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HomeMy WebLinkAboutRDA 2 RDA AFDBL HSG REIMB AGMNT 06-05-07. .:..., ~ , Agenda Item RDA 2 '` '~ 'R' .. ~ Reviewed: ,,~ i ~~ ;,~ .: ~ , ,~ ~~~ ~ ~~~~ ~ City Manager ~a ~w °~. Finance Director NIA MEETING DATE: JUNE 5, 2007 T0: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM: CHRISTINE A. SHINGLETON, ASSISTANT CITY MANAGER SUBJECT: MCAS TUSTIN REDEVELOPMENT PROJECT AFFORDABLE HOUSING REIMBURSEMENT AGREEMENT SUMMARY: The Reimbursement Agreement and authorizing resolutions provides for City of Tustin funding assistance for development of affordable housing units within the MCAS Tustin Redevelopment Project Area. RECOMMENDATION: It is recommended that the Redevelopment Agency approve and authorize the execution of a Reimbursement Agreement by and between the City of Tustin and the Tustin Community Revelopment Agency for reimbursement to the City to assist the Agency in carrying out its affordable housing obligations under the MCAS Redevelopment Plan and the MCAS Tustin Specific Plan. FISCAL IMPACT: Funding under the Reimbursement Agreement would be made from tax increment revenues, including but not limited to the Agency's Low- and Moderate-Income Housing Set-Aside deposits from the MCAS Tustin Project Area, Town Center and South Central Project Areas (since there are resolutions adopted for Citywide benefit) as determined by the Agency and the Director of Finance on annual basis as part of the budget process and during the period of the Redevelopment Plan. BACKGROUND: The City of Tustin approved the MCAS Resuse/Specific Plan on February 3, 2003, and City and Agency approved the MCAS Tustin Redevelopment Plan on June 16, 2003. The ReuselSpecific Plan and the Redevelopment Plan specify the number of affordable housing units to be produced at the Project Area. Page 2 Under the California Health and Safety Code, Section 33000, et. seq. California Community Redevelopment Law, the "CRL"), at least 15% of all new and substantially rehabilitated dwelling units developed within a project area are required to be made available at an affordable housing cost, to and occupied by person and families of low- or moderate-income with not less the 40% of the total required dwelling units to be affordable to very-low income households. Affordable dwelling units produced in a project area must remain affordable for a period of at least 45 years forfor-sale unit and 55 years for rental units. In addition, the CRL requires not less than 20% of the tax increment revenues in a project area be deposited into aLow-~ and Moderate-Income Housing Set-Aside Fund, which may only be expended for affordable housing purposes. Both the above requirements under the CRL must be met every 10 years during the period of the Redevelopment Plan. The ten-year production and expenditure requirements under the CRL put a high financial burden on redevelopment agencies such as Tustin which have new project areas that have a high number of new dwelling units being developed during the early years of the Plan. There is insufficient tax increment revenue in the MCAS Tustin Project Area's early years for the Agency to make subsidies available to developers at the levels that would permit the development of the affordable housing on an economically feasible basis.. In order to assist the Agency in meeting its affordable housing obligations in the MCAS Tustin Project Area, the City of Tustin has entered into an agreement to sell property at a discount sufficient to permit developers to economically develop the required number of affordable housing units and has encumbered the sale of the properties and units with covenants, promissory notes and deeds of trust to ensure maintaining the affordability of those units in accordance with the CRL. The initial Five-Year Implementation Plan included in documents adopted with the MCAS Tustin Redevelopment Plan, projected a total of 2,760 dwelling units including 416 affordable units to be produced over the first five years of the Plan. The mid-term review on the Initial Five Year Implementation Plan considered by the Agency and received by the City Council on June 19, 2006 indicated that it was projected that approximately 2,297 new units would be constructed in the MCAS Tustin project Area through 2007, including 618 affordable units. To date, a total of 565 dwelling units have been produced including 117 affordable units, which reflects an average subsidy of approximately $351,000 per unit to secure the required long-term affordability covenants. The affordable housing units are located at Tustin Fields I & II and are comprised of 33 very low-, 23 low-, and 62 moderate-income units, which are secured by promissory notes and deeds of trusts by the City that reflect an average of approximately $502,600 for very low-income units, $485,900 for low-income units, and $279,100 for moderate-income units. The City's promissory notes and deeds of trust reflect the difference between the fair market value of the dwelling units at the time of purchase and .the affordable housing purchase price of the units. The total promissory note value associated with production of these affordable housing units is $23,585,726 on Tustin Field I and $22,822,010 on Tustin Field II, for a combined total of $46,407,736. Page 3 Preliminary estimates indicate that required affordable housing units within the Tustin Legacy Community Partners