HomeMy WebLinkAboutStaff Report 372-08City of Palo Alto
C ty Manager’s Report
TO:
FROM:
DATE:
SUBJECT:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: PLANNING AND
COMMUNITY ENVIRONMENT
SEPTEMBER 15, 2008 CMR: 372:08
APPROVAL OF AMENDMENT TO ALMA STREET
AFFORDABLE MULTI-FAMILY RENTAL HOUSING PROJECT
ACQUISITION AND DEVELOPMENT AGREEMENT TO AMEND
THE SCHEDULE OF PERFORMANCE AND PROVIDE THAT
THE CITY HOLDS TITLE TO THE CITY PARCEL AND OLE’S
PARCEL UNTIL CONSTRUCTION FINANCING CLOSING FOR
THE DEVELOPMENT
RECOMMENDATION
Staff recommends that the City Council approve the attached amendment to the Alma
Street Affordable Multi-Family Rental Housing Project Acquisition and Development
Agreement (ADA Amendment) between the City and Palo Alto Family, L. P.
BACKGROUND
The August 6, 2007 Acquisition and Development Agreement (ADA) between the City,
Eden Housing and Community Housing Alliance (CHA) set forth the terms and
conditions for City financing for the acquisition of the property at 801 Alma Street (also
known as the Ole’s Parcel) and the transfer of title to the City-owned property at 841
Alma Street (the City parcel) for the purpose of creating a site for a mixed use
development with 50 affordable family rental units over ground floor retail space. The
City fulfilled its obligation, as required by the ADA, to remove the electrical substation
facility and equipment from the City parcel by the end of 2007. Palo Alto Family, L.P.,
(the Partnership set up by Eden Housing and CHA to be the project developer) closed
escrow and took title to. 801 Alma on August 1, 2008 using a City housing fund loan of
$3.5 million and $500,000 contributed by CttA. An application for a Planned
Community (PC) zone change has been submitted to the City and the Architectural
Review Board (ARB) conducted a preliminary review on September 4, 2008° Eden
Housing and CHA have requested certain amendments to the ADA regarding ownership
of the project site prior to the beginning of construction (Attachment A). In addition, the
CMR: 372:08 Page 1 of 3
Schedule of Performance needs to be updated with the current target dates for the PC
application review,, financing milestones and estimated construction schedule
(Attachment B).
DISCUSSION
The ADA specifies that the City would transfer title of the City parcel to the developer
concurrently with the developer’s acquisition of 801 Alma Street. However, Eden
Housing and CHA have requested that the City postpone transferring title of the City
parcel until the financing for the family housing project is in place and the project is
ready to begin construction. They have also requested permission to deed the 801 Alma
property to the City on, or shortly after, October 2, 2008, in order for the City to hold title
to the entire family housing project site until the developer is ready to begin construction.
It is projected that the City would hold title for about 15 months or until February 2010.
If the developer holds title to the site during this period, the affordable housing project’s
budget will have the burden of paying real property taxes on the full fair market value of
the land. As described in the ADA Amendment, the deed to 801 Alma will not be
recorded until the property is vacant and a closure permit has been issued by the City’s
Fire Marshal. The developer will also be responsible for liability insurance coverage and
property maintenance for the 801 Alma property during the holding period and the City
will continue to maintain the City parcel. Under the existing terms of the ADA, the City
is fully indemnified for any existing conditions on the property at 801 Alma, including
environmental contamination.
Revisions to Schedule of Performance: The project schedule is about six to eight months
behind the original schedule approved in August 2007 as part of the ADA. Eden Housing
and CHA have worked diligently and in good faith over the last 12 months on the many
tasks in the predevelopment phase. However, issues connected with the negotiation of
the purchase and condominium agreements with the owners of the 875 & 853 Alma
Street properties were the principal cause for delay in submittal of a complete application
for planning entitlements. The revised schedule (Attachment B) estimates that Council
action on the PC zone change will be completed by April 2009, which is a key milestone
in order for the developer to apply for tax credits in the summer of 2009. Because the tax
credit funding is highly competitive, the ADA allows the developer to reapply during two
years of funding cycles. If successful in securing necessary construction financing
awards in 2009, the developer will take title to the site and begin construction in early
2010 with project completion by late 2011.
