RESOLUTION NO.   26-2004

 

 

 

AUTHORIZING A FIRST AMENDMENT TO THE Ground Lease with AR Preservation, L.P., a California Limited Partnership, to revise the schedule of performance for the rehabilitation of 179 units of very low-income housing at the Alexander Residence, 230 Eddy Street as part of the Agency’s Housing Preservation Program; Citywide Tax Increment Affordable housing Program

 

BASIS FOR RESOLUTION

 

• 1.In furtherance of the objectives of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq., (the “CRL”)), the Redevelopment Agency of the City and County of San Francisco (the “Agency”) undertakes programs for the reconstruction and rehabilitation of slums and blighted areas in the City and County of San Francisco (the “City”).

 

• 2.The Agency is authorized under the CRL to increase and maintain the affordability of the housing stock in the City for occupancy by very low-, low- and moderate-income households.

 

• 3.Pursuant to the CRL and in response to the serious threat to San Francisco’s affordable housing stock posed by the expiration of Section 8 mortgages, the Agency established a Housing Preservation Program, which has included the lending or expenditure of Tax Increment Housing Funds in order to preserve the affordability of Section 8 rental units.

 

• 4.The Alexander Residence is a 179-unit residential property (the “Development”) located at 230 Eddy Street, San Francisco, California, which was at risk of converting to market-rate housing.   To preserve this housing, the Agency and Tenderloin Neighborhood Development Corporation, a California nonprofit public benefit corporation (“TNDC”), the managing general partner of AR Preservation L.P., a California limited partnership (the “Tenant”), acquired the land and the Development, respectively, on December 19, 2000.  Tenant operates the building under a Ground Lease Agreement (“Lease”) with the Agency.

 

• 5.Since TNDC’s acquisition of the building, it has diligently completed all predevelopment work for the property’s rehabilitation, including negotiation of favorable tax credit partnership terms and resolution of structural design issues. Construction commenced in November 2002, and is schedule to conclude by June 2004. 

 

• 6.To accommodate the delay in construction commencement caused by the tax credit partnership negotiations, Tenant has requested a first amendment (“First Amendment”) to the Lease to revise the Schedule of Performance (Attachment 3 of the Lease) to extend the construction completion date and date of Tenant’s submission of a Notice of Completion for Agency Approval. 

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco   that the Executive Director is authorized to enter into a First Amendment to the Ground Lease with AR Preservation, L.P., a California limited partnership, to revise the schedule of performance for the rehabilitation of 179 units of very low-income housing at the Alexander Residence, 230 Eddy Street as part of the Agency’s housing preservation program and Citywide Tax Increment Affordable Housing Program.

 

APPROVED AS TO FORM:

 

 

 

_______________________

James B. Morales

Agency General Counsel

118-09604-001                                                       Consent Agenda Item No.   4 ( b )

February 17, 2004                                                     Meeting of March 2, 2004

 

MEMORANDUM

 

TO:                  Agency Commissioners

 

FROM:             Marcia Rosen, Executive Director

 

SUBJECT:      Authorizing a First Amendment to the Ground Lease with AR Preservation, L.P., a California Limited Partnership, to revise the schedule of performance for the rehabilitation of 179 units of very low-income housing at the Alexander Residence, 230 Eddy Street as part of the Agency’s Housing Preservation Program; Citywide Tax Increment Affordable Housing Program.

 

EXECUTIVE SUMMARY

In December 2000, the Tenderloin Neighborhood Development Corporation (“TNDC”) and the Agency acquired the Alexander Residence (“Alexander”; “Property”) improvements and land, respectively, as part of the Agency’s Housing Preservation Program. The Alexander is a 179-unit SRO providing very low-income housing located in the City’s Tenderloin neighborhood.   The Alexander was at risk of converting to market-rate housing prior to TNDC’s and the Agency’s acquisition.  Subsequently, TNDC became the managing general partner of AR Preservation, L.P. (“Sponsor”), a tax credit limited partnership formed to rehabilitate, own, and operate the Property.  AR Preservation was successful in securing 9% low-income housing tax credit equity, Affordable Housing Program (“AHP”) funding, a HOPWA loan, permanent financing from Citibank, an Agency standby payment guarantee, and a $4.7 million tax increment loan from the Agency.  The Sponsor has repaid, with interest, all but $120,000 of the Agency loan.   The Sponsor is nearing the successful completion of the building’s rehabilitation, which has included extensive system and aesthetic upgrades to the units. 

The Sponsor projected a construction completion date of December 31, 2003.   However, actual completion is not expected until June 2004, due to delays incurred during pre-construction negotiations with the Sponsor’s original tax credit investor.  After diligently pursuing the best tax credit partnership terms available, the Sponsor selected an alternate investor, Alliant, which is a strong and reputable firm.  Construction commenced in November 2002, and is proceeding well.  The Sponsor expects to complete construction this June, and anticipates no problems or delays.

 

Staff recommends approval of the First Amendment to the Ground Lease. 

 

DISCUSSION

The Alexander Residence is a 179-unit housing development located at 230 Eddy Street in the Tenderloin neighborhood.   In 2000, the Alexander and several other similar properties were “at-risk” of converting from affordable to market-rate housing.  To preserve the hundreds of very low-income units that were at stake, the Agency entered a purchase and sale agreement with the properties’ owner, and issued a request for qualifications (“RFQ”) from developers to own and operate the buildings. 

 

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Through the RFQ process, the Agency selected TNDC to acquire the Alexander improvements, to complete extensive renovations to improve the building’s habitability and extend its life, and to own the property under a long-term ground lease.   TNDC enjoyed the overwhelming support of the Alexander tenants as the building’s new owner/operator. The Agency and TNDC completed the acquisition process on December 18, 2000, and TNDC proceeded with predevelopment work for the impending renovation.  

 

The Sponsor’s predevelopment work included completion of architectural plans, securing planning approvals, hiring of project team members in conformance to the Agency’s Equal Opportunity Program requirements, and securing an array of funding sources, including 9% low-income housing tax credit equity, AHP funds, permanent funding from Citibank, renewal of a project-based Section 8 rental contract, and Agency financing.   The Sponsor was successful in bringing all necessary funding to the development program between 2001 and 2002.  The Sponsor repaid, ahead of schedule, nearly all of the Agency’s tax increment loan of approximately $4.7 million. 

 

Though diligent and successful in all its predevelopment activities, the Sponsor was delayed in commencing construction due to difficult negotiations with its initial tax credit investor.   In the last several years, tax credit investors have requested that developers complete a “Probable Maximum Loss” estimate (“PML”) to measure the expected seismic performance of a building based upon a 475-year earthquake (i.e., an 8.0 magnitude earthquake, which is projected to occur every 475 years).  The PML measures expected damage and monetary loss rather than whether or not the building is life-safe.  Many investors require a PML that does not exceed a certain value and that is derived from generic mathematical calculations that often do not reflect the age of the building, its past performance in seismic events, and the strength of its overall structural design and life-safety systems.   The Sponsor’s initial tax credit investor required a PML that was lower than appropriate for a rehabilitated building built in the 1920s.  The Sponsor, however, was able to successfully conclude partnership negotiations with an alternate investor who used a PML model that found the building’s expected earthquake performance to be acceptable.

 

While concluding its tax credit negotiations, the Sponsor commissioned a structural review of the building’s overall structural system from a reputable, independent engineering firm experienced in San Francisco’s and California’s seismic and building conditions.   This firm’s report confirmed the opinion of the Sponsor’s original structural review, which was that the Alexander’s excellent design of steel frame and exterior reinforced concrete will allow it to perform well in a major earthquake and provide life safety to its occupants.

