City Council
Report
City Council Meeting: December 17, 2024
Agenda Item: 11.A
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To: Mayor and City Council
From: Heather Averick, Director, Housing and Human Services Department Subject: Approve Deal Terms and Authorize Development and Disposition Agreements (DDAs) and Ground Leases for 1217 Euclid Street, 1211-1217 Fourteenth Street, and 1402 Wilshire Boulevard
Recommended Action
Staff recommends that the City Council:
1. Authorize the City Manager to negotiate and execute a Ground Lease with a fiftyfive (55) year term, with two options to extend by twenty-two (22) years each, and a Disposition and Development Agreement (DDA) with Hollywood Community Housing Corporation (HCHC) for development and operation of affordable housing on City-owned property located at 1217 Euclid Street;
2. Authorize the City Manager to negotiate and execute a Ground Lease with a fiftyfive (55) year term, with two options to extend by twenty-two (22) years each, and a Disposition and Development Agreement (DDA) with HCHC for development and operation of senior affordable and senior permanent supportive housing at 1211-1217 Fourteenth Street on property to be acquired by HCHC at 1402 Wilshire Boulevard and deeded to the City;
3. Declare 1402 Wilshire Boulevard “exempt surplus land” as defined in Government Code Section 54221(f) upon the City receiving fee title to the site at closing of construction financing;
4. Adopt a Resolution declaring 1402 Wilshire Boulevard as exempt surplus land, contingent upon HCHC acquiring the site and transferring fee title to the City at closing of construction financing, and authorize the City Manager to take actions necessary to comply with the Surplus Land Act (Government Code sections 54220 et seq.;
5. Authorize the City Manager to submit the report of declared exempt surplus land as part of the Annual Report to the California Department of Housing and Community Development (HCD), in conformance with state law;
6. Authorize the City Manager to negotiate and execute all necessary documents to make a Housing Trust Fund loan to HCHC in an amount consistent with the Housing Trust Fund Guidelines loan limits;
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7. Provide direction to staff regarding public replacement parking including any City investment from the Housing Trust Fund;
8. Adopt a finding that the actions to approve the Ground Leases and DDAs for the Developments are exempt from CEQA pursuant to CEQA Guidelines Section 15182 and a finding that the Developments have been previously analyzed in the 6th Cycle Housing Element Environmental Impact Report (SCH# 2020100575).
Summary
On March 19, 2024, the City Council selected the development team led by HCHC to construct and operate 100% affordable housing on three City-owned public parking lots located at 1217 Euclid Street, 1211-1217 Fourteenth Street, and 1146 Sixteenth Street (Attachment A). As authorized by the City Council, the City Manager executed an Exclusive Negotiation Agreement (ENA) (Attachment B) with HCHC to provide an opportunity for HCHC to refine its original development proposal for 130 residences based on community input, due diligence research and financial feasibility analysis.
On August 27, 2024, the City Council gave staff direction to continue exclusive negotiations with HCHC based upon a revised proposal for large family housing on 1217 Euclid Street and senior housing, including 40 senior permanent supportive housing (PSH) apartments, on 1211-1217 Fourteenth Street and 1402 Wilshire Boulevard, provided that 1402 Wilshire Boulevard can be acquired by HCHC from a third party (Attachment C). Per City Council direction, this revised project will be coupled with a City subsidy from the Housing Trust Fund, and development on 1146 Sixteenth Street will remain public parking to mitigate public parking impacts.
Background
On October 11, 2022, the City Council adopted the 2021-2029 Housing Element, a State-mandated plan for meeting the City’s share of regional housing needs. State law requires that the Housing Element include an inventory of land that demonstrates the City’s capacity to realistically accommodate new housing development at all income levels. To address the City’s shortfall of sites suitable for the creation of affordable housing for low-income households, the City committed to developing 100% affordable housing on City-owned sites identified in Appendix F, Figure F-7 of the Housing Element (Attachment D).
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As specified in Housing Element Program 2.E (Attachment E), by June 30, 2027, the City must issue at least three requests for proposals (RFPs) for City-owned sites. Below is a summary of key milestones in the development team selection process.
Date Milestone
December 1, 2022
Housing Commission provided advisory input
to Council (Attachment F) on issuance of an
RFP for teams to develop affordable housing
on three City-owned surface public parking
lots located at 1217 Euclid Street, 1211-1217
Fourteenth Street and 1146 Sixteenth Street
(Attachment G).
March 14, 2023
Council declared the sites as exempt surplus
land, allowing the City to move forward with
the RFP in accordance with State law
(Attachment H).
