Agenda Item No. 4
And i
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: April 10, 2023 FROM: Matthew Bronson, City Manager
PREPARED BY: Megan Martin, Community Development Director David Hale, City Attorney
SUBJECT: Cleaver & Clark Commons Affordable Housing Project Update and Development Impact Fee Deferral Request
RECOMMENDATION
Receive a presentation on the status of the Cleaver & Clark Commons multi-family affordable housing project (DA 21-20); and direct the Community Development Director to execute an agreement with People’s Self-Help Housing and the Housing Authority of San Luis Obispo for a Development Impact Fee (DIF) deferral until issuance of a Certificate of Occupancy or Final Inspection, whichever occurs first, and condition any issuance of building permits to require the execution of the DIF agreement consistent with Government Code Section 66007.
BACKGROUND
On December 13, 2021, the City Council approved the Cleaver & Clark Commons Development Application 21-20 for a Use Permit, Development Permit and Lot Merger and related Disposition and Development Agreement for a 53-unit affordable housing project at 1206 West Grand Avenue.
The project applicant was People’s Self-Help Housing (PSHH) and the Housing Authority of San Luis Obispo (HASLO).
The project consisted of two, three-story buildings totaling approximately 50,604 square feet and a maximum building height of 43 feet. The project includes the following:
• 53 multi-family units: 52 affordable housing units and one onsite property manager unit. • 24 one-bedroom, 15 two-bedroom, and 14 three-bedroom apartments. • On-site laundry facilities located on the ground floor of Building “B”. • Common rooms within Building ‘A’ and ‘B’ with kitchen space, as well as space for resident services and events.
• 1,830 square-feet of outdoor common area space that includes a barbeque area, benches, picnic tables, and a play area for use by residents.
• 63 parking spaces and bicycle racks.
• 8,600 square feet of landscaping, including the use of trees along property lines. • Trash enclosure with pedestrian access.
• Removal of the existing commercial building and park bench. • Preservation of the on-site Coast live oak tree.
• Merger of the three existing lots.
Staff Report: Cleaver & Clark Commons Status Update & DIF Deferral Request Page 2 April 10, 2023
Since approval, PSHH and HASLO retained a new design team who recommended minor modifications to the project design resulting in minor modifications and the protection of the 100- year-old Coast live oak tree at the project. The design maintains the modern architectural style consistent with the approved project and although approved prior to the City’s adoption of Objective Design Standards, the modifications as proposed meet these new standards. All other details of the project, as approved and described above, remain unchanged. PSHH and HASLO submitted for building permits in December 2022 and are currently in the second round of plan check review.
Staff is processing this review in a timely manner with an expectation of issuing the permit to the PSHH/HASLO team by fall 2023 so that construction may begin in January 2024.
Development Impact Fee Deferral Request
Development Impact Fees, or DIFs, are imposed as a condition of approval on all development projects for which a building permit is issued. They are established to fund the expansion of infrastructure to support new housing, including local services such as schools, parks, and transportation infrastructure. Typically, the City has collected these fees or charges for public improvements on non-residential development upon building permit issuance. However, the City is statutorily required to defer development impact fees for residential development to the final inspection or issuance of Certificate of Occupancy but may require the developer to enter into a contract for deferral of DIFs.
• Government Code Section 660071 requires any local agency that imposes any fees or charges on a residential development for the construction of public improvements to not require payment until the date of final inspection or the date the Certificate of Occupancy is issued, whichever occurs first. However, a local agency may require payment of those fees or charges at an earlier time if an account has been established for the public improvements wherein funds have been appropriated and the local agency has a proposed construction schedule or plan, or if the agency seeks reimbursement for prior expenditures; and • Government Code Section 66007 (b) (1) precludes a local agency from expediting the payment of fees prior to final inspection or issuance of the Certificate of Occupancy if the project is owned by a nonprofit housing developer in which 49 percent of the total units in the project are reserved for lower income households.
• GBMC Article X, Chapter 13, Section 101306 and Government Code Section 66007 (c)(1) Grants the Community Development Director authority to execute a contract with the City to pay the deferred impact fees at final inspection and/or issuance of a Certificate of Occupancy for the project.