 

The Sponsor has completed three quarters of the renovation work, which includes, at the common areas, an overhauled elevator, repaired/upgraded life safety systems, steam heating system repair, major electrical updating, general plumbing improvements, a reconfigured ground floor and mezzanine area for improved tenant usage, a new roof, new front sidewalk, a full exterior painting, and the rehabilitation of approximately 1800 square feet of commercial space.   Interior unit improvements include new carpet and paint, new bathroom flooring and fixtures

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where needed, upgraded electrical elements, and window repairs. The Sponsor anticipates successful completion of this difficult project in June of this year, and has requested the change in the schedule of performance to conform with this anticipated completion date.

 

Staff recommends approval of the First Amendment to the Ground Lease

(Originated by Kate Hartley, Development Specialist)

 

 

Marcia Rosen

Executive Director

 

 

101-0804-002                                                                                      Agenda Item No.  4 ( c )

February 20, 2004                                                                             Meeting of March 2, 2004

 

 

INFORMATIONAL MEMORANDUM

 

TO:                   Agency Commissioners

 

FROM:             Marcia Rosen

                         Executive Director

 

SUBJECT:             Workshop on the Agency’s Fiscal Year 2004/05 Budget

 

 

Enclosed for your review is the Agency’s proposed budget for fiscal year 2004/05, which will be presented to the Commission and for public comment at the meeting of March 2^nd.   This follows the SB 2113 workshop conducted at the meeting of February 17^th. Commission approval of the Agency’s budget will be requested at the meeting of March 16^th. The following summarizes the Agency’s proposed budget for the next fiscal year.

 

Budget Assumptions

The proposed budget for fiscal year 2004/05 is prepared within the context of the following assumptions and constraints.

 

• Financial challenges facing the City and dwindling debt capacity available to the Agency.
• Increased amount of tax increment necessary in fiscal year 2004/05 for debt service payments associated with the delay in the sale of the Agency’s fiscal year 2002 and 2003 bonds.
• Anticipated new project areas (Mid-Market, Transbay, and Bayview) are not projected to generate tax increment for several years and, therefore, have little or no resources to implement programs.
• Uncertainties related to future takeaways from the state, which could further reduce the Agency’s tax increment.
• SB 2113 amendments are assumed for the Golden Gateway, Hunters Point, and India Basin redevelopment project areas.

 

SB 2113

At the Commission meeting of February 17, 2004, staff presented a workshop on the implementation of SB 2113 (memo attached). In assuming SB 2113 amendments for the Hunters Point, India Basin and Golden Gateway redevelopment project areas, the Agency’s proposed fiscal year 2004/05 budget complies with the Board of Supervisors’ request in Ordinance No. 211-03 that the Agency propose plan amendments pursuant to Health and Safety Code Section 33333.7 (“SB 2113”) for the Agency’s older project areas, unless significant blight remains in a project area.   An SB 2113 plan amendment would allow the Agency to (i) incur indebtedness until January 1, 2014, and (ii) collect tax increment for the repayment of such indebtedness until January 1, 2044, solely for the purpose of funding low-and moderate-income housing to replace an estimated 7,000 units lost in the early years of San Francisco redevelopment. 

 

Based on this agreement and the remaining blight in the Agency’s older project areas, the fiscal year 2004/05 budget assumes the adoption of SB 2113 plan amendments for the Hunters Point, India Basin, and Golden Gateway redevelopment project areas.   The Agency’s proposed housing budget for fiscal year 2004/05 is larger by $15 million because of SB 2113, and the housing budget would need to be reduced by such amount if SB 2113 amendments for Hunters Point, India Basin, and Golden Gateway were not implemented by the end of the 2003/04 fiscal year.

 

Fiscal Constraints, Revenues, Tax increment

Due to the fiscal constraints facing the City and Agency, staff proposes a work program budget for fiscal year 2004/05 that is approximately $4 million less than the 2003/04 budget, with cuts across all major expenditure categories except for job training and public improvements. The increase in the amount budgeted for public improvements is primarily due to a request from the developer of Mission Bay to sell up to $15 million in tax allocation bonds, which we are obligated to do pursuant to the tax allocation agreements entered into between the City and the developer.   Other funds for public improvements are budgeted for completion of the Muni substation and parcel 732-A in the Western Addition ($6.6 million) and Yerba Buena Gardens ($5.6 million).  We propose to fund a portion of the latter with savings generated from refunding the Moscone Bonds issued in 1994, which savings would be shared with the City.  The proposed housing budget is reduced by almost $25 million and will be reduced by $15 million more if implementation of SB 2113 is delayed beyond the 2004/05 fiscal year.

 

The Agency proposes keeping unchanged its staffing level of permanent employees and salary scale. However, overall personnel costs shown in the proposed budget are higher because the Agency must begin to cash fund in fiscal year 2004/05 the CalPers retirement program.   Additional funds are also requested for administration costs, primarily reflecting unavoidable costs related to the need for the Agency to move to new offices, since its current lease expires in September 2005.

 

Revenues are lower in 2004/05 than in the current year, reflecting the unusually large carryover amounts budgeted in fiscal year 2003/04. The aberration in 2003/2004 was a result of tax increment transfers and financings requested by the Mayor’s Budget Office that had a salutary effect on the City’s budget, but are simply not available in 2004/05.

 

The larger amount of tax increment requested for next year -- $54.5 million versus $34.0 million --reflects three non-discretionary items: (1) no carryover tax increment as in the current year to pay debt service, (2) higher debt service payments associated with the delay in the sale of the Agency’s 2002 and 2003 bonds, and (3) developer pass-through obligations related to Mission Bay.

 

Overview

Despite these budget constraints, the Agency anticipates an active year, funded in part by prior years’ allocations, and potentially by new community facilities bonds for Hunters’ Point Shipyard infrastructure.   The Agency’s primary focus for fiscal year 2004/05 is (1) creation of the housing for low-and moderate-income households, including the first affordable housing development in the Octavia Boulevard corridor, (2) completion of redevelopment programs in the older project areas, such as the Western Addition and Yerba Buena Gardens, (3) adoption and implementation of the new Mid-Market, Transbay, and Bayview Hunters Point project areas, and (4) construction of infrastructure and public improvements in South Beach, Mission Bay and the Hunters Point Shipyard.  In addition, the Agency will continue its support of revitalization efforts that are ongoing, including a priority for job training and support of small businesses

 

The Agency’s total spending program for fiscal year 2004/05 is $157.9 million, of which $39.5 million is supported by non-tax increment revenue sources (land sale proceeds, leases, grants, developer contributions).   The Agency proposes funding the difference between the spending program and the non-tax increment revenue by requesting $54.5 million in tax increment and borrowing $61.2 million through the sale of tax allocation bonds, i.e., bonds repaid with tax increment. 

 

Of the total tax increment request of $54.5 million, the largest portion ($46.0 million) is required to pay debt service on outstanding debt.   $5.9 million is needed to pay for operations (personnel and administration costs), and the balance is for pass-through obligations that are either mandated by the state or required pursuant to developer agreements associated with Mission Bay.  To ease the financial burden on the City, the Agency proposes selling next year’s tax allocation bonds at the end of the fiscal year so that no additional tax increment will be needed to cover new debt service obligations in fiscal year 2004/05.  In addition to minimizing the impact on City finances, the Agency’s proposed budget will:

 

• 1) Pay for personnel and administration costs from non-borrowed funds.
• 2) Maintain Agency operations at approximately the current level.
• 3) Pursue a sizable affordable housing program that is consistent with the Agency’s available debt capacity.
• 4) Advance completion of the Agency’s work in older project areas.
• 5) Initiate implementation of redevelopment plans for three new project areas – Transbay, Mid-Market and Bayview Hunters Point.

 

Work Program Activities

Affordable Housing. The proposed budget for fiscal year 2004/05 includes a total investment in affordable housing of  $46.3 million. Of that total, $8.7 million is the federally funded HOPWA program.  The balance of the proposed housing budget would be used to purchase Central Freeway sites formerly owned by Caltrans to help finance construction of Octavia Boulevard, acquire and preserve an at-risk affordable housing development, acquire a new site for affordable housing construction, commence another Mission Bay housing development, and finance the construction of family housing in the South of Market built in conjunction with a medical clinic.  Affordable housing comprises over half of the Agency’s total work program budget for fiscal year 2004/05.

