manager Real Estate Financing and Investment Field Study and Survey Legal Engineering Environmental Land Use Community Issues Market Research Architectural Services Financing Title Issues Exhibit 1 provides the background on each of these firms, resumes of the principals working on this study and outlines each firm's participation in detail. The proposal also provides the full scope of work to be undertaken. The study is expected to take approximately four to five months. As the Agency knows, the issues facing the Southwest Neighborhood are many and varied. Through extensive efforts involving both the Agency and the City improvements in the Southwest Neighborhood are becoming noticeable. Staffbelieves it is time for the Agency to move to the next step; specifically developing a long range strategy to stabilize the neighborhood through the infusion of home ownership opportunities for current and future residents. The proposed study will begin this process. Assistant City Mananbse~r eC~edloZpm~,3 gram Manager