Along with their submittal of an application for building permits, PSHH and HASLO continue to seek the necessary funds for the development project. In February 2023, through the California Multifamily Super NOFA (Notice of Funding Availability), the project was awarded approximately $10 million. The next major funding application for the project will seek to secure low-income tax credits through the California Tax Credit Allocation Committee (TCAC). Together, these funds will support the overall fees associated with permitting and construction; and, once constructed, the site-based residential services to the project’s residents.
As PSHH and HASLO await award of the additional funds, they have requested the City defer $535,410.72 in fees (Attachment 2) to issuance of a Certificate of Occupancy or Final Inspection.
Their request includes the South County Sanitation District Fee which is not a DIF eligible for 1 https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=66007.&lawCode=GOV Staff Report: Cleaver & Clark Commons Status Update & DIF Deferral Request Page 3 April 10, 2023
deferral by the City. As such, Attachment 1 – Exhibit “A” reflects the appropriate DIFs and the corrected deferral amount of $444,434.72. Deferral will provide additional time to obtain grant funding to ensure the project will be 100% affordable. As described above, impact fees related to the construction of public improvements or facilities is entitled to a deferral and this authority is granted to the local agency for consideration and approval with implementation through execution of a contract between PSHH, HASLO, and the City.
Staff is proposing the deferred fees be paid in full at the time the first unit has Final Inspection or issuance of Certificate of Occupancy Permit, whichever comes first. Deferral of fees will not affect the public health, safety or general welfare of the community and deferral will have no long-term fiscal impact because these fees for capital costs of public facilities will be fully paid prior to issuance of a Certificate of Occupancy. For these reasons, staff supports the request to defer the DIFs and allow PSHH and HASLO to provide payment prior to Certificate of Occupancy and is requesting authority from the Council in executing an agreement for this deferral.
FISCAL IMPACT
Approval of the DIF deferral has no long-term fiscal impact to the City as the fees will ultimately be paid to the City. Following execution of the contract (Attachment 1), the DIF would be required to be paid in full prior to issuance of the Certificate of Occupancy or Final Inspection of the first unit, whichever comes first.
ALTERNATIVES
The City Council has the following alternatives to consider:
1. Direct the Community Development Director to execute an agreement with PSHH and HASLO, to defer the Development Impact Fees of $444,434.72 to the issuance of the Certificate of Occupancy or Final Inspection, whichever occurs first, and condition any issuance of building permits to require the execution of the DIF agreement consistent with Government Code Section 66007; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Draft DIF Deferral Agreement
2. PSHH and HASLO DIF Deferral Request
RECORDING REQUESTED BY:
City of Grover Beach
154 S. 8th Street
Grover Beach, CA 93433
WHEN RECORDED MAIL TO:
Same
PURSUANT TO GOVERNMENT CODE SECTION 6103,
NO RECORDING FEE REQUIRED.
DEFERRED DEVELOPMENT IMPACT FEE AGREEMENT
This Agreement made and entered into as of this day of , 2023 by and between Cleaver & Clark Commons, L.P., a California Limited Partnership, (“Developer”), the Housing Authority of the City of San Luis Obispo (“HASLO”), a California Public Agency and the City of Grover Beach, a municipal corporation (the “City”). The City, Developer and HASLO may be referred to individually as a “Party” or collectively as the “Parties.” The term “Owner” shall refer collectively to Developer and HASLO;
WITNESSETH:
WHEREAS, the Owner or Owners acting on behalf and for the benefit of the Owner, has applied for a building permit from the City to do the following work (hereinafter referred to as the “Work”):
Building Permit #: BP22-00446
Nature of Work: Construction consisting of a fifty-three (53) rental unit complex, including one manager’s unit and fifty-two affordable rental units.
Legal Description: See Exhibit A which is incorporated herein by reference as if set out in full.
Location of Real Property for which permit/certificate issued: 1206 West Grand Ave.
