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AGENDA BILL Agenda Item No. 5(D) Date: December 17, 2013 To: El Cerrito City Council From: Hilde Myall, Housing Program Manager Melanie Mintz, Interim Community Development Director Subject: Approval of an Extension to the Exclusive Negotiating Rights Agreement with Eden Housing Inc. for City Housing Property at 10848 and 10860 San Pablo Avenue ACTION REQUESTED Adopt a resolution (Attachment 1) authorizing the City Manager to extend the Exclusive Negotiating Rights Agreement (ENRA) with Eden Housing, Inc. (Developer) for negotiation of a Disposition and Development Agreement (DDA) of an affordable housing project (Project) at 10848-10860 San Pablo Avenue to July 1, 2014. Extension of the ENRA is not a project under CEQA; an Environmental Impact Report has been prepared for the Eden Housing and will be considered by the Planning Commission on December 18, 2013. BACKGROUND Through a developer solicitation process, on October 18, 2010 the former El Cerrito Redevelopment Agency Board (Agency Board) selected Eden Housing, Inc. as Developer for the property at 10848 and 10860 San Pablo Avenue (Property) and authorized the Executive Director to negotiate an ENRA. The Property was originally purchased, pursuant to Agency Board Resolution No. 576, in 2009 for the purpose of increasing, improving and preserving the community’s supply of affordable housing. On February 22, 2011, the Agency Board adopted Resolution No. 605 authorizing the Agency’s Executive Director to execute the ENRA with Eden Housing, Inc. for the negotiation of a DDA for the development of an affordable residential mixed-use project on the Property. The ENRA was executed on March 8, 2011 and is included as Attachment 2. On March 7, 2011, the Agency Board adopted Resolution No. 606 authorizing the execution of a predevelopment loan agreement for $350,000 from the Low and Moderate Income Housing Fund with Eden Housing Inc. for the Project (Housing Loan). On March 22, 2011, pursuant to Agency Board Resolution No. 613 and City Council Resolution No. 2011-24, the Property was conveyed to the City through a Property Conveyance Agreement. The ENRA was assigned to the City through the Property Conveyance Agreement. ---PAGE BREAK--- Agenda Item No. 5(D) On January 17, 2012, the City Council adopted Resolution No. 2012-04 to retain the housing assets and functions previously performed by the Redevelopment Agency and becoming the housing successor to the El Cerrito Redevelopment Agency. Pursuant to Assembly Bill x1 26 (Dissolution Act), the Redevelopment Agency was dissolved as of February 1, 2012. Upon dissolution, all housing assets, less the unencumbered housing balance, and obligations of the former Agency were transferred to the City as housing successor. In March 2012, as permitted pursuant to Section 1.2 of the ENRA, the City Manager extended the negotiating period of the ENRA by 90 days. On May 15, 2012, the City Council adopted Resolution No. 2012-35 extending the Exclusive Negotiating Rights Agreement (ENRA) with Eden Housing through June 8, 2013. Extension of the ENRA allowed the City time to resolve the property asset transfer issues related to the dissolution of the former Redevelopment Agency. Pursuant to the Dissolution Act, the City of El Cerrito submitted a Housing Assets Transfer Form to the California Department of Finance (DOF). In September 2012, the City received a letter from the DOF indicating that they had reviewed the Housing Assets Transfer Form and did not object to any assets or transfers of assets. Relying upon that approval and discussions with reputable title companies, the Developer has proceeded with entitlements work for the project. On May 21, 2013, the City Council adopted Resolution No. 2013-26 extending the ENRA with Eden Housing through January 8, 2014. ANALYSIS The ENRA establishes procedures and standards for the negotiation of the DDA including achievement of certain predevelopment tasks to determine the feasibility of the development. The ENRA does not obligate either party to acquire or convey any property, grant the developer the right, entitlement or environmental approvals to develop the property, or obligate the parties to undertake any activities or costs, except for the preliminary analysis and negotiations contemplated in the ENRA. Negotiation of an ENRA does not commit the City to award funds nor to pay any cost incurred by the developer in preparing the submittal or in negotiating the ENRA. Current Development Proposal The project proposal is for a mixed-use residential development consisting of approximately 63 rental units (62 affordable units for seniors and 1 manager’s unit), approximately 1,900 square feet of commercial space for the Samuel Merritt College Clinic, approximately 1,150 square feet of retail space, and retaining as a historic cultural resource the Contra Costa Florist Shop, which is the small stone-faced structure facing San Pablo Avenue. Financing The total loan amount of the City’s Housing Loan with Eden is $350,000. A total of $100,000 of the loan commitment has been disbursed to the project. The outstanding balance of $250,000 is an enforceable obligation of the Successor Agency and has been ---PAGE BREAK--- Agenda Item No. 5(D) listed on the Recognized Obligations Schedule for the January through June 2014 period. Pursuant to the terms of the Housing Loan, no funds in excess of $100,000 can be disbursed until Eden has executed a DDA with the City for the subject property. In addition to the City’s loan commitment of $350,000, Eden proposes to pursue a combination of County HOME/CDBG funds, County Housing Authority Project-based Section 8 funds and 9% Low Income Housing Tax