 

The proposed housing budget amount of $46.3 million assumes that SB 2113 amendments are made as indicated above to Hunters Point, India Basin and Golden Gateway project areas, which amendments would increase the Agency’s debt capacity.   The proposed budget would need to be reduced by $15 million if such amendments were not adopted in order to remain within the Agency’s lower debt capacity ceiling. 

 

Public Infrastructure.   The Agency is requesting $28.6 million in fiscal year 2004/05 for public improvements, of which $15 million represents major infrastructure improvements in Mission Bay North.  Other major items requested for public improvements include $6.6 million to assist development of an entertainment and dining venue with residential and union offices on Agency Parcel 732-A and initial seismic work on the historic landmark Muni Substation’s future cultural use as the Agency approaches close out in the Western Addition Project Area A-2.  The Agency’s $5.5 million request for the Yerba Buena Center will also move the Agency towards completion in this project area, with a portion of the funds set aside for a capital reserve account necessary to preserve and protect the public investment in Yerba Buena Gardens.  Major public improvements will be undertaken in South Beach Harbor, including park improvements and construction of a harbor services building, public plaza, guest dock, dinghy dock and ADA improvements, using previously secured funding.

 

Business development funding in the amount of $867,000 is being requested in fiscal year 2004/05. To support the Agency’s loan programs for small business and property owners, especially along Sixth Street and the lower Fillmore, $647,000 is budgeted for the on-going MOCD-administered contract with “loan packagers.”  A portion of the balance of business development money will fund the Agency’s final efforts to bring the Fillmore Jazz Preservation District back to life by continuing to stage district’s annual events and fund a Promotions Office to stage newer activities such as a farmer’s market to promote the lower Fillmore.  Finally, $100,000 will be added to the Sixth Street economic revitalization program to clean up this deteriorated area.

 

Other sizable budget items for fiscal year 2004/05 include $6.9 million for the upkeep of Yerba Buena Gardens and $930,000 for the maintenance and improvements of South Beach Harbor, both of which are self-financed, and $1.0 million for job training and placement.

 

Conclusion

The proposed budget for fiscal year 2004/05 has been prepared under a very difficult financial environment and within the constraints facing the Agency. Nonetheless, the proposed budget coupled with prior year appropriations will permit the Agency to undertake meaningful work and achieve accomplishments in fiscal year 2004/05.

 

Commission approval of the Agency’s fiscal year 2004/05 will be requested at the meeting of March 16^th.

 

 

Originated by:   Mario Menchini, Senior Financial Analyst

 

 

 

Marcia Rosen

Executive Director

 

Attachment

 

 

MEMORANDUM Agenda Item No.   4 (l)

February 12, 2004                                                                 Meeting of February 17, 2004

 

To:                    Agency Commissioners

 

From:                Marcia Rosen

                         Executive Director

 

SUBJECT:              Workshop on the Staff’s Recommended Implementation of SB 2113

 

EXECUTIVE SUMMARY

 

This memorandum summarizes staff’s analysis of Senate Bill 2113 (“SB 2113”) and its recommendation for implementing SB 2113 in a manner that balances maximizing affordable housing funds with financing and completing the remaining non-housing program for the Agency’s expiring project areas.    Staff recommends amendments pursuant to SB 2113 that phase in its implementation for the Hunters Point, India Basin Industrial Park and Golden Gateway redevelopment plans in FY 2004-2005; the Rincon Point-South Beach and Western Addition A-2 redevelopment plans in FY 2006-2007; and the Yerba Buena Center redevelopment plan in FY 2009-2010. 

 

BACKGROUND

 

SB 2113[1]is a provision of the California Community Redevelopment Law specific to San Francisco that potentially applies to any redevelopment plan adopted in San Francisco before 1994.   Specifically, these older project areas are Bayview Industrial Triangle, Chinatown Cultural Center, Golden Gateway, Hunters Point, India Basin Industrial Park, Rincon Point-South Beach, South of Market, Western Addition A‑2, and Yerba Buena Center. 

 

Through SB 2113, the legislature provided the Agency with a special redevelopment financing tool for the replacement of the approximately 7,000 housing units lost during the Agency’s early redevelopment activities, before state law imposed a replacement-housing obligation in 1975.   The Director of the California Department of Housing and Community Development (“HCD”) has already certified that housing units affordable to persons and families of low and moderate income that were lost due to Agency action before 1976 have not yet been replaced, as required to implement SB 2113.

 

SB 2113 allows the Agency to amend its older redevelopment plans to issue tax increment debt until 2014 and to receive tax increment to repay that debt until 2044, regardless of the plans’ expiration dates.   These plan amendments effectively extend by ten years the Agency’s authority to issue debt to fund affordable housing.

 

An SB 2113 plan amendment requires that tax increment funds generated in the project area be used solely to finance affordable housing and related administrative costs.  In addition, SB 2113 requires the Agency to use these funds to address the housing needs of very low-, low- and moderate-income households, with at least 50% of the funds assisting very low-income households.  Thus, SB 2113 amendments provides the Agency’s affordable housing program with a much greater capacity to house those most in need.

 

SB 2113 also requires that the City and County of San Francisco complete its 5-year update of its General Plan’s Housing Element, pursuant to state law.   The updated Housing Element must be certified by HCD prior to the effectiveness of any SB 2113 plan amendment.

 

Outstanding Non-Housing Program in Expiring Project Areas

 

Because tax increment collected after an SB 2113 amendment may be used only to fund housing activities, staff reviewed the status of implementation of non-housing programs in the older project areas.   Consequently, staff recommends phased implementation of the SB 2113 to provide the Agency with sufficient time and revenues to complete the non-housing programs in the Western Addition A-2, Rincon Point-South Beach and Yerba Buena Center projects, while also ensuring a continuing revenue stream for the production of affordable housing.  The non-housing programs to be completed and that will require non-housing Agency staff support in these project areas are outlined below.

 

Western Addition A-2:                          

                       

• Jazz District, 732-A and Muni Substation economic development and cultural activities
• Plan amendment to allow for a density bonus on publicly owned parcels developed for redevelopment purposes, affecting Parcel 732-A and Central Freeway affordable housing parcels
• Possible plan amendment to rezone property for a proposed California Pacific Medical Center facility on Van Ness Avenue and Geary Boulevard

 

Rincon Point-South Beach:

 

• South Beach Harbor improvements
• Rincon Park operations and maintenance

 

Yerba Buena Center:

 

• MoAd
• Jessie Square garage and public improvements
• Yerba Buena Gardens capital replacement
• Mexican Museum
• Jewish Museum
• Plan amendment to remove Bloomingdale’s financing provisions

 

 

 

Staff’s Recommendation to Stagger SB 2113 plan amendments

 

Staff recommends amendments that phase in SB 2113 implementation for the Hunters Point, India Basin Industrial Park and Golden Gateway redevelopment plans in FY 2004-2005; the Rincon Point-South Beach and Western Addition A-2 redevelopment plans in FY 2006-2007; and the Yerba Buena Center redevelopment plan in FY 2009-2010.   This approach was determined to best balance maximizing affordable housing funds with financing the remaining non-housing program for the Agency’s expiring project areas.  

 

Next Steps

 

Agency staff intends to present a proposed budget scenario that assumes the approval of SB 2113 plan amendments to the Agency Commission as part of its FY 2004-2005 budget workshops, contingent on Board of Supervisors approval of an updated Housing Element and certification by HCD.   Presentations to the community advisory bodies of each potential affected project area have also been scheduled.  Subsequently, SB 2113 plan amendments would be presented to the Agency Commission and the Board of Supervisors. 

