TO:
VIA:
FROM:
DATE:
Placentia City Council
CITY COUNCIL
CITY ADMINISTRATOR
DIRECTOR OF DEVELOPMENT SERVICES
JUNE 6, 2023
GENDA REPORT
SUBJECT: LAND PURCHASE OPTION AGREEMENT WITH MERCY HOUSING
CALIFORNIA FOR THE BAKER STREET AFFORDABLE HOUSING
DEVELOPMENT
FISCAL
IMPACT: LAND FINANCING TERMS TO BE DETERMINED VIA DEVELOPMENT
AGREEMENT
SUMMARY:
On February 6, 2023, the City issued a Request for Proposals (RFP) for an Affordable Housing Development on Baker Street. The specific City -owned properties include 323, 307, 312, and 314 Baker Street (Baker Street) as well as evaluate options for the potential acquisition of additional private properties for a larger development. The RFP solicited interest from four (4) different firms.
On April 3, 2023, the Evaluation Committee consisting of the Keyser Marston Staff, Director of Development Services and the Assistant to the City Administrator reviewed and scored the four proposals received. The Evaluation Committee agreed that Mercy Housing would be the best qualified developer to construct and operate a high-quality affordable housing development along Baker Street. On April 19, 2023, the Housing, Community and Economic Development Ad -Hoc Committee reviewed the proposals and the recommendation of the Evaluation Committee. The Ad -Hoc Committee also agreed to recommend Mercy Housing as the top selected proposal to the City Council. On May 16, 2023, the City Council convened in Closed Session to review the recommendations and directed Staff and the City Attorney's Office to begin negotiations with Mercy Housing on the financing and development of the site.
The County of Orange concurrently has a Notice of Available Funding (NOFA) for the 2023 Supportive Housing NOFA of up to $67.1 million which is due by June 18, 2023 for Urban County Participating Cities, of which the City of Placentia is a part. Mercy Housing would be an eligible recipient of these funds for the Baker Street development and has indicated that they would like to apply to receive these grant funds. As a part of the NOFA, site control is a requirement to apply for funding. This action authorizes the City Administrator to enter into a Land Purchase Option Agreement with Mercy Housing California for development and operation of a high-density affordable housing development on Baker Street.
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June 6, 2023
City Council/Successor Agency/ICDA Agenda
June 6, 2023
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Award the Request for Qualifications/Proposals to Mercy Housing California for the Affordable Housing Development on Baker Street; and
2. Reject all other proposals; and
3. Approve Resolution No. R-2023-41, A Resolution of the City Council of the City of Placentia, California Approving a Land Purchase Option Agreement and the Execution of a Loan Commitment Letter in the amount of $3,274,260 for a Residual Receipts Loan to Finance an Affordable Housing Development at 323, 307, 312 and 314 Baker Street; and
4. Authorize the City Administrator and/or his designee to execute all necessary documents, in a form approved by the City Attorney.
STRATEGIC PLAN STATEMENT:
This item is consistent with the City Council approved 5 -Year Strategic Goal to Promote Community and Economic Development under Objective #3.9, which is Facilitate Affordable Housing along Baker Street.
DISCUSSION:
On July 18, 2017, the City Council adopted the Old Town Revitalization Plan (Plan) and related Zone Change and General Plan Amendment. Adoption of the Plan and associated documents will improve and position the City's historic center to better connect with other areas of the City, while improving the Old Town itself. Old Town Placentia is an asset to the City and is poised to be one of the City's key destinations. The Plan will enhance the historic and economic importance of the area by creating a cohesive walkable historic village with retail, restaurants, offices, and residential development. The Baker Street properties described within the RFP are located in the Plan area and are designated for high-density residential development at a maximum density of 65 dwelling units per acre. This area is zoned for a maximum building height of four stories (55 feet) located along Baker Street, located just north of the BNSF railroad tracks, west of Melrose Street and east of Walnut Avenue.
Request for Proposal Process
The RFP was released on February 6, 2023 with a submission deadline of March 20, 2023. A total of four (4) firms met the deadline. The RFP included the City's desire to develop a high- quality, 100% affordable rental housing development that achieves the following objectives:
1. The City wishes to maximize the amount of density that can be developed (65 units per acre, 4 stories/55 feet)
City Council/Successor Agency/ICDA Agenda
June 6, 2023
2. With the exception of property management units, housing must be restricted to low- income households.
3. The project should complement the surrounding uses and contribute to the revitalization of the Old Town as a walkable urban center.
