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CC 2018-04-10_09j Amend Agreement_Habitat for Humanity MEMORANDUM TO: CITY COUNCIL FROM: TERESA McCLISH, COMMUNITY DEVELOPMENT DIRECTOR BY: KELLY HEFFERNON, ASSOCIATE PLANNER SUBJECT: CONSIDERATION OF AMENDMENT NO. 1 TO AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE AS HOUSING SUCCESSOR TO THE DISSOLVED ARROYO GRANDE REDEVELOPMENT AGENCY AND HABITAT FOR HUMANITY FOR SAN LUIS OBISPO COUNTY DATE: APRIL 10, 2018 SUMMARY OF ACTION: Approving the Amendment will extend the project commencement date of the Affordable Housing Agreement by three (3) years, or until May 14, 2021. IMPACT ON FINANCIAL AND PERSONNEL RESOURCES: There is no financial impact or impact to personnel resources of the proposed action. The cost of the original loan was $260,000 paid from Redevelopment Agency Affordable Housing Set Aside funds. RECOMMENDATION: It is recommended the City of Arroyo Grande as Housing Successor to the Dissolved Arroyo Grande Redevelopment Agency: 1) Approve Amendment No. 1 to the Affordable Housing Agreement to allow a three (3) year time extension to commence the project; and 2) Authorize the Mayor to sign the Amendment. BACKGROUND: On December 14, 2010, the Redevelopment Agency of the City of Arroyo Grande (“RDA”) approved a Loan and Negotiation Agreement (“Agreement”) with Habitat for Humanity for San Luis Obispo County to acquire property located at 184 Brisco Road and develop a minimum of seven (7) multi-family owner-occupied low income affordable housing units. The Agreement required the RDA and Habitat for Humanity to negotiate an Affordable Housing Agreement to further implement the project. Habitat for Humanity successfully acquired the property with use of the funds, which was at a cost well below the appraised value due to a foreclosure. Item 9.j. - Page 1 CITY COUNCIL CONSIDERATION OF AMENDMENT NO. 1 TO AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE AS HOUSING SUCCESSOR TO THE DISSOLVED ARROYO GRANDE REDEVELOPMENT AGENCY AND HABITAT FOR HUMANITY FOR SAN LUIS OBISPO COUNTY APRIL 10, 2018 PAGE 2 In 2011, the State Legislature adopted ABx1 26, which eliminated all redevelopment agencies and was later upheld by the State Supreme Court in its opinion in CRA v. Matosantos. This action delayed execution of the final Affordable Housing Agreement. The Loan and Negotiation Agreement was determined to be an enforceable obligation on the Recognized Obligation Payment Schedule approved by both the Oversight Board and the Department of Finance. Subsequently, pursuant to a provision of ABx1 26, in subdivision (a) of Health and Safety Code Section 34176, the City elected to retain the housing assets and functions of the dissolved Redevelopment Agency and pursuant to that section all housing assets and functions of the dissolved Agency were transferred to the City. The City thereby became the “Housing Successor" to the dissolved Agency and in that capacity has the rights, powers, duties, and obligations of the dissolved Agency with respect to the transferred housing assets and functions. The Affordable Housing Agreement, contemplated by the Loan and Negotiation Agreement, was approved by the City in its capacity as Housing Successor on May 14, 2013. Habitat for Humanity is a nonprofit agency seeking to eliminate poverty housing and homelessness and to make decent shelter a matter of conscience and action. Habitat for Humanity has built roughly 300,000 houses around the world, providing over 1.5 million people with safe, decent, affordable shelter. Using volunteer labor and tax-deductible donations of money and materials, Habitat for Humanity builds