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HOUSING AUTHORITY AGENDA REPORT
City of Anaheim
HOUSING AND COMMUNITY DEVELOPMENT
DEPARTMENT
DATE: JUNE 11, 2024
FROM: HOUSING AND COMMUNITY DEVELOPMENT DEPARTMENT
SUBJECT: APPROVAL OF A PRELIMINARY AWARD LETTER,
GROUND LEASE OPTION AGREEMENT, AND
COOPERATION AGREEMENT FOR THE BEACH-
LINCOLN AFFORDABLE RENTAL HOUSING
DEVELOPMENT AT THE SOUTHEAST CORNER OF
BEACH BOULEVARD AND LINCOLN AVENUE
ATTACHMENT (Y/N): YES ITEM # 02-A
GOVERNMENT CODE § 84308 APPLIES: NO
RECOMMENDATION:
That the Governing Board of the Anaheim Housing Authority, following a joint public hearing, by Resolution, approve a Preliminary Award Letter, Ground Lease Option Agreement, and Cooperation Agreement substantially in the form attached hereto, regarding the Beach-Lincoln Affordable Rental Housing Project between the Anaheim Housing Authority and Lincoln Beach LP; authorizing the Executive Director or her designee, to execute and administer the Preliminary Award Letter and Ground Lease Option Agreement on behalf of the Authority; Authorizing the Executive Director, or her designee, to negotiate the terms of and finalize an Affordable Housing Agreement and Ground Lease for the Project; authorizing the Executive Director or her designee to enter into subsequent agreements necessary to implement the Project, provided that such agreements do not materially increase or extend the assistance provided by the Housing Authority under the Preliminary Award Letter; and making certain other findings in connection therewith.
DISCUSSION:
In 2019, the Anaheim Housing Authority (Authority) acquired an approximately 3.59- acre site (Site) comprising four separate parcels located on the southeast corner of Beach Boulevard and Lincoln Avenue. The Site, formerly home to the Americana Motel, a former car wash, a gas station, and a restaurant, was identified by Staff as an opportunity for the creation of new affordable rental housing options for Anaheim’s low-income individuals and moderate and above-moderate homeownership opportunities in West Anaheim.
On October 26, 2021, the Housing Authority Governing Board adopted a resolution declaring the Property as surplus land in accordance with the Surplus Land Act.
Following this declaration, on February 1, 2022, the Authority released a written Notice Preliminary Award Letter, Ground Lease Option and Cooperation Agreement – Southeast Corner Beach/Lincoln June 11, 2024
of Availability (NOA) to over 400 entities identified on the State of California Housing and Community Development Department’s list of interested parties per Government Code Section 54222. These entities included local public entities, non-profit and for- profit affordable housing developers, and school districts within the jurisdiction where the surplus land is located. In response to the NOA, the Authority received a total of five notices of interest. Priority consideration was given to those proposals that included an affordability component, ensuring compliance with Government Code Section 54222.5, which mandates that at least 25% of the total units developed on surplus land be offered at affordable housing costs or affordable rent to lower-income households.
The proposal submitted by Brandywine/Innovative Housing Opportunities (IHO) was selected due to its commitment to providing the deepest levels of affordability and its alignment with the Beach Boulevard Specific Plan. The proposal for the 3.59-acre site includes 47 affordable intergenerational rental housing units, 60 for-sale townhomes, and a commercial component. To ensure adherence to the affordability requirements stipulated by the Surplus Land Act and to meet tax credit funding deadlines, staff prioritized the affordable rental component, which is the focus of this report and herein referred to as the “Project.” The Authority will Ground Lease 0.65-acres of the Site's southern portion to IHO for the development of 46 affordable rental housing units plus 1 manager unit. The Project will be an intergenerational community serving 37 senior households and 9 young adults aging out of foster care with extremely low-income households based on the area median income. The disposition of land for the 60 for-sale townhomes and commercial component will be considered at a future date by the Housing Authority.
