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HomeMy WebLinkAboutRDA O3 KENYON DR. 08-20-01AGENDA REPORT RDA NO. 3 08-20-01 MEETING DATE: AUGUST 20, 2001 630-20 TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR FROM' REDEVELOPMENT AGENCY STAFF SUBJECT: AUTHORIZATION TO RELEASE A REQUEST FOR PROPOSALS FOR KENYON DRIVE REVITALIZATION SUMMARY Agency approval is requested for the issuance of a Request for Proposals for the revitalization of properties in the Kenyon Drive Neighborhood located in the South Central Redevelopment Project Area. RECOMMENDATION It is recommend that the Redevelopment Agency authorize Agency staff to issue a Request for Proposals from interested Owner Participants and developers for the revitalization of the Kenyon Drive Neighborhood FISCAL IMPACT The action at this time will have no fiscal impact on the Redevelopment Agency. BACKGROUND/DISCUSSION As you am aware, the Agency has indicated it's desire to place a high priority on improvement of the Southwest neighborhood and as part of the South Central Redevelopment Project Implementation Plan. The Agency directed staff to proceed on three projects including' the rehabilitation of Kenyon Drive, a 125-unit neighborhood of multifamily rental units; development of a senior citizen housing project; and initiation of a Myrtle Avenue at Newport Avenue residential project. As required by California Redevelopment Law, staff initiated an Owner Participation process in the Kenyon Drive Neighborhood. Informal solicitations of property owners interest in revitalizing the Kenyon Drive neighborhood were initiated in 2000. Unfortunately, informal contacts were unsuccessful. Thirteen property owners were subsequently mailed requests to contact Agency staff to discuss their views of appropriate actions, if any, that the property owners might take in cooperation with the Redevelopment Agency towards the revitalization of the neighborhood. Property owners were also asked to identify their individual interest in participating in a collective revitalization program. During this initial process, only four property owners elected to contact the Agency to express their interest in revitalizing the neighborhood and in a couple of cases their interest in selling their property in the short term. Staff continued efforts to contact William A. Huston Authorization for Kenyon Drive RFP August 20, 2001 Page 2 the other property owners but was only able to-get a response from one additional owner, who recently purchased a property in the neighborhood. A more formal follow-up written request to the property owners was mailed on several months ago in an effort to increase the number of responses from the owners. The request m-iterated the agency's inquiry regarding their interest in participating in revitalizing the neighborhood and contained a one-page survey questionnaire along with a stamped return envelopment. At this time, six property owners have contacted staff, four of which have returned the survey. The survey respondents represent 36% of the property owners having 48% of the apartment units in the neighborhood. The property owners contacting Agency staff all expressed their intent not to hold their properties for more than a couple of more years. With the exception of one response to the contrary, the survey respondents indicated the following: the neighborhood needed revitalization with Agency assistance; properties were not adequately maintained or managed; the design quality was appropriate; a collective revitalization effort would have a positive impact on the area; and, owners expressed an interest in participating with the Agency and other property owner in pursuing options for revitalizing the Kenyon Drive neighborhood. During the intervening period staff has also discussed the City's revitalization desires and objectives with a number of private developers who were exploring redevelopment opportunities in the City of Tustin. While them was a measure of interest by the developers in the Kenyon Drive neighborhood, what was expressed to Agency staff is the need for a substantial rehabilitation of the apartments in the area. A major impediment expressed by the developers was the risk associated with the assembly of the properties, as well as the complexity and time required for completing a revitalization project. There appears to be no interest in a rehabilitation and conversion to condominium ownership project at Kenyon Drive neighborhood due primarily to the age of the units (35 to 40 years). The conceptual neighborhood revitalization study prepared for the southwest neighborhood in December 1999 identified Kenyon Drive as important to revitalizing the southwest neighborhood in order to establish the necessary market initiative in the planning area. The study identified two redevelopment options for Kenyon including either a condominium conversion project or substantial rehabilitation of the apartments creating an attractive and highly amenitized gated