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2012 06 13 HCE`yt OF TAT p HOUSING COMMISSION AG EN DA La Quinta City Hall Study Session Room 78-495 Calle Tampico, La Quinta, California Regular Meeting WEDNESDAY, JUNE 13, 2012 6:00 P.M. Beginning Resolution No. 2012-001 CALL TO ORDER 1 . Roll Call Commissioners: Dorsey, LaRocca, McDonough and Chairperson Leidner 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 Minutes from March 14, 2012 Housing Commission meeting PRESENTATIONS 1 . Introduction of City Manager 2. Tour of the City of La Quinta Emergency Operations Center (EOC) CORRESPONDENCE AND WRITTEN MATERIAL — None. CONSENT CALENDAR None. BUSINESS ITEMS 1 . Consideration of the Housing Commission Work Plan for Fiscal Year 2012/2013 STUDY SESSION - None. REPORTS AND INFORMATIONAL ITEMS 1 . Update on Oversight Board 2. Review of Recent Housing Authority and Oversight Board Actions 3. Update Regarding Washington Street Apartments Rehabilitation Project COMMISSIONER ITEMS - None. ADJOURNMENT * b ? + * i * * * * * * * * * * * * * * * M * * * * * * * * * * * * * + if . * k It * * * * * * * it K ,* * * * * * * * * ,W N k i The next regular meeting of the Housing Commission will be held on September 12, 2012 commencing at 6:00 p,m. in the La Quinta Study Session Room, 78-495 Calle Tampico, La Quinta, California 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 June 13, 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 Highway 1 11, La Quinta, California on June 7, 2012. Dated: June 7, 2012 'tdRI AFOND, Ex c tive As ' tant City of La Quinta, ifornia 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) 777-71 23, 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 June 13, 2012 MINUTES HOUSING COMMISSION MEETING A Special Meeting Held in the Study Session Room at La Quinta City Hall 78-495 Calle Tampico, La Quinta, CA March 14, 2012 This meeting of the Housing Commission was called to order at 6:00 p.m. by Chairperson Leidner. CALL TO ORDER A. Roll Call B. Pledge of Allegiance Present: Commissioners Dorsey, Hunter, LaRocca, McDonough Chairperson Leidner Absent: None Staff Present: Debbie Powell, Economic Development/Housing Manager; Yvonne Franco, Interim Management Assistant; Lori Lafond, Executive Assistant Chairperson Leidner introduced Michele McDonough to the Commission and ' welcomed her as the newest member of the Commission PUBLIC COMMENT: None CONFIRMATION OF AGENDA: It was moved by Commissioners Dorsey/LaRocca to confirm the agenda with the addition of an item listed under Reports and Informational Items - Commission Compensation. Motion carried unanimously. 1. Approval of the Minutes for the Meeting on December 21, 2011 It was moved by Commissioners LaRocca/Dorsey to approve the minutes as recommended. Motion carried unanimously. PRESENTATIONS: 1. Presentation by the YMCA of the Desert Regarding Programs at Vista Dunes Courtyard Homes and Wolff Waters Place Paula Simonds, Community Program Director of the YMCA of the Desert spoke about the programs offered by YMCA to our affordable housing residents — see Attachment 1 for a list of programs. CORRESPONDENCE AND WRITTEN MATERIAL: None BUSINESS ITEMS: None STUDY SESSION: None REPORTS AND INFORMTIONAL ITEMS: Update on Affordable Housing Projects Staff presented staff report. Commissioner LaRocca asked if the affordability covenants on the residences that were sold as affordable housing will be affected. Staff indicated that the Successor Housing Agency may enforce the covenants. Staff further explained that there is currently pending legislation that will secure the covenants. Commissioner LaRocca asked if the Oversight Board will be meeting on a regular basis. Staff indicated that the Board will be meeting the Wednesday after the City Council meetings, and should wind down after a few months but for now, twice a month. Commissioner Hunter asked if notice will be sent to Washington Street Apartments residents regarding the delay in the rehabilitation project. Staff stated that notices will be sent as soon as more information is received regarding the housing legislation. 2. Update on Former Redevelopment Agency and Housing Authority Staff presented staff report. Commissioner LaRocca asked about interest rates on the silent second home loans and whether or not the buyer can refinance on those loans. Staff stated that they can refinance on their first mortgages but there are some challenges due to realtors being misinformed of the silent second program. Commissioner Hunter asked if the silent second homes were becoming difficult to sell. Staff stated that sometimes it is a challenge due to the income requirements and credit requirements. Housing Commission Minutes March 14, 2012 2 Commissioner McDonough asked about qualifying requirements for the silent second program/affordable housing. Staff indicated that there are several requirements including income, household size, and income limits are based on a percentage