INFORMATION SUMMARY (33433 REPORT)
FOR THE
DISPOSITION AND DEVELOPMENT AGREEMENT
WITH
SARAH’S CARE HOME
This summary is prepared pursuant to Section 33433 of the California Health and Safety Code.
1. Background:
With City Council’s direction, the parcels were acquired by the former Lancaster Redevelopment Agency (“Agency”) for redevelopment purposes. The parcels were purchased using low- and moderate-income housing funds in the early 2000s. The Lancaster Housing Authority (“Authority”) began the process of revitalization by demolishing dilapidated buildings, clearing the land, and preparing the parcels for income- eligible households. In 2012, the properties were transferred to the Lancaster Housing Authority upon the dissolution of the Redevelopment Agency pursuant to a housing asset transfer form as required under the California Health & Safety Code Section 34176(a) (2).
Sarah’s Care Home (Developer) proposes to develop land owned by the Authority located at the southwest corner of Kingtree Avenue and Avenue J-2. The proposed project is located in District Edge sub-district within the Lancaster Health District Master Plan area.
The District Edge zone is envisioned to provide a variety of urban housing choices that would support a comfortable pedestrian public realm, supported by public transportation and neighborhood-serving retail and service uses. The Developer envisions that the Property will be developed into no fewer than sixty-five (65) residential units of multi- family housing units for seniors. It is anticipated that the housing units will be financed with grant funds from the California Department of Health Care Services (DHCS) and California Department of Social Services (CDSS) Community Care Expansion Program and/or another affordable housing financing sources, with rents based on County of Los Angeles Affordable Financing guidelines.
The purpose of the Disposition and Development Agreement (Agreement) is to implement the City’s objective of improving and increasing the supply of affordable housing in the City of Lancaster.
The DDA is an agreement between the Authority and the developer for the sale and development of the Site. The DDA governs the Developer’s obligations with respect to the acquisition of the land, requirements for closing, and schedule of performance, and provides a legal framework for addressing default.
The applicant for Sarah’s Care Home will be submitting an application to Planning within the next few months. The developer plans to break ground in April 2024.
2. Cost of the Agreement to the former Agency/Authority:
The former Agency purchased these properties using Low- and Moderate-Income Housing Funds in the early 2000s. The total acquisition/demolition cost was $5,430,668.00±.
The Developer has agreed to purchase the Property for $1,300,000.00, which is based on an independent appraisal.
The total cost to the former Agency and the Authority is approximately $4,103,668.00.
3. Estimated value of interest to be conveyed at highest and best use permitted by the Redevelopment Plan:
The estimated value of the interest to be conveyed is $1,300,000, which is based on an independent appraisal.
4. The estimated value of interest to be conveyed at the use and with the conditions, covenants, and restrictions required by the DDA:
The analysis of the “estimated value of interest” must consider the fair market value of the property, the Authority’s obligation to assist with a growing need within the community to provide affordable housing to families of various ages and income levels, and the DDA’s condition that all the units through deed restrictions will remain affordable for thirty (30) years. Therefore, the value of the properties with affordable housing covenants and restrictions in the proposed DDA is less than zero. Specifically, without subsidies, the below-market rate rents required by the DDA would not generate enough income to support the development costs of the project.
5. The Disposition is for not less than the full market appraised value at the use and with the covenants, conditions, and development costs authorized by the sale: Impact of affordable housing on conveyance price:
The primary purpose of this disposition of the Authority-owned land is to develop the parcels for uses consistent with the City’s Housing Element that encourages infill development, enhancing and preserving existing neighborhoods, increasing affordable housing, and eliminating blight. To accomplish this, the Agreement provides that the Authority will transfer its interest in the parcels, at its fair market value, to the Developer upon the express condition that the Developer will develop the parcels for the uses described in the Agreement.
Restricted rents at or below 80% of the Area Median Income significantly reduce the potential value of the project. In turn, this reduction directly reduces the residual value of the land compared to market-rate projects. Given these circumstances, the Project cannot support the sale of the property at the highest and best market value.
6. Explanation as to the reason why the sale of the Site will assist in the elimination of blight:
The Project will consist of the development of a minimum of sixty-five (65) Residential Units of multi-family housing for seniors which are subject to long-term income and affordability restrictions. In accordance with the California Redevelopment Law, as portrayed in the California Health and Safety Code Section 33433, the conveyance of a property that results in the provision of housing for low- or moderate-income persons satisfies the blight elimination criteria imposed by Section 33433. Thus, the scope of development required by the Agreement fulfills the blight elimination requirement.