San Francisco Redevelopment Agency

RESOLUTION NO.   29-2006

COMMENDING AND EXPRESSING APPRECIATION TO

KATE HARTLEY

FOR FIVE YEARS OF DEDICATED SERVICE UPON HER DEPARTURE FROM THE REDEVELOPMENT AGENCY OF THE

CITY AND COUNTY OF SAN FRANCISCO

BASIS FOR RESOLUTION

1. Kate Hartley joined the Redevelopment Agency of the City and County of San Francisco (“Agency”) in 2000 as a Development Specialist in the Housing Division after working at the San Francisco Housing Development Corporation on a number of development projects sponsored by the Agency, including Garnett Terrace and 4445 Third Street. 

1. At the Agency, Ms. Hartley initially filled in for Agency staff on leave but quickly developed her own portfolio of projects. 

1. Ms. Hartley led the Agency’s efforts in acquiring, from the City and County of San Francisco (“City”), the affordable housing parcels vacated by the demolition of the Central Freeway.  She represented the Agency in meetings with the community about the reuse of those parcels and the design of new projects.  Ms. Hartley assisted in the Redevelopment Plan Amendments needed to permit the development of certain parcels.  She was responsible for the issuance of Request for Proposals for four parcels including, Parcel A or Parkview Terrace, which is fully funded and will be starting construction by April 2006. 

1. Ms. Hartley also led efforts to modify the Agency’s first-time homebuyer program to ensure that the Agency could continue to fund first-time homebuyers without providing recurring subsidies to maintain affordability.  The result of her efforts is the Agency’s Limited Equity Homeownership Program.

1. Ms. Hartley excelled in her position and had the utmost respect for developers, the public, and her colleagues.  She is known for her dedication to affordable housing, her high professional standards, and her scooter which transported her between the BART station and the office.

1. Ms. Hartley’s accomplishments were attained while working as a   part-time employee.  In an effort to provide further balance in her life, she has chosen to seek a new opportunity in the field of financial consulting for affordable housing developers.  At this new position, Ms. Hartley will be able to continue her work in the affordable housing field and be able to spend more time with her family. 
   
2. Ms. Hartley has made significant contributions to the Agency, to the City, and to the development of affordable housing that will last long after her last commission memo.   We will miss her at the Agency and wish her the best of luck and success in her new position, her career, and her life.

RESOLUTION

ACCORDINGLY, IT IS RESOLVED that the Redevelopment Agency of the City and County of San Francisco, on behalf of its past and present Commissioners, Executive Directors and employees, recognizes Kate Hartley’s dedicated service to the City and Agency, expresses appreciation for her contributions to improving the quality of life in San Francisco, and wishes her well in her new position as she continues to pursue her passion for affordable housing and community development.

APPROVED AS TO FORM:

_________________________

James B. Morales

Agency General Counsel

RESOLUTION NO.  30-2006

AUTHORIZING EXCLUSIVE NEGOTIATIONS WITH

Westbay Housing Corporation, a California nonprofit public benefit corporation, and Satellite Housing, Inc., a California nonprofit public benefit corporation, for the development of very low-income rental housing for persons with disabilities on Central Freeway Parcel Q, southwest corner of Octavia Boulevard and Oak Street; Citywide Tax Increment Housing Program

BASIS FOR RESOLUTION

1. On November 19, 2004, the Redevelopment Agency of the City and County of San Francisco (“Agency”) purchased Central Freeway Parcel Q from the City and County of San Francisco (“City”) for the express purpose of developing affordable housing.

1. On September 9, 2005, the Agency issued a Request for Proposals (“RFP”) for the construction, ownership, and operation of 15 units of affordable housing for disabled individuals and their families on Central Freeway Parcel Q.  The RFP sought high-quality proposals from experienced development teams comprised of a developer, architect, service provider and property manager.

3.     Two development teams submitted proposals, both of which met the minimum requirements defined in the RFP.  An interdisciplinary evaluation panel comprised of Agency staff and a staff member from the San Francisco Department of Public Health, with expertise in supportive services, (“Evaluation Panel”) reviewed the proposals and interviewed the development teams.  The teams then presented their proposals at a public town hall meeting on February 7, 2006.  