master developer footprint could total approximately $62 million dollars or more. The Agency's special redevelopment attorney on the MCAS Tustin Redevelopment Project, McDonough Holland and Allen, reviewed the City and Agency's affordable housing programs at MCAS Tustin and determined that the CRL permits the City and Agency to enter into a cooperation agreement permitting the City to be reimbursed for its financial assistance to the Agency in carrying out the Redevelopment Plan, including the production of affordable housing units. The Agency may reimburse the City from tax increment generated by the Project Area and from its Housing Set-Aside Funds as allowed under the CRL. The attached Reimbursement Agreement includes the terms of the City's assistance and the Agency's obligations, .which allows for flexibility in when periodic payments may be made by the Agency to the extent that funds are available to the Agency for such purpose. The Agreement will allow the Agency to reimburse the City to cover both sales of properties occurring prior to approval of the cooperation agreement as well as those made afterward. Staff will be available at the June 5th City Council meeting to answer any questions. Christine A. Shingletan Assistant City Manager REIMBURSEMENT AGREEMENT BETWEEN THE CITY OF TUSTIN AND TUSTIN COMMUNITY REDEVELOPMENT AGENCY RELATED TO AFFORDABLE HOUSING RESPONSILITIES TO BE ASSUMED BY THE AGENCY This Agreement is entered into as of the day of , 2007 ("Effective Date"), by and between the CITY OF TUSTIN, a municipal corporation ("City"} and the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency"). RECITALS A. The City adopted a Specific Plan/Reuse Plan for the former Marine Corps Air Station-Tustin ("Specific Plan/Reuse Plan") on February 3, 2003 by Ordinance No. 1257, which provides the policies, regulations, implementation strategies and procedures necessary to guide the civilian reuse of the former Marine Corps Air Station- Tustin ("MCAS"). B. The City adopted the Redevelopment Plan ("Redevelopment Plan") for the Marine Corps Air Station Tustin Redevelopment Project ("Project") on June 2, 2003, by Ordinance No. 1276 which authorizes the use within the Project of the powers contained in the California Community Redevelopment Law (Health & Safety Code §33000 et seq.), including, without limitation, the authorization to receive an allocation of a portion of the property taxes paid in the Project area pursuant to Health and Safety Code Section 33670(b) ("Tax Increment"). C. The City has acquired from the Department of the Navy certain real property within the Project for re-sale to developers for the development of residential uses including specified numbers of affordable housing units pursuant to the Specific Plan/Reuse Plan and the Redevelopment Plan. D. The Community Redevelopment Law (Health & Safety Code §33334.2) requires that not less than twenty percent (20%) of the Tax Increment allocated to the Agency must be used by the Agency for the purposes of increasing, improving, and preserving the community's supply of affordable housing for persons and families of low and moderate income. In carrying out the purposes of this section, a redevelopment ' rovidin agency may exercise any or all of its powers including, but not limited to, p g subsides to, or for the benefit of persons and families of low and moderate income, to the extent those households cannot obtain housing at affordable costs on the open market. 831845v2A 29171/0001(2) 5/25/2007 E. In addition, the Community Redevelopment Law requires that at least fifteen percent (15%) of all new and substantially rehabilitated dwelling units developed within a redevelopment project area shall be available at affordable housing cost to persons and families of low or moderate income and shall be occupied by these persons and families (the "Inclusionary Housing Requirement"). Not less than forty percent (40%) of these dwelling units must be available at affordable housing cost to very low- incomehouseholds and shall be occupied by these persons and families. F. Dwelling units developed pursuant to the Inclusionary Housing Requirement are to remain available at affordable housing cost to and occupied by very low-, low-, and moderate-income persons and families for the longest feasible time, but for not less than fifty-five (55) years for rental units and forty-five (45) years for owner- occupied units. G. To assist in enabling the Agency to provide the required affordable housing for the benefit of very low-,low-, and moderate-income persons and families in implementing the Specific PlanlReuse Plan and the Redevelopment Plan, the City has re- sold certain property ("Property") and will resell additional Property within the Project area for residential development at a fair reuse value for the residential use and with the covenants and conditions under the Specific Plan/Reuse Plan and Redevelopment Plan, including the required numbers of affordable housing units.. H. To assist the Agency in ensuring that such affordable housing units developed on such Property are sold and remain available at affordable housing costs to, and occupied by, persons and families of very low to moderate income at a subsidized affordable sale price for at least the periods of time prescribed by Health and Safety Code Section 33334.30, and to provide for future ongoing monitoring requirements for such affordable