RESOLUTION NO. 11386
A RESOLUTION OF THE CITY COUNCIL OF
THE CITY OF ORANGE, (1) APPROVING THE
DISPOSITION AND DEVELOPMENT
AGREEMENT BY AND BETWEEN THE CITY OF
ORANGE AND KATELLA TERRACE, L.P . AND
ITS ATTACHMENTS, ESTABLISHING THE
TERMS AND CONDITIONS FOR THE GROUND
LEASE OF CERTAIN PROPERTY LOCATED AT
1249 E. KATELLA AVENUE, ORANGE ,
CALIFORNIA AND THE DEVELOPMENT OF AN
AFFORDABLE RESIDENTIAL RENTAL
PROJECT FOR SENIOR LOWER INCOME
HOUSEHOLDS ON S AID PROPERTY; ( 2)
APPROVING THE GROUND LEASE OF SAID
PROPERTY TO A LIMITED PARTNERSHIP
ENTITY FOR SUCH PROJECT ; AND ( 3)
APPROVING OTHER RELATED ACTIONS
WHEREAS, the City of Orange (the “City”) is a municipal corporation organized and existing under the Constitution of the State of California;
WHEREAS, on February 8, 2022, the City and OSH Katella Terrace, LLC entered into an Agreement to Convey Land providing for the conveyance to the City of certain real property located at 1249 E. Katella Terrace, Orange, California (the “Site”) for the purpose of facilitating development of the Site with a project to provide rental housing affordable to senior lower income households;
WHEREAS, Katella Terrace, L.P. (“ Developer”) has proposed to finance, develop, and operate on the Site a 74-unit residential rental project affordable to lower income senior households, together with ancillary improvements, all as described in the proposed Disposition and Development Agreement and i ts Attachments (collectively, the “Project”). Developer’s proposed financing for the Project is anticipated to include a combination of the construction loan, permanent loan, City Council Ground Rent Loan (i.e., a carry-back loan by the City to Developer to finance Developer’s prepayment of the capitalized annual lease payments over the term of the Ground Lease), other public and private affordable housing funds and financing, Developer equity derived from the syndication of low income tax credits, and deferred developer fee;
WHEREAS, the City has previously approved certain entitlements for the Project under applicable City codes, ordinances and regulations;
WHEREAS, in order to carry out and implement the Project, and pursuant to the terms and conditions of the proposed Disposition and Development Agreement including its Attachments (collectively, “Agreement”), the City proposes (i) to lease the Site to Developer pursuant to the proposed Ground Lease for not less than the fair market value of the Site for the 2 development and operation of the Project, and (ii) to finance Developer’s ground lease of the Site with a carry-back loan based on the appraised fair market val ue of the Site at the time of commencement of the Ground Lease, as prepayment of the capitalized annual lease payments over the term of the Ground Lease;
WHEREAS, the City desires to enter into the Agreement with Developer for the purpose of and related to the development and operation of the Project on the Site;
WHEREAS, the City is authorized to sell or lease land such as the Site for development of affordable housing; and
WHEREAS, pursuant to California Government Code Section 65402 (a), it is determined that the location, purpose and extent of the proposed disposition of the Site for the purposes and uses proposed by Developer as outlined and provided for in the Agreement conform with the City’s adopted General Plan;
WHEREAS, in accordance with California Government Code Sections 54221 and 37364, the Site is “exempt surplus land” under the Surplus Land Act because , pursuant to the proposed Agreement, the Site will be used exclusively (with the exception of one unit for the residen t manager) to provide housing affordable to lower income senior households, meeting the requirements of Section 37364 , the proposed disposition of the Site for the purposes and uses proposed by Developer pursuant to the Agreement are in the City’s best interests, and the proposed Project will comply with the terms of Section 37364;
WHEREAS, Government Code Section 37364 authorizes a city to sell, lease, ex change, quitclaim, convey, or otherwise dispose of real property to provide housing affordable to persons and families of low or moderate income, provided the following conditions are met:
a. Not less than 80 percent of the area of any parcel of property will be used for development of housing;
b. Not less than 40 percent of the total number of those housing units developed on any parcel shall be affordable to households whose incomes are equal t o, or less than, 75 percent of the maximum income of lower income households, and at least half of which shall be affordable to very low-income households; and
c. Dwelling units produced for persons and families of low or moderate income under Government Code Section 37364 shall be restricted by regulatory agre ement to remain continually affordable to those persons and families for the longest feasible time, but not less than 30 years , with such regulatory agreement recorded in the office of the county recorder in which the housing development is located; and
WHEREAS, the California Department of Housing and Community Development has confirmed that the transfer of the Site pursuant to the Agreement, the Ground Lease and this Resolution will be a transfer of exempt surplus land;
WHEREAS, pursuant to California Government Code Section 52201, the City has caused the preparation of a summary report (“Summary Report”);
3 WHEREAS, a public hearing has been duly called, noticed and advertised as required by law for Tuesday, April 12, 2022, at 6:00pm at the Council Chambers located in the City Hall, for the City Council to consider approval of the Agreement and the disposition of the Site by ground lease pursuant to the proposed Agreement, and copies of the proposed Agreement and the Summary Report were made available for public inspection and comment as required by the applicable law; and
WHEREAS, the City Council did receive and consider a staff report on the proposed project and any comments received during the public review period.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Orange as follows:
1. The City Council finds and determines that the foregoing recitals are true and correct and are incorporated herein by this reference as a substantive part of this Resolution.