June 22, 2023 City issued the RFP (Attachment I)
February 1, 2024
Housing Commission provided advisory input
to the City Council on the selection of the team
led by HCHC (Attachment J)
March 19, 2024
Council selected the team led by HCHC,
comprised of HCHC as developer, Kevin Daly
Architects (kdA) as the architect, The People
Concern (TPC) as its services provider, and
Morley Builders as its construction estimator.
Council authorized the City Manager to
negotiate and execute an Exclusive
Negotiation Agreement (ENA) with HCHC.
May 31, 2024 City Manager executed ENA with HCHC
HCHC’s original proposal (Attachment K), submitted in response to the RFP, envisioned the following development plan:
Original HCHC Proposal
Site Apartments
Euclid St. 65 (including 40 PSH apartments)
Fourteenth St. 45
Sixteenth St. 20
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Total 130
The proposal included a “base case” parking scenario with no off-street public parking replacement. The proposal also included an alternative scenario with a total of 34 offstreet replacement public parking spaces. In the alternative scenario, public parking would be provided on the ground level on the Euclid and Fourteenth street sites, with two levels of underground parking to accommodate resident parking at an estimated cost to the City of $5.5 million.
Original HCHC Parking Proposal
Site Base case Alternative Cost to City
Private
Parking
Public
Parking
(offstreet)
Private
Parking
Public
Parking (offstreet)
Euclid St. 43 0 52 17 $2,800,000
Fourteenth
St. 43 0 52 17 $2,700,000
Sixteenth St. 10 0 10 0
Total 96 0 114 34 $5,500,000
Community engagement
HCHC hosted four community outreach meetings, on May 22, 23, and July 8, 10. Two meetings were held in-person and two virtually. Notices were mailed to residences and businesses within a 750-foot radius of each of the three sites, as well as organizations including Santa Monica Mid-City Neighbors and Wilshire Montana Neighborhood Coalition. The meetings were also advertised on the City Housing Division website, in the Santa Monica Daily Press, and sent to the Housing Division email list. In addition to mailings, a representative from HCHC hand-delivered meeting flyers to businesses.
HCHC also noticed the meetings to organizations that provide housing and/or services to people that may be eligible for affordable or permanent supportive housing.
At the meetings, staff from HCHC, kDa and TPC introduced their organizations, presented the team’s proposal, answered questions and took comments. HCHC also collected comments through a dedicated website and voicemail line it established for 5 of 23
the proposed development (Attachments L and M).
Key concerns raised by community members in the May meetings related to the proposed development on the City-owned lots included:
• Loss of public parking, which serves as visitor parking for residents as well as employees and patrons of neighborhood businesses and UCLA Medical Center • The amount of on-site parking for residents of the proposed developments will lead to increased competition for limited street parking • The potential for increased crime and other safety and quality of life concerns • The scale of the proposed development
• The potential for increased traffic and congestion as a result of the new housing during and after construction
Based on the feedback, the team revised its original proposal and presented the changes at the July meetings. The changes presented in July are summarized in the table below.
Original Proposal Examples of Feedback Proposed Changes Housing Type
Location
Supportive housing
located on Euclid St.
Family apartments
located on 14th St.
14th Street has more traffic
and safety concerns and is
closer to UCLA medical
facilities, and is more
appropriate for Supportive
Housing
Family apartments moved
to Euclid St.
Supportive housing moved
to 14th St.
Alley
Congestion
At grade and
subterranean resident
parking accessed from
alleys
Alleys are narrow and
congested
Vehicle queueing areas
provided within property
lines to minimize impact on
alleys
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Original Proposal Examples of Feedback Proposed Changes Staffing Each site will have one
full-time property
manager. Typical office
hours will be 8am to
5pm, Monday through
Friday.
Security issues may arise
after hours or on
weekends
A second full-time
employee will live at the
14th St. property. Job duties
and hours to be determined
and the goal will be to
enhance safety and
security.
Site Security Open access
landscaped front yards
with secured building
door access
Measures to enhance
safety are important and
site perimeters need to be
secured
Perimeter fences, fobaccess gates, and security
cameras installed at all
sites
Services Possible inclusion of a
food pantry to benefit
food insecure
households
Services, such as food
distribution, should not be
open to the broader
community
Services will be for
residents only, not the
broader community
After the July meetings, HCHC conducted additional due diligence to determine how to address community concerns related to the loss of public parking, building height and density, while still achieving the RFP objective to build 130 residences. HCHC determined that acquisition of 1402 Wilshire Boulevard, which currently houses Unleashed by Petco, had been listed for sale and is adjacent to the Fourteenth Street parking lot, would offer a way to preserve some existing parking and mitigate the height adjacent to neighboring residential properties on Fourteenth Street, while also reducing the length of construction time.