4. The development team should maximize the use of available outside funding sources to enhance the feasibility of developing 100% affordable housing.
5. The project must be demonstrably financially feasible to construct and operate throughout the initial 55 -year affordability term.
6. Additional phases can be added as adjacent parcels become available.
7. Establish connections to the Placentia or Buena Park Navigation Center to allow for permanent housing opportunities for individuals and families residing at the Navigation Centers.
8. Set-aside one unit to be used by House Homeless Intervention Shelter (HIS 00), a local non-profit transitional shelter as a replacement for their current property.
The submitted proposals were reviewed by an Evaluation Committee consisting of Keyser Marston staff, Director of Development Services and the Assistant to the City Administrator. The City's Evaluation Committee evaluated all proposals received in accordance with the firms' technical experience in performing work of a closely similar nature; strength and stability of the firm; strength, stability, experience, and quality of the final product completed with other agencies.
The City's Evaluation Committee also evaluated the depth of the firms' understanding of affordable housing, the City's requirements, overall quality of work plan; logic, clarity, and specificity of work plan and variances proposed for the work plan; and the utility of technical or procedural innovations.
The RFP solicited interest among four (4) different developers that specialize in affordable housing, as follows:
Jamboree Housing Corporation
Mercy Housing California
National Core
Presidio West Investments, LLC
The Evaluation Committee was impressed by the quality of proposal received by Mercy Housing and their proven track record of expertise in affordable housing development among municipalities. Thus, the Evaluation Committee agreed that Mercy Housing would be the best qualified developer to construct and operate a high-quality affordable housing development along Baker Street.
On April 19, 2023, the Housing, Community and Economic Development Ad -Hoc Committee reviewed the proposals and the recommendation of the Evaluation Committee. The Ad -Hoc Committee also agreed to recommend Mercy Housing as the top selected proposal to the City Council. On May 16, 2023 the City Council convened in Closed Session to review the
City Council/Successor Agency/ICDA Agenda
June 6, 2023
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recommendation. The City Council agreed to begin negotiations with Mercy Housing on the financing and development of the site.
The development will include approximately 68 units of affordable housing, with a mix of 1, 2, and 3 bedrooms ranging from 30% to 60% AMI, 20 of the units to be set-aside for formerly homeless households, and potentially a Phase II Plan for approximately 40 units.
The County of Orange currently has a Notice of Available Funding (NOFA) for the 2023 Supportive Housing NOFA of up to $67.1 million and the deadline to apply for funding is June 18, 2023 for Urban County Participating Cities, of which the City of Placentia is a part. Mercy Housing would be an eligible recipient of these funds for the Baker Street development in the amount of approximately $3 million in capital and 19 Project -based Section 8 vouchers for the proposed permanent supportive housing units. These vouchers and capital funds are needed to apply for State applications, which are now only released once per year. As part of the County's NOFA requirements, site control is needed to apply for funding.
This action authorizes the City Administrator to enter into a Land Purchase Option Agreement with Mercy Housing California for development and operation of a high-density affordable housing development on Baker Street. Such site control conveyance instrument would assist Mercy Housing's commencement of applying for financial opportunities for the construction and operation of Baker Street through programs established by the County, State and Federal agencies.
FISCAL IMPACT:
The City's financial commitment will be to provide a residual receipts loan, in an amount equal to the appraised fair market value of the property, for this affordable housing development on Baker Street for families and families moving out of homeless. To proceed with the grant funding application with the County, Mercy Housing needs to demonstrate a financial commitment from the City and the Loan Commitment letter provides that financial commitment.
Prepared by:
Jeannette Ortega
Assistant to the City Administrator/
Economic Development Manager
Reviewed and approved:
Jennifer Lampman
Director of Finance
Reviewed and approved:
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Joseph M. ambert
Director of Development Services
Reviewed and appr_o_ved:
Damien R. Arrula
City Administrator
City Council/Successor Agency/ICDA Agenda
June 6, 2023
Attachments:
1. Resolution R-2023-41 with Residual Receipts Loan Commitment Letter and Land Purchase Option Agreement
2. Request for Qualifications/Proposals for Affordable Housing Development at Baker Street
3. Mercy Housing's Response to Request for Qualifications/Proposals