 

Originated by José Campos, Planning Supervisor

 

 

 

                                                                         Marcia Rosen

                                                                         Executive Director

 

 

RESOLUTION NO.   27-2004

 

 

 

CONDITIONALLY APPROVING THE AMENDED COMBINED BASIC CONCEPT AND SCHEMATIC DESIGN FOR PARCEL 2 OF BLOCK N3A, A

98-UNIT RESIDENTIAL PROJECT IN THE MISSION BAY NORTH REDEVELOPMENT PROJECT AREA, PURSUANT TO AN OWNER PARTICIPATION AGREEMENT WITH CATELLUS DEVELOPMENT CORPORATION; MISSION BAY NORTH REDEVELOPMENT PROJECT AREA

 

BASIS FOR RESOLUTION

 

1.       On September 17, 1998, by Resolution No. 185-98, the Redevelopment Agency of the City and County of San Francisco (“Agency”) approved the Redevelopment Plan for the Mission Bay North Redevelopment Project Area (“Plan”).  On the same date, the Agency adopted related documents, including Resolution No. 188-98 authorizing execution of an Owner Participation Agreement (“North OPA”) and related documents between Catellus Development Corporation, a Delaware corporation (“Catellus”), and the Agency.  The Plan and its implementing documents, as defined in the Plan, constitute the “Plan Documents.”

 

2.       The Plan and the Plan Documents, including the Design Review and Document Approval Procedure, designated as Attachment G to the North OPA (“DRDAP”), provide that development proposals in Mission Bay North will be reviewed and processed in “Major Phases,” as defined in and consistent with the Plan and the Plan Documents.  Submission of design plans and documents for any specific building (“Project”) must be consistent with the requirements established for each Major Phase.  The DRDAP sets forth the review and approval process for Major Phases and Projects.

 

3.       On August 15, 2000 the Agency adopted Resolution No. 148-2000, which found that the potential environmental impacts of the Blocks N3, N3a, N4, and N4a Major Phase were within the scope of impacts discussed in the Final Subsequent Environmental Impact Report (FSEIR) certified on September 17, 1998, by the Agency (Resolution No. 182-98) and the San Francisco Planning Commission (San Francisco Planning Commission Resolution No. 14696) and approved the Blocks N3-N4a Major Phase submission.  On December 12, 2000 the Agency adopted Resolution No. 250-2000, which approved Catellus’ combined Basic Concept and Schematic Design for Parcel 2 of Block N3a.  Since that time, as permitted under the North OPA, Catellus sold Block N3a, Parcel 2 to another developer, Signature Properties (“Developer”), which will develop the parcel. 

 

4.       Pursuant to the Plan and Plan Documents, including the DRDAP, the Developer has submitted an Amended Combined Basic Concept and Schematic Design for Parcel 2 of Block N3a, plans dated December 4, 2003 and January 27, 2004 (“Amended Schematic Design”).

 

5.       The Amended Schematic Design shall replace the original combined Basic Concept and Schematic Design for Parcel 2 of Block N3a.  The Agency has reviewed the new Amended Schematic Design as provided in the DRDAP, finds it acceptable and recommends approval thereof, subject to the resolution of certain design concerns.

 

FINDINGS

 

The Agency finds and determines that the proposed development as submitted is an Implementing Action exempt from additional environmental review requirements pursuant to State CEQA Guidelines sections 15180, 15162 and 15163 for the following reasons:

 

A.      The Implementing Action is within the scope of the Project analyzed in the FSEIR, and no FSEIR revisions are required due to the involvement of new significant environmental effects or a substantial increase in the severity of previously identified significant effects.

B.       No substantial changes have occurred with respect to the circumstances of the Project analyzed in the FSEIR which would require major revisions to the FSEIR due to the involvement of new significant environmental effects, or a substantial increase in the severity of effects identified in the FSEIR.   

C.      There is no new information of substantial importance to the Project analyzed in the FSEIR which would indicate any of the following:  (i) the Implementing Action will have significant effects not discussed in the FSEIR; (ii) significant environmental effects will be substantially more severe; (iii) mitigation measures or alternatives found not feasible which would reduce one or more significant effects have become feasible; or (iv) mitigation measures or alternatives which are considerably different from those in the FSEIR will substantially reduce one or more significant effects on the environment.

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the Amended Schematic Design for Parcel 2 of Block N3a is hereby approved pursuant to the Mission Bay North Owner Participation Agreement with Catellus Development Corporation, subject to resolution of the following design concerns to the Agency staff’s satisfaction at the next phase of design:

 

• 1.Additional design studies of the townhouse privacy screens and landscape treatment shall be submitted for Agency staff review.   The design goal is to create visual interest and establish a comfortable pedestrian scale at the street level while maintaining the privacy and security of the ground floor units.

 

• 2.The Project’s colors, materials, and finishes are subject to further review and approval by staff during the Design Development phase.

 

• a.Additional design studies of the three-story “horizontal screen wall” material shall be submitted for Agency staff review. The design goal is to select a finish material that will complement the overall design of the building and the other exterior finish materials.

 

 

APPROVED AS TO FORM:

 

 

 

_________________________

James B. Morales

Agency General Counsel

MEMORANDUM

 

TO:                  Agency Commissioners

 

FROM:             Marcia Rosen, Executive Director

 

SUBJECT:      Conditionally Approving the Amended Combined Basic Concept and Schematic Design for Parcel 2 of Block N3a, a 98-unit residential project in the Mission Bay North Redevelopment Project Area, pursuant to an Owner Participation Agreement with Catellus Development Corporation; Mission Bay North Redevelopment Project Area

 

SUMMARY

 

In accordance with the Agency’s Mission Bay North Owner Participation Agreement with Catellus Development Corporation, Signature Properties has submitted an amended combined Basic Concept and Schematic Design (“Schematic Design”) for a 98-unit private condominium development for Parcel 2 of Block N3a (“Project,” or “235 Berry Street”) in Mission Bay North.   The Project is bounded by Berry Street to the north, Mission Creek Park to the south, and a pedestrian midblock walkway to the east and west. 

 

This Project is part of the Block N3, N3a, N4, and N4a Major Phase development program approved by the Agency Commission on August 15, 2000 (Resolution No. 148-2000).   On December 12, 2000, the Agency Commission approved Catellus’ previous combined Basic Concept and Schematic Design for this parcel for a 105-unit private residential development (Resolution No. 250-2000); however, Catellus did not commence construction on the approved project.  Since that time, Signature Properties purchased the parcel and has elected to return to the Commission with a new Schematic Design for the Project.  The proposed amended Schematic Design will replace the original Schematic Design approved for the parcel.  Signature Properties expects to begin construction on the Project in February 2005 with anticipated completion in August 2007.

 

Staff recommends approving the Block N3a, Parcel 2 Schematic Design subject to the resolution of design concerns at the next phase of design.

 

DISCUSSION

 

The Mission Bay North Owner Participation Agreement (“OPA”) between the Agency and Catellus Development Corporation establishes the protocols for development approvals in Mission Bay North.   Catellus is required to submit its overall plans for development in “Major Phases” of one or more land use blocks, with each Major Phase consisting of the private development projects and related public improvements on these blocks.  Designs for individual building projects can be submitted following the Major Phase approval, and must be consistent with the requirements established for each Major Phase.

 

On August 15, 2000, the Commission approved the Major Phase application for Blocks N3, N3a, N4, and N4a (Resolution No. 148-2000).   Blocks N3-N4a are residential land use blocks located between King Street and Mission Creek and between Fourth and Sixth Streets.  The developable site area on these four blocks is approximately 12 acres and is divided into 11 separate parcels with each parcel being developed as a separate phase.  The approved N3-N4a Major Phase program provided for the development of 1,815 residential units and up to 70,000 square feet of ground floor retail uses.  The Agency has three Affordable Housing parcels, which were previously identified under the OPA, within the N3-N4a Major Phase located on Block N3a/Parcel 1 (Mission Creek Senior Community), Block N4/Parcel 2, and Block N4a/Parcel 2.