WHEREAS, the applicant for such permit is required to pay development impact fees in the estimated amount of $444,432.72, as set forth in Exhibit A to this Agreement (hereinafter referred to as the “DIFs”) as a condition of receiving such permit; and WHEREAS, the Owner has requested that the payment of the DIFs be deferred until such time as the date of final inspections are completed or Certificates of Occupancy (hereinafter referred to as COs” ) are being issued by the City, whichever occurs first, and; WHEREAS, the City Manager has determined that the payment of the DIFs can be deferred until the time of final inspection or issuance of COs in order to assist the Owner with the financial requirements of the project, which project will be of economic benefit to the City in the Attachment 1
form of additional 52 affordable rental units and meeting the City’s Regional Housing Needs Allocation (RENA), and
WHEREAS, the Work shall be for multiple units of residential housing and the City shall require under Government Code Section 66007 (a) to be paid in full upon the final inspection or issuance of the first COs requested and issued by the City, whichever comes first, for the first unit completed, and
WHEREAS, in accordance with Government Code Section 66007 (c) (1), the Owners have agreed to enter into this Agreement for the purpose of deferring and payment of the DIFs within the timeframes defined herein.
NOW, THEREFORE, WITH THE INCLUSION AND INCORPORATION BY REFERENCE HEREAFTER OF THE ABOVE WHEREAS PROVISIONS, IT IS HEREBY AGREED as follows:
1. Payment of DIFs. The Owner hereby agrees, in consideration of the deferment of the DIFs by the City, that the Owner agrees to timely pay in full DIFs listed on Exhibit A to this Agreement, prior to the final inspection of the issuance of the first COs issued by the City, whichever comes first for the first unit completed and that such payment in full is a condition precedent to City’s obligation to issue any COs along with the successful passage of final inspection by the Owner.
2. Lien. Should Owner fail to comply with the provisions of Paragraph 1 above, the City is hereby granted a statutory lien as to the full amount of any balance thereof due and any delinquencies thereof, including accumulated interest and service charges attaching thereto, pursuant to Civil Code Sections 2884, et seq., with all rights of a lien or therein set forth. In the case of default hereunder, City may declare the entire remaining balance due.
3. Prevailing Wage Law. California Prevailing Wage law applies to projects where public funds are used for construction or for the payment of fees that are mandatory conditions of construction. Pursuant to Paragraph 1 [Payment of DIFs], City will defer payment of DIFs. Owner further agrees to pay interest in accordance with the requirements of Paragraph 2 above, on the deferred DIFs at the rate equivalent to 2% plus the rate that the City would receive if the City had the DIFs in hand and had invested those moneys in the City’s investment portfolio.
4. Deferral is a Payment of Public Funds. Owner is absolutely bound to pay all required fees, but in accordance with Paragraph 1, will be allowed to pay the DIFs over time with no interest other than as defined in Paragraph 2. The parties, having each researched California Prevailing Wage Law, and agree that this deferral is a payment of public funds pursuant to California Labor Code Section 1720 and the Project is a Public Works for purposes of Prevailing Wage Laws. Owners assume all responsibility and liability for compliance with California Prevailing Wage laws as applicable to this Work.
5. Owner’s Agreement to Indemnify and Defend City. If the Department of Industrial Relations determines the Project is a Public Work and the deferral of DIFs constitutes the payment of public funds for the Project, Owner further agrees that it shall indemnify and defend the City from and against any and all present and future liabilities, obligations, orders, claims, damagers, fines, penalties and expenses (including attorneys’ fees and costs) arising out of or in any way connected with Owner’s obligation to comply with all Prevailing Wage Laws with respect to the work of Public Improvements, including all claims that may be made by contractors, subcontractors or other party claimants pursuant to Labor Code Sections 1726 and/or 1781.
6. Changes in Fee Amounts. The parties understand and agree that the amounts set forth in Exhibit A are approximations and that the actual amounts may change as the Project is fully designed and brought to the City for review and approval. The parties agree that changes to the amounts of the DIFs shall not affect the terms of this Agreement, and in particular the payment amounts set forth in Exhibit A, may be adjusted to reflect a change in DIF amounts. Any change in the estimated amount of DIFs shall be communicated by City to Owner at the time a CO is requested to be issued and payment is due under Paragraph 1.
7. Sale of Property. In accordance with Government Code Section 66007 (c) (3) the Owners shall be required to provide notification to City of the opening of any escrow for the sale of the subject property defined in Exhibit A, for which the building permit was issued and to provide in the escrow instructions that the DIFs are to be paid to the City from the proceeds in escrow prior to disbursing proceeds to the Owners.
