CRA/lA BUILDING COMMUNITIES

Transcription

1 CRA/lA BUILDING COMMUNITIES Community Redevelopment Agency of the CITY OF LOS ANGELES DATE/ MAY FILE CODE I 1200 West 7th Street I Suite 500 Los Angeles I California T / F CRA File No. ~41Z... Council District: _1 Contact Person: Gazala Pirzada (818) Honorable Council of the City of Los Angeles John Ferraro Council Chamber 200 N. Spring Street Room 340, City Hall Los Angeles, CA Attention: Alan Alietti, Office of the City Clerk COUNCIL TRANSMITTAL: Transmitted herewith, is a Board memorandum adopted by Agency Board on May 19; 2011 for City Council review and approval in accordance with the "Community Redevelopment Agency Oversight Ordinance" entitled: VARIOUS ACTIONS RELATED TO: Elmer Court. Disposition Development and Loan Agreement with Heritage Housing Partners for a 1 0-Unit Affordable Homeownership Project on a CRA/LA Owned Property Located at Elmer Avenue in the North Hollywood Redevelopment Project Area EAST VALLEY REGION (CD 4) RECOMMENDATION That City Council approve(s) recommendation(s) on the attached Board Memorandum. ENVIRONMENTAL REVIEW The proposed Project is exempt from the provisions of California Environmental Quality Act ("CEQA") pursuant to Section (In-fill Development Projects) of the CRA/LA and State CEQA Guidelines. FISCAL IMPACT STATEMENT There is no fiscal impact to the City's General Fund, aw as a result of this action. Christine Essel, Chief Executive Officer cc: Sharon Gin, Office of the City Clerk (Original & 3 Copies on 3-hole punch) Lisa Johnson Smith, Office of the GAO lvania Sobalvarro, Office of the CLA Steve Ongele, Office of the Mayor Noreen Vincent, Office of the City Attorney

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3 CRA/LA BUILDING COMMUNITIES bee: Sylvia Amaya Nenita Tan, Office of the City Controller Records (2 copies) Miguel Dager Margarita H. de Escontrias Gazala Pirzada

4 THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA 2 MEMORANDUM DATE: TO: FROM: STAFF: MAY 19,2011 CRA/LA BOARD OF COMMISSIONERS CHRISTINE ESSEL, CHIEF EXECUTIVE OFFICER MARGARITA DE ESCONTRIAS, REGIONAL ADMINISTRATOR GAZALA PIRZADA, PROJECT MANAGER ELIZABETH CARVAJAL, ASSISTANT PROJECT MANAGER ELLEN ALDERMAN COMIS, SENIOR HOUSING FINANCE OFFICER NH SUBJECT: Elmer Court. Disposition Development and Loan Agreement with Heritage Housing Partners for a 10-unit affordable homeownership project on a CRA!LA owned property located at Elmer Avenue in the North Hollywood Redevelopment Project Area EAST VALLEY REGION (CD4) INVESTMENT COMMITTEE: Approved on April 27, RECOMMENDATION(S) That the CRA/LA Board of Commissioners: 1. Hold a Public Hearing, and request that the City Council hold a Public Hearing, pursuant to Health and Safety Code Section regarding the proposed disposition of the CRA/LA-owned property located at Elmer Avenue to Heritage Housing Partners for the construction of Elmer Court, a 1 0-unit affordable homeownership project; 2. Approve the Concept Plans for the Elmer Court housing development; 3. Request that the City Council remove the property located at Elmer Avenue from Attachment A of the CRA/LA Report dated March 17, 2011, attached to Council File S1, recommending the Conveyance of Real Property for Implementation of Potential Redevelopment Activities as contemplated under the Cooperation Agreement for Payment of Costs Associated with Certain CRA/LA Funded Capital Improvements, Public Improvements and Affordable Housing Projects, dated as of March 10, 2011 between the CRA/LA and the City of Los Angeles. 4. Request that the City Council acknowledges and approves the CRA/LA's implementation of the Elmer Court Disposition Development and Loan Agreement under the Cooperation Agreement for Payment of Costs Associated with Certain CRA/LA Funded Capital Improvements, Public Improvements and Affordable Housing Projects, dated as of March 10, 2011 between the CRA/LA and the City of Los Angeles

5 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE2 That the CRA!LA Board of Commissioners, subject to City Council approval: 1. Adopt a Joint Resolution authorizing CRA!LA to sell the half-acre property located at Elmer Avenue to Heritage Housing Partners for $1, and make certain findings pursuant to Health and Safety Code Section 33433, that (i) the sale of the property will provide housing for low- and moderate-income households; (ii) the sale is consistent with the Five-Year Implementation Plan and Redevelopment Plan for the North Hollywood Redevelopment Project Area; and (iii) the consideration to be received by CRAILA is not less than the fair reuse value of the property, determined at the use and with the covenants, restrictions and development costs required by the Disposition Development and Loan Agreement with Heritage Housing Partners, and request that the City Council adopt said Joint Resolution; 2. Authorize the Chief Executive Officer or designee to execute the Disposition and Development Agreement with Heritage Housing Partners to convey the property for $1 in accordance with Health and Safety Code Section and record a covenant agreement restricting use of the property to affordable housing for 45 years, and take such other actions as may be necessary to carry out this transaction; and 3. Adopt a Resolution making the finding that an economically feasible alternative of financing on substantially comparable terms but without subordination of CRAILA's Deed of Trust and the covenants and use restrictions is not reasonably available, and authorize the subordination of the CRAILA's Deed of Trust and the covenants and use restrictions to Heritage Housing Partner's conventional lender. 4. Approve a waiver from the CRA!LA Housing Policy that requires that a minimum of 5% of all Homeownership Assisted Units be for low-income households and that no more than 15% of CRA!LA Assisted Units be designated for moderate-income households. 5. Amend the FY2011 Budget and Work Program to transfer $200,000 from budget line item Economic Development (NH2030) to budget line item Affordable Housing (NH1180) for the development of Elmer Court housing project. SUMMARY The recommended actions will authorize the Chief Executive Officer ("CEO") or designee to execute a Cisposition Development and Loan Agreement ("DDA'') with Heritage Housing Partners ("Developer"), in order to convey the CRA!LA owned half-acre property located at Elmer Avenue (the "Property) for $1 in accordance with Health and Safety Code Section and develop a 10-unit affordable homeownership project for moderate-income households (the "Project). The total development cost for this Project is $5,262,000. In addition to transferring the Site for $1 the proposed level of CRA!LA assistance totals $3,183,000 comprised of a $509,563 predevelopment loan that will be deemed satisfied at the end of the 3 year term and a $2,673,437 construction loan to finance construction expenses and soft second homebuyer loans. Of the total $3,183,000 in CRAILA financial assistance, $1,930,000 will be forgiven at a rate of 10% as each unit is sold and the remaining $1,253,000 will be transferred to the homebuyers as second trust deeds. In addition, the Developer is required to apply for approximately $400,000 in Cal Home funds and make best faith efforts to secure funding from other appropriate state and federal sources. Any additional funding secured by the Developer will reduce the CRA!LA soft second mortgages on a dollar for dollar basis. The soft second mortgages will be recorded against the property.