The current design reflects community feedback and Council direction as shown in the table below.
Original Proposal Examples of
Feedback
Updates
Population Served Low-income
individuals,
families, and
formerly unhoused
individuals in
supportive housing
There is a need for
senior housing
Family apartments
provided at Euclid St
14th St targeted to
seniors (55+ and up)
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Original Proposal Examples of
Feedback
Updates
Public Parking Affordable housing
development
on three public
parking lots
Parking lots are
heavily used
by residents,
businesses, and
hospital visitors
16th St to remain
undeveloped as
public parking
PSH Staffing Each development
site will have one
full-time property
manager. Typical
office hours will be
8am to 5pm,
Monday through
Friday.
Security issues may
arise after hours or
on weekends
Two full-time resident
property managers
will live at the 14th St
property. Security will
be provided on nights
and weekends during
Year 1, subject to
reassessment with
the City
Building Height 14th St building five
to six stories high
Building is too tall
for a
residential street
without other tall
buildings
Combined 14th St &
1402 Wilshire site
design where
building is six stories
along Wilshire Blvd,
stepping down to four
stories on residential
street
Unit Sizes Buildings will
include a mix
of studio, one-, two-
, and threebedroom units
Studio units are too
small. Larger units
should be provided.
No studios will be
provided. All
130 apts will be one-,
two-, or threebedrooms
HCHC presented its revised proposal at a fifth community meeting co-hosted by City staff on October 23, 2024. Written comments submitted to HCHC during the meeting comment period are provided in Attachment N.
Business outreach
City staff conducted door-to-door outreach to businesses on Wilshire Boulevard between Eleventh and Sixteenth streets to obtain information about employees’ and customers’ use of the City-owned parking lots. Staff distributed a survey and/or spoke with owners or employees at 31 businesses. At least 13 other businesses were vacant. 8 of 23
With a few exceptions for walking, cycling/scooters, public transit, and car drop-off (including rideshare), nearly all reported that their employees and customers drive to the business. There were a variety of parking resources utilized, including dedicated on-site parking, street parking (metered and unmetered), and the City-owned lots. Some businesses with on-site parking reported not having sufficient parking for both employees and customers, particularly if the lot is shared with other businesses.
There are two businesses that purchase a total of 13 monthly passes at the Euclid Street City-owned lot and there are no current monthly pass holders at the Fourteenth Street lot. Two business owners specifically mentioned that parking would present a serious obstacle to employee hiring and retention if monthly passes were not available.
One employee reported that her employer purchased a monthly pass for her at the building leased by UCLA Health at Wilshire Boulevard and Twelfth Street. Another business reported that UCLA Medical Center employees regularly park in the business’ on-site customer parking lot and that the employees of the business use the Sixteenth Street City lot (not currently proposed for development).
Discussion
Development
The proposed Developments include 130 new affordable residences distributed between the Euclid and Fourteenth Street/1402 Wilshire Boulevard sites as follows:
1-bedroom 2-bedrooms 3-bedrooms Total Stories
Euclid Street 21 14 13 48 6
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Fourteenth
Street/1402
Wilshire
Boulevard
80 2 82 3 - 6
The distribution of residences between the two sites maximizes competitiveness for State tax credit financing. In addition, the combined Fourteenth Street/1402 Wilshire Boulevard site allows the building to be stepped down from six stories to four stories adjacent to existing residential property on Fourteenth Street and to three stories on the Fourteenth Court alley. There are forty residences set aside for senior PSH. The Developments will restrict 100% of the apartments (excluding managers’ units) at or below 60% AMI.
The proposal includes on-site parking for residents as follows:
Number of
residences
On-site resident
parking Parking type
Euclid Street 48 40 Ground level and one
underground level
Fourteenth Street/
1402 Wilshire
Boulevard
82 42 Ground level
Total 130 82
The parking ratios are based on affordable housing leasing and affordable housing best practices, with a higher ratio of spaces provided at Euclid Street where two- and three-bedroom apartments for larger households are proposed and a lower ratio provided at Fourteenth Street for senior apartments. The buildings will have secure bicycle parking available for residents and are located near public transit. The City also operates MODE, a low-cost on-demand rideshare program, for seniors and people with disabilities that residents can utilize.