8. Indemnity. Except as to the sole negligence, active negligence or willful misconduct of the City, Owner expressly agrees to, and shall, indemnify, defend, release, and hold the City, and it respective officials, officers, attorneys, employees, agents, and contractors harmless from and against any action, liability, loss, damage, entry, judgment, order, and lien, which arises out of, or are in any way related to, any act or omission of Owner, or its officers, directors, employees, agents, or contractors, connected with the performance under this Agreement, the construction, use, or operation of the Project, notwithstanding that the City may have benefited therefrom, or any challenge to this Agreement. This Paragraph shall apply to any acts or omissions, willful misconduct or negligent conduct whether active or passive, on the part of Owner’s officers, directors, employees, agents and contractors. The City shall not be responsible for any acts, errors or omissions of any person or entity except the City and the officers, agents, servants, attorneys, employees or contractors. The parties expressly agree that the obligations of Owner under this Section shall survive the expiration or early termination of the Agreement.
9. Legal Actions. Legal actions must be instituted and maintained in the Superior Court of the County of San Luis Obispo, State of California, Central Branch, Civil Division, or if appropriate, in the United States District Court for the Central District of California.
Participant specifically waives any rights provided to it pursuant to California Code of Civil Procedure §394 and any federal statue or rule of similar effect.
10. Applicable Law. The laws of the State of California shall govern the interpretation and enforcement of this Agreement.
11. Attorney’s Fees. In the event either party commences an action against the other party which arises out of a default of, breach of, failure to perform, or that is otherwise related to, this Agreement, then the Prevailing Party in the Action shall be entitled to recover its litigation expenses from the other party in addition to whatever relief to which the prevailing party may be entitled. For purposes of this section, “Prevailing Party” shall have the same meaning as ascribe in §1032 (a)(4) of the California Code of Civil Procedure.
12. No Third-Party Beneficiaries. This Agreement is for the sole and exclusive benefit of the City and Owner. No other parties or entities are intended to be, or shall be considered, a beneficiary of the performance of any of the parties’ obligations under this Agreement.
13. Interpretation. The City and Owner acknowledge that this Agreement is the product of mutual arms-length negotiations and drafting and each represents and warrants to the other that it has been represented by legal counsel in the negotiation and drafting of this Agreement. Accordingly, the rule of construction which provides the ambiguities in a document shall be construed against the drafter of that document shall have no application to the interpretation and enforcement of this Agreement. In any action or proceeding to interpret or enforce this Agreement, the finder of fact may refer to such extrinsic evidence not in direct conflict with any specific provision of this Agreement to determine and give effect to the intention of the parties hereto.
14. Severability. Each provision, term, condition, covenant, and/or restriction, in whole and in part, in this Agreement shall be considered severable. In the event any provision, term, condition, covenant, and/or restriction, in whole and/or in part, in this Agreement is declared invalid, unconstitutional, or void for any reason, such provision or part thereof shall be severed from this Agreement and shall not affect any other provision, term, condition, covenant, and/or restriction, of this Agreement and the remainder of the Agreement shall continue in full force and effect.
15. Amendment to Agreement. Any amendment to this Agreement must be in writing and signed by the appropriate authorities of the City and Owner.
16. Notices. All notices or written demands to be given pursuant to this Agreement by either party shall be mailed by certified mail, return receipt requested, addressed as follows:
Owner: Developer Cleaver and Clark Commons, L.P.
c/o Cleaver & Clark Commons LLC
1060 Kendall Road
San Luis Obispo, CA 93401
Attn: Ken Trigueiro, CEO & President
HASLO Housing Authority of San Luis Obispo
487 Leff Street
San Luis Obispo, CA 93401
Attn: Scott Collins, Executive Director
With copy to:
People’s Self-Help Housing
1060 Kendall Road
San Luis Obispo, CA 93401
Attn: Ken Triguerio, CEO & President
City: City of Grover Beach
154 S. 8th Street
Grover Beach CA 93433
Attn: Matthew Bronson, City Manager
Each party shall promptly notify the other in writing of any change in that party’s mailing address.
17. Recordation of Agreement. Owner(s) represent that they are the owners of record for the Real Property and have full authority to enter into this Agreement which shall be recorded as an obligation on the Real Property. Upon execution of this Agreement by the City and the Owner, this Agreement shall be recorded in the Office of the San Luis Obispo County Recorder. From and after the date of recordation, the terms and conditions of said Agreement shall be binding upon the heirs, executors, administrators, grantees, successors and assigns of the Owner as covenants running with the land until full payment of the DIFs is received by the City.