of the Riverside County median income (a schedule prepared each year by the County). Commissioner Compensation: Staff informed the Commission that compensation for all Boards and Commissions will be brought to City Council for discussion. This is based on an IRS audit that the City of Palm Desert went through regarding the payments to Commissioners. The IRS has determined that cities can no longer pay board members and/or commissioners as an accounts payable item. The members will have to be on the City payroll so that taxes are deducted. The City Council will meet on March 20, 2012 to discuss this item. Staff will provide more information at the next Housing Commission meeting on June 13, 2012. COMMISSIONER ITEMS: None. ADJOURNMENT: There being no further business, it was moved by Commissioners Hunter/McDonough to ,adjourn this meeting of the Housing Commission. This meeting of the Housing Commission was adjourned on March 14, 2012, at 6:54 p.m. Motion carried unanimously. Submitted by Lori Lafond Executive Assistant Housing Commission Minutes March 14, 2012 3 ATTACHMENT 1 FOR YOUTH DEVELOPMENT the FOR HEALTHY LIVING FOR SOCIAL RESPONSIBILITY La Quinta Housing Commission March 14, 2012 Vista Dunes (National Core/Hope Through Housing- Rancho Cucamonga, CA) 44-950 Vista Dunes Drive, La Quinta, CA 92253 Program Director: Alisa Rutherford- 760-409-0536 arutherford@desertymca.org 3 years of program provision Registered number of children: 78 — Grades K-8 Wolff Waters (Coachella Valley Housing Coalition- Indio, CA) 47-795 Dune Palms Road, La Quinta, CA 92253 Program Director: Catherine Alvarez- 760-902-6564 calvarez@desertymca.or� 2 years of program provision Registered number of children: 40- Grades K-12 Community Partners: 1, Anderson Foundation- Summer Camp Grant 2. Big Brothers Big Sisters of the Desert 3. City of La Quinta- $5,000 grant for swim lessons 4. Desert Sands Unified School District- Summer Food Service Program (lunches) 5. Desert Sands Unified School District- Henry Jue, Teacher and creator and instructor of Y I Like Math program 6. Family YMCA of the Desert- Day Camp/Youth and Government opportunities provided with Financial Assistance 7. FIND Food Bank- Food provision 8. Junior League- Volunteerism 9. Hidden Harvest- Produce provision 10. La Quinta High School- Student Volunteers and athletic demo days 11. Old Town Artisan Studio- Summer Art Program 12. Phoenix Suns 13. Regional Access Project- Funding for Y Be Fit health/fitness program 14. Regional Access Project- Summer program funding 15. Southwest Community Church- Facilitator of food provision Titf 4 449mrw AGENDA CATEGORY: HOUSING COMMISSION MEETING DATE: June 13, 2012 BUSINESS SESSION: _ ITEM TITLE: Consideration of the Housing Commission Work Plan for Fiscal Year 2012/2013 CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: RECOMMENDATION: Review and approve the Housing Commission Work Plan for Fiscal Year 2012/2013 BACKGROUND AND OVERVIEW: Every fiscal year, which runs from July through June, each City Board and Commission must prepare a work plan, which is then approved by the City Council or Housing Authority. A draft of the Housing Commission Work Plan for Fiscal Year 2012/2013 is attached for your review and approval (Attachment 1). The Work Plan consists of objectives proposed by Commissioners and staff for the coming year. Staff has prepared a list of suggestions for the Housing Commission to review, make additions or deletions, and ultimately, approve. After the Work Plan is approved by the Housing Commission, it will be submitted to the Housing Authority on July 17, 2012 for its approval. FINDINGS AND ALTERNATIVES: The alternatives available to the Housing Commission include: 1 Approve the Housing Commission Work Plan for Fiscal Year 2012/2013; or 2. Do not approve the Housing Commission Work Plan for Fiscal Year 2012/2013; or 3. Provide staff with alternative direction. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Attachment; 1 . Draft Housing Commission Work Plan FY 2012/2013 2 ATTACHMENT 1 Housing Commission Work Plan FY 2012/2013 With the State wide dissolution of redevelopment agencies, local housing authorities had the option of becoming "Housing Successors" to the former redevelopment agencies. The La Quinta Housing Authority adopted Resolution No. 2012-002, electing to become the Housing Successor to the former La Quinta Redevelopment Agency. The Housing Authority will continue with the former La Quinta Redevelopment Agency's efforts to provide quality affordable housing. The Housing Commission's function is to review and make recommendations on matters that come before the Housing Authority, except emergency matters and matters the Housing Commission itself elects not to consider. • Review quarterly reports from Housing Authority -owned properties, including the Cove Rental Homes and Washington Street Apartments • Review quarterly reports from the various non -Housing Authority - owned