On-site Resident Services
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HCHC will employ one full-time Resident Services Coordinator to facilitate services and activities for the 87 general affordable apartments. Examples of services include linkages to community-based services, GED preparation, resume workshops, and life skills classes. In addition, three full-time Property Managers (one at Euclid Street and two at the Fourteenth Street/1402 Wilshire Boulevard site) will reside on-site. TPC will provide two full-time intensive Case Managers to serve clients in the PSH apartments with the support of a part-time program manager and director. This staffing ratio is aligned with PSH best practices. On-site offices will be provided for HCHC and TPC staff.
In addition to case management, TPC services are tailored to meet individual client needs and may include assistance with applying for benefits; transportation; crisis management; life skills education; social and recreational activities; employment and educational resources; money management/representative payee; and linkages to other resources based on an individual clients’ needs. All services will be provided by case managers on-site, or through linkages to outside service programs. Case managers will make frequent contact with their clients from initial lease-up and movein through residency, with frequency tailored to the client’s need.
DDA Terms Summary
HCHC has entered into a Purchase and Sale Agreement with the owner of 1402 Wilshire Boulevard. Should the City Council authorize execution of the DDA and Ground Lease, HCHC plans to close escrow on 1402 Wilshire Boulevard in the third quarter of 2025 following execution of the DDA. HCHC would own 1402 Wilshire Boulevard until it has secured all construction financing, which is estimated to occur in May 2026. At that point, as will be memorialized in the DDA, HCHC will transfer ownership of 1402 Wilshire Boulevard to the City and the City will concurrently ground lease the combined Fourteenth Street/1402 Wilshire Boulevard site back to HCHC.
To proceed, staff seeks City Council approval of the proposed DDA terms (Attachments O and P), including authorization for the City Manager to finalize and 11 of 23
execute the DDAs and Ground Leases. Key terms include:
• For both the Euclid Street and the combined Fourteenth Street/1402 Wilshire Boulevard sites, the City will provide a ground lease term of 55 years plus two options of 22 years to retain City ownership in exchange for the continued operation of the property as affordable housing.
For each site, HCHC will make an annual ground lease payment to the City of $1 per year plus an amount based on the fair market value of the 1217 Euclid Street and 1211-1217 Fourteenth Street sites at time of construction loan closing. At year 56, assuming extension of the lease is exercised, rent will be equivalent to City’s share of residual receipts. • The City will receive a 50% share of residual receipts for the Euclid site. For the Fourteenth Street/1402 Wilshire Boulevard site, 50% of residual receipts will be split between the City and other public lenders based on their respective shares of project funding. Repayment of the loan shall be paid from the City’s share of residual receipts after payment of the Ground Lease Rent. • The Santa Monica Housing Authority will provide 40 Project-Based Vouchers (PBVs) for the PSH apartments at the Fourteenth Street/1402 Wilshire Boulevard site.
• HCHC will receive a developer fee subject to either the fee limit in the Santa Monica Housing Trust Fund Guidelines at the time of closing or a negotiated fee based on third-party review, up to the maximum allowable developer fee per CA LIHTC regulations at time of closing. • A resident Property Manager will be on duty at each site Monday through Friday from 8:00 a.m. to 5:00 p.m. beginning with move-ins. At the Fourteenth Street/1402 Wilshire Boulevard site, a second resident Assistant Property Manager will be on duty from 2:00 p.m. to 10:00 p.m. Monday through Friday, with the shift adjustable as needed. At all times when not on duty, the Property Manager or Assistant Property Manager will be on-call and available by phone for after-hours emergencies.
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• HCHC will provide security for the first year of operations at the Fourteenth Street/1402 Wilshire Boulevard site during night and weekend hours when a resident property manager is not on duty, with continuation after the first year subject to reassessment with City staff.
Financing Summary
To develop the sites, HCHC will apply for the following financing sources:
1. Multifamily Housing Program (MHP) from HCD
2. 4% and 9% Low Income Housing Tax Credits that are competitively awarded by the California Tax Credit Allocation Committee (CTCAC)
3. Tax-exempt Bonds from the California Debt Limit Allocation Committee (CDLAC)
4. Construction and permanent financing (mortgage) from a conventional lender(s) If a funding gap should occur, City staff can approve Housing Trust Fund (HTF) loans that comply with the underwriting criteria and loan limits within the City’s HTF Guidelines. Any request outside of the HTF limits will be brought before City Council for approval. Currently, HCHC anticipates a total funding gap for both developments of $13,500,000, which falls within the City’s HTF Guidelines. The funding gap is a result of the City not having a sufficient scope of new, unfunded transit improvements in the area to be competitive for the Affordable Housing and Sustainable Communities program, which was a key funding source anticipated in HCHC’s original proposal.