4.     The RFP set forth specific ranking criteria to guide the Evaluation Panel in recommending a development team for exclusive negotiating rights to develop affordable housing for disabled individuals at Parcel Q, including previous development experience, developer staff capacity, architectural design, building constructability, financial feasibility, and appropriateness of the supportive services plan. 

5.     The Evaluation Panel completed its review in accordance with the stated goals of the RFP and the priorities defined by the ranking criteria and determined that the submittal presented by the joint-venture team of Westbay Housing Corporation, a California nonprofit public benefit corporation, and Satellite Housing, Inc., a California nonprofit public benefit corporation (together, “Westbay/Satellite”) offered the best development program for Parcel Q.  The Evaluation Panel recommends that the Agency Commission authorize exclusive negotiations with Westbay/Satellite.

6.     An eighteen-month period (“Exclusive Negotiations Period”) will allow the Developer to pursue predevelopment activities for the construction and operation of affordable and supportive housing for persons with disabilities.  Westbay/Satellite must meet a series of milestones during the Exclusive Negotiations Period that will result in the execution of a ground lease agreement and a grant and regulatory agreement for consideration by the Agency Commission after a public hearing, as required by law.

RESOLUTION

ACCORDINGLY, IT IS RESOLVED by the Redevelopment Agency of the City and County of San Francisco that the Executive Director is authorized to negotiate and to execute an Exclusive Negotiations Agreement (“ENA”) with the joint-venture team of Westbay Housing Corporation., a California nonprofit public benefit corporation, and Satellite Housing, Inc., a California nonprofit public benefit corporation, (together, “Developer”), for the development of very low-income rental housing for persons with disabilities on Central Freeway Parcel Q, at the southwest corner of Octavia Boulevard and Oak Street, as part of the Agency’s Citywide Tax Increment Affordable Housing Program, substantially in the form lodged with the Agency General Counsel.

APPROVED AS TO FORM:

_________________________

James B. Morales

Agency General Counsel

118-09106-002                                                           Agenda Item No.   4 ( c )

February 23, 2006                                                                 Meeting of March 7, 2006

MEMORANDUM                              

TO:                         Agency Commissioners

FROM:          Marcia Rosen, Executive Director

SUBJECT:            Authorizing exclusive negotiations with Westbay Housing Corporation, a California nonprofit public benefit corporation, and Satellite Housing, Inc., a California nonprofit public benefit corporation, for the development of very low-income rental housing for persons with disabilities on Central Freeway Parcel Q, southwest corner of Octavia Boulevard and Oak Street; Citywide Tax Increment Housing Program.

EXECUTIVE SUMMARY

On September 9, 2005, the Agency issued a Request for Proposals (“RFP”) for the construction, ownership, and operation of affordable housing for disabled individuals and their families on Central Freeway Parcel Q.  As discussed in the Informational Memorandum provided to the Commission on August 16, 2005 and January 17, 2006, (attached) the RFP sought high-quality proposals from qualified development teams who met certain minimum qualifications.

Two development teams submitted proposals for Parcel Q (the “Site”), both of which met the minimum qualifications required for full staff review.  An interdisciplinary evaluation panel comprised of Agency staff and a representative from the San Francisco Department of Public Health with expertise in supportive services (the “Evaluation Panel”) reviewed the proposals and interviewed each development team.  The RFP set forth specific criteria designed to guide the Evaluation Panel’s analysis.  The development teams then presented their proposals at a public town hall meeting on February 7, 2006.

The Evaluation Panel determined that both proposals were of excellent quality.  After careful consideration of the proposals, in accordance with the RFP’s stated goals and ranking criteria, and consideration of the public comments at the February 7^th meeting, the Evaluation Panel concluded that the submittal presented by the joint venture team of Westbay Housing and Satellite Housing (“Westbay/Satellite”; the “Developer”) offers the best development program for Parcel Q.

Staff recommends the Commission authorize an exclusive negotiation agreement with the joint venture team of Westbay Housing and Satellite Housing, leading to the Commission’s consideration of a ground lease agreement and grant agreement for development of the Site during an 18-month exclusive negotiations period.

DISCUSSION

Background: The Request for Proposals

On September 9, 2005, the Agency issued an RFP requesting proposals from qualified teams comprised of a non-profit housing development corporation to act as sponsor under the HUD Section 811 program, a design architect, a service provider, and a property management agent to develop and operate approximately 15 units of affordable rental housing and related space for disabled individuals and their families. 

