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HomeMy WebLinkAbout1996-06-10 City Council (28)C ty City of Palo Alto Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: Planning and Community Environment AGENDA DATE: June 10, 1996 CMR:286:96 SUBJECT:Approval of Proposed Off-Site Location of Below Market Rate Program Units for the 651 Hamilton Avenue Senior Condominium Project REQUEST Council is requested to approve the proposed off-site location at 290-310 Ventura Avenue, Palo Alto, of the seven required Below Market Pate (BMR) program units to be provided by the developer in satisfaction of its obligations under the recorded subdivision agreement and the adopted Planned Community zone for the 36-unit senior condominium project at 651 Hamilton Avenue. RECOMMENDATIONS Staff recommends that the Council: 1) 2) Adopt a motion approving the location of the seven off-site Below Market Rate program units at 290-310 Ventura Avenue, Palo Alto, and Direct the city Manager, or her designee, to review all agreements between the Palo Alto Housing Corporation (PAHC) and the Hamilton Group regarding the terms and conditions of the transfer of the property at 290-310 Ventura Avenue, Palo Alto, from the Hamilton Group to the PAHC, and to prepare an agreement with PAHC regulating the rents and occupancy of the units in the property for future Council action. POLICY IMPLICATIONS The actions recommended in this staff report are consistent with the Housing Element of the Comprehensive Plan and with the City’s affordable housing development objectives, as stated in the Consolidated Plan for 1995 - 2000, adopted by the Council on May 1, 1995. The actions are also consistent with the below market program requirements of Ordinance 4173, adopted on September 27, 1993, approving the Planned Community zone for the 651 CMR:286:96 Page 1 of 3 Hamilton Avenue project and with the project’s Subdivision Agreement, executed December 11, 1995, between the City and The Hamilton Group. EXECUTIVE SUMMARY In satisfaction of Programs 9 and 13 of the City’s Housing Element, the developers of the senior condominium project at 651 Hamilton Avenue agreed to acquire or construct at least seven housing units at an off-site location within the City, and to transfer the units to PAHC free and clear, and in reasonably good condition, prior to initial occupancy of the senior condominiums. Under the Planned Community zone ordinance and the subdivision agreement for the project, the location of the off-site BMR units is subject to Council approval. The Hamilton Group has entered into a purchase contract for an existing !2-unit apartment complex at 290-310 Ventura Avenue, between Park Boulevard and E1 Camino Real, for the purpose of meeting the BMR program requirement. The complex contains 10 two-bedroom units and 2 three-bedroom units grouped around a landscaped courtyard. Although about 40 years old, the apartments are attractive and well-suited for family housing. Both City staff and the PAHC Board of Directors support the selectionofthis property to satisfy the BMR requirements for the 651 Hamilton project. PAHC and the Hamilton Group are presently finalizing a memorandum of understanding detailing the process, timing and the responsibility for various costs necessary to implement the eventual transfer of title to PAHC according to the intent of the BMR agreement. The Hamilton Group will acquire the apartment project (close of escrow is scheduled for June 18), and will hold and manage the property until the first unit in the 651 Hamilton condominiums is ready for occupancy. At that point, PAHC will acquire title to the Ventura property. Since the property contains 12 units, rather than the 7 which are required to satisfy the BMR agreement, the Hamilton Group proposes to pay 7/12ths of the purchase price, and PAHC will pay the remaining 5/12ths. The rehabilitation costs will be divided in the same manner. The Hamilton Group has involved PAHC in their investigations and inspections of the condition of the property. The rehabilitation work, necessary to bring the project up to the "reasonably good condition" standard set in the BMR agreement, will be completed by the Hamilton Group prior to transfer of the property to PAHC. Since these actions involve. a private real estate transaction, which has not yet closed escrow, the financial details must be kept confidential. FISCAL IMPACT The potential effect on City housing funds is not yet known. PAHC may need to request funding from the City to make their acquisition of the project feasible, since the Hamilton Group is obligated to pay for costs allocable to only seven of the twelve units. PAHC intends to seek private bank financing for the costs not covered by the Hamilton Group. The variables which affect the need for City funding are the future interest rate on PAHC’s bank CMR:286:96 Page 2 of 3 loan, and the project’s ultimate rent structure. The Community Development Block Grant (CDBG) program budget for the 1996-97 fiscal year includes $577,649 ofunallocated funds, designated for housing purposes, which could be made available to PAHC to assist with their acquisition of the property. At this time, no commitment or decision has been made regarding the use of CDBG funds for this project. ENVIRONMENTAL ASSESSMENT An initial study (92-EIA-7) recommending adoption of a Negative Declaration was approved by the City Council on August 9, 1993. No significant impacts were determined to result from the 651 Hamilton project. Actions by a public agency related to the acquisition of existing housing units, as part of an affordable housing program, are categorically exempt under Section 15326 of the California Environmental Quality Act (CEQA) Guidelines. STEPS FOLLOWING APPROVAL Acquisition of the 290-310 Ventura property is currently scheduled to occur by June 18, 1996. According to the conditions of approval for the 651 Hamilton project, the transfer of the below market units to PAHC must be completed "prior to occupancy" of the Hamilton project, which is projected to occur in about one year. Prior to the transfer of the Ventura property to PAHC, an agreement with PAHC to regulate the property’s use and occupancy, and action on City funding, if needed, will be scheduled for timely Council review. ATTACHMENTS None. PREPARED BY: Catherine Siegel, Housing Coordinator DEPARTMENT HEAD REVIEW: KENNETH R. SCHREIBER CITY MANAGER APPROVAL: CC: Director of Planning and ~mmunit~ent IPSt/y Manager ~ Palo Alto Housing Corporation The Hamilton Group CMR:286:96 Page 3 of 3