The anticipated $13,500,000 City loan is inclusive of a $6,000,000 loan to HCHC which will be used to acquire 1402 Wilshire Boulevard and is allowable under the City’s HTF Guidelines. The City would fund the acquisition loan concurrently with HCHC closing escrow on 1402 Wilshire Boulevard in Spring 2025. After HCHC secures construction financing--anticipated in Spring 2026--the City will receive $3,500,000 for the loan to acquire 1402 Wilshire. The remaining $11,000,000 of the City loan will be used to close the financing gap for the Euclid Street development. 13 of 23
Anticipated Funding Timeline for City Loans
1402 Wilshire
Boulevard
Acquisition
Euclid Street
Construction
Start
Fourteenth
Street/1402
Wilshire
Boulevard
Construction
Start
Spring 2025 Fall 2025 Spring 2026 Total
Fourteenth
Street/1402
Wilshire
Boulevard
$6,000,000 (or
purchase price)
($3,500,000)
estimated
repayment to
City
$2,500,000
Euclid Site $11,000,000 $11,000,000
Total: $13,500,000
Replacement Public Parking
The loss of public parking has been a key topic of concern from community engagement meeting feedback. Community members have expressed concerns about the impact of the loss of public parking on local businesses, as well as the resulting increase in competition for limited street parking in the area if public parking is not replaced.
No parking is required for the Developments per the City’s Zoning Ordinance. Santa Monica Municipal Code Section 9.28.060 (A)(1)(a) implements Assembly Bill 2097, a State law prohibiting cities from implementing parking minimums for housing projects within a ½ mile from a major transit stop. This property falls within the halfmile radius of a major transit stop, so no parking is required for this site.
The revised proposal preserves 21 existing parking spaces at the Sixteenth Street lot. There are 98 existing parking spaces across the Euclid and Fourteenth Street lots. As part of an ongoing Citywide parking study to inform future parking pricing, a consultant for the City’s Department of Transportation (DOT) analyzed utilization of the City’s structures, lots, and meters. (Attachment Q) is an analysis of parking 14 of 23
demand, including the two surface lots for the Development. The data comes from the City’s online parking data platform, which tracks pay station activity. The chart below shows average occupancy during the year (in the “Average” columns) and peak occupancy on one of the busiest days of the year (in the “Peak” columns).
Occupancy of Santa Monica City Lots
Lot Capacity
Average Peak**
2022 Occ. % 2023 Occ. % 2022 Occ. % 2023 Occ. %
Mid-City Lot 7
(1217 Euclid
St.)
49 15 31% 20 41% 21 43% 28 57%
Mid-City Lot 8
(1146 Sixteenth
Street)
*will remain
public parking
21 16 74% 16 75% 20 95% 21 100%
Mid-City Lot 12
(1211-1217
Fourteenth St.)
49 37 76% 40 82% 51 104% 53 108%
**85th Percentile busiest day (see Attachment Q)
To summarize, Lot 7 (Euclid) and Lot 12 (Fourteenth Street) average a combined 65% utilization and 79% on one of the busiest days of the year, reflecting a potential public benefit if 60-77 of the existing parking spaces were to be replaced. However, the elimination of the retail use at 1402 Wilshire Blvd will alleviate some demand for public parking. Additionally, in other thriving commercial districts in the City, such as Montana Avenue and Ocean Park Boulevard, there are no City-owned public parking lots to support businesses. In those corridors, residents, employees and patrons utilize public on-street parking, privately-owned off-street parking, as well as the robust multimodal options that the City and the private sector provide, such as transit, cycling, and shared use mobility devices.
Based on community feedback, staff and HCHC assessed potential options for 15 of 23
replacement public parking, which are presented below.
On-street perpendicular parking replacement
One option for replacement public parking is to convert one side of the on-street parking into perpendicular (or “nose-in”) to accommodate additional on-street spaces.
Perpendicular parking is already present in the area between Ninth and Sixteenth streets and between Colorado Avenue and Broadway, excluding the signalized corridors, such as Eleventh and Fourteenth streets. Conceptually, it is estimated that reconfiguring street parking to perpendicular on one side of Euclid Street between Wilshire Boulevard and Arizona Avenue, and one side of Sixteenth Street between Wilshire Boulevard and California Avenue, could yield additional on-street spaces.