properties, including Wolff Waters Place, Vista Dunes, Seasons Senior Housing, Hadley Villas • Invite local affordable housing property managers/management firms to make presentations to the Commission regarding the properties and programs for residents • Facilitate programs/education/outreach for renters about becoming homeowners • Conduct an educational seminar for local brokers regarding La Quinta's affordable housing programs and projects • Review documents related to Housing Authority -owned properties such leases, rules & regulations, and admission applications • Continue to receive updates on projects in process, including Washington Street Apartments and Coral Mountain Apartments • Continue to receive updates on State legislation affecting affordable housing The La Quinta Housing Authority will be formulating plans and policies with regards to Housing Authority -owned properties and assets: • Review Housing Authority's action plan regarding Housing Authority - owned vacant land • Review Housing Authority's policy related to foreclosures on silent second trust deed homes • Review Housing Authority's policy changes related to the Watercolors Senior Housing Development PA T---Idf 4 4Q" AGENDA CATEGORY: HOUSING COMMISSION MEETING DATE: June 13, 2012 BUSINESS SESSION: ITEM TITLE: Update on Oversight Board CONSENT CALENDAR: STUDY SESSION: PUBLIC HEARING: RETORTS & INFO: C� At the last Housing Commission meeting, staff presented a report regarding the former Redevelopment Agency, which included details about the Successor Agency to the former La Quinta Redevelopment Agency (the City of La Quinta opted to take on this role), and the Oversight Board to the Successor Agency of La Quinta Redevelopment Agency. Briefly, the formation of an oversight board was mandated by the State to direct and oversee successor agencies as they close out former redevelopment agencies. One of the responsibilities of the Successor Agency is to prepare a list of "Recognized Obligations" of the former La Quinta Redevelopment Agency, which is basically a schedule of payments over a six-month period that the former redevelopment agency was obligated to pay. These payments include bond debt service payments, payments on existing contracts, other debt payments, administrative costs, etc. Once approved, the successor agency is allowed to use its property tax distribution to make the payments. Our Oversight Board was formed on March 7, 2012, and has held regular meetings since that time. In general, the Oversight Board meetings have been cordial and productive, The Oversight Board has considered and approved a variety of items, including the continuation of an existing Owner Participation Agreement for the expansion of Torre Nissan; the continuation of an existing Disposition and Development Agreement for Coral Mountain Apartments; along with several other housing -related items, which are detailed in a separate report. All Oversight Board actions are subject to approval by the State Department of Finance (DOF). To date, the DOF has not questioned any of our Oversight Board's actions, but has questioned items contained within our Enforceable Obligation Payment Schedule and Recognized Obligation Payment Schedules, including the Washington Street Apartment Rehabilitation Project and the Foreclosed Home Purchase Program. The Successor Agency has appealed (see Attachment 1); however, we have received no further communication from the DOF regarding these items. An update of the status of the Washington Street Rehabilitation Project is included as a separate report on today's agenda. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Attachment 1 : Letter to Department of Finance dated March 29, 2012 2 ATTACHMENT 1 N P.O. Box 1504 1.A (.ZUINTA, CALfF0RNIA c 22,17-150 1 78-195 CAi.i.r: "1ANIVIC0 (760) 777-7000 LA QCIN iA, CA1.il'ORNIA 9 2 2 a 3 1.AX (760) 7 7 7-7 1 U 1 March 29, 2012 Mr. Mark Hill Program Budget Manager Department of Finance 915 L Street Sacramento, CA 95814-3706 RE; Enforceable Obligation Payment Schedule (FOPS) for the Former La Quinta Redevelopment Agency Dear Mr. Hill: Thank you for your review of the EOPS prepared by the former La Quinta Redevelopment Agency (the "Agency"). As you indicated in your March 2, 2012 letter, the City of La Quinta is the Successor Agency to the former Agency. We would like to take this opportunity to respectfully respond to the concerns you raised on behalf of the California Department of Finance, which are reproduced in the bulleted items below. Please see our responses, which are in italics. 