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2.D. STAFF REPORT - BAKER STREET PROPERTIES AND DDA MERCY HOUSING

Placentia City Council
March 5, 2024

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2.D. STAFF REPORT - BAKER STREET PROPERTIES AND DDA MERCY HOUSING
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March 5, 2024
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Placentia City Council
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14
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Placentia City Council
TO: CITY COUNCIL
VIA: CITY ADMINISTRATOR
FROM: DIRECTOR OF DEVELOPMENT SERVICES
DATE: MARCH 5, 2024

AGENDA REPORT
SUBJECT: PUBLIC HEARING AND CONSIDERATION OF A RESOLUTION MAKING FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 FOR REAL PROPERTY LOCATED AT 314 BAKER STREET AND 323 BAKER

STREET IN CONJUNCTION WITH AUTHORIZING THE SALE OF THE

PROPERTIES IN CONNECTION WITH DISPOSITION AND DEVELOPMENT AGREEMENT NO. DDA -2023-01 WITH MERCY HOUSING CALIFORNIA TRANSFERRING TITLE OF PROPERTIES LOCATED AT 300, 307, 312, 314, AND 323 BAKER STREET TO MERCY HOUSING CALIFORNIA TO FACILITATE

THE DEVELOPMENT OF A FIVE STORY, MULTIFAMILY APARTMENT
BUILDING, WITH 68 AFFORDABLE WORKFORCE HOUSING UNITS, ONSITE

RESIDENT SERVICES AND MANAGEMENT, ONSITE PARKING AND A
SATELLITE PARKING SITE ON A TOTAL OF 0.77 -GROSS ACRE CITY -OWNED VACANT PROPERTY LOCATED AT 300, 307, 312, 314, AND 323 BAKER

STREET AND FINDING THE PROJECT TO BE EXEMPT FROM FURTHER

ENVIRONMENTAL REVIEW AS AN INFILL DEVELOPMENT PROJECT
FISCAL
IMPACT: ONE TIME REVENUE: $ 482,400.84 DEVELOPMENT IMPACT FEES SALE OF PROPERTIES: $3,200,000.00 (AFFORDABLE HOUSING FUND) SUMMARY:

On February 6, 2023, the City issued a Request for Proposals (RFP) for an Affordable Housing Development on Baker Street. The specific properties included 323, 307, 312, and 314 Baker Street (Baker Street). The RFP solicited interest from four (4) different firms and sought proposals for two phases based upon the properties owned by the City. 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 and had the best proposal which contemplated development on both phases. Subsequently, on April 19, 2023, the Housing, Community and Economic Development Committee (the "HCED Committee"), which is comprised of Councilmember Wanke and Mayor Pro Tem (then Councilmember) Kerwin reviewed the proposals and the recommendation of the Evaluation Committee. After reviewing all of the information and a discussion with the Evaluation Committee, the HCED Committee agreed with the Evaluation Committees findings and recommended Mercy Housing as the top selected

2.d.

March 5, 2024

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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. On June 6, 2023, the City Council approved a Land Purchase Option Agreement with Mercy Housing California for development and operation of a high-density affordable housing development on Baker Street.

As a part of the RFP process, Phase II of the RFP called for the developer to seek out additional land that was still privately held and is located in between or adjacent to the City's parcels located further west along the north side of Baker Street. The purpose of this goal was to complement the overall development and/or provide additional parking. Mercy Housing approached the City with a proposal to purchase one of those properties (325 Baker Street). On December 5, 2023 the City Council convened in Closed Session to review and discuss this proposal. Subsequently, on January 23, 2024 the City Council approved a Land Purchase Option Agreement with Mercy Housing California's acquisition fund (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. If Mercy Housing California is successful in acquiring the additional private parcels, an Amendment to the DDA would be provided to the City Council for consideration of a Phase II development.

The first contemplated action is consideration of a Resolution making findings pursuant to Health and Safety Code Section 33433 for real property located at 314 Baker Street and 323 Baker Street. The contemplated action requires City Council consideration at a noticed Public Hearing.

The 314 and 323 Baker Street properties were acquired by the City's former Redevelopment Agency using tax increment earmarked for the Low and Moderate -Income Housing Asset fund.

For that reason, Health and Safey Code Section 33433 requires a public report on this disposition and approval by the legislative body at a public hearing.