 

On December 12, 2000, the Agency Commission approved Catellus’ previous combined Basic Concept and Schematic Design for this parcel for a 105-unit private residential development (Resolution No. 250-2000); however, Catellus did not commence construction on the approved project.   Since that time, as permitted under the OPA, Catellus sold the parcel to another developer, Signature Properties, which will develop the Block N3a/Parcel 2 project.  Signature Properties is also the developer of the nearly completed 100-unit private condominium project on Block N3a/Parcel 3 (255 Berry Street), which is located directly adjacent to the Project.  As the owner and developer of the Project, Signature Properties has returned to the Commission with a new Schematic Design.  The proposed amended Schematic Design will replace the original Schematic Design.

 

Block N3a/Parcel 2 Schematic Design

 

Block N3a/Parcel 2 has a site area of 42,958 square feet (0.98 acres) and fronts Berry Street to the north, Mission Creek Park to the south, and two 30 foot-wide pedestrian midblock walkways to the east and west.   The residential program consists of 98 units within a 7-story building.  Two-story townhomes wrap the Project’s perimeter, and flats comprise the remaining upper 5 levels.  The units are a mix of one and two-bedrooms as well as one three-bedroom, which range from 920 to 1940 square feet with an average unit size of 1150 square feet.  The townhomes on the ground floor completely wrap and conceal a two-story on-grade interior parking structure. Signature Properties has retained Leddy Maytum Stacy Architects and Marta Fry Landscape Architects for the Project.

 

The proposed building design activates all frontages of the Project.   A main lobby is located midblock on Berry Street.  The ground floor perimeter townhouses have direct entries, and the townhouse entries off the midblock walkways have been set back 5 feet with additional landscaping to create a more generous pedestrian environment.  The building has a maximum height of 73 feet consistent with the maximum Mission Bay height of 75 feet, and the design includes the required Mission Bay North Design for Development building stepbacks at the Mission Creek frontage. 

 

Open space areas for the residents are provided through a variety of ways.   There is a landscaped podium courtyard located at the third level, atop the interior parking garage, and balconies off individual units are also located on all elevations of the building.  The townhouse units also have private, screened, landscaped terraces that serve as a “green” buffer at the sidewalks and midblock walkways. The building construction consists of structural steel stud framing above a two-story cast-in-place concrete garage.  Building materials and colors have been selected to articulate the building mass into smaller elements.  These materials include colored, cement board panels, colored stucco, nonreflective metal panels, tile, and glass.

 

The Project’s design minimizes curb cuts on Berry Street through a consolidated loading and parking garage entrance.   The Design for Development Standards allow a maximum of 1 parking space for every residential unit and require 1 bicycle parking space for every 20 vehicular parking spaces.   In accordance with the standards, the Project provides a total of 98 vehicular parking spaces and 15 secured bicycle parking spaces, which is above the bike parking requirement.  In addition, the Project is in close proximity to local and regional transit.  The Muni N-line stop and Caltrain station are located 2 blocks to the north of the parcel, and a future Muni Third Street Light Rail Station will be located 1 block to the east at Fourth and Berry Streets.

 

Citizens Advisory Committee

 

The Schematic Design for Project was presented to the Mission Bay Citizens Advisory Committee (“CAC”) on February 12, 2004. The CAC approved the design and commented positively on the proposed vibrant colors and the complete screening of the parking garage by residential units. 

 

Mission Bay Affordable Housing Development

 

Under the terms of the Mission Bay North OPA, 20% of the housing units in the North Plan Area will be affordable, developed through a combination of inclusionary rental and ownership units included in private development, and through Agency sponsored nonprofit developers on up to 3.8 acres to be transferred by Catellus to the Agency.   The Housing Program in the OPA does not require any affordable units within the Block N3a/Parcel 2 Project. 

 

Catellus is required to provide inclusionary housing units based on a formula, at a number equal to 10% less 45 of all the residential units in Mission Bay North Project Area.   Assuming the Project Area is fully built out to its maximum entitlement of 3,000 units, Catellus will be responsible for 255 inclusionary units, or approximately 8.5% of the total residential units.

 

The required affordability levels of the 255 Catellus inclusionary units is as follows:

- 46% (117 units) Moderate Income Units, for households earning up to 110% of area median income (AMI).

- 14%   (36 units) Low Income Units, for households earning up to 70% AMI.

- 40% (102 units) Very Low Income Units, for households up to 50% AMI.

 

83 of the Moderate Income Units (equal to 32.5% of the 255 inclusionary units) will be affordable condominiums.   The other 172 units, including the remaining 34 Moderate Income Units and all of the Low and Very Low Income Units (67.5% of the 255 total), will be rental units.

 

Catellus must provide its inclusionary affordable units proportionately as the development goes forward, subject to certain adjustments. The rental Moderate Income and Low Income Units must be included in private rental projects until those affordable units are all built.   The Very Low Income units, however, can be grouped together to allow the use of more efficient financing tools.  Catellus also has the option to group the Moderate Income ownership units.

 

The following table is a summary of residential projects in planning and development in Mission Bay North for which the Commission has completed schematic design review, including the current Block N3a/Parcel 2 Project.

 

Project	Developer	Total # of Units/Type	# of  Below Market Rate Units	Status
Block N3a/Parcel 2, 235 Berry Street   (This Project)	Signature Properties	98 condos	0	Schematic Design to be reviewed by Commission. Construction to commence 4th quarter 2004.
Block N1 Mission Place	Catellus Development Corp.	595 rental	27	Completion expected March 2004.
Block N2/Parcel 1 The Glassworks	Catellus Development Corp.	34 condos	0	Completed July 2003.
Block N2/Parcel 2 Rich Sorro Commons	Mission Housing Development Corporation	100 rental	100	Completed June 2002.
Block N2/Parcel 3 Avalon at Mission Bay	Avalon Bay Communities	250 rental	21	Completed March 2003.
Block N3/Parcel 1	Avalon Bay Communities	313 rental	19	Construction on hold.
Block N3/Parcel 2	Catellus Development Corp.	303 rental	0	Construction on hold.
Block N3a/Parcel 1 Mission Creek Senior Community	Mercy Housing California	139 rental	139	Construction to commence April 2004.
Block N3a/Parcel 3 255 Berry Street	Signature Properties/The Riding Group	100 condos	0	Completion expected April 2004.
TOTALS:		1932 Units      1700 rentals   232 condos	306 BMR Units   306 BMR rentals     0 BMR condos

 

Planning work is also underway for a Catellus mixed-income project that will include approximately 130 very low-income units, and a request for proposals for the Agency’s third and fourth affordable housing projects (totaling 131 units) will be issued this spring.   Catellus’ inclusionary unit obligation to provide 83 for-sale Moderate Income Units will be provided on one or more of the four remaining undeveloped Catellus residential parcels within Blocks N4 and N4a. 

 

Staff Analysis and Recommended Conditions of Approval

 

Staff believes that the Block N3a/Parcel 2 Schematic Design submission is in compliance with the Redevelopment Plan, the Design for Development, and other plan documents. 

As is typical, there are a number of remaining design issues to be resolved in subsequent design stages.   Staff recommends the approval of the Block N3a/Parcel 2 Schematic Design subject to resolution of design concerns to the Agency staff’s satisfaction at the next phase of design. 

 

1. Additional design studies of the townhouse privacy screens and landscape treatment shall be submitted for Agency staff review.   The design goal is to create visual interest and establish a comfortable pedestrian scale at the street level while maintaining the privacy and security of the ground floor units.

 

2. The Project’s colors, materials, and finishes are subject to further review and approval by staff during the Design Development phase.

 

• a.Additional design studies of the three-story “horizontal screen wall” material shall be submitted for Agency staff review. The design goal is to select a finish material that will complement the overall design of the building and the other exterior finish materials.

