September 13, 2022
HOUSING AUTHORITY
Economic Development
DATE: September 13, 2022
TO: Housing Authority Board of Commissioners
FROM: Shasa Curl, City Manager
Nannette J. Beacham, Executive Director of the
Richmond Housing Authority
Gabino Arredondo, Project Manager
Subject: Nystrom Village Exclusive Right to Negotiate Agreement (ERNA) FINANCIAL IMPACT: Proposed terms to include the Developer pay a nonrefundable $100,000 deposit upon execution of the ERNA and the Developer to pay or reimburse Richmond Housing Authority (RHA) for all predevelopment expenses, including tenant relocation costs, and RHA consulting and legal fees. RHA will receive a capitalized ground lease of at least $500,000 for each block payable in two installments during construction, and an annual ground lease payment equal to its pari passu share of 50 percent of residual receipts, shared with other soft lenders as necessary. During years 1-12, RHA will receive a minimum ground lease of $50,000 per year. If residual receipts are not sufficient to pay this minimum payment, ground lease payments accrue with interest and are payable in future years from residual receipts.
PREVIOUS COUNCIL
ACTION:
September 21, 2021
STATEMENT OF THE
ISSUE:
On September 21, 2021, the Richmond Housing Authority (RHA) Board of Commissioners authorized the Executive Director of the RHA to negotiate an Exclusive Right to Negotiate Agreement (ERNA) for the redevelopment and operation of Nystrom Village.
Negotiations have concluded and the final form of the agreement is ready to be reviewed and approved by the Board.
AGENDA
REPORT
September 13, 2022
RECOMMENDED
ACTION:
ADOPT a resolution authorizing the Executive Director of the Richmond Housing Authority (RHA) to execute an Exclusive Right to Negotiate Agreement (ERNA) with McCormack Baron Salazar and Richmond Neighborhood Housing Services; and AUTHORIZE the Executive Director of the RHA to negotiate a Master Development Agreement (MDA), Ground Leases, Disposition and Development Agreements, and any other related documents and agreements necessary for the redevelopment and operation of Nystrom Village – Richmond Housing Authority (Nannette Beacham 621-1300).
DISCUSSION:
Public Housing Authority Recovery and Sustainability (PHARS) Agreement
The Richmond Housing Authority (RHA) has been operating under a Public Housing Authority Recovery and Sustainability (PHARS) Agreement with the U.S. Department of Housing and Urban Development (HUD) since February 5, 2013, due to RHA’s designation as a “troubled” housing authority. RHA staff members collaborated with representatives from HUD Region IX to prepare a required 2019 PHARS Agreement and Action Plan. The RHA Board of Commissioners approved the 2019 PHARS on October 22, 2019 (Attachment 2). The 2019 PHARS delineates performance outcomes, timelines, and reporting requirements focused on the repositioning of the RHA Public Housing portfolio.
Asset Repositioning
On December 4, 2018, the RHA Board of Commissioners directed RHA staff to move forward with repositioning RHA’s public housing developments and other real estate holdings. This strategy supports the underlying goals of RHA to ensure no reduction in rental housing options for Richmond residents, and to maximize the benefit/utilization of the federal funds. RHA is receiving HUD-funded technical assistance from Enterprise Community Partners to assist with the asset repositioning and meeting HUD regulations. RHA staff members are working diligently to proceed with the repositioning strategy and have made progress on Nystrom Village.
Nystrom Village
RHA's purpose is to provide quality, safe, sanitary, and sustainable housing for very low- and low-income individuals and families in the City of Richmond through the administration of the Low-Income Public Housing Program. Through implementation of the 2019 PHARS agreement, the proposed redevelopment plan for Nystrom Village will enable RHA to expand its scope to include moderate-income/workforce housing as a component of the redevelopment while also retaining existing very low- and low-income unit.
September 13, 2022
Nystrom Village is a four-block housing development situated between Florida and Virginia Avenue (North to South) and South 13 Street and South 16 Street (East to West) in Richmond. The four-block area encompasses nine (9) acres, and currently accommodates 51 wood frame duplexes, built in 1941, to house workers from the Kaiser Shipyards. The site has a mix of one hundred (100) 1-, 2- and 3-bedroom units.
The property is owned and managed by RHA. In addition to the age and condition of the units, there are several units with habitability issues that would require hundreds of thousands of dollars to rehabilitate.
On April 20, 2020, RHA issued a Request for Proposals (RFP) seeking a qualified housing development team, or team of developers, with capacity to redevelop and operate Nystrom Village with new affordable and market-rate housing units including 100 replacement affordable housing units. Richmond Housing Authority received proposals from three qualified development teams, and a review panel reviewed submittals and made a final recommendation to the RHA Board of Commissioners.
RHA hosted mandatory virtual meetings for potential developers on May 20, 2020, and June 10, 2020, with over 90 participants in attendance via zoom. The meeting provided attendees with an opportunity to gain a deeper understanding of the vision and expectations for Nystrom Village, and an opportunity for prospective developers to ask questions of various department staff.
On July 10, 2020, RHA received three (3) submittals from qualified development teams:
The Pacific Companies (TPC) (in conjunction with EAH Housing and Novin Development); Community Development Partners (CDP); and McCormack Baron Salazar (MBS) (in conjunction with Richmond Neighborhood Housing Services (RNHS)). Each development team has experience redeveloping properties, building new developments, and managing affordable housing developments. Following due diligence review, the Nystrom Village Review Panel recommended MBS and RNHS as the preferred development team to redevelop and operate Nystrom Village.
On September 21, 2021, the RHA Board of Commissioners authorized the Executive Director of the RHA to negotiate an ERNA for the redevelopment and operation of Nystrom Village.
Negotiations have concluded and the final form of the agreement is ready for review and approval by the Board. Key terms in the ERNA include: the term of the ERNA is 90 days with two (2) 30-day extensions; Developer pays $100,000 nonrefundable deposit that is not applied toward lease payments/purchase price or RHA expenses; during the term of the ERNA, Developer will provide financial feasibility studies, conceptual renderings, a phasing plan and schedule for the proposed development; the parties will negotiate lease/disposition agreements that will include, among other terms, the following provisions: (i) Developer will be responsible for cost of demolition, remediation, and relocation, (ii) all current residents will have a right to return to the development when rehabilitation is completed, (iii) Developer will reimburse RHA and
September 13, 2022
City for all City and RHA expenses, including legal and consulting fees, (iv) neither RHA nor the City will provide any form of subsidy, including loans, grants, or fee waivers or reductions.
ATTACHMENTS:
Attachment 1 – Resolution
Attachment 2 – 2019 PHARS
Attachment 3 – ERNA