RESOURCE IMPACTS
There are no significant resource impacts of the City retaining title to the City parcel until
¯ the new housing is ready to be constructed. The City may be able to use the property for
temporary storage of City vehicles during this period. The developer will bear the
expenses of insuring and maintaining the 801 Alma property. Also, holding title to the
entire family housing site strengthens the City’s security for its site acquisition loan.
CMR: 372:08 Page 2 of 3
POLICY IMPLICATIONS
The proposed amendments to the ADA will support the development of this affordable
family rental housing by helping to reduce the project’s development costs. The project is
consistent with the Comprehensive Plan’s Housing Element and the Phase 2 South of
Forest Area Coordinated Area Plan (SOFA CAP) which encourages the development of
new housing and expanding the supply of affordable housing.
ENVIRONMENTAL REVIEW
The City has initiated preparation of an Environmental Impact Report (EIR) covering the
development of the project; the EIR will be completed prior to final review of the
Planned Community application.
PREPARED BY:
Catherine Siegel
Advance Planning Manager
DEPARTMENT HEAD:
Curtis Williams, Interim Director
Planning and Community Environnlent
CITY MANAGER APPROVAL:
Ja ~r~_S _/I(eene //\.U
Ci~4VIanager ~
ATTACHMENTS
Attachment A:
Attachment B:
Amendment to Alma Street Affordable Multi-Family Rental Housing
Project Acquisition and Development Agreement between City of Palo
Alto, Eden Housing and the Community Housing Alliance
Amended Attachment No. 3: Amended Schedule of Performance
cc:
Community Housing Alliance
Eden Housing Corporation
Ole’s Automotive Repair Shop
Palo Alto Hardware Store
Palo Alto Family, L.P.
CMR: 372:08 Page 3 of 3
ATTACHMENT A
AMENDMENT TO ALMA STREET AFFORDABLE MULTI-FAMILY RENTAL
HOUSING PROJECT ACQUISITION AND DEVELOPMENTAGREEMENT
This Amendment ("Amendment") to the Alma Street Affordable Multi-Family Rental
Housing Project Acquisition and Development Agreement ("Agreement") dated as of the
. day of ., 2008 is entered into by and between the City of Palo Alto,
a chartered city ("City") and Palo Alto Family, L.P., a California limited partnership
("Developer"). City and Developer agree as follows:
RECITALS
City and Developer’s general partners, Community Housing Alliance, Inc., a California
non-profit public benefit corporation ("CHA") and Eden Housing, Inc., a California non-
profit public benefit corporation ("Eden") entered into the Agreement August 6, 2007, in
order to set forth the terms and conditions of the Developer’s acquiring the City Parcel at
841 Alma Street and Ole’s Parcel at 801/809 Alma Street and developing the Site as
either (i) a mixed-use project that will provide ground floor commercial/retail and 35 to
55 units of affordable multi-family rental, housing or, (ii) 50 to 55 units of affordable
multi-family rental housing ("Development").
B.Since August 6, 2007, the following actions set out in the Agreement have been taken:
CHA and Eden have formed Palo Alto Family~ L.P., a California limited
partnership ("Partnership") in which CHA and Eden are equal general partners;
ii.The Partnership has closed escrow on Ole’s Parcel as required under the Ole’s
Purchase Agreement, with the assistance of $3,500,000 in City funding;
iii. The City has closed and removed from the City Parcel the City electric substation;
iv.The Developer has entered into purchase and condominium, agreements to buy 875
Alma Street (Palo Alto Hardware);
Application for a PC Zone for the Development has been submitted to the City and
a preliminary ARB meeting was held on September 4, 2008.
The Schedule of Performance, Attachment 3 to the Agreement calls for the City to
transfer the City Parcel to the Developer on approximately August 1, 2008; however, the
Developer does not want to take title to the City Parcel at this time due to the fact that
property taxes will be incurred on that parcel from the time the Developer takes title until
the time of the construction financing closing and beginning of construction.
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ATTACHMENT A
The Developer also would like the City to take title to Ole’s Parcel, once Ole vacates the
site on October 1, 2008, due to the fact that property taxes will be incurred on Ole’s
Parcel from the time the Developer took title until the time of the construction financing
closing and beginning of construction.