2. The City Council has received and heard all oral and written objections (if any) to the proposed Agreement, to the proposed ground lease disposition of the Site, and to other matters pertaining to this transaction, and that all such oral and written objections (if any) are hereby overruled.
3. Based on the whole record before it , the Ci ty Council finds and determines, pursuant to California Government Code Section 65402(a), that the location, purpose and extent of the proposed disposition of the Site for the purposes and uses proposed by Developer as outlined and provided for in the proposed Agreement are in conformance with the City’s adopted General Plan.
4. Pursuant to California Government Code Section 37364, the City Council finds and determines that the Site can be used to provide housing affordable to persons and families of low or m oderate income, as defined by California Health and Safety Code Section 50093 or as defined by the United States Department of Housing and Urban Development or its successors , and that the proposed disposition of the Site for the purposes and uses proposed by Developer pursuant to the proposed Agreement are in the City’s best interests.
5. Based on the whole record before it , the City Council finds and d etermines pursuant to California Government Code Section 54221 (b)(1) that the Sit e is “exempt surplus land” under the California Surplus Land Act based on California Government Code Section 54221(f)(1)(A) bec ause the Site will be transferred pursuant to California Government Code Section 37364 and used to provide housing pursuant to the proposed Ag reement, including 73 units of the total 74 units (or more than 98 % of the total units) that will be restricted and covenanted by the recorded Regulatory Agreement to be exclusively rented at affordable rent to lower income senior households, and more than half of which shall be rented at affordable rent to very low income senior households , meeting the requirements o f California Government Code Section 37364, and the proposed Project will comply with the terms of Section 37364 pursuant to the proposed Agreement.
4 6. Based on the whole record before it, the City Council finds and determines pursuant to California Government Code Section 52201, each of the following:
a. That the lease of the Site as described in the proposed Agreement will provide affordable housing for very low and low er income persons and will assist in the creation of economic opportunity.
b. That the consideration for the lease of the Site pursuant to the proposed Ground Lease (Attachment No. 7 to the Disposition and Develop ment Agreement) is not less than the fair market value of the Site at its highest and best use , based on an independent appraisal of the Site.
7. The City Council approves the terms and provisions for the lease of the Site and approves the proposed Agreement between the City and Developer for the lease of the Site and the development and operation of the Project, including all exhibits and Attachments thereto, in the form as submitted by the City Manager of the City.
8. The City Council authorizes and directs the Mayor of the City to execute the Disposition and Development Agreement on behalf of the City, subject to the approval as to form by the City Manager of the City and its legal counsel.
9. The City Council authorizes and directs the City Manager of the City, or designee, to execute all documents, instruments, and agreements required by and for the implementation of the Disposition and Development Agreement including, without limitation, all Attachments to the Disposition and Development Agreement, on behalf of the City, subject to the approval as to form by the City Manager of the City and its legal counsel.
10. The City Council authorizes and directs the City Manager of the City, or designee, (i) to make such amendments, changes or revi sions to the Agreement or to any document, instrument, or agreement required by and for the implementation of the Agreement on behalf of the City, as approved by the City Manager of the City and its legal counsel ; (ii) to execute such other documents and take such other actions as are necessary or desirable and appropriate to carry out and implement the purposes of the Agreement and to effectuate the intent of this Resolution on behalf of the City including, without limitation, approving extensions of deadlines set forth in the Agreement (or any portion thereof) as determined necessary by the City Manager, or designee, to effectuate the purposes of the Agreement; and (iii) to administer the City’s obligations, responsibilities and duties to be performed under the Agreement and all documents, instruments, and agreements required by and for the implementation of the Agreement on behalf of the City.
11. If any provision of this Resolution or the application of any such pro vision to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution that can be given effect without the invalid provision or application, and to this end the provisions of this Resolut ion are severable. The City Council declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion of this Resolution.
12. This Resolution shall take effect upon the date of its adoption. 5 ADOPTED this ____ day of ____________________, 2022
Mark A. Murphy, Mayor, City of Orange
ATTEST:
Pamela Coleman, City Clerk, City of Orange
6 STATE OF CALIFORNIA )
COUNTY OF ORANGE )
CITY OF ORANGE )
I, PAMELA COLEMAN, City Clerk of the City of Orange, California, do hereby certify that the foregoing Resolution was duly and regularly adopted by the City Council of the City of Orange at a regular meeting thereof held on the day of , 2022 by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Pamela Coleman, City Clerk, City of Orange