CITY OF SIGNAL HILL
STAFF REPORT
2175 Cherry Avenue • Signal
Hill, California 90755-3799
10/10/2023
AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
HONORABLE CHAIR
AND MEMBERS OF THE HOUSING AUTHORITY
FROM: CARLO TOMAINO
CITY MANAGER
SUBJECT:
SELECTION OF NATIONAL COMMUNITY RENAISSANCE AS THE CITY’S
DEVELOPMENT PARTNER FOR THE ORANGE BLUFF AND WALNUT BLUFF
WORKFORCE HOUSING SITES
Summary:
In April, the City Council and Housing Authority Board authorized staff to issue a Notice of Funding Availability (NOFA) totaling approximately $10 million to leverage toward the development of the Orange Bluff and Walnut Bluff workforce housing sites. Staff received six proposals; after conducting an extensive selection process, including in-person interviews and onsite property tours, staff recommends National Community Renaissance (National CORE) as the preferred development partner. As one of the largest nonprofit developers in the United States, National CORE has a strong reputation for developing high-quality properties. Among the distinguishing features of National CORE’s proposal was its comprehensive redevelopment plan to fund the cost of infrastructure improvements, not only for the workforce housing sites, but also for the Heritage Square and Town Center Northwest sites. National CORE also proposed a robust social services component, including the development of a 5,000 square foot Boys and Girls Club. Staff recommends the City Council and Housing Authority Board select National CORE and direct staff to negotiate an Exclusive Negotiation Agreement to effectuate the next steps in the development process. Over the next few months, staff would negotiate the terms of the ENA and return to the City Council and Housing Authority Board with the final recommended document for approval.
Strategic Plan Goal(s)
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 3 Economic Development: Improve the local economy, support local businesses, and create a vibrant downtown core.
Goal No. 4 Infrastructure: Maintain and improve the City’s physical infrastructure, water system, CITY OF SIGNAL HILL Page 1 of 7 Printed on 10/6/2023
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Goal No. 4 Infrastructure: Maintain and improve the City’s physical infrastructure, water system, and recreational spaces.
Recommendation:
Staff recommends the City Council and Housing Authority Board select National Community Renaissance as the City’s development partner and direct staff to negotiate an Exclusive Negotiation Agreement (ENA) for the development of the Orange Bluff and Walnut Bluff workforce housing sites.
Fiscal Impact:
The fiscal impact associated with the recommended action includes staff and City Attorney time to negotiate the Exclusive Negotiation Agreement. The City and the Housing Authority have access to multiple sources of funding restricted to the development of affordable housing. As of July 1, 2023, the Housing Authority has a fund balance of $6.4 million. In addition, the Housing Authority Fund is estimated to receive $2.8 million from a Successor Agency loan expected to be fully repaid by 2028.
The City also has approximately $750,000 in affordable housing in-lieu fees from a prior Development Agreement. Lastly, the City has access to $167,262 in Permanent Local Housing Allocation (PLHA) funding to offset the cost of site remediation; the City is in the process of securing additional funding through this program. The proposed ENA will include language regarding the use and timing of the City and Housing Authority funding sources.
Background:
Workforce Housing Sites
The City’s Certified Housing Element identifies two sites owned by Signal Hill Petroleum for the future development of workforce housing. As part of the Housing Element update process, the City Council entitled both sites to collectively accommodate up to 380 units. These sites, along with two additional market-rate sites, achieve the City’s goals of meeting its Regional Housing Needs Assessment allocation. Once constructed, the two properties would fulfill the City’s broader housing goals by increasing the available inventory of housing for low- and moderate-income residents.
Similar to properties found throughout Signal Hill, the workforce housing sites have active and abandoned oil well sites and significant topography issues that need to be addressed as part of the site preparation process. The NOFA issued by staff included substantial discussion regarding the associated challenges so that prospective developers could account for these factors as part of their financial assessment of the sites. As the owner and development partner, Signal Hill Petroleum would provide its technical expertise throughout the process.
For the City Council’s reference, the section below provides a description and conceptual site plan for both sites. The first site is known as “Orange Bluff” and comprises approximately 8.6 acres of property located on the south side of East 28th Street between Orange Avenue and Gundry Avenue.
The City entitled the site to accommodate up to 290 workforce units in a village cluster setting of six 3 - to 5-story structures around a common open space with internal private drives for circulation. The property has two access points onto public streets, at East 28th Street and at Gundry Avenue. The second site is known as “Walnut Bluff” and is a 2-acre property located at the northwest corner of East Willow Street and Walnut Avenue. The site is entitled to accommodate up to 90 workforce units CITY OF SIGNAL HILL Page 2 of 7 Printed on 10/6/2023
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East Willow Street and Walnut Avenue. The site is entitled to accommodate up to 90 workforce units in three 3- to 4-story structures clustered around an internal parking area and open space.