units under Health and Safety Code Section 33418, the City has encumbered or will encumber such units with covenants and deeds of trust. The difference between the market value of such units and the affordable sale price of such affordable housing units is represented by the gap funding assistance provided to affordable homebuyers with promissory notes by second deeds of trust in favor of City hereinafter referred to as the "Housing Affordability Subsidy". I. As of the date of this Agreement, the City has resold to developers for residential development Property on which a total of five hundred sixty-five (565) housing units will be constructed. Of the five hundred sixty-five (565) housing units to be constructed, one hundred and seventeen (117) units of .the required one hundred and eighteen (118) units restricted consistent with the Inclusionary Housing Requirement, pursuant to an Affordable Housing Covenant and an Affordable Housing Deed of Trust have provided. The City's Housing Affordability Subsidy for the units sold as of the date of this Agreement is $46,407,736. The City anticipates reselling additional Property to developers for residential development on which a total of two thousand one hundred and five (2,1 OS) housing units will be constructed, with two hundred (200) for sale units to be restricted consistent with the Inclusionary Housing Requirement. The City's 2 5/25/2007 Housing Affordability Subsidy for these additional units in the future is currently estimated at $62,296,000. J. Pursuant to the Health and Safety Code Section 33128, the Agency is performing a public function of the City and may have access to services and facilities of the City. K. The City and the Agency desire to enter into this Agreement: 1. To provide the terms and conditions under which the Agency will reimburse the City for the Affordable Housing Subsidy. 2. To set forth activities, services and facilities that the City will render for and make available to the Agency in furtherance of the activities and functions of the Agency under the Community Redevelopment Law; and 3. To provide that the Agency will reimburse the City for actions undertaken and costs and expenses incurred by it for and on behalf of the Agency. AGREEMENT 1. The Agency agrees to reimburse the City for the Affordable Housing Subsidy from Tax Increment received by the Agency from the Project or other available Agency sources including funds deposited into the Agency's Low and Moderate Income Set-Aside Funds for use within the territorial jurisdiction of the Agency. The City and the Agency agree that as of the date of this Agreement, the amount of the Affordable Housing Subsidy is $46,407,736. 2. The City agrees to provide for the Agency such staff assistance, supplies, technical services and other services and facilities of the City as the Agency may require in carrying out its functions under the Community Redevelopment Law. Such assistance and services may include the services of officers, employees, attorneys and special consultants. 3. The City will keep records of: (a) sales of property in the Project and the amount of the Housing Affordability Subsidy, and (b) activities and services undertaken pursuant to this Agreement and the costs thereof, in order to ensure that an accurate record of the Agency's liability to the City can ~be ascertained. The City shall periodically, but not less than annually, submit to the Agency a statement of the costs incurred by the City in rendering activities and services to the Agency pursuant to this Agreement. Such statement of costs may include a proration of the City's administrative and salary expense attributable to services of City officials, employees and departments rendered for the Agency. s~2s~zoo~ 4. The Agency agrees to reimburse the City for all costs incurred by the City pursuant to this Agreement from and to the extent that funds are available to the Agency for such purpose from Tax Increment or from other sources, provided that the Agency shall have the sole and exclusive right to pledge any such sources of funds to the repayment of other indebtedness incurred by the Agency in carrying out the Project. The costs of the City under this Agreement (including, without limitation, the Affordable Housing Subsidy) will be shown on statements submitted to the Agency pursuant to Section 3 above. Although the parties recognize that payment may not occur for a few years and that repayment may also occur over a period of time, it is the express intent of the parties that the City shall be entitled to repayment of the expenses incurred by the City under this agreement, consistent with the Agency's financial ability, in order to make the City whole as soon as practically possible. 5. The obligations of the Agency under this Agreement shall constitute an indebtedness of the Agency within the meaning of Section 33670 et seq. of the Health and Safety Code, to be repaid to the City by the Agency with interest at five percent (5%) per annum. (SIGNATURES PAGES FOLLOW) 4 5/25/2007 IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date. "CITY" CITY OF TUSTIN By: Lou Bone, Mayor APPROVED AS TO FORM: Douglas C. Holland, City Attorney ATTEST: Pamela Stoker, City Clerk "AGENCY" TUSTINCOMMUNITY REDEVELOPMENT AGENCY APPROVED AS TO FORM: By: Lou Bone, Chair Board of Directors Douglas C. Holland, Agency Counsel ATTEST: Pamela Stoker, Agency Secretary 5 5/25/2007