The second action is the consideration of a Resolution approving Development Disposition Agreement (DDA) No. DDA -2023-01 with Mercy Housing California which will sell City owned property to Mercy Housing California, upon satisfaction of numerous conditions set forth in the DDA. This transfer of property will facilitate the future construction of a five -story, 100 percent affordable 68 -unit workforce housing development with onsite residential services and amenities, and onsite parking, with an additional satellite parking, located on 0.77 -acres at 300, 307, 312, 314, and 323 Baker Street, within the Old Town (OT) Zoning District. The project is utilizing State density bonus law, as set forth in California Government Code Section 65915. When the aforementioned density bonus consideration is combined with a 100% affordable unit classification, the project is eligible for up to four incentives and concessions. In brief, those considerations will be to exceed density, seek relief from open space, parking and height regulations.

State housing law, primarily the Housing Accountability Act and the State Density Bonus law require this type of 100% affordable housing development to be a permitted use by right in a zone allowing residential development and subject only to ministerial review based on the City's codified object design and development standards. Therefore, the development entitlement itself

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will be reviewed and considered administratively. However, this proposed DDA transferring the properties to Mercy Housing California for subsequent development requires City Council action.

RECOMMENDATION:

It is recommended that the City Council take the following actions:

1. Open Public Hearing regarding the contemplated action to make findings pursuant to Health and Safety Code Section 33433 for real property located at 314 Baker Street and 323 Baker Street; and

2. Receive the Staff Report, consider all public testimony, ask questions of Staff; and

3. Close the Public Hearing; and

4. Adopt Resolution No. HSA -2024-01, a Resolution of the City Council of the City of Placentia, California, making findings pursuant to Health and Safety Code Section 33433 for real property located at 314 Baker Street and 323 Baker Street and authorizing the sale of the properties in connection therein; and

5. Adopt Resolution No. R-2024-17, a Resolution of the City Council of the City of Placentia, California, approving the Disposition and Development Agreement No. DDA -2023-01 with Mercy Housing California transferring title of properties located at 300, 307, 312, 314, and 323 Baker Street to Mercy Housing California to facilitate the future development of a five story, 68 unit multifamily affordable housing development with onsite resident services and management, onsite parking and a satellite parking site on a 0.77 -gross acre site and finding the project to be exempt from further environmental review as a class 32 infill categorical exemption; and

6. Authorize the City Administrator to execute the 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 to Facilitate Affordable Housing along Baker Street
DISCUSSION:

The applicant, Mercy Housing, requests approval of a Development and Disposition Agreement ("DDA") to allow for the construction of a five -story, affordable workforce housing development featuring 68 affordable housing units with associated amenities for residents, onsite resident services, and onsite and satellite parking sites on property located at 300, 307, 312, 314, and 323 Baker Street. A DDA is a hybrid real estate transaction transferring property to a developer and

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also including substantial conditions both prior to the sale and after close of escrow to ensure the City property is used as intended, in this case for the development of an affordable housing project. This project is the first affordable housing development in Placentia's Old Town (OT) High Density Residential (HDR) Zoning District since adoption of the district in 2017.

The DDA provides for the sale of the City properties at fair market value, however the cost of the land will be paid back to the City over the affordable housing regulatory restriction period of 55 years by way of a residual receipts loan. The loan agreement and affordable housing regulatory agreement will be brought before the Council for consideration prior to the close of escrow on the properties. The residual receipts loan agreement will be based on the loan commitment letter previously approved by the City Council.

The actual transfer of the properties and close of escrow will not occur until the developer has the project financing fully in place and construction plans ready for the issuance of a building permit.

These conditions ensure the City does not prematurely transfer the property before the development is ready to begin construction.

The total 0.77 -gross acre City -owned site is situated at the terminus of Baker Street between Melrose Street and Walnut Street, which abuts the BNSF tracks to the south and is just west of the future platform for Placentia's anticipated Metrolink station. The project will help fulfill local and regional affordable housing needs, while serving as an additional catalyst bringing further development within the Old Town District and nearby TOD zone, thus implementing the City's vision as an area that encourages high quality, transit -oriented development with associated amenities and to create a compact pattern of development that is conducive to walking, bicycling, and using public transportation.

As discussed above, the actual development entitlement approval is an administrative ministerial approval and therefore not a "project" as defined in the California Environmental Quality Act (CEQA) as CEQA only applies to a discretionary approval. However, the approval of the proposed DDA is subject to the discretion of the City Council. CEQA instructs the City to first review a project for the applicability of any statutory or categorical exemptions. In this case the proposed development and this DDA meet all of the criteria for a Class 32 Infill Development Project which are as follows:
(a) The project is consistent with the applicable general plan designation and all applicable general plan policies as well as with applicable zoning designation and regulations. (b) The proposed development occurs within city limits on a project site of no more than five acres substantially surrounded by urban uses.
(c) The project site has no value as habitat for endangered, rare, or threatened species. (d) Approval of the project would not result in any significant effects relating to traffic, noise, air quality, or water quality.