The RFP set forth the following criteria by which competing developers would be ranked:

1. Experience and staff capacity of all team members
2. Ability of developer to secure HUD Section 811 (“811”) and California ’s Multifamily Housing Program Supportive Housing funding (“MHP”)
3. Quality of the services program, including each proposed service plan’s ability to[1]
   1. Integrate tenants into the community and neighborhood
   2. Provide employment opportunities for tenants
   3. Provide life skills development aimed at enabling tenants’ independent living and economic empowerment
   4. Create collaborative linkages with other service providers
   5. Assist tenants to retain their housing and stabilize their health
4. Financial feasibility
5. Strength and constructability of the proposed design concept and prior experience of the architect.
   1. Proposals were also expected to conform to the Market and Octavia Neighborhood Plan, including creation of an active, pedestrian-oriented design at the ground floor.

6)     Strength of developer’s ties with the community and with minority and disability communities in particular.

Generally, an express goal of the RFP was to generate creative and innovative development programs that would serve a population with a demonstrated need and maximize the availability of non-Agency funding. 

Developer Responses

The following development teams met the threshold qualifications for Parcel Q:

Developer: Westbay Housing, Inc. & Satellite Housing, Inc.

Architect: Fougeron Architects

Service Provider: Toolworks, Inc., Golden Gate Regional Center, and Norcal Vocational

Property Manager: John Stewart Company

Proposal Target Population: 15 units of housing for developmentally disabled individuals (e.g., persons with metal disabilities, epilepsy, cerebral palsy or autism)

Developer: Housing Services Affiliate of the Bernal Heights Neighborhood Center

Architect: Gelfand Partners Architects & SGPA Architecture & Planning

Service Provider: Progress Foundation

Property Manager: Caritas Management

Proposal Target Population: 15 units of housing for mentally ill individuals

Evaluation Process

The Evaluation Panel consisted of the following people:

• Olson Lee – Agency Deputy Executive Director – Housing
• Elena Branick – Agency Senior Architect
• Juanita Johnston – Agency Contract Compliance Specialist
• Kate Hartley – Agency Development Specialist
• Sonia Bailey – San Francisco Department of Public Health

The Evaluation Panel thoroughly reviewed each team’s submission, guided by the criteria listed above.  To evaluate experience and qualifications, the Evaluation Panel assessed the financing, construction type, rental history, and current condition of each team’s comparable developments.  To evaluate staff capacity, the Evaluation Panel reviewed the current and projected workloads of all “key personnel” whose work assignments would include Parcel A.  Agency staff analyzed the financial plans to insure that each developer demonstrated thorough knowledge of both the proposed funding sources and current economic conditions affecting design and construction.  To evaluate the appropriateness of the proposed design, Agency architect Elena Branick led the Evaluation Panel through an analysis of the Agency’s development and design standards and, within this context, the relative merits of each design concept.    Finally, Sonia Bailey of the Department of Public Health analyzed the services plans and the feasibility of the proposed services budgets.

The Evaluation Panel then invited developers to interviews in which they clarified their respective qualifications, plans and assumptions in response to Evaluation Panelists’ questions.  The evaluation process concluded with the developers’ presentation of their proposals to the larger Market-Octavia community on February 7, 2006, at which community members had the opportunity to ask each developer specific questions about their proposals. 

Evaluation Results

The Evaluation Panel agreed that both of the proposals were of excellent quality, but concluded that the proposal presented by the joint-venture team of Westbay/Satellite – housing for developmentally disabled individuals and their families – offered the superior development program.  The specific merits of this proposal, as defined by the ranking criteria, are described below.

1. Experience and staff capacity:  Westbay Housing is a new organization that was established in 2004 for the purpose of increasing housing opportunities for developmentally disabled individuals.  Because Westbay did not meet the threshold experience criterion on its own, it partnered with Satellite Housing.

With Satellite on board, the team brings extensive experience working with HUD, and is the only one of the two competing development teams that has successfully secured both HUD 811 and MHP funding for the same project.  The Satellite executive director and project managers demonstrated extensive knowledge about financing and regulatory issues, and Agency staff will seek to secure Satellite’s lead role in the project’s ongoing financial analysis.  