 

Construction of the Project is expected in August 2007.

 

(Originated by Tiffany Bohee, Assistant Project Manager)

 

 

Marcia Rosen

Executive Director

Attachments:

• -Block N3a/Parcel 2, 235 Berry Street Schematic Design Site Plan (p. A2.1)
• -3^rd Floor Courtyard Landscape Plan (p. L1.2)
• -Illustrative Perspective from Berry Street (p. A0.1)

-      Illustrative Perspective from Mission Creek (p. A0.2)

 

 

RESOLUTION NO.   28-2004    

 

 

 

AUTHORIZING A HOUSING OPPORTUNITIES FOR PERSONS WITH AIDS CAPITAL LOAN AGREEMENT WITH MERCY HOUSING WEST, A CALIFORNIA NONPROFIT CORPORATION, IN AN AMOUNT NOT TO EXCEED $631,214 FOR THE REHABILITATION OF 68 VERY LOW-INCOME RENTAL UNITS AT THE DEREK SILVA COMMUNITY RESIDENCE, 1580-1598 MARKET STREET

 

BASIS FOR RESOLUTION

 

• 7.The Agency is authorized under a Housing Opportunities for Persons with AIDS ("HOPWA") Grant Agreement with the United States Department of Housing and Urban Development ("HUD"), executed pursuant to the AIDS Housing Opportunity Act (42 U.S.C. §§ 12901 to 12912), to provide qualifying sponsors with resources for meeting the housing needs of persons with Acquired Immune Deficiency Syndrome ("AIDS").

 

• On December 31, 2001, Mercy Housing California XVII, a California limited partnership (the “Developer”), acquired the Derek Silva Community Residence, consisting of 61 residential units and approximately 6,400 square feet of ground floor commercial space, located at 1580-1598 Market Street in San Francisco, and the improvements thereon (the “Property”), in part with a loan of HOPWA funds approved by the Commission on December 4, 2001, pursuant to Resolution No. 212-2001.

 

• 9.Catholic Charities of the Archdiocese of San Francisco (“CCASF”) operated the Property as affordable supportive housing for persons living with HIV/AIDS under a master lease from the previous owner from 1995 through the acquisition of the Property by the Developer in December 2001.    The Developer will continue to operate the Property as affordable supportive housing for persons living with HIV/AIDS with CCASF providing on-site supportive services to the residents (the “Project”). 

 

• 10.The Developer has secured financing to rehabilitate the Property to increase the number of residential units available to very low-income people living with HIV/AIDS from 61 to 68, and to make needed structural and electrical improvements. 

 

• 11.Additional funding that has been secured for the rehabilitation and permanent financing of the Property includes a tax credit allocation from the California Tax Credit Allocation Committee, as well as funding from the State of California’s Multifamily Housing Program.

 

• 12.The Developer has obtained a Section 8 project-based voucher allocation from the San Francisco Housing Authority (“SFHA”) for 90% of its 68 units (61 units) to support the ongoing operation of the Property.   The projected rent levels that determine the subsidy amount for these vouchers was estimated at a significantly higher amount than was finally approved by the SFHA due to the decline in the rental housing market during the previous months.  This reduction created a shortfall in the amount of funding available to rehabilitate and operate the Project.  The Borrower requested additional funds from the Agency in the amount of $1,066,000 to meet this shortfall and fully fund the rehabilitation.

 

• 13.On December 19, 2002, the following actions were completed:                           

 

• 1.the execution of a loan in the amount of $1,066,000 of federal Financial Adjustment Factor (“FAF”) funds to rehabilitate the Property (the “Loan”), pursuant to Agency Resolution No. 214-2002; 

                                                                        

• 2.the issuance of Multifamily Housing Revenue Bonds in the amount of $11,650,000, pursuant to Agency Resolution No. 215-2002;

 

• 3.the transfer of the land portion of the Property to the Agency as repayment of the HOPWA Loan, and the execution of a Ground Lease to lease the land back to the Borrower, pursuant to Agency Resolution No. 216-2002; and

 

• 4.the execution of a Standby Payment Agreement to guarantee the payment of the Multifamily Housing Revenue Bonds in an amount not to exceed $5,440,000, pursuant to Agency Resolution No. 216-2002.

 

• 14.On December 16, 2004, the Commission approved a First Amendment to the FAF Capital Loan Agreement with the Developer to extend the rehabilitation completion date from December 2003 to July 2004.

 

• 15.Since the rehabilitation began, several unforeseen conditions have been identified that exceed the funding currently allocated for the rehabilitation of the Property, including additional structural problems, the need for more extensive elevator rehabilitation, and a relocation process that was longer than anticipated due to the difficulty in finding comparable units for those tenants who were being relocated.

 

• 16.Mercy Housing West, a California nonprofit corporation, the managing general partner of the Developer, has requested a loan of federal HOPWA funds in an amount of $631,214.00 to complete the rehabilitation of the Derek Silva Community Residence.

 

• 17.The Agency now desires to execute a HOPWA Capital Loan Agreement with the Borrower for the requested amount. The Borrower will complete the rehabilitation of the Property with the funds.

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the Executive Director is authorized to enter into a HOPWA Capital Loan Agreement with Mercy Housing West, a California nonprofit corporation, in conjunction with the rehabilitation of 68 very low income rental units at the Derek Silva Community Residence, 1580-98 Market Street, substantially in the form lodged with the Agency General Counsel.

 

APPROVED AS TO FORM:

 

 

 

_________________________

James B. Morales

Agency General Counsel

RESOLUTION NO.   29-2004  

 

 

 

AUTHORIZING A FIRST AMENDMENT TO THE GROUND LEASE WITH MERCY HOUSING CALIFORNIA XVII, A CALIFORNIA LIMITED PARTNERSHIP, TO CLARIFY THE ANNUAL RENTAL PAYMENTS, FOR THE DEREK SILVA COMMUNITY RESIDENCE, 1580-1598 MARKET STREET

 

BASIS FOR RESOLUTION

 

1. In furtherance of the objectives of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq., (the “Law”), the Redevelopment Agency of the City and County of San Francisco (the “Agency”) undertakes programs for the reconstruction and rehabilitation of slums and blighted areas in the City and County of San Francisco (the “City”).

 

2. The Agency is authorized pursuant to the Law to increase and maintain the affordability of the housing stock in the City for affordability by very-low, low and moderate-income households.

 

3. The Agency is authorized under a Housing Opportunities for Persons with AIDS ("HOPWA") Grant Agreement with the United States Department of Housing and Urban Development ("HUD"), executed pursuant to the AIDS Housing Opportunity Act (42 U.S.C. §§ 12901 to 12912), to provide qualifying sponsors with resources for meeting the housing needs of persons with Acquired Immune Deficiency Syndrome ("AIDS").

 

4. On December 31, 2001, Mercy Housing California XVII, a California Limited Partnership (the “Developer”), acquired the Derek Silva Community Residence, consisting of 61 residential units and approximately 6,400 square feet of ground floor commercial space, located at 1580-1598 Market Street in San Francisco, California and the improvements thereon (the “Property”), in part with a loan of federal HOPWA funds in the amount of $2,300,000 approved by the Commission on December 4, 2001.

 

5. On December 19, 2002, the land portion of the Property was transferred to the Agency as repayment of the HOPWA Loan, and a ground lease to lease the land back to the Developer (the “Ground Lease”) was executed, pursuant to Agency Resolution No. 216-2002.

 

6. The Ground Lease requires modification of language to clarify the accounting of contingent rent.   No other material change is contemplated for Commission approval as part of this amendment.

 

RESOLUTION

 

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the Executive Director is authorized to enter into a First Amendment to the Ground Lease with Mercy Housing XVII, a California Limited Partnership, for the land at 1580-1598 Market Street, to clarify the annual rental payments, substantially in the form lodged with the Agency General Counsel.