0 Project 1, page 1, line item 3 in the amount of $3.2 million for the home purchase and rehabilitation program, It is our understanding the city has the right but not the obligation to enforce the provisions of the agreement, Since the agreement is not legally binding, it should not be listed as an Enforceable Obligation, Successor Agency Response — The Successor Agency believes the Agreement for Home Purchase and Rehabilitation Program ("Home Purchase Agreement") is an enforceable obligation. The Home Purchase Agreement is between the former Agency and La Quinta Palms Real Estate Co., Inc. ("LQ Palms"), a private entity. The Home Purchase Agreement increases, preserves, and improves the supply of affordable housing in the City. As such, it is a housing asset of the former Agency. Pursuant to Health and Safety Code Section 34176(b)(2) and La Quinta Housing Authority ("Authority") Resolution No. 2012-002, adopted on January 12, 2012, the Authority is the "housing successor" to the former Agency, and the Home Purchase Agreement has therefore been transferred to the Authority. The Home MIS Mark Hill Department of Finance March 29, 2012 Page 2 Purchase Agreement obligates the Authority, in its capacity as the housing successor, to provide certain payments to LO Palms, for LO Palms' acquisition, rehabilitation, and resale, as affordable housing units, unoccupied and dilapidated single family homes in the City. Although you are correct that the Home Purchase Agreement does not obligate the City to perform any tasks thereunder, it does obligate the Authority to perform tasks. The Home Purchase Agreement is binding against the Authority, and thus we believe it is properly listed as an Enforceable Obligation. The Oversight Board has not yet had the opportunity to review the Home Purchase Agreement - it is scheduled for their April 3, 2012 meeting. In the meantime, the Successor Agency intends to list the Home Purchase Agreement on its BOPS, but will remove the payments shown on the current schedule pending your response to this letter. • Project 1, page 2, line item 7 in the amount of $14.8 million payable to the Coachella Valley Water District. HSC section' 34163(b) prohibits a redevelopment agency from entering into a contract with any entity after June 29, 201 1 . It is our understanding that a binding construction contract for these future infrastructure improvements has not been awarded. Successor Agency Response - The Domestic Water and Sanitation System Installation and Irrigation Service Agreement between the Coachella Valley Water District ("CVWD") and the former Agency ("CVWD Agreement") was executed on June 11, 2005. The CVWD Agreement relates to the development of real property located in the City and referred to as the "SilverRock Resort" area ("SRR Area"). The CVWD Agreement requires the City, in its capacity as the Successor Agency, to perform a series of water/sewer/infrastructure improvements (as listed in Exhibit A to the CVWD Agreement) in exchange for CVWD's agreement to provide water service to the SRR Area. The improvements are to be performed as the SRR Area is developed over time, therefore, as you noted, there are no current construction contracts in place for these improvements. The SRR Area has been master planned and zoned for golf course, tourist commercial, and public uses. The Successor Agency anticipates that the SRR Area will be developed as the economy improves, at which time the Successor Agency's obligations pursuant to the CVWD Agreement will be triggered, and the Successor Agency will need to enter into contracts for the construction of the improvements. It is our understanding that successor agencies may enter into contracts if necessary to fulfill enforceable obligations. Health and Safety Code Section 34177(c) provides that Successor Agencies are required to "Perform obligations required pursuant to any enforceable obligation", and Health and Safety Code Section 34177(1) provides that Successor Agencies are required to "Continue to oversee development of properties until the contracted work has been completed or the contractual obligations of the former Mark Mill Department of Finance March 29, 2012 Page 3 redevelopment agency can be transferred to other parties. " The Successor Agency contends that the CVWD Agreement is an enforceable obligation, and thus intends to list the CVWD Agreement on its ROPS. A copy of the Agreement is attached. • Project 2, page 4, line item 6 in the amount of $3.76 million payable to RSG. It is our understanding that binding construction contracts for the rehabilitation and construction improvements to Washington Street apartments have not been awarded. Successor Agency Response - The agreements listed in line items 5 and 6 relate to the rehabilitation of the Washington Street Apartments development, a rental housing development restricted to extremely -low and very -low income senior and disabled tenants (the "Development"), as well as the development of certain site improvements at the Development. The former Agency inadvertently listed "RSG" as the Payee under line item 6 (the "USDA-RD Commitment Agreement'). That line item should instead state "To be determined," as the entity that will perform the actual construction work has not yet been determined. The former Agency acquired the Development in 2008, for