Funding Sources and Restrictions:
As noted, the City and the Housing Authority collectively have access to multiple potential sources of funding (totaling approximately $10 million) that can only be utilized for the development of affordable housing. The Housing Authority has a fund balance of $6.4 million which is held in the Affordable Housing Trust Fund. Additionally, there is a projected $2.8 million balance due to the Housing Authority from a Successor Agency loan that is expected to be fully repaid in 2028. The City also has $750,000 related to affordable housing in-lieu fees from a prior Development Agreement. Lastly, the City has access to $167,262 in PLHA funding that could be used to offset the cost of site remediation; the City is in the process of securing additional funding through this program. The City’s financial contribution will require the units to remain income-restricted pursuant to affordability covenants as required by State law for a minimum of 55 years.
Analysis:
Development Proposals:
On April 25, 2023, the City Council authorized staff to issue a NOFA requesting proposals from qualified developers with proven experience to act as a development partner to construct the two workforce housing sites. Staff ensured the NOFA clearly communicated that the selected developer would be required to negotiate successfully with the property owner to secure the site control and acquire the funding necessary to design and build both projects. The NOFA evaluation process only considered those developers with significant experience working on complex workforce housing projects. Developers evaluated the financial feasibility of building both sites and provided conceptual pro-forma analyses in their respective proposals for review. The City received six proposals in CITY OF SIGNAL HILL Page 3 of 7 Printed on 10/6/2023
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response to the NOFA from the following developers as listed alphabetically below:
· Jamboree Housing
· META Housing
· National Community Renaissance
· Thomas Saffron and Associates
· USA Properties
· West Hollywood Community Housing Corporation
The City formed a Selection Committee comprised of the City Manager, Deputy City Manager, Director of Community Development, the City Attorney’s Office, and a representative from Signal Hill Petroleum, to evaluate the proposals and engage the developers in an interview process. The evaluation criteria measured each developer’s qualifications and experience, demonstrated ability to secure project financing, ability to negotiate site control with a private partner, project management experience, and post-construction management experience.
After an extensive review of the proposals, the Selection Committee recommended interviewing five of the six development firms. The Selection Committee conducted 90-minute interviews with each firm and asked questions to test the developers with respect to their ability to successfully build complex projects that involve negotiating with a private party, engaging in site remediation activity involving petroleum wells, securing funding from multiple public and private sources, and ensuring construction is completed within budget. The detailed discussions that occurred as part of the interviews resulted in two firms (National CORE and USA Properties) being invited to the final round of the selection process.
As part of the final step in the selection process, the Selection Committee toured multiple properties owned and operated by the two prospective development partners. During the tours, the Selection Committee had further opportunities to meet with the development team from each firm, including construction managers, and ask in-depth questions regarding construction quality, cost, and project timing. The tours also provided the Selection Committee opportunities to further discuss onsite amenities, programming, and observe long-term maintenance practices.
Proposed Development Partner
Based on the breadth of the entire selection process, the Selection Committee unanimously recommends National CORE as the preferred development partner for the Orange Bluff and Walnut Bluff workforce housing sites. National CORE, a 501(c) (3) not-for-profit public benefit corporation, would serve as the developer, general contractor, property manager, asset manager, and compliance manager. Established in Rancho Cucamonga in 1992, National CORE is an award-winning home builder and property manager with 19 communities in Los Angeles County, and four additional communities under construction. National CORE has decades of experience developing affordable housing projects with complex financing structures. Throughout the selection process, National CORE consistently demonstrated its ability to complete projects and work with both private and public partners to develop affordable housing. The section below highlights key elements of the National CORE proposal as well as the developer’s qualifications. · Proven Expertise in Affordable Housing: National CORE specializes in developing and CITY OF SIGNAL HILL Page 4 of 7 Printed on 10/6/2023
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· Proven Expertise in Affordable Housing: National CORE specializes in developing and managing affordable housing properties. National CORE has decades of experience successfully completing numerous projects across various communities, demonstrating the organization’s deep understanding of the affordable housing market. · Community-Centric Approach: National CORE is committed to creating sustainable, vibrant communities; its developments often include amenities such as parks, community centers, and educational resources, promoting a high quality of life for residents. · Financial Stability: National CORE's financial stability and access to capital ensure that it can effectively manage the financing and construction of affordable housing projects. This stability reduces the risk associated with such developments and guarantees that the project will be completed on time and within budget.
