1 APPROVED AS TO FORM AND LEGALITY
_________________________
CITY ATTORNEY’S OFFICE
OAKLAND CITY COUNCIL
RESOLUTION NO. ______________ C.M.S.
RESOLUTION APPROPRIATING $4,000,000 FROM GROUND RENT
LOAN PAYMENT; AUTHORIZING A $4,000,000 LOAN TO EAST 12
TH
STREET HOUSING, L.P. FUNDED BY THE GROUND RENT LOAN
PAYMENT FOR THE DEVELOPMENT OF 91 UNITS OF AFFORDABLE
HOUSING ON A PORTION OF THE 12 TH STREET REMAINDER
PROPERTY LOCATED AT EAST 12TH STREET AND 2ND AVENUE; AND
ADOPTING CALIFORNIA ENVIRONMENTAL QUALITY ACT
FINDINGS
WHEREAS, the City of Oakland (“City”) owns approximately 0.925 acres of vacant property (Assessor Parcel Number 019-0027-014), commonly known as the 12th Street Remainder Parcel, bounded by East 12th Street on the ea st, Second Avenue and property owned by the Oakland Unified School District on the south, open space to the west, and Lake Merritt Boulevard to the north (the “Property”); and
WHEREAS, On July 21, 2023, Ordinance No. 13724 C.M.S, the City Council authorized the City Administrator to negotiate a Lease Disposition an d Development Agreement (“LDDA”) between the City of Oakland and East 12
th Street Housing L.P., a California limited partnership (“Developer”), an affiliate of East Bay Asian Local Development Corporation, for the development of 91 units of affordable housing (the “Project”) on a portion of the Property (“Parcel 1”) and to negotiate and execute a 99-year ground lease between the City and Developer with $1.00 per year base rent plus rent based on the appraised $4,000,000 fair market value (“FMV”) of Parcel 1 in the form of a loan (“Ground Rent Loan”) for a term of fifty-fi ve (55) years from permanent loan conversion and an interest rate of three percent (3%); and
WHEREAS, the Environmental Review Officer determined (1) that pursuant to Government Code Section 65651(b)(2), the City’s review and approval of the Project, which consists of affordable housing, including 30 pe rcent supportive housing, shall not constitute a “project” for purposes of the California Environmental Quality Act (“CEQA”) (Section 21000 et seq. Of the Public Resources Code) and therefore shall not be subject to CEQA review and (2) that the anticipated environmental effects of the Proj ect had been adequately evaluated by the Lake Marritt Station Area Plan Final Environmental Impact Report (Final EIR) (certified November 2 2014); the Project is consistent with a Communi ty Plan, General Plan or Zoning under Section 15183 of the State CEQA Guidelines (Projects cons istent with a Community Plan, General Plan or Zoning); and that the Project complies with Section 15183.3 of the State CEQA Guidelines (Streamlining for Infill Projects); and furthe r, the Project is exempt from CEQA under the following Sections of the State CEQA Guid elines: Section 15601(b)(3) (Common Sense Exemption), Section 15268 (Ministerial Proj ects), and Section 15332 (In-Fill Development Projects); and
WHEREAS, on February 1, 2023, the City and Developer entered into a Lease Disposition and Development Agreement (“LDDA”) for development of the Project on Parcel 1; and
WHEREAS, on April 16, 2019, City Council authorized Resolution No. 87626 for the City to apply for, accept, and appropriate loan and grant funds under the state of California’s Affordable Housing and Sustainable Communities program for the Project to be developed on Parcel 1.