18. Counterpart Originals. This Agreement may be executed in duplicate originals, each of which is deemed to be an original.
[The remainder of this Page is intentionally left blank] IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of the date first above written.
City of Grover Beach
By:
Matthew Bronson
City Manager
Approved as to form:
David Hale
City Attorney
Developer:
Cleaver & Clark Commons, L.P.
a California Limited Partnership
By: Cleaver & Clark Commons, LLC
a California Limited Liability Company
its managing general partner
By: People’s Self-Help Housing
Corporation, a California
Nonprofit public benefit
Corporation, its sole member/manager
By:__________________________
Kenneth Triguerio
Chief Executive Officer and President
By; San Luis Obispo Nonprofit Housing Corporation
a California nonprofit public benefit corporation, its
administrative general partner
By:_________________________
Ken Litzinger,
Chief Financial Officer
HASLO
Housing Authority of the City of
San Luis Obispo
a California Public Agency
By:_____________________________
Name:__________________________
Title____________________________
State of California )
)
County of San Luis Obispo )
On before me, , Notary
Public, personally
appeared who proved to me on the basis of
satisfactory evidence to the be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature (SEAL)
State of California )
)
County of San Luis Obispo )
On before me, , Notary
Public, personally
appeared who proved to me on the basis of
satisfactory evidence to the be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature (SEAL)
EXHIBIT “A”
487 Leff Street
San Luis Obispo, CA 93401
1060 Kendall Road
San Luis Obispo, CA 93401
February 27, 2023
RE: Cleaver & Clark Commons
Request for Deferral of Impact Fees
Dear Ms. Martin,
People’s Self-Help Housing’s (PSHH) and the Housing Authority of San Luis Obispo’s (HASLO) would like to thank the City for their continued support of our Cleaver & Clark Commons project.
Our team submitted our first round of plans for plan check on December 21st and we are currently working to provide a timely response to the City’s first round of comments by end of March 2023.
Our current timeline is working towards being permit ready by this Fall in order to be able to begin construction by January 2024.
PSHH and HASLO respectfully request a deferral of the City of Grover Beach’s impact fees imposed on the project in an estimated amount up to $535,410.94. Table 1 and Table 2 follow this letter and provide a breakdown of fees as estimated and provided by City staff in March and December of 2022. Our Cleaver & Clark Commons project will be 100% affordable to households earning less than 60% area median income. Impact fees related to the construction of public improvements or facilities are entitled to fee deferral pursuant to California Government Code Section 66007. With this in mind, we ask for a deferral payment of the impact fees identified in Table 1 and 2 to Certificate of Occupancy currently planned for January 2026.
Once again, we thank the City of Grover Beach for their support of this important project! We are excited to continue working together to bring this new, beautiful, and innovative affordable housing to the City. If you have any other questions or concerns, please do not hesitate to contact me at [email protected] or 805-548-2343.
Sincerely,
Dalia Flores
Project Manager II
Attachment 2
487 Leff Street
San Luis Obispo, CA 93401
1060 Kendall Road
San Luis Obispo, CA 93401
Table 1: Total Local Development Impact Fees per March 2022 Estimate Type of Fee Amount
Fire Facilities $ 5,976.78
General Facilities $ 4,721.52
Law Enforcement Facilities $ 5,838.86
Parks & Recreation $ 314,330.28
Traffic Fees $ 34,296.86
Wastewater Collection $ 24,139.57
Wastewater Treatment $ 107,034.00
Water Facilities $ 26,046.50
Stormwater $ 13,008.60
Total $ 535,410.97
Table 2: Total Local Development Impact Fees per December 2022 Estimate Type of Fee Amount
Fire Protection DIF: MFR $ 6,070.09
Law Enforcement DIF: MFR $ 6,789.30
Park Improvement DIF: MFR $ 142,968.03
Park Land Dedication In-Lieu Fee $ 145,803.00
Recreation Facility DIF: MFR $ 25,559.25
Sanitation District Fee: Apts 2bdrms or Less $ 72,384.00 Sanitation District Fee: Apts 3bdrm+, Each $ 34,650.00
Transportation DIF: MFR $ 51,614.05
Total $ 485,837.72