September 19, 2006                                                            Agenda Item No. 4 ( b )

118-57306-002                                                                   Meeting of September 16, 2006

 

MEMORANDUM

 

 

TO:                  Agency Commissioners

 

FROM:            Marcia Rosen, Executive Director

 

SUBJECT:       Authorizing a First Amendment to the Notre Dame Apartments Ground Lease with Notre Dame Housing Partners, L.P., a California limited partnership, to revise the permitted uses of operating income for the rehabilitation of 205 units of very low income rental housing units at Notre Dame Apartments, 1590 Broadway Street, as part of the Agency’s Affordable Housing Preservation Program and Citywide Tax Increment Housing Program

 

 

EXECUTIVE SUMMARY

 

The Notre Dame Apartments is a 205-unit housing development located at 1590 Broadway Street in the lower Russian Hill neighborhood (the “Development”), located on land owned by the Agency,  that was “at-risk” of converting from affordable senior housing to market rate housing.  The Chinatown Community Development Center (the “Developer”), through its affiliate entity Notre Dame Housing Partners, L.P., acquired and rehabilitated the Development in order to preserve its affordability.  The financing plan to preserve, acquire, and rehabilitate the Development called for $16,643,472 in tax-exempt-bond-financed first and second permanent mortgages, payment by the Agency of $5,400,000 to purchase the land ($5,200,000 of which was immediately refunded to the Agency to be used as prepaid land rent), commercial construction loans from Citibank, and low-income housing tax credit proceeds in the amount of $7,219,761.

 

The Developer requested the Agency to issue up to $16,643,472 in multi-family housing bonds for acquisition and rehabilitation costs for the Development.  To ensure the permanent affordability of the Development, Agency staff structured the transaction to include the purchase of the land by the Agency, and its lease for 99 years to a limited partnership, Notre Dame Housing Partners, L.P. (the “Tenant”), currently controlled by the Developer.  The Tenant owns the Development.  On October 31, 2000, the Commission approved the issuance of the bonds, the land purchase by the Agency, and the Ground Lease.

 

Subsequent to the original approval by the Agency and completion of the project, the Agency’s Asset Management staff noted that the Ground Lease did not state that income from operations could be used to finance the rehabilitation of the Development as was intended by all parties.  As a result, a technical revision to cure this omission to the Ground Lease is necessary in order to more accurately reflect the originally agreed upon financing structure.

 

In addition, certain sections of the Lease need to be clarified and restated as related to the definitions of Annual Rent and Surplus Rent, and the application of Surplus Rents. These revisions do not change the provisions of the Lease Agreement, but rather clarify and better define the language of the original Lease.

 

Staff recommends authorization of a First Amendment to the Ground Lease to revise the permitted uses of operating income to include rehabilitation costs  and to clarify certain sections of the Lease pertaining to Annual Rents and the uses of Surplus Cash, in conjunction with the rehabilitation of the Notre Dame.

 

DISCUSSION

 

Background

 

The Notre Dame Apartments was originally constructed as a hospital in 1909, and was purchased and rehabilitated by Notre Dame Apartments, a California Limited Partnership, in 1975. The property has a Below-Market Rate HUD-insured mortgage, which matures on June 1, 2016, and a Section 8 Contract for all 205 units, which first expired on September 30, 1996 and has since been renewed five times.

 

The owner of the Notre Dame Apartments had the right to prepay the HUD-insured mortgage, opt-out of the Section 8 program, and terminate the restrictions that kept the entire Development affordable.  Security Properties, Inc. of Seattle was the managing general partner of the limited partnership and expressed an interest in selling its entire portfolio of San Francisco HUD-insured properties (five in total). The Agency acquired all the San Francisco properties, thus preserving the long-term affordability of the entire portfolio, including Notre Dame. On June 27, 2000, the Commission approved the assignment of the Agency’s rights to the Improvements under the Purchase Agreement to the Developer and a Guarantee for the repurchase of Section 8-supported bonds in an amount not to exceed $6,704,522.  The Developer (through the single-purpose limited partnership) would own, rehabilitate, and operate the Development. On October 31, 2000, the Commission approved the issuance of tax-exempt bonds not to exceed $16,643,472, a loan in the amount of $5,400,000 for the purchase of the land by the Agency, and the approval of the Ground Lease.  A portion of the financing, $5,200,000 was immediately paid to the Agency and applied as pre-paid rent for the project.

 

Ground Lease Revision

 

When the Agency Commission authorized the Ground Lease and financing for the rehabilitation of the Notre Dame Apartments, as approved by the Loan Committee, one of the identified sources of the rehabilitation was income from operations, estimated at that time to be $1,078,287. Both the proforma approved by the Loan Committee, and the Commission Memorandum of October 31, 2000  included mention of income from operations as a source to pay for rehabilitation costs during the construction phase. However, the Ground Lease did not include language allowing income from operations as a permitted source, nor did it allow the use of surplus cash to pay for construction costs during the rehabilitation. In order to cure the omission in the Ground Lease and to accurately reflect the originally agreed upon financing structure, a technical revision to the Ground Lease is necessary.