 

APPROVED AS TO FORM:

 

 

 

_________________________

James B. Morales

Agency General Counsel

 

118-09504-002                                                                   Agenda Item No. 4 ( e & f )

February 17, 2004                                                                 Meeting of March 2, 2004

 

 

 

MEMORANDUM

 

TO:                   Agency Commissioners

 

FROM:             Marcia Rosen, Executive Director

 

SUBJECT:        Authorizing a Housing Opportunities For Persons With AIDS Capital Loan Agreement with Mercy Housing West, a California nonprofit corporation, in an amount not to exceed $631,214 for the rehabilitation of 68 very low-income rental units at the Derek Silva Community Residence, 1580-1598 Market Street.

 

                         Authorizing a First Amendment to the Ground Lease with Mercy Housing California XVII, a California limited partnership, to clarify the annual rental payments, for the Derek Silva Community, 1580-1598 Market Street.

 

EXECUTIVE SUMMARY

Derek Silva Community Residence (“DSC”) is an existing 61-unit apartment building, with ground floor retail space, located at 1580-98 Market Street.   On December 31, 2001, the building was acquired by Mercy Housing California XVII, a California limited partnership (“MHC”). to preserve it as affordable housing for very low-income people living with HIV/AIDS..

 

On December 4, 2001, the Commission authorized a Housing Opportunities for Persons With AIDS (“HOPWA”) capital loan agreement with MHC in amount not to exceed $2,300,000 to fund the acquisition of DSC.   On February 19, 2002, the Commission authorized a bond inducement resolution in an amount not to exceed $13,300,000, which allowed the Agency to apply for an allocation of tax-exempt mortgage revenue bond authority from the California Debt Limit Allocation Committee (“CDLAC”) to finance both construction and permanent financing of DSC.   On December 10, 2002, the Commission authorized the following actions: the bond issuance; a Standby Payment Agreement; a Purchase and Sale Agreement, which transferred ownership of the land underneath DSC from MHC to the Agency in full payment of the HOPWA capital loan; a Ground Lease to lease the land to MHC; and a Financial Adjustment Factor (“FAF”) loan of $1,066,000.

 

A much-needed rehabilitation began in March 2003.   Several unforeseen issues have resulted in an increase in costs that exceeds the amount of funding that was previously obtained for the project.  The project required more structural work and greater relocation expenses than originally planned.  MHC has requested additional financing from the Agency to fund the increased costs.  Staff is also proposing an amendment to the Ground Lease to clarify the terms of this document.

 

Staff recommends authorization of a HOPWA Capital Loan Agreement in amount not to exceed $631,214, and a First Amendment to the Ground Lease.

 

DISCUSSION

Background

Beginning in 1995, Catholic Charities of the Archdiocese of San Francisco, a California nonprofit corporation, now Catholic Charities/Catholic Youth Organization (“CCCYO”) has operated DSC as supportive housing for very low-income people living with HIV/AIDS, initially under a master lease from the previous owner.   In December 2001, the building was acquired by Mercy Housing California XVII (“MHC”) and master leased to CCCYO.  DSC was at risk of being lost due to the prior owner’s unwillingness to renew the lease with CCCYO at affordable terms.  Since CCCYO is primarily a service organization, it requested assistance from MHC to acquire and rehabilitate the site and master lease the service space back to CCCYO, thereby preserving the affordability of the residential units.  DSC presently consists of  61 studios, one-bedroom and two bedroom units.  Upon rehabilitation completion there will be an additional 7 units for a total of 68 units. DSC is the largest project of independent living units for people living with HIV/AIDS currently in the City.  All residents pay no more than 30% of their adjusted gross incomes for rent.  An extensive supportive services program is provided by CCCYO with funding from the federal Ryan White CARE program, the City’s general fund through the City’s Department of Public Health, and the State’s Supportive Housing Initiative Act program through the City’s Department of Human Services. 

 

DSC was acquired by Mercy Housing California XVII (“MHC”), a California limited partnership on December 31, 2001, with Mercy Housing West. as its general partner.  The property was acquired, in part, with HOPWA funds ($2,300,000), which were approved by the Commission on December 4, 2001.  MHC obtained an interim loan from Bank of America for $5,000,000 to fund the remainder of the acquisition and predevelopment costs. 

 

The initial permanent financing for the project included a permanent loan from tax-exempt bond proceeds, low-income housing tax credit equity of over $4 million, and $5 million in State of California Multifamily Housing Program funds.     In September 2002, the Agency received a bond allocation for the project.   In December 2002, the Agency issued $11,650,000 in tax-exempt bonds which was used to fund construction and permanent loans.   MHC secured project based Section 8 vouchers for 90% of the units.

 

On December 10, 2002, the Agency Commission approved an additional $1,066,000 for the Project from Financial Adjustment Factor (“FAF”) funds.   These additional funds were needed because at the time that the San Francisco Housing Authority (“SFHA”) completed the local market study and set the rents for the project-based Section 8 vouchers, the rents were much lower than expected, therefore leaving a financing gap of over $1,000,000. The Commission approved several other actions on that date including, a Standby Payment Agreement in an amount not to exceed $5,440,000 so that the Section 8 rents could be used to underwrite additional mortgage debt. To provide security for this Standby Payment Agreement, staff proposed that the HOPWA loan be repaid by transferring ownership of the land to the Agency.  The appraised land value was equal to the original HOPWA loan to the project of $2,300,000.  On December 10, 2002, the Commission also approved this land transfer from MHC to the Agency and a Ground Lease with MHC for a minimum of 65-years with an automatic renewal for an additional 34 years. 

 

MHC plans to continue master leasing the residential portion of the building to CCCYO under the current terms through the construction period.   Once construction is complete and permanent financing is in place, including the Section 8 subsidies, MHC’s Property Manager, Mercy Services Corporation, Inc.  (“MSC”) will be the property manager and CCCYO will continue to be the on-site service provider under a memorandum of agreement with MHC.

 

The rehabilitation work includes structural improvements to the property, which will improve its ability to withstand an earthquake, modernize the elevator, and improve the mechanical and plumbing systems.   The basement is being rehabilitated to allow the existing services and offices to be moved out of residential units and into the basement space.  This will allow 7 units that had been used for services space to be used for housing again, increasing the number of affordable units available, as well as the amount of operating income to the project.

 

Developer Description

Mercy Housing Inc. (“MHI”) is a national not-for-profit organization dedicated to providing quality, affordable, service-enriched housing for low- and very low-income individuals and families.   Mercy Housing California (“Mercy”) is a regional affiliate of MHI and is based in San Francisco.  Mercy Housing California XVII, a California limited partnership (“MHC”) is a limited partnership in which an affiliate of MHC, Mercy Housing West, is the nonprofit general partner.  MHC was created specifically to develop and own Derek Silva Community.  For tax reasons, the proposed HOPWA loan will be made to Mercy Housing West. and assigned to MHC. 

 

Development Update and Request for Additional Funds

Through a competitive process, MHC selected Swinerton Builders to be the general contractor, and K2 Architects to be the architecture firm for DSC.   Construction began in March 2003.

 

In order to complete the rehabilitation, about half of DSC residents have been temporarily relocated.   This relocation process is being overseen by Transitions, a woman-owned business enterprise relocation consultant, which has worked closely with the residents, along with MHC staff, to ensure that they are informed about the development and construction process and how it will affect them.  Bettye Webb, Agency Relocation Supervisor, reviewed and approved the relocation plan. 

 

Any major renovation with tenants in place is very difficult and the DSC renovation has been particularly difficult due to the residents’ compromised immune systems and their overall physical and mental health.   There have been complaints of dust, noise and a variety of other concerns pertaining to the need to enter occupied apartments to perform certain work.  MHC, CCCYO, and Swinerton Builders staff have tried to mitigate all tenant concerns by relocating more tenants than originally intended and adjusting the construction schedule in response to the needs and concerns of the tenants.  Also, at their own expense, Mercy Services and CCCYO have hired a resident liaison to work directly with the residents, on resolving the residents concerns and problems related to the construction. This person is on site 4 hours per day Monday through Friday for the duration of the renovation.  Though significant progress has been made toward the completion of construction, there have been several unforeseen issues, which have resulted in a more expensive project than originally anticipated by the development team. 