Credits (LIHTC), which are allocated through competitive processes. If successful in obtaining County housing funds, the developer would anticipate submitting an application to the State Tax Credit Allocation Committee (TCAC) for 9% LIHTC in the March 2014 round. Entitlements and Environmental Review Eden Housing submitted a revised planning application for the project in mid-November which responded to public comments, refined certain elements and provided significant design and content development of the historical interpretive display. The project is scheduled to come before the Planning Commission for consideration of the California Environmental Quality Act (CEQA) environmental review document and land use approvals on December 18th. The City has prepared and circulated for public comment a Draft Environmental Impact Report (EIR) for the project. The Draft EIR was published in late August and is available on the Community Development Department’s webpage and at City Hall. The circulation and public comment period for the Draft EIR closed on October 10th. During that time, staff scheduled several opportunities for public review and comment, including a community meeting on historic features on September 11th; Planning Commission CEQA Scoping and Study Session on September 18th; and a Design Review Board Conceptual Review on October 2nd. The Final EIR, which includes all comments received on the Draft EIR and responses to those comments is available at City Hall and on the Community Development Department’s webpage. As discussed in the EIR and presented at public meetings, Eden Housing is proposing to address the impacts of the project on the Mabuchi residence and Contra Costa Florist Shop through a combination of measures including retaining and rehabilitating the Contra Costa Florist Shop, documenting the historic resource through a historic building survey, incorporating Japanese-inspired landscaping and commissioning an interpretive display to commemorate the history of the site. Eden has involved key stakeholders from the El Cerrito Historical Society and the Contra Costa Japanese American Citizens League and hired a professional exhibit design firm to design and develop the content of the interpretive display commemorating the history of the Contra Costa Florist Shop and the Japanese-American cut-flower industry in Western Contra Costa County. Requested ENRA Extension Staff and the developer are in negotiations for terms of the potential development agreement and land transfer including the development financing plan, business terms with the Samuel Merritt Clinic, retail terms, and overall timeframe for development. Staff has engaged the services of Keyser Marston to assist in developer negotiations and ---PAGE BREAK--- Agenda Item No. 5(0) the preparation of the Summary Report that is required to be prepared pursuant to Health and Safety Code Section 33433. Staff will update City Council as appropriate as real estate negotiations progress. Staff anticipates bringing the DDA to City C'ouncil for consideration in February 2014 after completion of CEQA and entitlement approvals. The developer has been proactive in resuming entitlements and environmental review work for the project. Staff recommends that ~den Housing has made satisfactory progress under the ENRA to merit an extension. The extension would be in the form of a letter agreement, a draft of which is included as Attachment 3. ENVIRONMENTAL REVIEW The extension of the ENRA does not constitute a project pursuant to the California Environmental Quality Act (CEQA) and does not commit the City to proceed with the development at this phase. FINANCIAL CONSIDERATIONS The financial impact of this item is neutral as the proposed City Council action does not commit funds nor obligate the City to commit funds in the future. LEGAL CONSIDERATIONS The Counsel to the City as housing successor has reviewed this report and the attachments. Scott Hanin, City Manager Attachments: 1. Resolution Authorizing the Extension of the Exclusion Negotiating Rights Agreement 2. Exclusive Negotiating Rights Agreement between the Agency and Eden Housing, Inc. 3. Draft Letter Agreement Extending the Exclusive Negotiating Rights Agreement ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 1 Page 1 of 3 RESOLUTION NO. 2013-XX A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO AS HOUSING SUCCESSOR TO THE EL CERRITO REDEVELOPMENT AGENCY (THE “CITY”) AUTHORIZING THE CITY MANAGER TO EXTEND THE EXCLUSIVE NEGOTIATING RIGHTS AGREEMENT WITH EDEN HOUSING, INC. FOR NEGOTIATION OF A DISPOSITION AND DEVELOPMENT AGREEMENT FOR THE PROPERTY AT 10860 AND 10848 SAN PABLO AVENUE WHEREAS, the former El Cerrito Redevelopment Agency (the “Agency”) and City of El Cerrito have encouraged redevelopment in specific portions of the El Cerrito Redevelopment Project Area in accordance with the goals and objectives of the City of El Cerrito Redevelopment Plan as amended; and WHEREAS, the Agency acquired 10860 and 10848 San Pablo Avenue (the “Property”) for the purposes of increasing, improving and preserving the community’s supply of low- and moderate-income housing and, in part, used Housing Fund monies to purchase the Property pursuant to California Health and Safety Code §33334.2; and WHEREAS, the Agency issued a request for qualifications and proposals from developers to solicit interest in redeveloping the Property as a residential mixed-use development including affordable housing consistent with California Health and Safety Code §33334.2 and the City of El Cerrito General Plan; and WHEREAS, the Agency Board, after reviewing the submitted proposals determined that Eden Housing, Inc.'s proposal most closely met the Agency's goals for