 

In addition to this, certain sections of the Lease needed to be clarified and restated as related to the definitions of Annual Rent and Surplus Rent and the application of Surplus Rents.  These revisions do not change the provisions of the Lease Agreement, but rather clarify and better define the language of the original Lease.

 

Staff recommends authorization of a First Amendment to the Ground Lease to revise the permitted uses of operating income and to clarify certain sections of the Lease pertaining to Annual Rents and the uses of Surplus Cash, in conjunction with the rehabilitation of the Notre Dame Apartments.

 

(Originated by Garrett P. Smith, Asset Manager)

 

 

 

 

Marcia Rosen

Executive Director

 

MEMORANDUM                                                                   Agenda Item No. 4 ( c )

101-6201-002                                                                         Meeting of September 19, 2006

 

 

 

TO:                  Agency Commissioners

 

FROM:            Marcia Rosen

                        Executive Director

 

SUBJECT:       Authorizing execution of a Mentorship Agreement with the National Urban Fellows, Inc., a nonprofit public benefit corporation, in an amount not to exceed $60,000, for the 2006-2007 academic year

 

 

 

EXECUTIVE SUMMARY

 

Since 1996, the Agency has participated in the National Urban Fellow (NUF) program, a unique Masters of Public Administration program at Bernard M. Baruch College of the City University of New York, which includes 14 months of academic study and practical work experience in a mentorship setting at a public agency or nonprofit organization.  The Agency is pleased to confirm that Mr. David Miller has been assigned to the Agency for his mentorship period beginning this month.  A copy of Mr. Miller’s resume is attached.

 

The proposed action would authorize the Agency to sponsor Mr. Miller through the NUF at a cost not to exceed $60,000.  This amount is paid to NUF to cover a stipend for the Fellow, tuition, fees, travel expenses and other related program costs. 

 

Staff recommends authorization to sponsor the National Urban Fellowship for Mr. Miller and to pay the related fees.

 

DISCUSSION

 

The National Urban Fellow program was founded in 1969 to provide promising mid-career public sector professionals of diverse racial and ethnic backgrounds an opportunity to increase the range and strength of their leadership skills and to earn a Master degree in Public Administration.

 

The NUF program identifies and recruits experienced professionals from across the country who exhibit skills, capacity and commitment to assume higher levels of responsibility in the public sector.  These individuals are provided with intensive academic preparation and are then placed in a mentorship assignment with key public sector administrators.  Upon successful completion of the 14-month program, the Fellows receive a Masters in Public Administration at the Bernard M. Baruch College of the City University of New York.

 

BACKGROUND

 

National Urban Fellows, Inc. (NUF, Inc.), a 501 (c) (3) nonprofit organization, was founded in 1969 in collaboration with Yale University, the National League of Cities, and the U.S. Conference of Mayors, with financial support from The Ford Foundation.   The program has successfully prepared over 920 mid-career minorities and women for leadership/management positions in the public, private and nonprofit sectors. Fellows are prepared through a unique combination of academic training and hands-on experience (mentorship).

 

National Urban Fellows is a rigorous, full-time graduate program comprised of two semesters of course work, an academic conference, and a nine-month mentorship, leading to a Master of Public Administration (MPA) degree from Bernard M. Baruch College, School of Public Affairs, City University of New York. During the mentorship, Fellows complete course work via distance learning. An MPA degree is awarded to Fellows upon successful completion of all academic and program requirements.

 

NUF, Inc. recruits and selects superior post baccalaureate, mid-career professionals with strong public policy backgrounds, significant work experience and community service, leadership capability, and who demonstrate a sound understanding of public sector issues.

 

MENTORSHIP DESIGN

The mentorship is the hallmark of the NUF, Inc. program, and for many Fellows it is the high point of their fellowship experience.  The needs and interests of the Mentors and Fellows are carefully assessed and matched to provide the best experience for both. The mentorship builds on the academic component, enhances professional competence, and opens up new areas of interest and employment. The assignments provide Fellows with an invaluable opportunity to experience public policy planning and implementation, and in a broader perspective, to examine local, regional and national issues.  The mentorship assignment begins in September, the day after Labor Day, and concludes the last Friday in May. Progress during the mentorship is closely monitored. A work plan at the beginning of the assignment and two project reports track the Fellows’ progress. Staff visits to mentor cities enhance this oversight process.

 

Mentors are senior administrators in federal, state, and local government agencies; executives in business and foundations; and in nonprofit organizations.

 

Fellows work at the level of “special assistants” to their Mentors, and are required to perform responsibly in managing critical assignments during this core segment of the fellowship

 

The Agency’s contribution to the placement of a Fellow is $60,000, which helps to underwrite the Fellow’s tuition and fees at Baruch; a stipend of $25,000; book allowance; moving allowance; reimbursement for program related travel; Mid-Year Academic Conference; administrative and development costs.  Funds are included in this year’s budget for this program.