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(e) The site can be adequately served by all required utilities and public services.

The proposed project does not trigger any of the exceptions to the use of the infill development exemption as there is no cumulative impact with successive projects of the same type in the same place. This is a single project to be developed on this one project site. There is no evidence of unusual circumstances and that there is a reasonable possibility that the development will have a significant effect on the environment due to unusual circumstances. The project abuts normal city streets with standard utility connections available and is located in a fully urbanized area with prior ground disturbance or development on much of the site.

The project does not have any potential to damage scenic resources or scenic highways as those terms are defined in the CEQA and CEQA Guidelines. The development is not proposed on a hazardous waste site nor will it cause a substantial adverse change in the significance of a historical resource.

In addition, the development and this DDA qualify for the CEQA statutory exemption for low- income housing development projects pursuant to Public Resources Code ("PRC") Section 21159.21 (Housing Project Exemptions) and Section 21159.23 (Low Income Housing). The criteria and analysis for these exemptions are attached to this staff report as Exhibit 1.

PROJECT DESCRIPTION
The proposed project (future entitlement) will involve the construction of a five -story, 100 percent affordable workforce housing development, with 68 units (67 of which are affordable), onsite residential services and amenities, and onsite parking, with an additional satellite parking. The project is to be developed on vacant City -owned parcels and will include partial street dedication.

The five parcels comprehensively total approximately 0.77 gross acres and are bound by BNSF railway tracks to the south, Melrose Street to the east, and residential properties to the west and north, with Santa Fe Avenue located further north. Primary access to the site is provided along Baker Street, with pedestrian access provided by stairways on the easterly side of the development, adjacent to Melrose Street:
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Due to recent State legislation and State density bonus law, as set forth in California Government Code Section 65915, this type of affordable development is permitted by right. Therefore, the development entitlement itself will be reviewed and considered administratively utilizing the City's Site Plan Review (SPR) process.

However, the DDA transferring the properties to Mercy Housing California for subsequent development requires City Council action. In addition, consideration of a Resolution making findings pursuant to Health and Safety Code Section 33433 for real property located at 314 Baker Street and 323 Baker Street. requires City Council consideration at a noticed Public Hearing.

As previously mentioned, the development will utilize State density bonus law, as set forth in California Government Code Section 65915, and with 100% of the units in an affordable housing classification, the project is eligible for up to four incentives and concessions during the SPR Administrative review process. During the City's SPR process, staff will evaluate the four incentives and concessions pursuant to State law. The proposed concessions are related to:

Exceeding OT HDR district density, concessions for open space regulations, concessions for parking requirements and height requirements.

The 33,497 square foot lot (0.77acres) permits an allowable density of 50 units in the High -Density Residential subsection of the Old Town Zoning Code, however the development will be eligible for an 80 percent density bonus, which calculates to a maximum of 90 units. The proposed 68 units represents a density bonus of 35 percent.

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The future development is contemplated to have five stories, with a maximum height of 68 feet.

This is in lieu of the four story/55-foot height limit of the HDR sub area of the Old Town Zone. The first story will feature parking, with the rest containing the 67 affordable housing units, and one housing unit for the onsite manager.

Open Space
The proposed development will utilize one of the four incentives and concessions, allowed by California Government Code Section 65915, by reducing the amount of common open space required by 25 percent. Placentia Municipal Code (Chapter 23.112.050 Table 2) requires 3,400 square feet of common open space (50 s.f. per unit), whereas this future project will result in 2,568 square feet of common open space. The common areas will consist of outdoor dining tables, lounging areas, synthetic turf with moveable furniture, and a firepit. The future development meets private open space requirements, which is 64 square foot per unit, which totals a requirement of 4,352 square feet of private open space, which this proposed project meets.

Access and Parking
Access for residents and guests will be via Baker Street, where parking is accessible on site or at the proposed satellite parking lot, located a few hundred feet west at the parcel identified as 323 Baker St. The parking requirement for a high-density residential project within the Old Town Zoning District is 1-2 spaces per unit, depending on the number of bedrooms, plus 2 spaces per unit for guest parking. This 68 -unit project, if market rate, would require 112 parking spaces.

