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:_____________________________
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