 

 

 

The Agency has enjoyed and benefited from its participation in the NUF program, and Agency NUF Fellows have received an invaluable education, leading to careers in community and economic development. 

 

We look forward to involving David Miller, this year’s fellow, in the important work of the Agency during the coming months.

 

 

 

 

                                                                  Marcia Rosen

                                                                  Executive Director

 

 

 

Attachment:      David Miller’s Resume

                       

 

108-13206-002                                                                                Agenda Item No. 4 ( d, e & f )

August 2, 2006                                                                                  Meeting of September 19, 2006

 

 

MEMORANDUM

 

TO:                 Agency Commissioners

 

FROM:           Marcia Rosen

Executive Director

 

SUBJECT:     Authorizing a First Amendment to the Owner Participation Agreement and a Regulatory Agreement with Kaiser Foundation Hospitals, a California nonprofit public benefit corporation, to amend the schedule of performance and amend other provisions governing the development of a 21-unit affordable rental housing project located at 2139 O’Farrell Street, Assessor’s Block 1101, Lot 022; Western Addition Redevelopment Project Area A-2

 

Conditionally approving the revised schematic design for a 21-unit affordable rental housing project located at 2139 O’Farrell Street, Assessor’s Block 1101, Lot 022; Western Addition Redevelopment Project Area A-2

 

Approving the Replacement Housing Plan related to the demolition of 21 affordable housing units at 1401-1417 Divisadero Street and the construction of a 21-unit affordable rental housing project located at 2139 O’Farrell Street, Assessor’s Block 1101, Lot 022; Western Addition Redevelopment Project Area A-2

 

 

EXECUTIVE SUMMARY

 

In February 1998, the Agency Commission authorized staff to enter into an Owner Participation Agreement with Kaiser Foundation Hospitals (“Kaiser”) for the development of a 21-unit affordable rental housing project at 2139 O’Farrell Street (the “OPA”), located between Divisadero and Broderick Streets in the Western Addition Redevelopment Project Area A-2 (the “Project Area”).  Under the OPA, Kaiser is required to build these 21 affordable housing units (the “Replacement Housing Units”) to replace the ones that will be lost to demolition when the hospital tears down a Kaiser-owned building located at 1401-1417 Divisadero Street (the “Pink Building”) to make way for the hospital’s expansion plans (See Attachment 1, Vicinity Map).

 

However, due to the hospital’s budgetary constraints over the last several years, Kaiser has been unable to proceed with its expansion plans, and therefore, the Replacement Housing Units were not built.  Kaiser is now ready to proceed, and seeks this proposed first amendment to the OPA (the “First Amendment”) and a new regulatory agreement (“Regulatory Agreement”) to govern the affordability requirements for the Replacement Housing Units, to amend the schedule of performance and other provisions governing the development of the Replacement Housing Units and subsequent demolition of the Pink Building.  Toward this end, Kaiser entered into a development agreement with Tabernacle Community Development Corporation, a California nonprofit public benefit corporation (“Tabernacle”), under which: (1) Kaiser will contribute the land and $5 million toward the total development costs for the Replacement Housing Units; and, (2) Tabernacle will build the Replacement Housing Units and cover certain development costs over $5 million.  The total development costs are expected to total approximately $5 million.  Kaiser is solely responsible for building the Replacement Housing Units.  The Agency is not responsible for any of the costs associated with this development.

 

The proposed First Amendment will acknowledge Kaiser’s development agreement with Tabernacle, allow for the execution of related documents (including the Regulatory Agreement), and amend other provisions associated with the Replacement Housing Units, all of which are discussed in greater detail later in this Commission Memorandum. 

 

Kaiser is also seeking approval of a revised schematic design for the Replacement Housing Units (See Attachments 2 and 3, Schematic Design and Floor Plans).  The revised schematic design (along with the proposed First Amendment) was developed in consultation with the Western Addition A-2 Citizens Advisory Committee (“WACAC”) and neighboring property owners.  The proposed development complies with the requirements of the Western Addition A-2 Redevelopment Plan (the “Plan”).  Staff has reviewed the revised schematic design and finds it acceptable subject to the conditions described later in this Commission Memorandum.

 

A replacement housing plan has been prepared in connection with the loss of the 21 units in the Pink Building in compliance with California Community Redevelopment Law (See Attachment 6, Replacement Housing Plan).  As to compliance with the California Environmental Quality Act (“CEQA”), staff has determined that the proposed project is categorically exempt from environmental review pursuant to CEQA Guidelines Sections 15301(l)(3) and 15332 because it is an infill development that involves the demolition of a small commercial structure.

 

Staff recommends authorizing the First Amendment to the OPA, the Regulatory Agreement, and conditional approval of the revised schematic design for the Replacement Housing Units, and approval of the Replacement Housing Plan for the Pink Building.