1. Ability to secure HUD 811 and MHP financing: Westbay/Satellite has successfully demonstrated its ability to secure the requisite funding.  Satellite Housing’s Lincoln Street Housing, currently under construction, has secured both HUD 811 and MHP funding.  Satellite’s University Avenue Housing, located in Berkeley, was recently awarded HUD Section 202 funding.

1. Quality of services program:  Westbay/Satellite has partnered with the following teams for provision of support services at the site:  Toolworks, Inc., as the lead service provider; Golden Gate Regional Center (“GGRC”), as the services funding agent and provider of case management services; and Norcal Vocational Services, which proposes to operate a vocational arts day program on site for tenants and/or other developmentally disabled persons.

The proposed services budget for this program is approximately $400,000, funds which are virtually guaranteed through an ongoing entitlement program funded by the Sate Department of Developmental Services and administered by GGRC.  Proposed services include individualized case management by Toolworks and GGRC; job training and/or search assistance and/or on-the-job coaching by Toolworks and GGRC; life skills counseling and training by Toolworks; and community integration services by Toolworks, including assisting residents to find and keep volunteer positions, attend college classes, and engage in recreational activities.

Importantly, the services program for the Westbay/Satellite proposal includes an on-site vocational arts program administered by Norcal Vocational.  Tenants will have the opportunity to participate in arts training and life skills development work on the building’s ground floor.  The arts training is targeted to fine art studies rather than “crafts.”  Tenant-artists will then be able to sell their work in a small retail section of the center that will front Octavia Boulevard, thus providing income to the tenants as well as an active street frontage, which is strongly desired by the Hayes Valley community and encouraged in the Market-Octavia Neighborhood Plan. 

1. Financial Feasibility:  Westbay/Satellite stated in their Evaluation Panel interview that they would be bringing an experienced financial advisor to the team if awarded an exclusive negotiations contract.  The combination of Satellite’s experience and an accomplished financial advisor provides sufficient evidence of the team’s ability to create a financially feasible program.

1. Strength and constructability of the proposed design concept and prior experience of the architect:  Fougeron Architecture has not completed a HUD 811 or 202 project, but has completed several affordable housing developments in San Francisco, including, as part of a joint-venture, the design work for Central Freeway Parcel A.   One distinct design advantage this proposal offers is the activated street frontage on Octavia Boulevard.

1.    Strength of developer’s ties with the community and with minority and disability communities in particular:  Neither Westbay nor Satellite has strong ties to the Market-Octavia or Hayes Valley community.  However, Westbay/Satellite has engaged Bethany Center to be its “community liaison” and assist with community outreach.  The team’s service providers – Toolworks, Norcal Vocational, and GGRC – together have served the disabled community in San Francisco for almost 100 years.

Evaulation Panel’s Summary Conclusions

Again, both the Bernal Heights and Westbay/Satellite proposals were excellent.  In particular, Bernal Heights ’s proposal showed great strength in its architect selection and design; its demonstrated dedication to serving disabled populations; and its staff’s understanding of affordable housing financing.  Given all the considerations discussed above, the panel’s final conclusion was that the overriding strength of the Westbay/Satellite services program, linked with Satellite’s very relevant experience, put the Westbay/Satellite proposal’s ranking above that of the Bernal Heights proposal.

Exclusive Negotiations

Parcel Q’s development depends on successful funding applications to the HUD 811 and MHP programs, both of which will be due in 2006.  Staff therefore recommends an accelerated development schedule pursuant to an exclusive negotiations agreement (“ENA”) with an eighteen- (18) month term (“Exclusive Negotiating Period”).  Below are the ENA’s proposed milestones and timeframes:

The Commission resolution authorizing exclusive negotiations (“Resolution”) through an ENA will allow the Executive Director to modify the milestones above after Westbay/Satellite has had an opportunity to review and comment on them. Failure to achieve any of the milestones would result in termination of the ENA unless extended or modified by the Executive Director.  The Resolution will call for execution of the ENA within one month of the Commission’s approval of exclusive negotiations.

(Originated by Kate Hartley, Development Specialist)

Marcia Rosen

Executive Director

Attachment 1:   Informational Memorandum, August 16, 2005

Attachment 2:  Informational Memorandum, January 17, 2006

bc:        Benham

            Sakai

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            Reynolds

            Branick

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