development of the Property and is the most qualified developer of those who submitted proposals; and WHEREAS, the Agency Board adopted Resolution No. 600 on October 18, 2010 designating Eden Housing, Inc. as the selected developer (the “Developer”) for the Property with the goal of negotiating a Disposition and Development Agreement (the “DDA”) for the development of the Property; and WHEREAS, the Agency Board adopted Resolution No. 605 on February 22, 2011 authorizing the Executive Director to execute an Exclusive Negotiating Rights Agreement with the Developer for negotiation of a DDA (the “ENRA”); and WHEREAS, the Agency executed an ENRA with the Developer on March 8, 2011; and WHEREAS, the Developer seeks to acquire the Property and develop a mixed-use residential development consisting of approximately 63 rental units affordable to very low- and low-income households including commercial space for the Samuel Merritt College Clinic, a retail space and preservation of the historic florist shop located on the Property (Development); and ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 1 Page 2 of 3 WHEREAS, the Agency provided a loan (Loan) from the Low and Moderate Income Housing Fund to the Developer for predevelopment expenses related to the Development for the purposes of increasing, improving and preserving the community’s supply of low- and moderate- income housing pursuant to California Health and Safety Code §33334.2; and WHEREAS, the Agency and the City have entered into a Property Conveyance Agreement conveying the Property to the City and wherein the City assumed the Agency’s rights and obligations under the ENRA to cause development of the Property consistent with the Redevelopment Plan and the Property’s intended use for the purposes of developing affordable housing units; and WHEREAS, the City adopted Resolution No. 2012-04 on January 17, 2012 electing to retain the housing assets and functions previously performed by the Agency in accordance with Section 34176 of the Redevelopment Law and becoming the housing successor to the El Cerrito Redevelopment Agency; and WHEREAS, the Agency was dissolved effective February 1, 2012 pursuant to the State Budget bill ABX1 26 (the “Dissolution Act”) and all housing assets, less the unencumbered housing balance, and obligations of the former Agency were transferred to the City as housing successor by operation of law; and WHEREAS, the City adopted Resolution No. 2012-35 extending the negotiating period of the Exclusive Negotiating Rights Agreement to June 8, 2013; and WHEREAS, the City adopted Resolution No. 2013-26 extending the negotiation period of the Exclusive Negotiating Rights Agreement to January 8, 2014; and WHEREAS, the City Council desires to extend the negotiating period of the Exclusive Negotiating Rights Agreement to July 1, 2014 subject to the Developer’s written consent to such extension; and whereas an extension of the ENRA also extends the Right of Entry between the Developer and the City dated March 8, 2011 for the Property. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: 1. The City Council finds that the above recitals are accurate. 2. The City Council hereby authorizes and directs the City Manager to prepare and execute an extension of the Exclusive Negotiating Rights Agreement to July 1, 2014 on behalf of the City as housing successor, and related documents and to take such other actions as are appropriate to effectuate the purposes of this Resolution. 3. Nothing in this Resolution shall affect the City’s policy discretion in granting or denying any potentially necessary Planning Approvals or other entitlements. 4. This Resolution shall become effective immediately upon its adoption. ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 1 Page 3 of 3 I CERTIFY that at the regular meeting on December 17, 2013, the City Council of the City of El Cerrito passed this resolution by the following vote: AYES: COUNCIL MEMBERS: NOES: COUNCIL MEMBERS: ABSTAIN: COUNCIL MEMBERS: ABSENT: COUNCIL MEMBERS: IN WITNESS of this action, I have hereunto set my hand and affixed the official Seal of said City, this day of December, 2013. Cheryl Morse, City Clerk Approved: Janet Abelson, Mayor ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 2 ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- ---PAGE BREAK--- Agenda Item No. 5(D) Attachment 3 10890 San Pablo Avenue • El Cerrito, CA 94530 • (510) 215-4380 December 2013 Ms. Linda Mandolini President Eden Housing, Inc. 22645 Grand Street Hayward, CA 94541 Re: Extension of Exclusive Negotiating Rights Agreement (“ENRA”) for 10848 & 10860 San Pablo Avenue, El Cerrito Dear Ms. Mandolini: This letter agreement (“ENRA Letter Agreement”) is to extend by mutual consent the Term of the Exclusive Negotiating Rights Agreement (the “Agreement”) dated March 8, 2011 between Eden Housing, Inc. and the City of El Cerrito, as successor to the El Cerrito Redevelopment Agency, for the proposed development located at 10848 and 10860 San Pablo Avenue, El Cerrito (the “Development”). Pursuant to the Agreement, the parties may alter the terms of the Agreement by providing written consent. The City of El Cerrito hereby agrees, subject to the written consent provided herein by the President of Eden Housing, Inc., to extend the Term of the Agreement to July 1, 2014. IN WITNESS WHEREOF, this Agreement has been executed, in triplicate, by the parties on the date first above written. EDEN HOUSING, INC., a California nonprofit public benefit corporation CITY OF EL CERRITO, a public body, corporate and politic By: Linda Mandolini Scott Hanin President City Manager Cc: Hilde Myall, City of El Cerrito Karen Tiedemann, Goldfarb & Lipman Woody Karp, Eden Housing, Inc.