The efforts to revitalize Beach Boulevard remain a priority for staff. The collective vision outlined in the Beach Boulevard Specific Plan has informed the overall site design, architecture, and landscape architecture to ensure the proposed developments integrate with the existing neighborhoods while enhancing the aesthetics and character of the boulevard. The standalone four-story contemporary affordable apartment development will offer ample outdoor spaces for residents and seamless connectivity to nearby amenities. A pedestrian paseo will divide the building's ground floor, enhancing walkability and fostering community interaction. Residents will have access to various private and common outdoor spaces on all levels, including a multi-purpose room that opens onto a deck area and outdoor gathering spaces. Residents will enjoy a thoughtfully designed one-bedroom unit layout with ample in-unit storage, accessible restroom facilities, and private balconies. The Project will be serviced by two elevators to ensure adequate circulation in the event of elevator repairs. Additionally, the project will provide 24 surface-level parking spaces, exceeding the parking requirements while providing a parking ratio that aligns with other recent senior affordable housing projects in the City. The development is located within a state-designated high-priority transit area, providing residents with convenient access to public transit. It is adjacent to the West Anaheim Youth Center and has forthcoming commercial amenities for residents to enjoy. Staff will continue to work with IHO to integrate appropriate art elements and final architectural features to ensure the Project continues the Authority’s legacy of high- quality affordable housing.
Preliminary Award Letter, Ground Lease Option and Cooperation Agreement – Southeast Corner Beach/Lincoln June 11, 2024
Furthermore, the Project will offer a comprehensive range of social services tailored to the diverse needs of senior residents and young adults aging out of foster care. The project will provide one full-time case manager and one part-time service coordinator to provide adult educational, health, and wellness classes on-site. An on-site manager will live on-site in addition to other safety and security measures to ensure the development remains well-maintained and properly managed.
IHO proposes to finance the project with a combination of funding sources, including $18,264,447 in federal tax credit equity and a $6,269,740 permanent loan from a private lender. While most of the funding needed to complete the Project is projected to come from federal tax credits, assistance is needed from the Authority to close the remaining financial gap. To address this gap, the Developer has requested that the Authority provide a loan of up to $6,000,000 funded in whole or in part from Low and Moderate Income Housing Asset Funds (LMIHAF), HOME, Permanent Local Housing Allocation Program funds (PLHA) and Homeless Housing Assistance and Prevention grants (HHAP-TAY). The Cooperation Agreement between the City and Housing Authority provides a mechanism to transfer federal and state-restricted housing funds provided directly to the City to the Housing Authority for inclusion in the Authority loan.
Additionally, the Authority proposes to enter into a 57-year ground lease of the site valued at approximately $2,600,000. This lease arrangement will allow the Authority to recoup the land acquisition costs and approximately $888,350 in site preparation costs over the lease term. The City is supporting the project by waiving the Transportation Impact Fee in the approximate amount of $60,959. The ground lease, Authority loan, site preparation costs, and Transportation Impact Fee waiver will be re-paid back to the Authority from 85% of the project’s available cash flow. Including local funding sources as part of the project's financing structure increases the competitive advantage of being awarded tax credits. The Developer also requests 46 Section 8 Project-Based Vouchers (PBV) for the project. The PBV program provides long-term, project-based affordable housing for extremely low-income households. The total development costs for the Project are $34,590,819.
Staff is supportive of the Project, as proposed, and therefore requests that the Governing Board of the Housing Authority approve and authorize a Preliminary Funding Award Letter outlining the terms and conditions of the Housing Authority’s provision of assistance to the Developer related to the Project. The Housing Authority will not enter into an Affordable Housing Agreement or release any funding until the Developer has provided evidence that all required third-party funding is in place for this development.
Any material changes in the terms outlined in the Preliminary Award Letter will be presented to the Governing Board of the Housing Authority for review and consideration.
The Tax Credit Allocation Committee application submittal deadline is July 2, 2024, with an award expected on October 2, 2024. Should the Project successfully obtain tax credits, IHO could begin construction in April or May of 2025.
Preliminary Award Letter, Ground Lease Option and Cooperation Agreement – Southeast Corner Beach/Lincoln June 11, 2024
This project is in line with City’s Strategic Plan Goal B Enhance Livability, Strategy 2 - Develop strategies to stabilize and expand affordable, workforce, and home ownership housing options for low-income residents.
IMPACT ON BUDGET
All proposed assistance to the Project is derived from restricted federal funds provided by HUD and Low Moderate Income Housing Asset Funds in the Housing and Community Development Department’s FY 2023/2024 budget.
Respectfully submitted,
Grace Ruiz-Stepter
Executive Director of
Anaheim Housing Authority
Attachments:
1. Resolution
2. Preliminary Award Letter
3. Ground Lease Option Agreement (Exhibit A of the Preliminary Award Letter)
4. Cooperation Agreement
5. Location Map
6. Project Plans