the express purpose of substantially rehabilitating the Development and developing site improvements at the Development. The Development was constructed with financial assistance from the United States Department of Agriculture - Rural Development ("USDA-RD"). In addition, the USDA-RD provides a rent subsidy for the tenants of the Development. The approval process for transferring the ownership of a USDA-RD assisted housing development is onerous, lengthy, and strictly scrutinized by the USDA-RD. The former Agency's application to the USDA-RD (the "Application") expressly stated that the Agency's purpose for acquiring the Development was to rehabilitate the Development and to develop site improvements, and the USDA-RD approved the former Agency's acquisition of the Development based on the Application. We have included with this letter a copy of the Agency's June 9, 2008 letter to the USDA-RD, which letters comprised a part of the Application, and a letter from the USDA-RD dated March 23, 2012 confirming that the USDA-RD's approval of the transfer of ownership of the Development was based on the Application and the former Agency's commitment therein to perform the rehabilitation, and to develop site improvements. It is the Successor Agency's opinion that upon USDA-RD's acceptance and approval of the Application, the Application became a binding agreement between the USDA-RD and the former Agency, which obligates the Authority, as the "housing successor" to the former Agency, to perform the rehabilitation, and to develop the site improvements, including executing the necessary agreements to effect all of the same. Therefore, the Successor Agency intends to list the USDA—RD Commitment Agreement on the ROPS but will Mark Hill Department of Finance March 29, 2012 Page 4 remove the payments listed on the current schedule pending your response to this letter. • Projects 1 and 2, page 6, line item 13 in the amount of $13.6 million for statutory housing fund set -asides. The requirement to set aside 20 percent of a redevelopment agency's tax increment for low and moderate -income housing purposes ended with the passing of the redevelopment dissolution legislation. MSC section 34177(d) requires that all unencumbered balances in the Low and Moderated ncome Housing Fund be remitted to the county auditor controller for distribution to the taxing entities. Successor Agency Response — This was placed on the FOPS in error and has been removed from the BOPS. Please feel free to contact Debbie Powell, Economic Development/Housing Manager at (760) 777-7073 should you have further questions or need additional information. Thank you again for your consideration. Sincerely, Mark Weiss Interim Executive Director of Successor Agency DP/lil cc: Debbie Powell, Economic Development/Housing Manager M. Katherine Jenson, Successor Agency Counsel Frank Spevacek, RSG Inc. Enclosures T_df 4 4 QKWOJ HOUSING COMMISSION MEETING DATE: June 13, 2012 AGENDA CATEGORY: BUSINESS SESSION: ITEM TITLE: Update on Recent Housing Authority and CONSENT CALENDAR: Oversight Board Actions STUDY SESSION: PUBLIC HEARING: REPORTS & INFO: Since the last Housing Commission meeting held in March 2012, the Housing Authority and Oversight Board have considered items that are related to affordable housing. It should be noted that ABx1 26, the law that dissolved redevelopment, provided that local housing authorities could assume all rights, responsibilities, assets, and obligations of former redevelopment agencies related to affordable housing. The La Quinta Housing Authority, via resolution, opted to become the "Housing Successor" to the former La Quinta Redevelopment Agency (RDA). However, as transactions have occurred involving former redevelopment agency housing properties throughout the State, title companies were hesitant to issue title insurance policies without Oversight Board approval. In addition, the State Department of Finance (DOF) rendered an opinion that housing assets are not transferred automatically by operation of law, but that these transfers must first be approved by oversight boards. Therefore, a series of actions was taken by the Oversight Board to the Successor Agency of La Quinta Redevelopment Agency relative to affordable housing to facilitate transfer of housing properties from the Successor Agency/former RDA to the Housing Authority, and approving transactions involving affordable housing assets. In addition, a few time -sensitive items came to staffs' attention that required immediate Housing Authority decisions to meet the Department of Finance's timetable to approve the Recognized Obligation Payment Schedule (BOPS) for the distribution of pass through payments and to distribute the remaining property tax to taxing agencies by June 1 . Below is a roundup of items that were covered by both the Housing Authority and the Oversight Board: HOUSING AUTHORITY April 17, 2012 The Housing Authority approved the appropriation