 

The relocation of the tenants took longer than scheduled because the relocation consultant and Mercy had difficulty locating affordable, comparable units for the existing tenants.   To resolve this problem, Mercy entered into a master lease for blocks of units at market-rate rental developments in the City.  In addition, subsequent to the start of construction, several tenants decided that living at DSC during construction was too problematic, so they were also relocated, and the work program was adjusted to avoid interference with the tenants’ living conditions during the extended relocation period.  To date, a total of 34 households have been relocated and 23 remain in the building.  

 

Several unforeseen conditions have also contributed to the delay in the construction schedule and the increase to the cost and scope of work, including the need for additional foundation work in the basement and around the parapets, the discovery of an underground storage tank, and obstructions to the planned steel reinforcement in the basement.   The Department of Public Works has also added to the scope of work, including lowering the PG&E vault and removing and replacing concrete parking strips adjacent to the property, as a result of field inspections since construction began.  The Agency’s Construction Specialist, Jill O’Brien has regularly attended on-site construction meetings and has reviewed and approved MHC’s request for additional funds.    

 

MHC has requested additional funds not to exceed $631,214 from the Agency to ensure that this project is completed in the most timely, efficient and thorough manner as possible.   MHC has negotiated with Swinerton Builders, in an effort to bring down construction costs.  As a result, Swinerton staff have agreed to waive the general conditions that would have resulted from the extended schedule and additional scope of work.  MHC has also obtained an additional $278,616 in tax credit investor equity for this project that will cover a portion of the additional costs.  Staff currently anticipates that, if this additional funding request is approved, the project will be complete by July 31, 2004.

 

Ground Lease Amendment

On December 19, 2002, the Agency also entered into a Ground Lease with MHC.   Staff is proposing an amendment to the Ground Lease that will clarify and restate the annual rent payment amounts. 

 

DSC is a critical part of the City’s continuum of housing and services for people living with HIV/AIDS.   In the past several years prior to rehabilitation, DSC had suffered from many deferred maintenance problems that affected the tenants, including a heating system that worked sporadically, two elevators that were frequently out of service, and significant structural problems.  These problems will all be resolved by this rehabilitation.   In addition, this rehabilitation will provide seven new units of affordable housing for people living with HIV/AIDS in San Francisco, and improved and expanded services and community spaces.  While the rehabilitation will take longer than originally anticipated, the resulting building will provide a much higher quality of life for both current and future tenants, and will ensure that the building will remain part of San Francisco’s affordable housing stock for the foreseeable future.

 

COMPLIANCE WITH AGENCY PURCHASING POLICY:

MHC has been working with Senior Contract Compliance Officer, Sylvester McGuire, to ensure that all activities are in compliance with Agency Purchasing Policies and Procedures.

 

   Staff recommends authorization of a HOPWA Capital Loan Agreement in amount not to exceed $631,214, and a First Amendment to the Ground Lease…

 

 

(Originated by Elizabeth Colomello, Development Specialist)

 

 

 

Marcia Rosen

Executive Director

 

 

RESOLUTION NO.  30-2004

 

 

 

AUTHORIZING AN AMENDED AND RESTATED Disposition and Development Agreement AND A FIRST AMendment to the REGULATORY AND GRANT AGREEMENT with THE Japanese American Religious Federation Assisted Living Facility, Inc., a california nonprofit public benefit corporation, to INCREASE the GRANT by an amount not TO EXCEED $1,267,865 FOR A TOTAL AGGREGATE AMOUNT OF $4,026,151, IN CONJuncTION WITH THE DEVELOPMENT OF A 54-UNIT SENIOR ASSISTED LIVING FACILITY, 1881 BUSH STREET; WESTERN ADDITION REDEVELOPMENT PROJECT AREA A-2

 

BASIS FOR RESOLUTION

 

• 1.The Redevelopment Agency of the City and County of San Francisco (“Agency”) and the Japanese American Religious Federation Assisted Living Facility, Inc., a California nonprofit public benefit corporation (“Developer”), are parties to a Disposition and Development Agreement (“DDA”) dated July 22, 1997, pursuant to which Developer is to purchase and develop a historic building and an adjacent site, located at 1881-1899 Bush Street on Agency Disposition Parcels 674 C & F, for a 54-unit assisted living facility for frail elderly persons.

 

• 2.On October 26, 1999, by Resolution No. 164-99, the Agency Commission approved grant and loan funds in an amount not to exceed $2,905,555 for the acquisition, rehabilitation and development of the project consisting of a loan for $1,680,555 pursuant to the terms and conditions of a Tax Increment Affordable Housing Loan Agreement and a grant for $1,225,000 pursuant to terms and conditions of a Grant and Regulatory Agreement.

 

• 3.Due to construction cost increases resulting from the expiration of the general contractor’s original bid and the additional time needed to meet requirements of the U.S. Department of Housing and Urban Development (“HUD”), in April 2001 the Developer requested and the Agency approved an additional grant of $1,381,000 to complete the project’s financing requirements. 

 

• 4.On December 20, 2000, a parcel map merged the two contiguous lots into one lot (Lot 33 of Assessor’s Block 674) that contains approximately 12,732.5 square feet.   On June 12, 2001, the Agency recorded the Deed, which conveyed ownership title of the new lot to the Developer, and construction began shortly thereafter. 

 

• 5.Due to the extraordinary cost to rehabilitate the historic temple building and integrate it with new constructed addition, the cost to complete the project was in excess of the original budget.   On November 28, 2003, the Developer requested an additional grant to pay for the project cost overruns and to support the first two years of operations when the cash flow is expected to be insufficient to support the debt service on the project.  The additional funds will allow the Developer to fund the construction cost overruns; furniture, fixtures and equipment; major and minor movables; additional insurance premiums; a hazardous materials tax required by the State of California (“State”); replenishment of the replacement reserves, and; the funding of the operating deficit required by HUD.  The Developer provided a cost summary that reflected the complexities of renovating a century-old temple building in disrepair while meeting the historic preservation and Federal Emergency Management Agency requirements.

 

• 6.Staff has reviewed the materials submitted by the Developer and established that $1,267,865 of the request is qualified for funding. 

 

• 7.On February 6, 2004, the Developer’s grant application was presented to the Agency’s Executive Director, who recommends authorization of the grant. 

 

• 8.On February 12, 2004, the consideration of the grant request was presented to the Western Addition Citizens Advisory Committee, who unanimously approved the request.

 

• 9.The Developer has confirmed that the balance of the grant request will be funded through additional fundraising campaigns. 

 

• 10.The Agency desires to amend and restate the DDA to incorporate all of the provisions of the first eight amendments to the DDA.

 

• 11.The Agency has tax increment funds available for funding the costs overruns in the form of a grant to the Developer.

 

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 the Amended and Restated Disposition and Development Agreement and a First Amendment to the Regulatory and Grant Agreement with the Japanese American Religious Federal Assisted Living Facility, Inc., a California nonprofit public benefit corporation, and authorize an increase in the tax increment grant in an amount not to exceed $1,267,865, for a total authorized tax increment grant of $4,026,151, for development of Kokoro Assisted Living Facility at 1881 Bush Street, located at 1881 Bush Street, the southeast corner of Bush and Laguna Streets, in a form substantially in the form lodged with the Agency General Counsel, and with any changes that do not materially affect the substance of the DDA and grant or materially increase the obligations of the Agency, and to execute any and all other conveyance instruments necessary to effectuate the proposed Amended DDA and grant. 

 

APPROVED AS TO FORM:

 

 

_________________________

James B. Morales

Agency General Counsel