Despite the many actions (enumerated in Recital B above) taken since August 6, 2007,
the Developer has not been able to meet the original Schedule of Performance outlined in
the Agreement.
The Developer and the City would like to amend the Schedule of Performance and have
the City hold title to both the City Parcel and Ole’s Parcel until construction financing
closing for the Development.
AMENDMENT
°
Schedule of Performance. The Amended Schedule of Performance attached to this
Amendment as Amended Attachment No. 3 shall supersede and replace Attachment No.
3 to the Agreement.
Section 4.7. Section 4.7 is hereby added to Article 4 of the Agreement to read as follows:
Section 4.7 Ole’s Parcel.
4.7.1 Conveyance of Ole’s Parcel.
Developer shall transfer Ole’s Parcel to the City on or shortly after October 2, 2008
and City shall accept title to Ole’s Parcel subject to the following conditions
precedent:
ao Developer represents and warrants that the building on Ole’s Property
is vacant and unused and the City’s Fire Marshal has issued Ole’s Car
Shop a closure permit.
b.Developer delivers to the City’s Real Property Manager an executed
and acknowledged Grant Deed.
Co Developer delivers to the City’s Real Property Manager a Certificate
of Insurance evidencing $2,000,000 in commercial liability insurance
for Ole’s Parcel on Insurance Services Office form CG 00 011 or
equivalent coverage. City and its employees and agents shall be added
as additional insureds.
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ATTACHMENT A
4.7.2 License to Maintain.
The City hereby gives Developer a license to enter upon Ole’s Parcel once City
takes title to Ole’s Parcel to maintain the parcel. Developer covenants and agrees
that Developer shall not use or occupy or allow any other person or entity to use or
occupy Ole’s Parcel, but shall keep the parcel secure and free from any
accumulation of debris or waste materials.
4.7.3 Conveyance of Ole’s Parcel to Developer.
The Developer and City agree that, within the times provided in the Amended
Schedule of Performance (subject to Force Majeure and any other mutually agreed
upon extensions of time), and subject to the City Conditions Precedent set forth in
Section 4.2.1 (other than Subsection 4.2.1 (f), which is inapplicable) of the
Agreement, City shall convey fee simple title to Ole’s Parcel to the Developer.
Ole’s Parcel shall be conveyed via grant deed, in the form attached to the
Agreement as Attachment No. 4 and incorporated herein by this reference (the
"Grant Deed"). City and Developer shall perform all acts reasonably necessary for
possession and title to Ole’s Parcel to be conveyed in accordance with Article 4 of
the Agreement.
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ATTACHMENT A
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
ATTEST:CITY OF PALO ALTO, a chartered city
City Clerk Mayor
"DEVELOPER"
APPROVED AS TO FORM:
Assistant City Attorney
PALO ALTO FAMILY, L.P.,
aCali~mianon-profitbenefitcorpor~ion.
By: COMMUNITY HOUSING ALLIANCE, INC.,
a California non-profit public benefit corporation,
its General Partner
¯ APPROVED:
By:
Name:
Title:
FEIR #:
Assistant City Manager
Director of Administrative Services
Director of Planning and Community
Environment
By: EDEN HOUSING, INC.,
a California non-profit public benefit
corporation, its General Partner
By:
Name:
Title:
FEIR #:
Insurance Review
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4
ATTACHMENT B
AMENDED
ATTACHMENT NO. 3
SCHEDULE OF PERFORMANCE
(All dates set forth below are preliminary and are subject to change as the planning and entitlement
process moves forward. Estimated Target Dates are conditioned upon prior Target Dates being met in a
timely manner.)
Abbreviations:
ADA -Acquisition and Development Agreement
ARB -Architectural Review Board (City)
CDLAC -California Debt Limit Allocation Committee (allocates tax-exempt bonds)
CEQA, NEPA - California Environmental Quality Act, National Environmental Policy Act
CHA -Community Housing Alliance, Inc.