DOT estimates the cost to design and implement this at approximately $60,000 per block. However, staff does not recommend conversion to perpendicular parking as a solution for the following reasons:
• Perpendicular parking is not suitable for streets with traffic signals, since higher-speed and higher-volume traffic flow would present safety issues for drivers backing into and out of perpendicular parking spaces. • Under existing City policy, parking regulations are aligned with the adjacent land use. Since the streets surrounding the proposed Developments are primarily residential, existing preferential parking regulations on those blocks would apply to any new, residential adjacent spaces. On Euclid Street between Wilshire Boulevard and Arizona Avenue, the existing preferential parking regulations are: No parking from 7:00 a.m. until 2:00 a.m. daily, except by permit. On Sixteenth Street between California Avenue and Wilshire Boulevard, the existing preferential parking regulations are: Two hour parking from 9:00 a.m. to 6:00 p.m. daily, and no parking from 6:00 p.m. to 2:00 a.m. daily, except by permit. Therefore, the benefit to non-residents of increased parking would be limited. In addition, some existing metered spaces near the intersection may need to be removed to accommodate perpendicular parking spaces. 16 of 23
• The City’s sustainability approach based on Council direction and adopted City policy is to facilitate a full range of transportation options through policies and infrastructure projects. These include transit service, bicycle and pedestrian infrastructure, shared use mobility devices, and burgeoning technology services such as autonomous taxis. Expansion of street parking would direct resources away from achieving the City’s sustainability objectives of reducing reliance on cars and prioritizing bicycle and pedestrian safety and effective transit service.
If Council provides direction to further investigate on-street parking reconfiguration in the area, DOT would need to conduct additional analysis to assess how many net new street spaces could realistically be created with a reconfiguration, taking into account factors such as existing street widths, space for loading zones, safety, visibility, and existing bike lanes (for example, Fourteenth Street is not suitable for nose-in parking due to conflicts with the existing bike lane, among other factors).
Enhanced business engagement
The GoSaMo Transportation Management Organization (TMO) could prioritize enhanced engagement with businesses along this stretch of Wilshire Boulevard to better understand the transportation challenges their employees and customers face and connect them to applicable transportation services.
Adjusting time limits on metered parking
According to pay station data, the most frequent lengths of stay at the Euclid and Fourteenth Street lots are one and two hours. For the meters on Wilshire Boulevard between Twelfth and Seventeenth Streets, the average length of stay is 49 minutes, according to a sample of meter data from November 1 – 15, 2024. The majority of meters in the area allow stays of up to two hours. Staff does not recommend shortening the amount of time allowed at meters to under two hours, as that may be insufficient to meet the needs of the majority of meter users. For very short-term uses (such as dry cleaners), the City tends to locate 30 minute or passenger loading nearby.
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On-site public parking replacement
HCHC’s original proposal provided an alternative scenario in which 17 off-street replacement public parking spaces could be included at ground level on Euclid and 14th streets, for a total of 34 off-street replacement public parking spaces. The alternative scenario required a second level of underground parking to accommodate resident parking at a cost to the City of $5.5 million ($2.8 million for the Euclid site, and $2.7 million for the Fourteenth Street site). The cost per off-street public space was estimated at nearly $162,000 in the original proposal. Any financing gaps in the Developments resulting from adding on-site, off-street replacement public parking would need to be filled from City sources, as there are no dedicated sources of non-City funding to pay for public parking.
After further due diligence, HCHC revised the design to accommodate site constraints as well as 48 residences on Euclid Street and has identified several barriers, making replacement public parking at Euclid Street site infeasible for the following reasons:
• Due to the revised design, some ground-level parking spaces were removed due to site constraints, which were identified as potential replacement public parking in the original proposal.
• A second level of underground parking would be needed to accommodate resident parking; due to ramping, the number of additional spaces that could be accommodated would be inefficient based on cost.
• Operationally, any replacement public parking would need to be on the street level to ensure security of the building and residents. If replacement public parking is underground, the development would need to have separate entrances, stairwells, and elevator access for both the residents and the public utilizing the replacement parking. The site area is not large enough to accommodate features required to ensure a secure environment for building residents, such as a separate parking entrance, stairwell and elevator to 18 of 23
separate the publicly-accessible and resident parking areas. • Providing public parking at street level would yield few public parking spaces due to required utility and service spaces and would either reduce the overall number of residential units or increase the height of project. Increasing the height of the project any further would require a different and more costly construction type, and would significantly widen the financing gap.
