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HomeMy WebLinkAbout2011-10-25 RDA Item No. 04CITY OF LADE I,LSI110 DREAM EXTREME. REPORT TO REDEVELOPMENT AGENCY TO: HONORABLE CHAIRMAN AND MEMBERS OF THE REDEVELOPMENT AGENCY FROM: ROBERT A. BRADY EXECUTIVE DIRECTOR DATE: OCTOBER 25, 2011 SUBJECT: AFFORDABLE HOUSING (AMCAL AND CENTRAL VALLEY COALITION FOR AFFORDABLE HOUSING) PROPOSALS Background On March 22, 2011, the Agency Board reviewed two separate affordable housing proposals from AMCAL and Central Valley Coalition for Affordable Housing. AMCAL is proposing to develop a 3.4 acre site at 6m Avenue and Bancroft Way for a two phased project. Phase I will provide 49 units of affordable senior housing and Phase II will provide 50 units of affordable family housing. Central Valley Coalition for Affordable Housing initially proposed to develop a 7.5 acre site located on Lakeshore Drive. Known as Lakeshore Village, the project will consist of 128 affordable units. Following the March 22, 2011 meeting, the two affordable housing proposals were forwarded to Keyser Marston and Associates (KMA) in order to perform a financial analysis and determine the necessary level of Agency assistance. On June 28, 2011, the Agency Board reviewed the KMA analysis and heard testimony from AMCAL and Central Valley Coalition. Because of uncertainty as to available funding in the Agency's Low and Moderate Income Housing Fund due to Governor Brown's proposal to eliminate redevelopment agencies, the Board directed staff to monitor the legislation, complete the analysis of the fiscal impacts, and bring the items back in 90 days. This 90-day period also provided time for the developers to revise their pro-formas, allow AMCAL to address the possible conflict of their project site with the Lake Elsinore Grand Prix, and to allow the Agency to identify and evaluate what the State was planning to do as it relates to redevelopment agencies. AGENDA ITEM NO. 4 Page 1 of 3 Affordable Housing Proposals October 25, 2011 Page 2 On September 7, 2011, AMCAL requested that the item be continued from the September 27, 2011 meeting to the regularly scheduled meeting of October 25, 2011 so that all Council Members would be present. Discussion Status of Legislation Eliminating Redevelopment On June 29, 2011, the State of California enacted Assembly Bill x1 26 and Assembly Bill x1 27. ABx1 26 eliminates redevelopment agencies and directs the resolution of their activities. ABx1 27 provides agencies an alternative "voluntary" program requiring various payments in lieu of elimination. The Housing Fund 2010/2011 year-end balance was approximately $6.47 million. However, on August 23, 2011, the City elected to participate in the "voluntary" program to keep the Redevelopment Agency in existence. Lake Elsinore's fiscal year 2011-12 payment to the State was initially reported to be approximately $7.74 million. However, following an appeal by the Agency, the State Department of Finance has been reduced the Agency's initial remittance obligation to approximately $7.32 million. The California Redevelopment Association has filed suit against the State concerning the legality of ABx1 26 and ABx1 27. That action is pending before the California Supreme Court and a decision is expected in January. The Supreme Court has also issued an order preventing redevelopment agencies from incurring new obligations. Consequently, at this time, the Agency has no authority to enter into any binding agreement with either developer or to commit any funds to either project. If the legislation is ultimately upheld, it will severely impact the availability of the Agency's Housing Funds. Status of AMCAL Project During the previous meeting, the Agency Board voiced a concern that the current location of AMCAL's project (corner of Bancroft Way and 6m Avenue) would impede on the current course of the Lake Elsinore Grand Prix. The Board directed AMCAL to contact the Lake Elsinore Storm to determine if the conflict could be mitigated. On August 19, 2011 AMCAL provided staff with a letter from the Lake Elsinore Storm (dated August 17, 2011) that indicated that the course could be re-routed. Accordingly, the current location of AMCAL's project would not impede on the ability of the Lake Elsinore Grand Prix to operate. Page 2 of 3 Affordable Housing Proposals October 25, 2011 Page 3 Status Central Valley Coalition For Affordable Housing Based on KMA's analysis, the Lakeshore Village would require approximately $9.65 million in Agency gap financing, well in excess of the Housing Funds that would be available even if ABx1 26 is overturned. In light of this shortfall, the Agency Board previously requested that Central Valley Coalition rework their project so that the requested gap financing was in line with the amount of funds that may be available. Central Valley Coalition has provided staff with a revised pro-forma and revised site plan. The revised pro-forma indicates a request for approximately $5 million in gap financing. The applicant is proposing to construct 72 units as part of a phased development, at an Agency subsidy of $33,333 a unit. This revised pro-forma has not been submitted to KMA for analysis. A potential second phase of 56 units is included in a revised site plan but not within the revised funding request. Recommendation It is recommended the Redevelopment Agency Board take no action at this time and direct staff whether it wants to revisit one or both projects at such time as the Supreme Court stay is lifted and the validity of ABx1 26 and 27 and the availability of the Agency's Low and Moderate Income Housing Funds for projects are determined. Prepared by: Justin Carlson, Redevelopment Agency Analys~ Reviewed by: Barbara Leibold, City Attorney Approved by: Robert A. Brady Executive Directo Page 3 of 3