The future SPR entitlement will utilize the parking ratios afforded by Density Bonus Law (DBL) for the project, pursuant to Gov. Code Section 65915 (p)(1), which permits a decrease in the amount of parking required under DBL. Notwithstanding the allowance of a significant parking decrease, this project will still provide a total of 94 parking spaces that will be a combination of first floor parking, with some tandem parking spaces and a satellite parking lot that will offer the city's first automated stacking mechanism for parking, which was recognized as a possible parking solution in PMC 23.112.060(f).

Architecture
The affordable housing development will be designed reminiscent of Mission Revival style architecture, which is consistent with objective design standards featured in the Old Town Zoning Code. Mission Revival is typified by flat front facades, arched parapets, and red mission style tile roofs. This development will feature many characteristics of Mission Revival architecture with light color plaster walls and a terra cotta color, low-pitched roof to mimic a tile roof.

The main entrance will feature arches, with blue and white Spanish style tiles lining all windows and doors along the first floor. The eastern elevation employs large arched windows, which will be visible from the Melrose Street frontage. The exterior facade consists of building projections and varying rooflines that bodes aesthetically and adds interest to the project's architecture. The project employs four-sided architecture by using the same material on all four sides of a structure so that, no matter what vantage point it is viewed from, the design is never interrupted, and all the parts are perceived as part of a unified whole.

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It should be noted that that the characteristics of the future development, including the architecture, number of parking spaces contemplated and height, are consistent with aspects of the conceptual development reviewed by City Council during the RFP process. On February 6, 2023, the City issued a Request for Proposals (RFP) for an Affordable Housing Development on Baker Street. The specific properties include 323, 307, 312, and 314 Baker Street (Baker Street).

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 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 Committee reviewed the proposals and the recommendation of the Evaluation Committee. The 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. On June 6, 2023, the City Council approved a Land Purchase Option Agreement with Mercy Housing California for development and operation of a high-density affordable housing development on Baker Street.

PROJECT CHARACTERISTICS
Subject Site and Surrounding Land Uses
The table below illustrates the site and surrounding existing land uses, General Plan Land Use designation and zoning:

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Location
Existing
Proposed
North (Santa
Fe Avenue)
South (across
BNSF tracks)
Existing Land Use
City -Owned Vacant
Property
Five Story, 68 -unit,
affordable housing
development, with
onsite parking and
satellite parking lot.

Mix of residential and
retail shops
Packing House
East (across City owned parking lot
Melrose Street)
West
Residential (single
family homes and
some duplexes)
Land Use Element
General Plan
Designation
OId Town
Old Town
Old Town
TOD
Old Town
OId Town
Zoning Map
Designation
Old Town (High -Density
Residential)
OId Town (High -Density
Residential)
Old Town
TOD
Old Town
Old Town
Although the development entitlement itself will be reviewed and considered administratively utilizing the City's Site Plan Review (SPR) process, the following matrix provides a summary of the development proposal:

STANDARD
Height* 3 min/4 max stories, 55'
*Height exceptions — See Table 2 in OT Zoning Code
Setbacks
Setback from Railroad Track
Front
Side
Rear
Streetside Yard
0'
5'-15'
0'
0'
5'-15'
Density 65 du/ac
Site Specific 50 du possible

CONTEMPLATED DEVELOPMENT
Five stories, 68'
Setback from Railroad Track
Front
Side
Rear
Streetside Yard
0'
5'
0'
0'
5'
Density Bonus (35%) Increase
68 units total

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Parking
Studio 1 min/1 max
1 bedroom 1 min/1.5 max
2 -bedroom 1.5 min/2 max
3 -bedroom 2 min/2.5 max
Guest 2 min/3 max per 10 units
Required w/out DBL
Minimum Lot Size*:
*for a development over 3 stories
Common Open Space
(68 units x 50 sq.ft.)
Private Open Space
(68 Units X 64 sq.ft.)
112 spaces
10,000 sq.ft.
50 sq ft/unit
3,400 sq.ft.
64 s.f./unit
4,352 sq.ft.

Electric Vehicle Charging
10% of project's parking spaces EV Level 2
or 5% of total spaces if DC fast charging
stations
Public Art
Encouraged
*Density Bonus Law — parking ratios N/A
Proposed 94 spaces
33,497 sq.ft.