Compared to the Euclid site, the larger footprint of the combined Fourteenth Street/1402 Wilshire Boulevard site offers fewer space constraints to replacing public parking on site. As currently designed, resident parking at the Fourteenth Street/1402 Wilshire Boulevard site is accessed from the Fourteenth Court alley to avoid cars crossing into the existing bike lane on Fourteenth Street to access the building. Adding public parking to the Fourteenth Street/1402 Wilshire Boulevard site would require redesign and a potential delay in obtaining necessary entitlements to apply for financing. If ground level parking is used for the public, a subterranean level of parking would be required for residents. Due to ramping required to reach the subterranean level, five resident spaces would be lost, leaving approximately 37 spaces for residents. HCHC estimates that 35 public parking spaces could be accommodated on site at ground level at a cost to the City of $6,340,316, or $181,152 per space. If non-City funds are used to cover the cost, the resulting shortfall in financing would need to be funded by the City’s Housing Trust Funds.
There are other Council-directed priorities for use of the Housing Trust Funds, including development of affordable housing on other City-owned sites identified in the Housing Element and direct assistance to low-income seniors under the Preserving Our Diversity (POD) program. Additionally, there is still money the City must repay back to the Housing Trust Fund, which continues to impede availability of these funds.
Exempt Surplus Land Declaration
The California Surplus Land Act (Government Code 54220 et seq.) (SLA) governs the sale or lease of surplus lands and requires local agencies to prioritize opportunities for certain uses including affordable housing development for any land the entity may sell 19 of 23
or lease. Surplus land may be declared either “surplus” or “exempt surplus” by the legislative body of the local agency as supported by written findings. Exempt surplus land does not have to follow the procedural requirements of the Surplus Land Act, and includes surplus land that is offered for open, competitive bid for a 100% affordable housing development. The law requires local agencies to report on the list of surplus lands in the General Plan Annual Progress Report, which is due April 1 of each year.
The SLA requires local agencies to formally declare publicly-owned property not necessary for the local agency’s use, as surplus land or exempt surplus land before beginning the disposition process. Surplus land must follow a statutory noticing and negotiation period with certain designated entities, including eligible housing sponsors defined by HCD. Exempt surplus land does not have to follow the procedural requirements of the Surplus Land Act.
As provided in the SLA, exempt surplus land includes “(i) Surplus land that is to be developed for a housing development, which may have ancillary commercial ground floor uses, that restricts 100 percent of the residential units to persons and families of low or moderate income, with at least 75 percent of the residential units restricted to lower income households, as defined in Section 50079.5 of the Health and Safety Code, with an affordable sales price or an affordable rent, as defined in Section 50052.5 or 50053 of the Health and Safety Code, for a minimum of 55 years for rental housing, land use for ownership housing, and 50 years for rental or ownership housing located on tribal trust lands, and in no event shall the maximum affordable sales price or rent level be higher than 20 percent below the median market rents or sales prices for the neighborhood in which the site is located. (ii) The requirements of clause (i) shall be contained in a covenant or restriction recorded against the surplus land at the time of sale that shall run with the land and be enforceable against any owner who violates the covenant or restriction and each successor in interest who continues the violation.”
The City Council adopted a resolution declaring the City-owned properties at 1217 Euclid Street, 1211-1217 Fourteenth Street and 1146 Sixteenth Street as exempt 20 of 23
surplus land on March 14, 2023. As required by the SLA, the City submitted the declaration and findings to HCD for review. On October 21, 2024, HCD provided a letter concurring with the City’s exempt surplus declaration for the three sites (Attachment R).
Because the SLA only applies to disposition of publicly-owned land, the proposed resolution declaring 1402 Wilshire Boulevard as exempt surplus (Attachment S) would become effective only upon a concurrent transaction in which HCHC transfers ownership to the City and the City ground leases the combined Fourteenth Street/1402 Wilshire Boulevard Site to HCHC.
Next Steps
With City Council approval, the City Manager will execute a DDA and associated documents to allow HCHC to apply for Tax Credits and other funding sources for the Developments’ construction. HCHC has submitted entitlement applications for the Developments, which are also required to be approved in order to apply for outside financing. The designs (Attachment T) are tentatively scheduled to be reviewed by the Architectural Review Board on December 16, 2024 for the Euclid Street site and on a date to be determined in early 2025 for the Fourteenth Street/1402 Wilshire Boulevard site.
For the Euclid Street site, HCHC plans to submit its tax credit funding application to California Tax Credit Allocation Committee (TCAC) in February 2025. HCHC anticipates receiving its TCAC award in May 2025 and will start construction in late 2025, with construction completion and move-ins estimated in 2027.
For the Fourteenth Street/1402 Wilshire Boulevard site, HCHC plans to submit its MHP funding application to HCD and complete its acquisition of 1402 Wilshire Boulevard in the second quarter of 2025. HCHC plans to submit its tax credit and taxexempt bond funding application to TCAC and CDLAC in August 2025. HCHC anticipates receiving its TCAC and bond award in December 2025 and will start construction in Spring 2026, after all construction financing sources have been 21 of 23
finalized and 1402 Wilshire Boulevard has been transferred to the City. Construction completion and move-ins for the Fourteenth Street/1402 Wilshire Boulevard site are estimated in 2028.