and rehabilitates homes with the help of future homeowners, referred to as “Family Partners”. Habitat for Humanity incorporates universal design features into the homes it builds and includes green/energy efficient features and low water use fixtures into the homes it builds. These features help to keep utility costs down for the homeowners and supports Habitat for Humanity’s commitment to green building. The City started working with Habitat for Humanity in 2014 on a conceptual development plan for the property. The design included eight (8) attached single-family homes facing an interior community open space area. The primary issue with this design was providing adequate emergency vehicle access. A Pre-Application for a similar development was submitted in August 2017 that addressed staff concerns, and a formal Tentative Tract Map and Planned Unit Development is expected to be submitted within the coming months. Item 9.j. - Page 2 CITY COUNCIL CONSIDERATION OF AMENDMENT NO. 1 TO AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF ARROYO GRANDE AS HOUSING SUCCESSOR TO THE DISSOLVED ARROYO GRANDE REDEVELOPMENT AGENCY AND HABITAT FOR HUMANITY FOR SAN LUIS OBISPO COUNTY APRIL 10, 2018 PAGE 3 ANALYSIS OF ISSUES: The Affordable Housing Agreement is structured as a loan that will be forgiven as the units are constructed (see Attachment 1 for Affordable Housing Agreement). Under the terms of the Affordable Housing Agreement, the project is to commence within five (5) years of the Effective Date, as defined in the Agreement. Accordingly, May 14, 2013 is the Effective Date and May 14, 2018 is the deadline to commence the project. The Terms of the Agreement also set forth project completion dates. Habitat for Humanity has requested that the time for performance be extended by three (3) years in order to first complete an affordable housing project in Paso Robles that is currently under construction (see Attachment 2 for request letter). If the proposed Amendment is approved, Habitat for Humanity will have until May 14, 2021 to secure project entitlements and commence the project. The Amendment specifically modifies Section 2.2 (Development Approvals), Section 2.3 (Schedule of Performance) and Attachment No. 2 which sets forth the Schedule of Performance, to allow for the time extension. ALTERNATIVES: The following alternatives are presented for consideration: 1. Approve Amendment No. 1 to the Affordable Housing Agreement as proposed; 2. Modify and approve Amendment No. 1 to the Affordable Housing Agreement; or 3. Provide direction to staff. ADVANTAGES: Approval of Amendment No. 1 to the Affordable Housing Agreement will allow sufficient time for Habitat for Humanity to secure entitlements and commence the project. DISADVANTAGES: None identified. ENVIRONMENTAL REVIEW: No environmental review is needed to approve the Amendment. PUBLIC NOTIFICATION AND COMMENTS: The Agenda was posted at City Hall and on the City’s website in accordance with Government Code Section 54954.2. Attachments: 1. Affordable Housing Agreement 2. Letter from Habitat for Humanity dated March 28, 2018 Item 9.j. - Page 3 AFFORDABLE HOUSING AGREEMENT AMENDMENT NO. 1 This First Amendment ("First Amendment") to Affordable Housing Agreement (“Agreement”) by and between the CITY OF ARROYO GRANDE SOLELY IN ITS CAPACITY AS HOUSING SUCCESSOR TO THE DISSOLVED REDEVELOPMENT AGENCY OF THE CITY OF ARROYO GRANDE (“City”), and HABITAT FOR HUMANITY FOR SAN LUIS OBISPO COUNTY, a California nonprofit public benefit corporation (“Developer”) is made and entered into this 10th day of April, 2018. The City and Developer are sometimes referred to herein as