DRC -Development Review Committee (City)
PC -Planned Community Zoning
TCAC -California Tax Credi’t Allocation Committee (allocates tax credits)
[PROJECTS HAVE BEEN CATEGORIZED PER DATE]
PREDEVELOPMENT AND CONVEYANCE PHASE:
Project Milestone Estimated Target Date Notes
1. City Council Study Session July 10, 2006
for Alma Affordable Family [Completed]
Housing
2. City Council Approval of
Tri-Party Agreement (City,
Eden & CHA) and Funding for
Purchase of Ole’ s by CHA
3. City makes Initial Deposit
for Purchase of Ole’s
4. City Council Approval of
ADA with Eden and CHA
(Developer)
5. CHA repays $480,000 loan
to City
6. City completes relocation,
removal of Substation function
from City Site
Sept. 18, 2006
[Completed]
Sept. 21, 2006
[Completed]
August 6, 2007
[Completed]
Sept 18, 2007
(deadline)
[Completed]
December 31, 2007
[Completed]
City makes $980,000 deposit of
which $480,000 is unsecured loan
to CHA,
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Project Milestone
7. Developer submits PC Zone
Application to City
8. Fundraising and applications
for City and other Subsidies
9. Developer forms Owner
Entities (Corporate General
Partner and Limited
Partnership)
10. City completes City Site
remediation, if required
11. City begins preparation of
any CEQA & NEPA Clearance
Documents, as required
12. Escrow to be Opened for
City Parcel
13. Developer submits
Plans for Preliminary ARB
review
14. City makes Final Deposit
for Purchase of Ole’ s and
Property is conveyed to CHA
15. Developer continues
Project Design and conducts
neighborhood outreach
16. Ole’s Property vacated
17. Developer to Submit List
of Possible General Contractors
for City Manager Review
18. Planning Commission
Initial Review of PC
Application
19. ARB Review of PC
Application
20. Planning Commission Final
Review of PC Application
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Estimated Target Date
March 26, 2008
[Completed]
March2008 -December
2009
May- July 2008
[Completed]
June 30, 2008
[Completed]
August 2008
[In Process]
July 15, 2008
[Completed]
July 17,2008
[Completed]
August 1, 2008
[Completed]
August 2008- April 2009
September 30, 2008
October 2008
November 2008
February/March 2009
April 2009
2
Notes
Fundraising continues for the
Senior Housing project per 3 year
fundraising plan
City makes $3,000,000 deposit
City Manager to respond within 10
days
Project Milestone Estimated Target Date Notes
21. City Council Final Review -May 2009
and Approval of PC
Application and Entitlements
22. Developer to Submit Tax
Exempt Bond and/or Tax Credit
Application(s)
July 2009
(Not later than first funding
cycle following approval of
Entitlements, provided the
application date is not less
than 30 days after the City
Council approval of PC
Application Entitlements -
2na Reading)
Developer shall have the right to
reapply to TCAC not less than four
additional funding cycles (2 years).
CONSTRUCTION PHASE:
Note that all dates below may be extended, if the project does not receive the requested funding at
the time of first application.
23. Developer Receives Tax
Credit Preliminary Reservation
Letter
24. Developer to Apply for
Building Permit
25. Developer Obtains All
Construction Financing
Commitments
26. Developer applies for
Parcel Merger-
27, City conveys City Property
to Developer
28. Parcel Map Merger Process
Completed to Merge Lots into
"Housing Site" prior to
construction loan closing
29. Developer to receive
Building Permit, Close on
Construction Loan(s) for
Affordable Family Housing and
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September 2009
October 2009
Within 4 weeks of Receipt
of Preliminary Tax Credit
Reservation
October 2009
October 2009
February 2010
February 2010
February 2010
Developer submits proof of
financing commitments to City
Manager
Project Milestone
begin Construction:
(A) With TCAC Financing
(B) With CDLAC Bond
Financing
30. Developer to Submit
Property Management Plan to
City
31. Substantial Completion of
Family Project
(TCAC or CDLAC)
32. State Housing Grant and
matching funds must be spent
33. Developer Completes
Lease-up and Occupancy
Estimated Target Date Notes
(A) Within 150 days of
receipt of Preliminary Tax
Credit Reservation
(B) Within 90 days of
CDLAC Allocation
Within 9 months after start
of construction
October 2011
Within 20 months of start
of construction.
October 12, 2011
August February 2012
Within 4 months of
completion of construction
(A ) Within the time frame required
by the TCAC Program
(B) Within the time frame required
by the CDLAC Program.
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