Project utilizing Incentive & Concession 25%
reduction
(68 units x 50 sq.ft.) 2,568
*Incentive utilized in Common Open Space, but
project meets private open space of PMC
Project will comply with PMC
TBD
4352 sq. ft
Other Departments Concerns and Requirements
During the City's SPR process, the development will be routed to the Divisions of Planning and Building, Public Works/Engineering, Police Department, and the Placentia Fire and Life Safety Department. These departments have already reviewed conceptual plans and have contemplated development requirements which will be set forth during the SPR process. All departments have indicated that any comments or code requirements can be mitigated during the SPR process.

ISSUES ANALYSIS:

Consistency with the General Plan
The General Plan features policies that promote the reinvestment of underutilized properties while being sensitive to the suburban atmosphere and requires new developments to provide adequate improvements and pay impact fees to offset the demand costs on City services and facilities. The proposed development and subdivision is consistent with the following Land Use Element and Housing Element policies and goals of the General Plan:

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Land Use Element
Policy 1.2 — Allow for a variety of residential infill opportunities including single family, multi -family, mixed-use, manufactured housing and mobile homes, in designated areas to satisfy regional housing needs.

Policy 1.6 — Encourage mixed-use development within the Old Town District, TOD District and other appropriate areas.

Policy 2.17 — Encourage the development of Mixed -Use and transit -oriented development to promote a wider range of residential opportunities, to help meet the regional housing needs, and to complement the principles of the Complete Streets model.

Policy 2.18 — Work proactively with Orange County Transportation Authority (OCTA) to properly plan appropriate land uses around existing and future planned transportation projects building by OCTA.

Goal 3— Revitalize underutilized, abandoned or dilapidated commercial, industrial, and residential uses and properties.

Policy 3.1 — Encourage opportunities for redevelopment and improvements in the Old Town area, the TOD district, industrial areas, neighborhoods in the southern sector of the City, and commercial centers along major roadway corridors.

Development of a large vacant property will promote further compatibility with existing developments within the surrounding area and stimulate investment and business activity which will strengthen the economic vitality of the City. The development will provide necessary improvements within the public right-of-way including street resurfacing and installation of new sidewalks, gutters, and driveway approaches, and miscellaneous public infrastructure pursuant to the Old Town Streetscape Master Plan. Overall, the proposed development will be consistent with the General Plan and will result in a compatible continuation of existing land uses and development within the surrounding area.

Housing Element
Goal 1 — Develop and maintain an adequate supply of housing that varies sufficiently in cost, size, type, and tenure to meet the economic and social needs of existing and future residents within the constraints of available land.

Program 1.2 — The development serves to locate housing near transportation to increase livability within new housing developments and locates a major workforce housing development near transportation option.

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California Housing Element law mandates that each city show it has adequate sites available through appropriate zoning and development standards and with the requirement public services and facilities for a range of housing types and incomes. The City must demonstrate that it has the capacity or adequate sites to accommodate the project needs for housing at all income levels.

Land Use Compatibility
The project will be compatible with the surrounding area as the development will revitalize an underutilized/vacant City -owned property with the development of 68 affordable housing units near the future Metrolink train platform. The development will be consistent with the OT zoning district, which is experiencing a revitalization of underutilized properties that will serve to encourage economic investment within the TOD and Old Town districts. The project aims to serve as an additional catalyst to the area by triggering more development. The development will provide a compatible transition between nearby land uses that complement the residential densities of the housing developments to the southeast and southwest along West Crowther Avenue. Based upon the use, overall site layout, and building design, the proposed development is not anticipated to result in any significantly adverse impacts to the surrounding area.

FISCAL IMPACT:

The one-time revenue for this project includes $482,400.84 in Development Impact Fees. Based on an appraisal report, the sales price for the properties at 314 Baker Street and 323 Baker Street is $1,018,960. The proceeds from 314 Baker Street and 323 Baker Street will be placed in the Housing Successor Agency's LMIHAF for future affordable housing development in the City. The sales price for the properties at 300, 307 and 312 Baker Street, and a street dedication of 39,991 square feet total $2,181,040. The total for all five properties and the street dedication is $3,200,000, which is approximately $80.00 per square foot. The City's financial commitment will be to provide a residual receipts loan, in the amount of $3,200,000 for this affordable housing development on Baker Street.

Prepar
Lesl y Whitt. er
Ass iate P anner
Reviewed and approved:
septi M. Lambert
Reviewed and approved:
lea inet't_ •.mega
Deputy Director of Administrative Services
Reviewed and approved:

Jennifer ampman
'rector of Development Services Director of Finance

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Reviewed and approved by:

Etir
Dahnien R. Arrula
City Administrator
Attachments:

1. Resolution No. HSA -2024-01

2. Resolution No. R-2024-17

3. PowerPoint Presentation

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