CITY COUNCIL STAFF REPORT
Meeting Date: November 06, 2023
TO: THE HONORABLE MAYOR AND CITY COUNCILMEMBERS
SUBJECT: ADOPT RESOLUTION NO. ___-23 EXECUTING AN AMENDMENT TO
AN AFFORDABLE HOUSING DISPOSITION AND DEVELOPMENT
AGREEMENT (DDA) FOR 85 WOODSWORTH LANE (APN 150-150-071)
AND AUTHORIZING THE CITY MANAGER OR DESIGNEE TO
EXECUTE AMENDMENT DOCUMENTS
SYNOPSIS
On February 22, 2021, the City Council approved an Affordable Housing Disposition and Development Agreement (Agreement) to convey a parcel of vacant land at 85 Woodsworth Lane (APN 150-150-071-2) (Site) to Habitat for Humanity East Bay/Silicon Valley (Developer) for the development of four ownership housing units. The City also provided the Developer a loan to ensure three of the units were reserved for low-income households. The Developer has completed a site survey determining the parcel is actually smaller than what was indicated on the assessor’s parcel map. Without a General Plan Amendment and rezoning of the property, the Site’s applicable existing land use and zoning regulations preclude development of four units on the now smaller property. The Developer proposes amending the Agreement to reduce the Project’s unit count from four to three units, all restricted for low-income households. The proposed First Amendment to the Agreement would also extend certain performance deadlines to account for the delay imposed by the change.
DISCUSSION
Background
Assembly Bill x1 26 dissolved all California redevelopment agencies effective February 1, 2012.
The City elected to serve as Housing Successor to the Former Agency and is responsible for managing the Former Agency’s housing assets. Upon dissolution, the Former Agency transferred the Site to the Housing Successor. State law required the Housing Successor to either sell or initiate affordable housing development on the Site by September 5, 2022. The City listed the Site for sale in November 2017, inviting proposals for affordable housing development or for the general sale of the Site. The City selected a proposal from the Developer to negotiate an agreement.
On February 21, 2021, the City Council approved an Agreement to convey the Site to the Developer for $10 for the development of four ownership housing units, of which three are restricted for low-income homebuyers and one is restricted for moderate income homebuyers.
Additionally, the City agreed to provide a forgivable $285,000 loan from the Housing Successor’s Low and Moderate Income Housing Asset Fund (Housing Asset Fund) to assist with the development of the three low income units. State law does not permit the Housing Asset Fund to assist with the development of moderate income units.
Analysis
Changes to Project Scope
On May 30, 2023, the Developer requested an amendment to the Agreement to reduce the Project unit count from four to three. At the time the Agreement was executed, the Developer had created a preliminary development plan for four units based on the Site size indicated on assessor’s parcel map (8,886 s.f.). The Developer’s civil engineer completed a survey revealing the total Site area (8,097 s.f.) is actually less than what is indicated on the parcel maps. The City’s zoning regulations allows a maximum density of 19.9 units/acre that limits the Project to three units.
Accordingly, the Developer is proposing to amend the Agreement to reduce the unit count from four to three, though all three will be restricted for low-income households. The $285,000 loan amount would remain unchanged. The Agreement originally limited City financial assistance to the Project’s three low-income units because State law does not permit the Housing Asset Fund to subsidize production of moderate income units. The City’s housing consultant, RSG, Inc., reviewed the Developer’s revised pro forma and found the $285,000 loan amount continues to be reasonable based on estimated construction costs, proposed financing sources, and the projected sales price of the homes based on affordable housing cost limits. The proposed amendment maintains City subsidy for three low-income housing units, as noted in the original Agreement.
The proposed Resolution provided as Attachment 1 to this staff report includes a copy of the Agreement and the proposed First Amendment. A copy of the Developer’s request to amend the Agreement is provided as Attachment 2. A copy of RSG’s memo summarizing its pro forma review is provided as Attachment 3.
Changes to Project Timeline
Exhibit C to the Agreement includes a Schedule of Performance that identifies deadlines for securing Project Entitlements, securing Other Funding Commitments necessary to develop the Project, and to close escrow. These deadlines were extended with City Council approval on October 6, 2022, due to delays in the entitlement process. The revised Project scope will further delay entitlements. Staff recommends modifying times and dates for performance as follows:
Item to be
Performed
Responsible
Party
Agreement
Reference
Current Time for
Performance
Modified Time for
Performance
Project
Entitlements
City and
Developer
2.5,
4.2.1.3,
4.2.1.8 Sept 27, 2023 Dec 31, 2024
Other Funding
Commitments
Developer 4.2.1.4 Dec 31, 2023 June 30, 2025
Escrow Closing
Date
City,
Developer,
and Escrow
Holder
1.1.29, 4.6 5
th day following
Escrow Holder’s
receipt of written
satisfaction or
waiver of all
conditions
precedent, no later
than Jan 31, 2024
5 th day following
Escrow Holder’s
receipt of written
satisfaction or waiver
of all conditions
precedent, no later
than July 31, 2025
The Developer anticipates completing entitlements earlier than December 31, 2024; however, City staff recommends extending the deadline further out of an abundance of caution. City staff also recommends permitting the City Manager to extend deadlines for performance at his discretion as needed.
The Developer has provided draft revised site plans for City review and made the following progress on the Project to date:
engaged architectural, civil, geotechnical, and environmental consultants completed site surveys, geotechnical reports, and Phase 1 environmental assessments engaged the environmental consultant to complete Phase 2 environmental assessments engaged City staff in preparing an entitlement package submittal to the City recorded loan documents
secured a Board resolution that commits to providing backstop funding provided draft revised site plans for three units
architect has begun drafting preliminary application drawings prepared a draft Planned Unit Development concept plan and provided to City for initial review
Modifying the dates and times in the Agreement will allow the City to continue to work with the Developer to complete the project and provide affordable housing and help meet the City’s Housing Element and Regional Housing Needs Allocation goals.
Other Project Agreements
The City has a separate agreement with the Developer to develop 250 Cleaveland Road with seven units of affordable housing (four low-income and three moderate). The Developer continues to make progress on obtaining entitlements to develop seven units on that site, including:
completed Cumulative Impact Study
prepared and submitted FEMA application for City review; two rounds of City comments have been addressed
architect has been engaged and has begun drafting preliminary application drawings civil engineer has been engaged and has prepared preliminary grading plans
FISCAL IMPACT
There is no immediate fiscal impact at this time. The Agreement approved a $285,000 expenditure from the Housing Successor’s Low and Moderate Income Housing Asset Fund, which is restricted for use on affordable housing activities. This expense is included in the Housing Successor budget.
PUBLIC CONTACT
Public contact was made through posting of the City Council agenda on the City’s official notice bulletin board, at the Pleasant Hill Senior Center and at the Pleasant Hill Police Department. The agenda and staff report are posted on the City’s web page.
RECOMMENDED CITY COUNCIL ACTION
Adopt the resolution modifying times or dates for performance in the Agreement, as proposed.
ALTERNATIVES TO RECOMMENDED ACTION
1. Do not adopt the resolution;
2. Continue the matter to a later date with direction provided to staff.
ATTACHMENT(S):
Proposed Resolution
1. Disposition and Development Agreement
2. First Amendment to Disposition and Development Agreement Developer Letter Requesting Amendment (May 30, 2023)
RSG Memo Reviewing Developer Request (June 29, 2023)
Prepared by: Troy Fujimoto, City Planner
Approved by: Ethan Bindernagel, City Manager