of $21,540,268 to fund a loan to Coral Mountain Partners, L.P., pursuant to a Disposition and Development Agreement. The Coral Mountain Apartments project will provide 176 affordable housing units and is located on the south east corner of Dune Palms Road and Highway 1 1 1, east of the self -storage facility and west of Costco Wholesale. May 15, 2012 The Housing Authority did not approve the acquisition of a single family residence in the La Quinta Cove to preserve an affordability covenant. The single family home was to be sold at a trustee's foreclosure sale on June 1, 2012. The home had been previously sold in February 2005 to a very -low income qualified buyer as part of the La Quinta Housing Program with a silent second trust deed amount of $70,000. June 5, 2012 The Housing Authority adopted a Resolution HA 2012-007 which covered five (5) items related to Washington Street Apartments: (1) it approved the implementation of the Washington Street Apartment Rehabilitation Project, (2) approved the expenditure of $3,006,360 in 2004 tax-exempt housing bond proceeds and $15,523,220 in 2011 taxable housing bond proceeds, (3) it confirmed that the housing bond proceeds are "Housing Assets" that are to be transferred to the Housing Authority Pursuant to Health & Safety Code Section 34176(b), (4) approved an amendment to the Recognized Obligation Schedule to reflect the Project/Bond obligations and the payments, and (5) approved the appropriation of $7,008,718 in 2011 taxable housing bond proceeds to fund the Project. OVERSIGHT BOARD The Oversight Board reviews and approves certain Successor Agency 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 Successor Agency to dispose of assets, terminate agreements, or amend agreements as it sees fit. As noted in an earlier report, the Department of Finance can call up and question any oversight board action within three days, and then has ten days for review. To date, the DOF has not called up any of the Oversight Board actions listed below; therefore, it is assumed that they are approved by the DOF. K April 4, 2012 The Oversight Board adopted a resolution making certain acknowledgements and confirming that the Oversight Board does not intend to direct the City of La Quinta as Successor Agency to La Quinta Redevelopment Agency to terminate the Disposition and Development Agreement with Coral Mountain Partners, L.P, The agreement provides for a loan of up to $29,000,000 of former La Quinta Redevelopment Agency housing funds. This item was brought to the Oversight Board in order to confirm that this development should proceed. As previously noted, the project will provide 176 affordable units on a 10.32 acre site. April 18, 2012 The Oversight Board adopted a resolution affirming that certain properties are housing assets, therefore transferring them to the La Quinta Housing Authority. Provisions within ABx1 26 provide that all housing assets of former redevelopment agencies are automatically transferred to the housing successor by operation of law. However, the Department of Finance recently opined that the transfers are not automatic, and must be approved by the Oversight Board. The properties that were subject to this action were purchased with low and moderate housing funds, and include the following: In Project Area 1 (Attachment 1) • 28 affordable rental houses in the Cove area (not shown on the exhibit) • Three (3) vacant residential lots in the Cove and one (1) residential lot East of Washington Street • Six (6) remaining unsold homes that were part of the Home Foreclosure Program • A vacant lot in the Village Commercial District located northwest of the La Quinta Community Park In Project Area 2 (Attachment 2) • Vacant land located on the SEC corner of Westward Ho Drive and Dune Palms Road • Coral Mountain Apartments • Washington Street Apartments and the 6.8 acre vacant parcel located to the south May 2, 2012 The Oversight Board adopted a resolution making certain acknowledgements with respect to housing assets of the Successor Agency to La Quinta Redevelopment Agency. Due to the redevelopment dissolution, the La Quinta Housing Authority held approximately 415 silent second trust deeds, which were previously held by the La Quinta Redevelopment Agency. The "Silent Second" program provides second trust deed mortgages to very low-, low-, and moderate -income households to allow for K, home ownership by funding the gap between an affordable home loan and the market price of the house. The silent second places a 45-year affordability covenant on the home, which 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. Due to uncertainty resulting from the dissolution of the redevelopment agencies, title companies are hesitant to issue title policies and first mortgage lenders are concerned about issuing loans. Therefore, it was necessary to receive Oversight Board approval of a specific transaction involving a home within the Watercolors