Past Council Actions
Meeting Date Description
08/27/2024 City Council direction to proceed with negotiations with HCHC based upon a revised development proposal
03/19/2024 City Council selection of the team led by HCHC for development of the City-owned sites at 1217 Euclid Street, 1211-1217 Fourteenth Street, and 1146 Sixteenth Street
03/14/2023 City Council adoption of a resolution declaring City-owned sites at 1217 Euclid Street, 1211-1217 Fourteenth Street, and 1146 Sixteenth Street as exempt surplus land in accordance with the Surplus Land Act
10/12/2021 City Council adopted the final 6th Cycle Housing Element Update (2021-2029)
6/25/2021 City Council provided direction to staff on the draft concepts and strategies to include in the 6th Cycle Housing Element Update Environmental Review
The development of affordable housing on 1217 Euclid Street, 1211-1217 Fourteenth Street and 1146 Sixteenth Street were analyzed as part of the 2021-2029 6th Cycle Housing Element Environmental Impact Report (EIR) [SCH No. 2020100575] that was certified by Council on October 12, 2021, with an Addendum to the EIR approved on October 11, 2022. Development of affordable housing on City-owned properties implements a portion of that 6th Cycle Housing Element and is consistent with the Housing Element EIR. Therefore, no further CEQA review is necessary for the development of affordable housing on these sites.
The DDAs and Ground Leases for the development of affordable housing is also exempt from CEQA pursuant to Section 15182 of CEQA. Section 15182 statutorily exempts qualifying residential or a mixed use projects from CEQA that are consistent 22 of 23
with an adopted specific plan. The DDA and Ground Lease for development of affordable housing meets the criteria described in Section 15182 in that the project would have a floor area ratio of at least 0.75, is located in a transit priority area, is consistent with the 6
th Cycle Housing Element for which an Environmental Impact Report was certified, and is consistent with the general use designation, density, building intensity, and applicable policies specified for the project area in the Southern California Association of Governments’ Sustainable Communities Strategy.
Additionally, the declaration of 1402 Wilshire Boulevard as exempt surplus land upon transfer of fee title to the City would have no possibility of significant effect on the environment, and therefore, is exempt pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines.
Financial Impacts & Budget Actions
There is a HTF request of approximately $13,500,000 to cover the current funding gap, which falls within the City’s HTF Guidelines. Staff will return to Council with any investment of HTFs or other City resources that fall outside the City’s HTF Guidelines.
Prepared By: Ayala Scott, Senior Development Analyst
Prepared By: Ayala Scott, Senior Development Analyst
Approved Forwarded to Council
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Attachments:
A. A. Selection of Hollywood Community Housing Corporation (HCHC) as the Development Team for Affordable Housing on Three City-Owned Sites Adjacent to Wilshire Boulevard - March 19, 2024 (web link)
B. B. Exclusive Negotiation Agreement and License Agreement, May 31, 2024 C. C. City Council Meeting Minutes, August 27, 2024
D. D. Housing Element Appendix F, Figure F-7
E. E. Housing Element Program 2.E
F. F. Housing Commission Meeting Minutes, December 1, 2022 G. G. Euclid, Fourteenth St. and Sixteenth St. Sites
H. H. Adoption of Resolution Declaring Surplus Properties - March 14, 2023 Staff Report (Web Link)
I. I. 1217 Euclid St., 1211-1217 14th St., 1146 16th St. RFP J. J. Housing Commission Meeting Minutes, February 1, 2024 K. K. Original HCHC Proposal
L. L. Comments Submitted to HCHC - May 8 - 31, 2024
M. M. Comments Submitted to HCHC June 24-July 25, 2024
N. N. Comments Submitted to HCHC - October 9 - October 31, 2024 O. O. Wilshire DDA Term Sheet Euclid
P. P. Wilshire DDA Term Sheet 14th
Q. Q. Surface Lot Replacement Study
R. R. HCD Exempt Surplus Land Declaration Review Letter 10.21.24 S. S. Proposed Resolution Declaring 1402 Wilshire Boulevard Exempt Surplus Land T. T. Exterior Renderings
U. U. HCHC_Dec 2024_OAKS INITIATIVE FORM
V. V. HCHC_Dec 2024_Levine Act Disclosure Form
W. Written Comments
X. PowerPoint Presentation