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2012 03 14 HC HOUSING COMMISSION AGENDA La Quinta City Hall Study Session Room 78 -495 Calle Tampico, La Quinta, California Regular Meeting Wednesday, March 14, 2012 6:00 p.m. Beginning Resolution No. 2012 -001 CALL TO ORDER 1. Roll Call Commissioners: Dorsey, Hunter, LaRocca, McDonough and Chairperson Leidner 2. Pledge of Allegiance PUBLIC COMMENT This is the time set aside for public comment on any matter not listed on the agenda. Please complete a "Request to Speak" form and limit your comments to three minutes. When addressing the Housing Commission, please state your name and address. CONFIRMATION OF AGENDA APPROVAL OF MINUTES 1. Approval of Special Meeting Minutes of December 21, 2011 PRESENTATIONS Presentation by the YMCA of the Desert Regarding Programs at Vista Dunes Courtyard Homes and Wolff Waters Place CORRESPONDENCE AND WRITTEN MATERIAL - None. CONSENT CALENDAR - None. BUSINESS ITEMS — None. STUDY SESSION — None. REPORTS AND INFORMATIONAL ITEMS 1. Update on Former Redevelopment Agency and Housing Authority 2. Update on Affordable Housing Projects COMMISSIONER ITEMS — None. ADJOURNMENT The next regular meeting of the Housing Commission will be held on June 13, 2012 commencing at 6:00 p.m. in the La Quinta Study Session Room, 78 -495 Calle Tampico, La Quinta, CA 92253. DECLARATION OF POSTING I, Lori Lafond, Executive Assistant of the City of La Quinta, do hereby declare that the foregoing Agenda for the La Quinta Housing Commission Meeting of March 14, 2012, was posted on the outside entry to the Council Chamber, 78 -495 Calle Tampico, the bulletin board at the La Quinta Post Office located at 51 -321 Avenida Bermudas, La Quinta, California and 78 -630 Hwy. 111, La Quinta, California on March 9, 2012. Dated: March 9, 2012 d n k, CAFOND, Execu i e Assistant City of La Quinta, Calfo nia Public Notices The La Quinta City Hall Session Room is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's office at (760) 777 -7123, forty -eight (48) hours in advance of the meeting and accommodations will be made. If special electronic equipment is needed to make presentations to the Housing Commission, arrangements should be made in advance by contacting the City Clerk's office at (760) 777 -7123. A one (1) week notice is required. Housing Commission Agenda 2 March 14, 2012 �g.fwR�rQ HOUSING COMMISSION MEETING DATE: March 14, 2012 AGENDA CATEGORY: BUSINESS SESSION: ITEM TITLE: Update on Former Redevelopment CONSENT CALENDAR: Agency and Housing Authority STUDY SESSION: PUBLIC HEARING: nT OTHER: R `� RECOMMENDATION No action is required - informational item BACKGROUND AND OVERVIEW At the last Housing Commission meeting update regarding the possible future of th occurred since that last meeting, staff Commissioners informed. n December 21, 2011, staff provided an Redevelopment Agency. Since much has s providing another update to keep the After many months of speculation, on D( Court upheld Assembly Bill x1 26, redevelopment agencies in California, eff Assembly Bill x1 27 ( "Continuation Act ") the Agency to opt -in to the "Voluntary Alt and remain in existence by giving an initi; subsequent annual payments of approxin 2040. The Agency had opted into the "' move forward with its affordable housi however, since the "VARP" was struck c Redevelopment Agency no longer exists. The Dissolution Act requires the desig former redevelopment agency. Theref Successor Agency to the La Quinta Red the winding down of the Agency's obli ;ember 29, 2011, the California Supreme "Dissolution Act ") which dissolved all active February 1, 2012 and struck down Assembly Bill x1 27 would have allowed rnative Redevelopment Program" ( "VARP ") I estimated payment of $18.3 million, and ately $4.6 million per year through 2039 - ARP" to retain its cash and assets and to g and economic development initiatives; Dwn by the Supreme Court, the La Quinta m of a Successor Agency ( "SA ") to the the City of La Quinta agreed to serve as )pment Agency. The SA is responsible for ms. In general, this means that all of the assets, properties, contracts, leases, and records of the Agency have been transferred to the Successor Agency and are also subject to monitoring, and in some cases the approval of, an Oversight Board. Per the Dissolution Act, the Oversight Board is comprised of seven (7) appointed members as follows: 2 County Appointees. Riverside County Supervisor Benoit appointed a resident from the City of La Quinta (John Pena) and a County employee familiar with redevelopment (Heidi Marshall). ■ 2 City of La Quinta Appointees. The Code authorizes the Mayor to appoint two members to the board, one of whom must be a represented employee of the former redevelopment agency. The Mayor appointed a current Council Member (Lee Osborne) and the Interim City Clerk (Susan Maysels). ■ 1 County Superintendent of Education Appointee. The Riverside County Superintendent of Education appointed the Desert Sands Unified School District's Assistant Superintendent of Business (Cindy McDaniel). • 1 Special District Taxing Entity Appointee. The largest special district by property share within the RDA project areas is entitled to appoint one member. For this purpose, School Districts are not considered and, therefore, the responsibility for appointment fell to the Coachella Valley Water District. CVWD appointed its Board President (Peter Nelson). ■ 1 Chancellor of California Community College Appointee. The State Chancellor appointed the Fiscal Director from College of the Desert (Wade Ellis). In general, the Oversight Board has a fiduciary responsibility both to the holders of enforceable obligations (such as bonds and agreements) and to the taxing entities that benefit