the “Parties”. RECITALS WHEREAS, DEVELOPER is a California nonprofit organization that develops homes for low income persons; and WHEREAS, DEVELOPER is the owner of that certain unimproved and vacant real property consisting of approximately 21,778 square feet of land area commonly known as 184 Brisco Road, located in the City of Arroyo Grande, County of San Luis Obispo, State of California (the “Site”); and WHEREAS, CITY and DEVELOPER entered into an Affordable Housing Agreement, under which DEVELOPER was to commence construction of a minimum of seven (7) multi-family owner occupied low income affordable housing units (the “Project”) on the Site no later than five (5) years from the Effective Date of the Agreement, which was defined to be the date inserted in the preamble in the Agreement, May 14, 2013; and WHEREAS, DEVELOPER has requested that the time for performance be extended by three (3) years to allow DEVELOPER to first complete an affordable housing project in Paso Robles that is under construction. NOW, THEREFORE, in consideration of the mutual covenants and conditions set forth herein, the Parties agree as follows: 1. Amendment of Affordable Housing Agreement. The Parties agree that Section 2.2 (Development Approvals), Section 2.3 (Schedule of Performance) and Attachment No. 2 (Schedule of Performance) of the Affordable Housing Agreement shall be amended to allow for the Project to be commenced by the date that is no later than eight (8) years after the Effective Date. 2. Terms. The Parties agree that except as modified herein, all other terms and conditions of the Affordable Housing agreement shall remain in full force and effect.     Item 9.j. - Page 4 IN WITNESS WHEREOF, this Agreement has been duly executed by the undersigned as of the date first written above. “CITY” CITY OF ARROYO GRANDE AS HOUSING SUCCESSOR TO THE DISSOLVED REDEVELOPMENT AGENCY OF THE CITY OF ARROYO GRANDE By:___________________________ Jim Hill, Mayor ATTEST: _______________________________ Kelly Wetmore, City Clerk APPROVED AS TO FORM: _______________________________ Heather K. Whitham “DEVELOPER” HABATAT FOR HUMANITY FOR SAN LUIS OBISPO COUNTY By:_____________________________ Its:_____________________________ Item 9.j. - Page 5 Item 9.j. - Page 6 Item 9.j. - Page 7 Item 9.j. - Page 8 Item 9.j. - Page 9 Item 9.j. - Page 10 Item 9.j. - Page 11 Item 9.j. - Page 12 Item 9.j. - Page 13 Item 9.j. - Page 14 Item 9.j. - Page 15 Item 9.j. - Page 16 Item 9.j. - Page 17 Item 9.j. - Page 18 Item 9.j. - Page 19 Item 9.j. - Page 20 Item 9.j. - Page 21 Item 9.j. - Page 22 Item 9.j. - Page 23 Item 9.j. - Page 24 Item 9.j. - Page 25 Item 9.j. - Page 26 Item 9.j. - Page 27 Item 9.j. - Page 28 Item 9.j. - Page 29 Item 9.j. - Page 30 Item 9.j. - Page 31 Item 9.j. - Page 32 Item 9.j. - Page 33 Item 9.j. - Page 34 Item 9.j. - Page 35 Item 9.j. - Page 36 Item 9.j. - Page 37 Item 9.j. - Page 38 Item 9.j. - Page 39 Item 9.j. - Page 40 Item 9.j. - Page 41 Item 9.j. - Page 42 Item 9.j. - Page 43 Item 9.j. - Page 44 Item 9.j. - Page 45 Item 9.j. - Page 46 Item 9.j. - Page 47 Item 9.j. - Page 48 Item 9.j. - Page 49 Item 9.j. - Page 50 Item 9.j. - Page 51 Item 9.j. - Page 52 Item 9.j. - Page 53 Item 9.j. - Page 54 Item 9.j. - Page 55 Item 9.j. - Page 56 Item 9.j. - Page 57 Item 9.j. - Page 58 Item 9.j. - Page 59 Item 9.j. - Page 60 Item 9.j. - Page 61 Item 9.j. - Page 62 Item 9.j. - Page 63 Item 9.j. - Page 64 Item 9.j. - Page 65 Item 9.j. - Page 66 Item 9.j. - Page 67 Item 9.j. - Page 68 Item 9.j. - Page 69 Item 9.j. - Page 70 Item 9.j. - Page 71 Item 9.j. - Page 72 Item 9.j. - Page 73 Item 9.j. - Page 74 Item 9.j. - Page 75 Item 9.j. - Page 76