neighborhood with centralized property management. Since the conceptual neighborhood revitalization study was prepared property values for the area have increased by approximately 45%. Based on a review of such factors as fair market rent levels, capitalization rates, supportable debt and a reasonable level of developer investment yield, the need for a significant level of financial assistance from the Agency will be necessary if a substantial rehabilitation project proceeds. The Agency's obligations could also be impacted by significant potential relocation expenses. In addition to the developer contacts discussed above, Staff was recently contacted by a large private developer who is currently pursuing a property assembly and rehabilitation project in the Kenyon Drive neighborhood. This developer has independently initiated contact with property owners in the Kenyon Drive neighborhood and entered purchase agreements with the two of the William A. Huston Authorization for Kenyon Drive RFP August 20, 2001 Page 3 larger property owners comprising 41 apartment units and is in negotiations for additional properties. This represents 33% of the 125-unit neighborhood. The developer is desirous of assembling all of the Kenyon Drive apartments and to undertake a substantial rehabilitation project that would include a gated entry making Kenyon a private street allowing for more parking and community open space amenity along with the exterior and interior rehabilitation of the units. While like others, the developer is willing to assume a measure of risk in assembling the properties, they ask that the Redevelopment Agency help mitigate the risk by initiating a formal Request for Proposals to owners and developers which would reflect the Agency's objectives and move the process along expeditiously. The apparent lack of interest or motivation by existing property owners to participate with the Agency and demonstrated current interest by highly qualified developers indicates that despite current high costs them is a current opportunity to implement the Southwest neighborhood revitalization program. Therefore, Agency staff would recommend that we formally request proposals from qualified developers and Owner Participants in the Kenyon Drive neighborhood. Attachment "A" provides an outline of the proposed Owner Participation process. Christine A. ,~hi~'gleton//,~ ' Assistant City Managei,~ rdareport~kenyondriverfp, doc Attachment Redevelopmedt-Pmgram Manager William A. Huston Authorization for Kenyon Drive RFP August 20, 2001 Page 4 Attachment- A KENYON DRIVE NEIGHBORHOOD REVITALIZATION OWNER PARTICIPATION AND DEVELOPER REQUEST FOR PROPOSALS PROCESS Ii Prepare Preliminary Design for Development, Request for Proposals and initiate formal Developer and Owner Participation Request for Proposals. · Delineation of general design and development standards. · Presentation of the criteria that the Agency will use to evaluate development proposals, including the South Central Redevelopment Plan Rules Governing Participation and Preferences by Property Owners and Businesses in the project area which call for the extension of a reasonable preference provided that the Owner's proposed development is consistent with the objectives the Agency's objectives and guidelines, identified in the RFP and that the Owner demonstrates the experience and ability to. perform under a Disposition and Development Agreement with the Agency. · Circulate Notice and Statement of Interest and RFP to businesses and property owners via certified mail retum receipt requested and distribute RFP to interested developers. · Owner Participant and developer submission of responses to include: a. Statement of their desired participation in the redevelopment project. b. Description and concept plan of the of redevelopment project they propose that is consistent with the Agency's objectives and guidelines. c. Demonstration of the feasibility of the proposed project. d. Identification of the necessity and method for assembling properties for private development. e. Evidence of their experience and ability to finance the acquisition and development and to operate the proposed project. f. Identification of the type of assistance they need from the Agency including, but not limited to financial assistance. . Redevelopment Agency authorization to enter exclusive negotiations or rejection of development proposals, which may include selection of a developer other than from among prospective Owner Participants in the event such proposals are determined by the Agency not to be acceptable. . If exclusive negotiations are approved and the proposal would likely cause tenant displacement, preparation of Replacement Housing Plan and Tenant Relocation Plan. . Consultation and review of Replacement Housing Plan and Relocation Plan with PAC. . Redevelopment Agency public hearing on the Replacement Housing Plan and Relocation Plan. Redevelopment Agency public hearing on the DDA and related documents.