from the distribution of property taxes and other revenues. The Oversight Board reviews and approves certain SA actions, such as the establishment of a "Recognized Enforceable Obligation Payment Schedule" and creation of an administrative budget. The Oversight Board can also direct the SA to dispose of assets, terminate agreements, or amend agreements as it sees fit. La Quinta's Oversight Board held its first meeting on March 7, 2012. Some of the items that were covered include the election of a Chair and Vice - Chair; the designation of a contact person for Department of Finance inquiries; adoption of a Resolution establishing the date, time and location for the meetings and Resolutions adopting bylaws and rules of procedure. The next meeting is scheduled to take place April 4, 2012 at 2:00 p.m. in the La Quinta City Council Chambers. K An important aspect of redevelopment was providing affordable housing. Many of the redevelopment agency -owned housing properties were transferred to the Housing Authority before the California Supreme Court decision in December. Most Housing Authority -owned properties contain existing units that are utilized for affordable housing purposes. As for the affordable housing activities of the former Agency, the La Quinta Housing Authority adopted a resolution transferring all rights, powers, assets, liabilities, duties and obligations associated with the housing activities to the Authority, essentially becoming the "Successor Housing Agency." Therefore, the La Quinta Housing Authority currently owns the following properties: ■ 28 rental houses in the Cove, and five rehabilitated foreclosed homes - two are currently in escrow and three are for sale. ■ The Washington Street Apartment complex and adjacent seven acre vacant parcel. The vacant parcel was slated for additional senior affordable housing. ■ A 10 -acre parcel east of the Dune Palms /Highway 1 1 1 intersection, next to the Costco building - the former Redevelopment Agency entered into a Disposition and Development Agreement with Coral Mountain Partners to develop a 176 - unit multi - family affordable apartment complex on this property. The project is currently in the design phase. By operation of law, the Disposition and Development Agreement now belongs to the La Quinta Housing Authority. ■ A five acre vacant parcel north of the intersection of Dune Palms Road /Westward Ho Drive, across from La Quinta High School. This property was slated for a multi - family and possibly special needs affordable housing project. The Agency had selected a developer through the Request for Proposals process, but put the project on hold pending resolution of the redevelopment issue. With redevelopment dissolved, the project remains on hold. ■ A 1.16 acre vacant parcel north of the Francis Hack /La Quinta Community Park in the Village. This parcel is slated for possible mixed -use affordable housing and retail. • There are also four small vacant lots (less than '/o acre each) located throughout the Cove area. Other agreements that have been transferred to the La Quinta Housing Authority include: ■ An agreement with La Quinta Palms Realty to provide property management services for the Cove rental homes. 3 ■ An agreement with Hyder Property Management to provide property management services at Washington Street Apartments. ■ A loan from the United States Department of Agriculture -Rural Development, which facilitates the rent subsidy at Washington Street Apartments. ■ A loan from Provident Bank, which was assumed from the previous owner, to purchase Washington Street Apartments. More detail about specific housing projects will be provided in a separate staff report within this packet. It should be noted that, as provided by the Dissolution Act, the properties listed above should be safe from a forced sale of property, as the La Quinta Housing Authority elected to retain all housing assets from the former redevelopment agency. Staff will continue to keep the Commissioners apprised on these issues. Respectfully submitted, Debbie Powell Economic Development /Housing Manager 2 T 4t r 4 4 a" HOUSING COMMISSION MEETING DATE: March 14, 2012 ITEM TITLE: Update on Affordable Housing Projects . AGENDA CATEGORY: BUSINESS SESSION: CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: OTHER: R4_ ABxl 26, the Redevelopment Dissolution Act, provides that local housing authorities can assume the housing functions of former redevelopment agencies. Therefore, the La Quinta Housing Authority adopted a resolution transferring all rights, powers, assets, liabilities, duties and obligations associated with the housing activities to the Authority, essentially becoming the "Successor Housing Agency" to the La Quinta Redevelopment Agency. The Dissolution Act also requires that unencumbered housing .funds that redevelopment agencies had "in the bank" be turned over to the County Auditor - Controller for distribution to taxing entities, such as the local school districts, fire districts, special districts, etc. In addition, it was unclear as to the disposition of bond proceeds that agencies have on -hand — it was not specified if those funds must also be turned over, if the bonds must be refunded, or if the successor housing agency could utilize those funds for affordable housing projects and obligations. For La Quinta, this means that approximately $4 million in housing funds and approximately $28 million in bond proceeds are at risk. There are currently two bills making their way to the Governor's desk for approval. One is SB 654, which seeks to protect over $1 billion in affordable housing funds. This bill would allow Successor Housing Agencies (e.g., Housing Authorities) to keep the current housing fund balances. The