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HomeMy WebLinkAboutMinutes - City Council - 2002-10-28 - Special Meeting 229 City Council, Special Meeting Council Chambers 777 Cypress Avenue Redding, California October 28, 2002 11 :30 a.m. The meeting was called to order by Mayor Kight with the following Council Members present: Pohlmeyer and Stegall. Council Members Cibula and McGeorge were absent. I Also present were City Manager Warren, Deputy City Manager Starman, City Attorney Fuller and City Clerk Strohmayer. RESOLUTION - Authorizing an application for Home Investment Partnerships (HOME) Program funds; and AGREEMENT - Community Housing Improvement Program (CHIP) (G-I00-075-200) Deputy City Manager Starman recalled that the City has always been successful in receiving at least $1 million in Home Investment Partnerships (HOME) Program funds. This year, the State's Notice of Funding Availability (NOF A) was increased to allow up to $3.5 million per agency. He explained that the proposal before Council is to construct new housing units on 2.9 acres of City-owned property located on Linden Avenue in the Martin Luther King, ~r. neighborhood. Mr. Starman also recalled that the City Council, at its meeting of August 20, 2002, approved circulation of a request for qualifications to develop affordable rental housing units as part of the Home Investment Partnerships Program (HOME) application process. Because of its overwhelming qualifications, Community Housing Improvement Program (CHIP), a well- known and well-established non-profit organization, was selected by an evaluation panel as a potential developer for the project property on Linden Avenue. I Mr. Starman stated that the previous Report to City Council dated October 7, 2002, recommended a multi-faceted application with two components, a project and a program. However, after further consultation with State officials it appears that will not be feasible. He recommended that a resolution be adopted authorizing the City Manager to submit an application to the HOME Program with the California Department of Housing and Community Development (HCD) in the amount of $3.5 million for new rental housing construction for federal fiscal year 2002. Council Member Stegall asked if the property on Linden A venue is the same location under review by Faithworks for a similar project. Mr. Starman responded that the actual size ofthe property owned by the City is approximately 4 acres and Faithworks is reviewing another portion for a project. He added that there is a potential for three types of projects in the immediate area. . In response to Council Member Stegall, Mr. Starman explained that during the Request for Qualification process quality of project and product was emphasized and the potential site plan underscores this element. I MOTION: Made by Council Member Stegall, seconded by Council Member Pohlmeyer, adopting Resolution No. 2002-156; a resolution of the City Council ofthe City of Redding authorizing the City Manager or his designee to submit an application for federal fiscal year 2002 funding under the Home Investment Partnerships Program in the amount of $3.5 million with the California Department of Housing and Community Development; and selecting Community Housing Improvement Program (CHIP) as the developer for the proposed project. The Vote: A YES: Council Members - Pohlmeyer, Stegall, and Kight NOES: Council Members - None ABSTAIN: Council Members - None ABSENT: Council Members - Cibula and McGeorge Resolution No. 2002-156 is on file in the Office of the City Clerk. 10/28/2002 230 FINANCING PLAN - Acquisition and rehabilitation of a multi-family apartment complex (G-l 00-075-1 0 1) Deputy City Manager Starman explained that the proposed financing plan to facilitate acquisition and rehabilitation of a multi-family apartment complex on Eugenia Avenue will enable the proponent of the project, Community Revitalization and Development Corporation (CRDC), to create housing for low-income tenants in the City. He noted that although the acquisition of the units would occur in a very short period of time, CRDC is requesting that rehabilitation of the six-unit apartment complex on Eugenia Avenue be deferred until after January 1, 2003, due to a new State law eliminating prevailing wage requirements which amounts to approximately $35,000 for this project. In that regard, he explained that CRDC is requesting the following: 1) a loan of Home Investment Partnerships Program (HOME) funds in the amount of$31 0,000 for acquisition, rehabilitation, contingency, and loan processing; 2) a grant in the amount of$2, 1 00 from the Community Assistance Weatherization Program for insulation, weatherstripping, and caulking; and 3) a grant in the amount of $2,100 from the Neighborhood Paint Voucher Program for interior and exterior paint materials. I Mr. Starman noted that although the value of the property will be only $300,000 (post- rehabilitation) and the loan request is $310,000, the project will generate sufficient cash flow to service the debt. He pointed out that public benefit is the rehabilitation of the six-unit apartment complex in a target neighborhood with a quality non-profit organization managing the complex and low-income rental units available to the community. Mr. Starman recommended that the City Council approve: 1) a loan of HOME funds in the amount of $31 0,000 for acquisition, rehabilitation, contingency, and loan processing, with rehabilitation deferred until January 1,2003; 2) a grant in the amount of $2,100 from the Community Assistance Weatherization Program for insulation, weatherstripping, and caulking; and 3) a grant in the amount of $2,100 from the Neighborhood Paint Voucher Program for interior and exterior paint materials. Donald Pugh, Redding resident, expressed concern regarding the caliber of management to be provided for the complex once it is rehabilitated. He stated his concern stemmed from the deteriorated condition of the units under the current owner and management and asked that code enforcement action be taken to force rehabilitation. He also asked for clarification regarding the 55-year rental to low-income provision and questioned the impact on HUD funding should rents increase. I Mr. Starman responded that the loan on the property will be partially conditioned upon the owner recording a 55-year affordability covenant which necessitates that four of the six units will be available to individuals or families with income of 50% or less of the area's median income, and two of the units will be restricted to 60% or less of the median income. He concurred that the numbers will be adjusted annually to reflect changes in the marketplace and will increase over time but will always be tied to the area's median income. Mr. Starman assured Mr. Pugh that CRDC has extensive expertise in managing this type of project and has demonstrated in the past its ability to manage apartment units in an effective manner. He concurred that the units are in need of rehabilitation, but not to the point that aggressive code enforcement can be utilized. He opined that the solution presented to Council is the most attractive alternative and is beneficial to the neighborhood and the City. In response to Mr. Pugh, Mr. Starman stated that the cost for acquisition ofthe property is $140,000 and an additional $170,000 will be for rehabilitation. I City Manager Warren asked Mr. Starman to explain the difference in the contemplated $4 million project on Linden Avenue which will have units costing approximately $135,000 each and the Eugenia Avenue rehabilitation project which will cost approximately $50,000 per unit. Mr. Starman explained that the six-unit complex on Eugenia Avenue is a typical older rectangular structure built many years ago that will be rehabilitated but is without architectural amenities. However, the project contemplated on Linden Avenue will be a new, modem state-of-the-art apartment complex with a recreation room, play grounds, open space, and larger units with attractive architecture. 10/28/2002 231 I MOTION: Made by Council Member Pohlmeyer, seconded by Council Member Stegall, approving: 1) a loan of HOME funds in the amount 'of$31 0,000 for acquisition of a six-unit apartment complex located on Eugenia A venue to include, rehabilitation, contingency, and loan processing, with rehabilitation deferred until January 1,2003; 2) a grant in the amount of $2,100 from the Community Assistance Weatherization Program for insulation, weatherstripping, and caulking; and 3) a grant in the amount of $2,100 from the Neighborhood Paint Voucher Program for interior and exterior paint materials. The Vote: A YES: Council Members - Pohlmeyer, Stegall, and Kight NOES: Council Members - None ABSTAIN: Council Members - None ABSENT: Council Members - Cibula and McGeorge There being no further business, at the hour of 11 :50 a.m., Mayor Kight declared the meeting adjourned. APPROVED 9~ KyL Mayor ATTEST: I ~$/~~ City Clerk ,. 1 I 10/28/2002