 

 

BACKGROUND

 

Kaiser is in the middle of a two-phase expansion plan for its Geary campus, which began in the late 1990s and runs along both sides of Geary Boulevard between Lyon and Divisadero Streets (See Attachment 1, Vicinity Map).  This expansion plan includes the demolition, construction and redevelopment of most of the hospital’s outpatient facilities, and other demolition and construction of new medical office buildings.  The first phase has been completed, except for the construction of the Replacement Housing Units.  Once the Replacement Housing Units are complete, Kaiser will begin the second phase of its expansion plan.  Please see the attached Commission Memorandum dated February 13, 1998 (Attachment 4) for further background information about Kaiser’s overall expansion plan.

As part this expansion plan, the Agency Commission authorized staff to enter into an OPA with Kaiser on February 24, 1998 for the development of the 21 Replacement Housing Units.  Under the OPA, Kaiser is required to build the Replacement Housing Units to replace the 21 rental housing units that will be lost to demolition when the hospital tears down the Pink Building to make way for the hospital’s expansion plans (See Attachment 1, Vicinity Map).  The 21 Replacement Housing Units will be located in a new four-story, 27,132-square-foot building, which will have housing on the top three floors, about 6,000 square feet of resident-serving open space, and 21 parking spaces on the first floor.

 

The site on which the Replacement Housing Units will be built is currently improved with a three-story medical office building that Kaiser also owns.  This medical office building will also be torn down to make way for the Replacement Housing Units and associated parking.

 

Due to the hospital’s budgetary constraints over the last several years, Kaiser has been unable to proceed with its expansion plans.  Kaiser is now ready to proceed, and seeks the proposed First Amendment, together with the Regulatory Agreement, to amend the schedule of performance and other OPA provisions governing the development of the Replacement Housing Units and subsequent demolition of the Pink Building.

 

 

DISCUSSION

 

As part of Kaiser’s efforts to complete phase one of its expansion plan, the hospital entered into a development agreement on January 21, 2006 with Tabernacle, an inter-denominational collaboration of San Francisco clergy dedicated to economic and community development, to build the Replacement Housing Units.  The proposed First Amendment will acknowledge this development agreement, allow for the execution of related documents (including the Regulatory Agreement), and amend other provisions associated with the Replacement Housing Units, which are discussed in greater detail below.

 

Proposed First Amendment to the OPA

 

The key components of the proposed First Amendment include: (1) a new, separate regulatory agreement that would allow the Agency to monitor affordability levels and tenant income qualifications for the 21 Replacement Housing Units during the required 55-year affordability term, (2) a revised form of Certificate of Completion (“COC”) that will require the Replacement Housing Units to be 100% leased before the Agency issues Kaiser a COC, and (3) a revised schedule of performance for the new construction period.  Each of these key components is discussed below:

 

• Regulatory Agreement.  The proposed First Amendment will require Kaiser to execute the Regulatory Agreement, which will allow Agency staff to monitor affordability levels and tenant income qualifications for the 21 Replacement Housing Units.  The term of the Regulatory Agreement will be in perpetuity.  It requires Kaiser, among other things, to submit quarterly reports to the Agency that describe: (1) Kaiser’s progress leasing the Replacement Housing Units to qualified low-income tenants; (2) the total number and identity of low-income tenants who reside in the Replacement Housing Units; (3) any recurring problems associated with the Replacement Housing Units; and, (4) any technical assistance Kaiser needs to fully lease the Replacement Housing Units and fulfill all of its obligations under the OPA and the Regulatory Agreement.  All of the Replacement Housing Units will be leased to households earning an annual income of no more than 60% of San Francisco Area Median Income (“SFAMI”) ($54,700 for a family of four in 2006), and rent levels will be equal to 30% of 60% of SFAMI, or approximately $1,231 (with utilities) a month for a two-bedroom unit in 2006.  Income levels will be recertified by Kaiser and the Agency on an annual basis.  The Agency’s Certificate of Preference Holders will receive first preference during the qualification process for any Replacement Housing Unit.

 

• Revised Certificate of Completion.  Under Kaiser’s development agreement with Tabernacle: (1) Kaiser will contribute the land and $5 million toward the total development costs of the Replacement Housing Units; and, (2) Tabernacle will build the Replacement Housing Units and cover certain development costs over $5 million.  Kaiser is solely responsible for building the Replacement Housing Units.  The Agency will not be responsible for any development costs.  Once the Replacement Housing Units are completed and fully leased, the Agency will issue Kaiser a COC, and Kaiser will transfer ownership of the Replacement Housing Units to Tabernacle, which will then operate and maintain them in accordance with the Regulatory Agreement.  This 100% leased provision ensures that Kaiser retains responsibility for building the Replacement Housing Units and making sure that the units are fully leased by qualified low-income tenants. 

 

• Revised Schedule of Performance.  Under the revised schedule of performance, the key milestones for project completion will be tied to the execution date of the First Amendment to the OPA instead of the original OPA.  Kaiser is expected to start construction of the Replacement Housing Units in May 2007 and complete construction in June 2008.  The marketing and lease-up will occur over the subsequent several months (See Attachment 5, Marketing Flyer).