development that had a silent second trust deed in order to facilitate the sale of the home to an income - qualified buyer. June 6, 2012 The Oversight Board adopted Resolution OB 2012-013 in which the Oversight Board (1) approved the implementation of the Washington Street Apartment Rehabilitation Project, (2) approved the use of 2004 tax-exempt housing bond proceeds and 2011 taxable housing bond proceeds to fund the project, (3) confirmed the status of the housing bond proceeds as housing assets transferable to the La Quinta Housing Authority, and (4) approved the payment schedule to the Recognized Obligation Payment Schedule (RODS) to reflect the project and payments. Staff based the recommendation for the resolution upon (i) the commitment the LQRDA made to the U.S. Department of Agriculture, Rural Development Division (RD) to rehabilitate the WSA, (ii) the fact that the covenants in the bond documents require that the bond proceeds be used on affordable housing projects within or benefitting the LQRDA's project areas, and (iii) the fact that the 2004 tax-exempt bond proceeds and the 2011 taxable housing bond proceeds are "housing assets" that must be transferred to the Authority. Staff will continue to update the Commission regarding future Housing Authority and Oversight Board actions. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Attachments: 1 . Planning Area I List of Housing Properties 2. 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A. rAlk 4b !ZN 6ff 41 Ilk MIZE, 0 MA Al 4111 d6 I f'; r E 'a 1*6 R I 'o, j M-A I T4t!t 4 4a" HOUSING COMMISSION MEETING DATE: June 13, 2012 AGENDA CATEGORY; BUSINESS SESSION: ITEM TITLE: Update on Washington Street Apartments CONSENT CALENDAR: Rehabilitation Project STUDY SESSION: PUBLIC HEARING: REPORTS & INFO: As discussed at the last Housing Commission meeting, the La Quinta Planning Commission approved all entitlements for this project, which allows staff and consultants to begin work on construction documents. The construction is to be funded with housing bond proceeds, but, given that the disposition of unencumbered bond proceeds has not yet been determined by the State, coupled with the fact that the State Department of Finance (DOF) questioned this project being listed as an enforceable obligation, this project has been placed on hold. However, in an effort to move the project forward, staff has presented resolutions to the Successor Agency, Housing Authority, and Oversight Board. In general, the resolutions approve the implementation of the Washington Street Apartment Rehabilitation Project; approve the use of certain housing bond proceeds to fund the project; confirms the bond proceeds are "Housing Assets" that are transferrable to the La Quinta Housing Authority; and amends the Recognized Obligation Payment Schedule to reflect a payment schedule for the project. By way of background, the La Quinta Redevelopment Agency (LQRDA) purchased the property to expand its stock of affordable housing and to eliminate blight. As the Commission is aware, the rent subsidy is provided by the United States Department of Agriculture -Rural Development Division (RD), and the LQRDA went through a lengthy process to gain RD's approval to purchase the property. The LQRDA made a written commitment to RD that it would complete the rehabilitation using redevelopment agency housing funds, and RD recently re -confirmed that its decision to approve the sale was predicated on the LQRDA's commitment to rehabilitate the property. The estimated construction cost is $18,529,580. The funding source for the project consists of bond proceeds from two housing bond issuances — $3,006,360 from the 2004 tax-exempt housing bond proceeds and $15,523,220 from the 2011 taxable housing bond proceeds. The bond indentures (agreements) and official statements specifically state that these bond proceeds are to be used for affordable housing purposes only. Therefore, based upon the written commitment to RD, and the fact that these bond proceeds must be used for affordable housing, the goal is to establish that this project is indeed an enforceable obligation. Our challenge is to get the State to concur with this opinion. If that happens, the project can move forward. Staff will keep the Housing Commission apprised on this issue. In regards to the current apartment operations, the Housing Authority has a contract with Hyder Property Management to manage the day-to-day operations. Hyder employs a manager who lives on -site to work directly with the residents. In late March, Hyder hired a new property manager, as the previous manager took a position in another city. As commonly occurs when a new manager comes on board, there have been some challenges. In recent discussions with the manager, things appear to be improving. Staff works closely with the property manager and Hyder to keep problems to a minimum. Respectfully submitted, Debbie Powell Economic Development/Housing Manager 4