WHEREAS, the Developer will pay in full the Ground Rent Loan in the amount of $4,000,000 from Housing and Community Development Afford able Housing Sustainable Communities (“HCD AHSC”) funds and Limited Part ner (LP) equity fund s at the closing for construction of the Project; and
WHEREAS, the Developer has requested a new lo an from the City in the amount of $4,000,000 (the “Loan”) for development of the Project to close a funding gap resulting from higher than anticipated construction costs of the Project; and
WHEREAS, the City has reviewed the pro forma for the Project and determined that, based on the development costs, rental income, and other revenue, the Proj ect needs the Loan to make the Project financially feasible; and be it
RESOLVED: That the City Council hereby authorizes the City Administrator to provide the Loan to the Developer in an amount not to exceed $4,000,000 to be used for development of the Project on Parcel 1; and be it
FURTHER RESOLVED: That the City Administrator is authorized to accept and deposit the funds from the $4,000,000 Ground Rent Loan payment to City Entity (1), Miscellaneous Capital Projects Fund (5999), Central District Redevelopment Organization (85245), Land Rental Miscellaneous Revenue Account (44219), in a New Project to be established (TBD), Downtown Redevelopment Program (SC13); and be it
FURTHER RESOLVED: That the City Administrator is authorized to appropriate the $4,000,000 loan expenditure budget into and fund the Loan from City Entity (1), Miscellaneous Capital Projects Fund (5999), Central District Redevelopment Organization (85245), Non-Grant Loan Expenditures Account (58312), in the same New Project to be established (TBD), Downtown Redevelopment Program (SC13) for development of the Project on Parcel 1; and be it 3 FURTHER RESOLVED: That the making of the Loan shall be contingent on the availability of sufficient funds in the above fund; and be it
FURTHER RESOLVED: That the Loan shall be for a maximu m term of fifty-five (55) years, with a simple rate of interest of three percent (3%), with repayment to the City from surplus cash flow from the project and other available funds during the term of the Loan, with the balance due at the end of the term, or on such other repayment terms and schedule as the City Administrator determines are in the best interests of the City and the Project; and be it
FURTHER RESOLVED: That as a condition of the Lo an, the City will require that appropriate restrictions on project occupancy, rents and operations be recorded against the Project improvements and the Developer’s leasehold interest in the land; and be it
FURTHER RESOLVED: That the Loan shall be secured by a deed of trust on the Project improvements and the Developer’s leasehold interest in the land; and be it
FURTHER RESOLVED: That the Loan shall be contingent on and subject to such other terms and conditions as the City Administrator may establish; and be it
FURTHER RESOLVED: That the City Administrator in their discretion is hereby authorized to subordinate the priority of any of th e City’s recorded interests in Property to a lien or encumbrance of another private or governmental entity providing financ ial assistance to the Project, if the City Administrator determines that (1) an economically feasible alternative method of financing the Project on s ubstantially comparable term s and conditions but without subordination is not reasonably available, (2) the City’s investment in the Project in the event of default is reasonably protected, and (3) subordination is in the best interests of the City; and be it
FURTHER RESOLVED: That the City Council here by finds and determines, on a separate and independent basis, (1) that pursuant to Government Code Section 65651(b)(2), the City’s review and approval of the Project, wh ich consists of affordable housing, including 30 percent supportive housing, shall not constitute a “project” fo r purposes of the California Environmental Quality Act (“CEQA”) (Section 21000 et seq. Of the Public Resources Code) and therefore shall not be subject to CEQA review a nd (2) that the anticipated environmental effects of the Project had been adequately evaluate d by the Lake Marritt Station Area Plan Final Environmental Impact Report (Fin al EIR) (certified November 2014) ; the Project is consistent with a Community Plan, General Plan or Zoning under Section 15183 of the State CEQA Guidelines (Projects consistent with a Community Plan, General Plan or Zoning); and that the Project complies with Section 15183.3 of the St ate CEQA Guidelines (Streamlining for Infill Projects); and further, the Project is exempt from CEQA under the following Sections of the State CEQA Guidelines: Section 15601(b)(3) (Common Sense Exemption), Section 15268 (Ministerial Projects), and Section 15332 (In-Fill Development Projects); and be it
FURTHER RESOLVED: That all loan documents shall be reviewed and approved as to form and legality by the City Attorney’s Office prior to execution; and be it
4 FURTHER RESOLVED: That the City hereby author izes the City Administrator to conduct negotiations, execute documents, administer the Loan, extend or modify the repayment terms, and take any other action with respect to the Lo an and the Project co nsistent with this Resolution and its basic purpose.
IN COUNCIL, OAKLAND, CALIFORNIA,
PASSED BY THE FOLLOWING VOTE:
AYES - FIFE, GALLO, JENKINS, KALB, KAPLAN, RAMACHANDRAN, REID, AND
PRESIDENT FORTUNATO BAS
NOES –
ABSENT –
ABSTENTION –
ATTEST:
ASHA REED
City Clerk and Clerk of the Council of the
City of Oakland, California