 

• Agency Programs.  In addition, the First Amendment will incorporate the Agency’s prevailing wage provisions into the OPA’s Equal Opportunity Program, which already requires Kaiser to use good-faith efforts to achieve the Agency’s goals for minority- and women-owned business enterprises and workforce hiring.  Kaiser has agreed to work with Ella Hill Hutch Community Center to hire local residents for construction jobs and administrative support.

 

Replacement Housing Obligation

 

Under California Community Redevelopment Law (California Health and Safety Code §§ 33000 et seq.), any low- or moderate-income housing unit that is demolished as part of a redevelopment agency action must be replaced by equivalent housing on a 1-for-1 basis within any redevelopment project area or on a 2-for-1 basis outside any redevelopment project area.  Because Kaiser is demolishing the 21-unit Pink Building (which is located within the now-expired Western Addition Redevelopment Project Area A-1), it must replace those 21 units and has decided to do so, on a 1-for-1 basis, at 2139 O’Farrell Street within the Project Area.

 

In addition, under California Health and Safety Code Section 33413.5, the Agency is required to prepare a replacement housing plan whenever a redevelopment agency action results in the loss of a low- or moderate-income housing unit (See Attachment 6, Replacement Housing Plan).  In this case, a replacement housing plan was anticipated shortly after the OPA was executed; however, because Kaiser’s expansion plans were delayed, it was not previously prepared.  Now that Kaiser has the funds to proceed with its expansion plans, a replacement housing plan must be prepared.  The demolition of the Pink Building will result in the loss of 13 studios and eight one-bedroom units. 

 

The key elements of the replacement housing plan include: (1) the lost 21 units will be replaced with 21 newly constructed units of comparable or greater size; (2) the Replacement Housing Units will be located within the Project Area; (3) the affordability level of the Replacement Housing Units will be at or below the affordability level of the lost units to the extent it is financially feasible; and, (4) the Replacement Housing Units will be targeted to the same household size as the lost units.  It is important to note that the Replacement Housing Units will be affordable to households earning no more than 60% of SFAMI; rents will be set at 30% of 60% of SFAMI; the term of affordability will last in perpetuity; the mix of new units will be comparable to the mix of lost units; and the units will be built over the next two years, well within the four-year timetable identified in California Health and Safety Code Section 33413(a).

 

Rent Control Obligation

 

Under the OPA, all 21 units of housing constructed on the Site and the rights of the tenants therein will be treated by the parties as if they are subject to Section 37.3 Rent Limitations and Section 37.9 Evictions of the San Francisco Residential Rent Stabilization and Arbitration Ordinance, codified in San Francisco Administrative Code Sections 37 et seq., as amended from time to time (“Rent Control Ordinance”). The OPA further specifies that annual rent increases for each unit shall be the lesser of: (a) the percentage rent increase published by the Rent Control Board pursuant to Section 37.3 of the Rent Control Ordinance; or (b) the percentage change in the AMI as set forth in Article 3.3 of the Agency’s Regulatory Agreement.  Furthermore, Kaiser, Tabernacle, or its successors or assigns, directly or through its property manager, shall not endeavor to recover possession of a unit except in compliance with Section 37.9 of the Rent Control Ordinance and the Agency’s Regulatory Agreement.  For the purposes of interpreting and enforcing these provisions, the parties shall substitute the term “Owner or its successor or assigns” for the term “landlord” and the term “Agency” for the term “Board” where used in Section 37.9 of the Rent Control Ordinance.  Thus, the OPA incorporates as a contractual requirement the tenant eviction protections and rent limitations of the Rent Control Ordinance.  Any dispute or breach of these rent control obligations would be resolved by the Agency.

 

 

 

 

Relocation Assistance

 

Over the last several months, Kaiser has prepared for the eventual demolition of the Pink Building by relocating all of the building’s residents.  In 2005, Kaiser hired Associated Right of Way Services to prepare a relocation plan and help facilitate and provide relocation assistance to the building’s remaining tenants, in compliance with California Relocation Assistance Law (Government Code §§ 7260-7277) and the California Relocation Assistance and Real Property Acquisition Guidelines (California Code of Regulations, Title 25, Division I, Chapter 6, §§ 6000 et seq.).  At that time, there were only six households remaining in the Pink Building, down from 12 households at the time the OPA was executed in 1998.  The other six households voluntarily terminated their leases before Kaiser was legally required to notify them of their relocation rights and benefits.  Of the six households that remained, five opted to move to permanent housing elsewhere and take Kaiser’s lump sum buyout payment of $100,000, plus funds to cover moving expenses.  One tenant opted for a temporary move to another housing unit until the Replacement Housing Units are completed, at which time this tenant will be relocated into one of the Replacement Housing Units.  In addition, this tenant is receiving or will receive: (1) a rental subsidy at the temporary location so that the tenant’s rental payments are equal to those the tenant was paying at the Pink Building; (2) a similar rental subsidy during the first 48 months of occupancy in the new Replacement Housing Unit; and, (3) funds to cover moving expenses for both moves.