· Strong Partnerships: National CORE has a history of successful collaborations with municipalities, nonprofits, and private entities. The firm’s ability to bring together diverse stakeholders and align their interests makes them an ideal partner for projects that require complex public-private partnerships.
· Commitment to Sustainability: National CORE prioritizes sustainability in its developments, incorporating energy-efficient designs and green building practices; this approach not only benefits the environment but also reduces long-term operational costs. · Community Engagement: National CORE's community engagement process ensures that resident voices are heard and considered during the planning and development phases; this approach fosters a sense of ownership and pride among the future residents. · Compliance and Accountability: National CORE is well-versed in the regulatory requirements and compliance standards related to affordable housing. The developer’s rigorous approach to compliance ensures that the project will meet all necessary guidelines and regulations.
· Local Impact: National CORE's projects have a positive local economic impact, generating jobs during construction and providing long-term employment opportunities in property management and maintenance.
Public Infrastructure Improvements
National CORE was the only developer to propose an approach to not only address the predevelopment work required for the Walnut and Orange Bluff properties, but also the Heritage Square and Town Center Northwest sites. National CORE proposes to pursue Infill Infrastructure Grants through the California Department of Housing and Community Development that would offset the cost of constructing these public improvements. According to due diligence conducted by National CORE, the Infill Infrastructure Grant (IIG) program may potentially provide as much as $30 million for site improvements. If successful, the IIG program would greatly facilitate pre-development work to advance construction of the four opportunity sites in the City’s Housing Element. To meet the State’s deadline, National CORE would begin work on the program application immediately; the City would CITY OF SIGNAL HILL Page 5 of 7 Printed on 10/6/2023
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deadline, National CORE would begin work on the program application immediately; the City would submit the grant for consideration in December. National CORE’s innovative and long-term strategic planning is a key reason the Selection Committee recommends this developer.
Partnership with the Boys and Girls Club
National CORE’s proposal includes a community center as well as other onsite amenities for the proposed communities. Another unique aspect of National CORE’s proposal includes the development of a 5,000 square foot Boys and Girls Club that would not only serve the two future residential properties, but also provide programming for all Signal Hill residents. The Boys & Girls Club of Long Beach would provide academic support such as STEM programs, sports programs, arts enrichment, career readiness, and leadership programs in the form of before- and after-school curriculum and day camps hosted at the proposed onsite facility. The Boys and Girls Club program would enhance National CORE’s array of existing social services program offered through its Hope for Housing Foundation. The Boys and Girls programs would also expand the City’s ability to offer programming that focuses on education and promoting opportunities for working parents to receive child-care support while they work or earn an education.
Conclusion:
National CORE continuously demonstrated its commitment to the City’s workforce housing projects; the firm’s proforma analysis was exhaustive in detail and identified multiple funding opportunities that could successfully leverage the City’s $10 million NOFA. Overall, National CORE not only proposed a project that would construct the proposed 380 units, but also a more comprehensive approach that could enable development of two other opportunity sites approved as part of the City’s Housing Element. In addition, National CORE proposed a partnership with the Boys and Girls Club that would increase the City’s ability to serve working parents and their children by offering valuable educational curriculum and cultural programs. In summary, National CORE is a highly qualified and experienced affordable housing developer with a commitment to creating thriving, sustainable communities. The developer’s expertise, financial stability, community engagement, and track record make National CORE a valuable development partner. Staff has attached National CORE’s development proposal and design concepts for the Orange and Walnut Bluff sites for the City Council’s information (Attachments A and B). The developer will provide additional opportunities to refine the architectural design as it advances the project.
Next Steps:
Subject to City Council and Authority Board approval, staff would develop an ENA with National CORE. The ENA is a legal instrument that commits the City and Housing Authority funding to National CORE for a pre-determined period while it engages in further due diligence and begins the process of assembling its capital stack to fund the project. National CORE would be responsible for securing all funding necessary for remediation, design, and construction of both projects. Potential funding sources may include the Mixed Income Program, Low- and Moderate-Income Housing Tax Credits, the Gateway Cities Affordable Housing Trust, the California Housing Finance Authority programs, Federal Housing and Urban Development programs, private equity loans, and other sources. Over the next few months, staff would work with National CORE and Signal Hill Petroleum to finalize the details of the ENA and return to the City Council and Housing Authority Board for final CITY OF SIGNAL HILL Page 6 of 7 Printed on 10/6/2023
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approval.
Reviewed:
_________________________
Sharon del Rosario
Attachments:
A. National CORE Development Proposal
B. National CORE Design Project Package
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