other, AB 1585 would clean up certain provisions of ABx1 26 and clarifies the function of successor agencies and oversight boards and will also seek to protect affordable housing funds. Until the status of these bills is known, several of La Quinta's housing projects and programs are on hold. At the time redevelopment was abolished, the Redevelopment Agency had several projects and programs underway. The following is a status on each of the projects: Coral Mountain Apartments - as described in the previous staff report, Coral Mountain Apartments will be located on approximately ten acres near Costco. The land was owned by the La Quinta Redevelopment Agency and has since been transferred to the La Quinta Housing Authority. The former RDA entered into a Disposition and Development Agreement with Coral Mountain Partners, LP, which provides a loan of up to $29 million of former Agency housing funds to facilitate the development of 176 apartment units that will be affordable to very low, low and moderate income family households. Because of redevelopment dissolution, the agreement automatically transfers to the La Quinta Housing Authority. As part of the agreement, the Housing Authority will lease the land to the developer for a minimum of 55 years (with the option of two ten -year extensions) with repayment derived from the residual rent receipts generated by the apartments. The Developer is securing 4% Tax Credits to fund the difference between the Agency's investment and total development cost. The City of La Quinta will be holding a TEFRA (Tax Equity and Fiscal Responsibility Act) hearing on April 3, 2012 to confirm the tax exempt status for the mortgage revenue bond financing that accompanies the 4% Tax Credits. Staff will be requesting that the Oversight Board confirm that the Board does. not intend to terminate this agreement. The entitlement and environmental review processes are complete, and the project is under design. Staff will share renderings of the project at the Commission meeting. Washington Street Apartments - as discussed in previous meetings, staff has been working on design of the rehabilitation and new units proposed for Washington Street Apartments. On February 14, 2012, the La Quinta Planning Commission approved all entitlements, which allows staff and consultants to begin work on construction documents. The construction is to be funded with the above - mentioned housing bond proceeds, but, given that the disposition of unencumbered bond funds has not yet been determined by the State, this project has been placed on hold. Foreclosed Home Program - the first phase of this program is nearly complete. The former redevelopment agency purchased thirteen dilapidated foreclosed homes. To date, rehabilitation has been completed on twelve homes and rehabilitation of the last home is underway. One of the homes was placed in the Cove rental program; seven have been sold; two are in escrow; and two are for sale. Prior to dissolution, the former redevelopment agency entered into a contract for the purchase and rehabilitation of an additional 21 foreclosed homes over a four -year period. However, this contract has been challenged by the State Department of Finance. By way of background, the Successor Agency to the former La Quinta Redevelopment Agency is required by the Dissolution Act to prepare a list of enforceable obligations, 2 which is subject to review by the State Department of Finance ( "DOF "). The DOF has determined that this agreement does not fit the definition of an enforceable obligation; however, the Successor Agency is challenging that determination. Given this uncertainty, the program has been placed on hold. Dune Palms /Westward Ho — as noted in the previous staff report, this project has also been placed on hold pending resolution of the disposition of housing funds and bond proceeds. Habitat for Humanity — The former redevelopment agency has worked with Habitat for Humanity in the past to help fund construction of several "mutual self -help homes" in the Cove area. In 2011, the former redevelopment agency entered into an agreement to help fund construction an additional five "mutual self -help homes" over five years, beginning in June 2013. This agreement is included in our list of enforceable obligations, and has not been questioned by the DOF. It is assumed this agreement will move forward, and because it is a housing agreement, it now falls under the jurisdiction of the Housing Authority. In addition, the Housing Authority now holds approximately 415 silent second trust deeds, which were previously held by the La Quinta Redevelopment Agency. The "Silent Second" program provides loans to very -low, low -, and moderate - income households to allow for home ownership. (The program was active in the late 1990's /early 2000's. However, it was later scaled back and is now used only for the Cove foreclosed home sales.) The silent second trust deed funds the gap between an affordable home loan and the market price of the house. (For example, if the income - qualified buyer can afford a $75,000 loan and the market price of the house is $140,000, the silent second trust deed would be in the amount of $65,000.) The silent second places a 45 -year affordability covenant on the home; therefore, the home must always be sold to an income - qualified buyer. The borrower does not make payments on this loan. If the home remains affordable for the entire 45 years, the second trust deed is forgiven. As always, staff will keep the Commission informed on the status of the housing funds, housing bond proceeds, and current legislation affecting these housing projects and programs. Respectfully submitted, e Debbie Powell Economic Development /Housing Manager 3