 

Kaiser’s relocation plan also addresses the fact that there is a commercial billboard tenant on the Pink Building site.  This billboard (wall sign) encumbrance is covered by a license agreement between Kaiser and Outdoor Systems, Inc. (“Licensee”).  In that license agreement, the Licensee acknowledges the fact that these premises are a part of Kaiser’s future expansion plans, and Licensee waived its right to any relocation advisory assistance and payments that Licensee may be entitled to in accordance with the Relocation Laws.

 

Kaiser has indicated to Agency staff that it does not anticipate any lawsuits or grievances to be filed in connection with its relocation program.  Moreover, Kaiser states that it has received letters from displaced residents thanking Kaiser for its assistance.  The last resident moved out of the Pink Building in July 2005, and the building has been vacant ever since. 

 

Schematic Design

 

The proposed schematic design for the Replacement Housing Units is a revision of the one developed at the time the OPA was executed in February 1998.  The revised schematic design acknowledges the residential character of the surrounding buildings, some of which date back to the early 1900s.  The consistent design language along this block of O’Farrell Street includes a strong masonry base with living spaces that feature bay windows and a strong cornice line at roof level.  The project architect, Michael Willis Architects, has designed the building massing into a U-shaped residential tower over the ground floor, which accommodates the building entrance and off-street parking for 21 cars.  The exterior elevation facing O’Farrell Street is articulated by a rhythm of bay windows to complement the adjacent buildings and maintain the Western Addition neighborhood’s architectural character (See Attachment 2, Schematic Design).

The project includes seven studios, 11 one-bedroom units, and three two-bedroom units (See Attachment 3, Floor Plans).  The specific building materials and colors are still under development, and will be subject to Agency review and approval during the next design phase.

 

The proposed revised schematic design complies with all requirements of the Plan, and staff finds it acceptable provided that the following conditions are resolved during the next design phase:

 

1.         Further design studies are required to develop additional architectural treatment of the exterior elevation elements facing O’Farrell Street to create a more pedestrian-friendly environment.

 

2.         Detailed landscape design drawings for all open spaces in the development, as well as the street trees and sidewalk details, shall be submitted to the Agency for review and approval.

 

3.         Final selection of the exterior materials and colors shall be submitted to the Agency for review and approval. 

 

CEQA Review

 

Staff has determined that the proposed project is categorically exempt pursuant to CEQA Guidelines Sections 15301(l)(3) and 15332 because the project is an infill development that involves the demolition of a small commercial structure.  The existing building at 2139 O’Farrell Street that is proposed to be demolished is a small commercial structure accommodating 29 employees.  The development of the Replacement Housing Units will be at a location that is surrounded by urban uses with no habitat value and already served by all necessary utilities and public services. 

 

Community Input

 

Kaiser regularly meets at its offices on Geary Boulevard with a group of residents (the “Task Force”) from the Western Addition community to discuss its expansion plans.  During these community meetings, Kaiser has frequently presented its development program and schematic design for the Replacement Housing Units.  Members of the Task Force have praised Kaiser for its outreach efforts to the Western Addition community.  In addition, on June 29, 2006, the proposed First Amendment, Regulatory Agreement and schematic design were reviewed by the Planning and Development subcommittee of the WACAC and were unanimously recommended to the full WACAC for endorsement.  On July 12, 2006, the proposed First Amendment, Regulatory Agreement and schematic design were presented to the full WACAC and were unanimously recommended for commission approval.  After the WACAC meeting, Kaiser requested a change to the proposed First Amendment that would require the 21 Replacement

 

 

 

Housing Units to be 100% leased instead of 100% occupied before the Agency issues Kaiser a COC.  Agency staff discussed this change at the next WACAC meeting held on August 15, 2006 under the “staff report” section of the meeting.  Through questions and comments made at this meeting, the WACAC members agreed that no formal approval of this change in the First Amendment is required by the WACAC, because they had all concurred and accepted this change in concept as discussed.

 

Originated by Tracie Reynolds, Real Estate and Development Services Manager, Albert J. Luis, Senior Development Specialist, and Elena Branick, Senior Architect

 

 

 

 

 

Marcia Rosen

Executive Director

 

Attachments:

Attachment 1:         Vicinity Map

Attachment 2:         Schematic Design

Attachment 3:         Floor Plans

Attachment 4:         February 13, 1998 Commission Memorandum

Attachment 5:         Marketing Flyer

Attachment 6:         Replacement Housing Plan

 

RESOLUTION NO. 119-2006

 

 

 

Authorizing a First Amendment to the Owner Participation Agreement and a Regulatory Agreement with Kaiser Foundation Hospitals, a California nonprofit public benefit corporation, to amend the schedule of performance and amend other provisions governing the development of a

21-unit affordable rental housing project located at

2139 O’Farrell Street, Assessor’s Block 1101, Lot 022; Western Addition Redevelopment Project Area A-2

 

 

BASIS FOR RESOLUTION

 

1. On February 24, 1998 by Resolution No. 1998-034, the Redevelopment Agency of the City and County of San Francisco’s (the “Agency”) Commission authorized staff to enter into an Owner Participation Agreement with Kaiser Foundation Hospitals (“Kaiser”) for the development of a 21-unit affordable rental housing project at 2139 O’Farrell Street (the “OPA”), located between Divisadero and Broderick Streets in the Western Addition Redevelopment Project Area A-2 (the “Project Area”).

