AGENDA REPORT
TO:
VIA:
FROM:
DATE:
SUBJECT:
Placentia City Council
CITY COUNCIL
CITY ADMINISTRATOR
DIRECTOR OF DEVELOPMENT SERVICES
JANUARY 23, 2024
PUT OPTION AGREEMENT WITH MERCY HOUSING CALIFORNIA FOR
PRIVATE PROPERTY AT 325 BAKER STREET (APN 339-382-20) FOR FUTURE
AFFORDABLE HOUSING DEVELOPMENT
FISCAL
IMPACT: $761,587 Potential Purchase in 2028 (Affordable Housing Development Impact Fee Fund Acct. No. 682534-6099). No fiscal impact in FY 2023-24.
SUMMARY:
On February 6, 2023, the City issued a Request for Proposals (RFP) for a high-quality 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, including 325 Baker Street (APN 339-382-20) for a larger development. The RFP solicited interest from four (4) different firms. On April 3, 2023, the Evaluation Committee consisting of consulting staff from Keyser Marston, Director of Development Services and the Deputy Director of Administrative Services (the "Evaluation Committee") 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. Subsequently on June 6, 2023, the City Council agreed to authorize 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. This action authorizes the City Administrator to enter into a Put Option Agreement with California Land Acquisition Fund Holding IV LLC for the acquisition of the private property at 325 Baker Street to expand and develop a larger affordable housing development along Baker Street.
1.g.
Jan 23, 2024
City Council/Successor Agency/ICDA Agenda
January 23, 2024
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Approve Resolution No. R-2024-03, A Resolution of the City Council of the City of Placentia, California Approving a Put Option Agreement with California Land Acquisition Fund Holding IV LLC for the purchase of 325 Baker Street for an Affordable Housing Development along Baker Street; and
2. 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.
The Request for Proposals (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 various objectives including adding additional phases as adjacent parcels become available.
On April 3, 2023, the Evaluation Committee consisting of the Keyser Marston Staff, Director of Development Services and the Deputy Director of Administrative Services 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
City Council/Successor Agency/ICDA Agenda
January 23, 2024
Mercy Housing on the financing and development of the site. Subsequently on June 6, 2023, the City Council agreed to authorize 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. The proposed 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 Phase II Plan includes the purchase of private parcels along Baker Street including 325 Baker Street (APN 339-392-20).
This action authorizes the City Administrator to enter into a Land Purchase Option Agreement with California Land Acquisition Fund Holding IV LLC for the acquisition of the private property at 325 Baker Street for the development and operation of a high-density affordable housing development on Baker Street.
The purchase will allow Mercy Housing California to apply for additional funding in an effort to construct a larger development along Baker Street. The agreement stipulates that if Mercy Housing California determines it is not feasible to construct and expand the Affordable Development at 325 Baker Street after four (4) years, Mercy shall have the option to require the City to purchase the Property, subject to the terms set forth in this Agreement. This includes the purchase price for the Property (the "Purchase Price") shall be equal to (i) $595,000 (the purchase price paid by Mercy to acquire the Property), plus (ii) all reasonable out-of-pocket costs and expenses incurred by Mercy in connection with its acquisition of the Property, plus (iii) one-half (1/2) of all insurance costs, real property taxes, maintenance costs, interest payments under the Mercy's Loan and other reasonable out-of-pocket costs and expenses incurred by Mercy in connection with its ownership of the Property prior to the Closing.
FISCAL IMPACT:
The City's financial commitment is subject to the development feasibility of the affordable housing development at Baker Street. If after four (4) years, it is determined that this is not feasible to construct and expand the affordable housing development at 325 Baker Street, Mercy Housing shall have the option to require the City to purchase the Property. This includes the purchase price for the Property (the "Purchase Price") shall be equal to $595,000, plus all reasonable out- of-pocket costs and expenses incurred by Mercy in connection with its acquisition of the Property, and one-half (1/2) of all insurance costs, real property taxes, maintenance costs, interest payments under the Mercy Housing's Loan with California Land Acquisition Fund Holding IV LLC.
Prepared by: Reviewed and approved:
/
Oea� ne'f- o rtega
DeputyDirector of Administrative Services
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Jooseph !M. Lambert
Director of Development Services
City Council/Successor Agency/ICDA Agenda
January 23, 2024
Reviewed and approved:
-_
Jennifer Lampman
Director of Finance
Reviewed and approved:
DamienArrula
City Administrator
Attachments:
1. Resolution R-2024-03
2. Put Option Agreement for the Purchase of 325 Baker Street