 

2. Under the OPA, Kaiser is required to build these 21 affordable housing units (the “Replacement Housing Units”) to replace the ones that will be lost to demolition when the hospital tears down a Kaiser-owned building located at 1401-1417 Divisadero Street (the “Pink Building”) to make way for the hospital’s expansion plans. 

 

3. Kaiser is in the middle of a two-phase expansion plan for its Geary Campus, which began in the late 1990s and runs along both sides of Geary Boulevard between Lyon and Divisadero Streets.  This expansion plan includes the demolition, construction and redevelopment of most of the hospital’s outpatient facilities, and other demolition and construction of new medical office buildings.  The first phase has been completed, except for the construction of the Replacement Housing Units.  Once the Replacement Housing Units are complete, Kaiser will begin the second phase of its expansion plan.

 

4. Due to the hospital’s budgetary constraints over the last several years, Kaiser has been unable to precede with its expansion plans.  Kaiser is now ready to proceed, and seeks the proposed first amendment to the OPA (the “First Amendment”) and a regulatory agreement (“Regulatory Agreement”) to amend the schedule of performance and other provisions governing the development of the Replacement Housing Units and subsequent demolition of the Pink Building.  The site on which the Replacement Housing Units will be built is currently improved with a three-story medical office building that Kaiser also owns.  This medical office building will also be torn down to make way for the Replacement Housing Units and associated parking.

 

5. Toward this end, Kaiser entered into a development agreement with Tabernacle Community Development Corporation, a California nonprofit public benefit corporation, which is an inter-denominational collaboration of San Francisco clergy dedicated to economic and community development (“Tabernacle”).  Under this development agreement:  (1) Kaiser will contribute the land and $5 million toward the total development costs for the Replacement Housing Units and (2) Tabernacle will build the Replacement Housing Units and cover certain development costs over $5 million.  The total development costs are expected to total approximately $5 million.  Kaiser is solely responsible for building the Replacement Housing Units.  The Agency will not be responsible for any development costs.

 

6. The proposed First Amendment will acknowledge this development agreement between Kaiser and Tabernacle, allow for the execution of related documents (including the Regulatory Agreement), and amend other provisions associated with the Replacement Housing Units.  The key components of the proposed First Amendment include:  (1) the Regulatory Agreement that would allow the Agency to monitor affordability levels and tenant income qualifications for the 21 Replacement Housing Units during the required 55-year affordability term, (2) a revised schedule of performance for the new construction period, and (3) a revised form of Certificate of Completion (“COC”) that will require the Replacement Housing Units to be 100% leased before the Agency issues Kaiser a COC and Kaiser is allowed to transfer ownership of the Replacement Housing Units to Tabernacle, which will then operate and maintain them in accordance with the Regulatory Agreement.  This 100% leased provision ensures that Kaiser retains responsibility for building the Replacement Housing Units and making sure that the units are fully leased by qualified low-income tenants.

 

7. Under the revised schedule of performance, the key milestones for project completion will be tied to the execution date of the First Amendment to the OPA and not the execution date of the OPA, as in the original schedule of performance.  Kaiser is expected to start construction of the Replacement Housing Units in May 2007 and complete construction in June 2008.

 

8. Regarding compliance with the California Environmental Quality Act (“CEQA”), staff has determined that the proposed project is categorically exempt pursuant to CEQA Guidelines Sections 15301(l)(3) and 15332 because it is an infill development that involves the demolition of a small commercial structure.  The existing building at 2139 O’Farrell Street that is proposed to be demolished is a small commercial structure accommodating 29 employees.  The development of the Replacement Housing Units will be at a location that is surrounded by urban uses with no habitat value and already served by all necessary utilities and public services. 

 

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the Executive Director is authorized to execute a First Amendment to the Owner Participation Agreement and a Regulatory Agreement with Kaiser Foundation Hospitals, a California nonprofit public benefit corporation, to amend the schedule of performance and amend other provisions governing the development of a 21-unit affordable rental housing project located at 2139 O’Farrell Street, Assessor’s Block 1101, Lot 022 in the Western Addition Redevelopment Project Area A-2, substantially in the form lodged with the Agency General Counsel.

 

 

APPROVED AS TO FORM:

 

 

 

_________________________

James B. Morales

Agency General Counsel

RESOLUTION NO. 120-2006

 

 

 

Conditionally approving the REVISED schematic design for a 21-unit affordable rental housing project located at

2139 O’Farrell Street, Assessor’s Block 1101, Lot 022;

Western Addition Redevelopment Project Area A-2

 

 

BASIS FOR RESOLUTION

 

1. On February 24, 1998, by Resolution No. 1998-035, the Redevelopment Agency of the City and County of San Francisco’s (the “Agency”) Commission authorized staff to enter into an Owner Participation Agreement with Kaiser Foundation Hospitals (“Kaiser”) for the development of a 21-unit affordable rental housing project at 2139 O’Farrell Street (the “OPA”), located between Divisadero and Broderick Streets in the Western Addition Redevelopment Project Area A-2 (the “Project Area”).

 

10. Under the OPA, Kaiser is required to build these 21 affordable housing units (the “Replacement Housing Units”) to replace the ones that will be lost to demolition when the hospital tears down a Kaiser-owned building located at 1401-1417 Divisadero Street (the “Pink Building”) to make way for the hospital’s expansion plans. 

 

11. Kaiser is in the middle of a two-phase expansion plan for its Geary Campus, which began in the late 1990s and runs along both sides of Geary Boulevard between Lyon and Divisadero Streets.  This expansion plan includes the demolition, construction and redevelopment of most of the hospital’s outpatient facilities, and other demolition and construction of new medical office buildings.  The first phase has been completed, except for the construction of the Replacement Housing Units.  Once the Replacement Housing Units are complete, Kaiser will begin the second phase of its expansion plan.

 

12. Due to the hospital’s budgetary constraints over the last several years, Kaiser has been unable to proceed with its expansion plans.  Kaiser is now ready to proceed, and seeks this proposed first amendment to the OPA (the “First Amendment”) and a regulatory agreement (“Regulatory Agreement”) to amend the schedule of performance and other provisions governing the development of the Replacement Housing Units and subsequent demolition of the Pink Building.  The site on which the Replacement Housing Units will be built is currently improved with a three-story medical office building that Kaiser also owns.  This medical office building will also be torn down to make way for the Replacement Housing Units and associated parking.

 

13. Toward this end, Kaiser entered into a development agreement with Tabernacle Community Development Corporation, a California nonprofit public benefit corporation, which is an inter-denominational collaboration of San Francisco clergy dedicated to economic and community development (“Tabernacle”).  Under this development agreement:  (1) Kaiser will contribute the land and $5 million toward the total development costs for the Replacement Housing Units and (2) Tabernacle will build the Replacement Housing Units and cover certain development costs over $5 million.  The total development costs are expected to total approximately $5 million.  Kaiser is solely responsible for building the Replacement Housing Units.  The Agency will not be responsible for any development costs.

 

1.   The revised schematic design (along with the proposed First Amendment) was developed in consultation with the Western Addition A-2 Citizens Advisory Committee (“WACAC”) and neighboring property owners.  The proposed development complies with the requirements of the Western Addition A-2 Redevelopment Plan (the “Plan”).

 

15. The proposed revised schematic design for the Replacement Housing Units acknowledges the residential character of the surrounding buildings, some of which date back to the early 1900s.  The design guidelines along this block of O’Farrell Street include a strong masonry base with living spaces that feature bay windows and a strong cornice line at roof level.  The project architect, Michael Willis Architects, has designed the building massing into a U-shaped residential tower over the ground floor which accommodates the building entrance and off-street parking for 21 cars.  The exterior elevation facing O’Farrell Street is articulated by a rhythm of bay windows to complement the adjacent buildings and maintain the Western Addition neighborhood’s architectural character.

 

16. The project includes seven studios, 11 one-bedroom units, and three two-bedroom units.  The specific building materials and colors are still under development, and will be subject to Agency review and approval during the next design phase.

 

1. The proposed revised schematic design complies with all requirements of the Plan, and staff finds it acceptable provided that the following conditions are resolved during the next design phase:

 

• Further design studies are required to develop additional architectural treatment of the exterior elevation elements facing O’Farrell Street to create a more pedestrian-friendly environment.

 

• Detailed landscape design drawings for all open spaces in the development, as well as the street trees and sidewalk details, shall be submitted to Agency staff for review and approval.

 

• Final selection of the exterior materials and colors shall be submitted to Agency staff for review and approval.

 

1.   The existing building at 2139 O’Farrell Street that is proposed to be demolished is a small commercial structure accommodating 29 employees.  The development of the Replacement Housing Units will be at a location that is surrounded by urban uses with no habitat value and already served by all necessary utilities and public services.

 

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the revised schematic design proposed by Kaiser Foundation Hospitals, a California nonprofit public benefit corporation, for the development of a 21-unit affordable rental housing project located at 2139 O’Farrell Street, Assessor’s Block 1101, Lot 022 in the Western Addition Redevelopment Project Area A-2 is approved conditionally in the form submitted, subject to resolution of conditions of approval set forth above, together with such refinements as the Executive Director may approve which do not materially alter the proposed schematic design.

 

 

APPROVED AS TO FORM:

 

 

 

_________________________

James B. Morales

Agency General Counsel