6 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE3 In addition, the CRA/LA Housing Policy requires that a minimum of 5% of all homeownership assisted units be for low-income households and that no more than 15% of CRA/LA Assisted Units be designated for moderate-income households. Due to financial feasibility, all units are for moderate-income households. PREVIOUS ACTIONS Apri11, City Council approval to amend and extend the Exclusive Negotiation Agreement ("ENA") with Heritage Housing Partners. February 4, CRA/LA Board of Commissioners approval to amend and extend the ENA with Heritage Housing Partners. February 18, 2009-City Council approval to execute ENA with Heritage Housing Partners. December 4, 2008-CRA/LA Board of Commissioners approval to execute ENA with Heritage Housing Partners. DISCUSSION & BACKGROUND The proposed 1 0-unit affordable town-home style homeownership project will be developed on a CRAILA owned site located at Elmer Avenue in the North Hollywood Redevelopment Project Area ("Project Area"). This Project will create homeownership opportunities for qualified moderate-income households. The proposed town-homes will be located around a central landscaped courtyard fronting Elmer Avenue. The proposed project meets a number of the North Hollywood Redevelopment Plan ("Plan") goals including: elimination and prevention of the spread of blight including vacant and underutilized parcels; housing production for all income levels; and high quality architectural, landscape, and urban design. CRA!LA staff and the Developer have been diligently negotiating the terms, cost, and scope of the Project for the last 2 years. Originally, the intent was to utilize the Small Lot Subdivision Ordinance; however, due to site constraints it was determined to be economically infeasible. CRA/LA staff and the Developer examined and discussed several design and development alternatives and explored various approaches to reduce the project funding gap in order to arrive at an option that is feasible from both an economic and community benefits point of view. Location The CRA/LA-owned property consisting of two parcels of land is a 21,750 S.F. (.5 acre) vacant site located at Elmer Avenue ("Property") in the North Hollywood Redevelopment Project Area (Attachment A). The property is designated as residential in both the North Hollywood-Valley Village Community Plan and the North Hollywood Redevelopment Plan, and zoned RD1.5-1VL (restricted density multiple dwelling). Developer Entity Heritage Housing Partners ("HHP") is a non-profit affordable housing developer established in 1998 as a non-profit real estate development firm specializing in affordable homeownership projects and historic preservation. Based in Pasadena, Heritage Housing Partners buys dilapidated historic properties and underutilized vacant land to develop safe, attractive affordable homes.

7 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE4 HHP is renowned for their high quality fully amenitized homeownership residential projects. The Developer recently completed Fair Oaks Court, a 41 unit, mixed-income housing project in the City of Pasadena. It is the first affordable homeownership project in the U.S. to use New Market Tax Credits. Fair Oaks Court received the 2009 Golden Nugget Award of Merit for outstanding attached project and residential community of the year. In addition, Fair Oaks Court was the Affordable Housing Finance, 2008 Reader's Choice Affordable Homeownership Project of the Year and the Southern California Association of Non-profit Housing (SCANPH), recipient of the 2008 Affordable Homeownership Project of the Year for Southern California award. Additionally, the Developer's 60-unit mixed-income homeownership housing project, Doran Gardens, is currently under construction in the City of Glendale. J. Lou Architect Inc. ("JLA") will be the architect for this Project. The Pasadena based firm has a wide array of experience in a wide variety of project types and scales including community buildings, historic preservation, and residential development. The General Contractor for this Project will be RAAM Construction Inc. ("RAAM"). RAAM is a Southern California based firm with experience in residential, commercial and hotel construction projects. Selection Process On June 27, 2008, CRAILA issued a Request for Proposals ("RFP") RFP No. NP-6617 for proposals from qualified and experienced developers for the development of a homeownership project. The RFP scope of development was the result of an analysis of the redevelopment priorities in the neighborhood, as well as extensive design and financial feasibility studies into the most appropriate and viable use for the infill location. The CRAILA received 2 proposals on August 20, 2008 which were reviewed by a panel of 5 CRAILA staff. The proposals were evaluated based on the development teams' qualifications and experience, the proposed development and design program, financial and market feasibility, and the proposed community benefits. Heritage Housing Partners was determined to be the most qualified candidate to fulfill the tasks outlined in the RFP. An Exclusive Negotiation Agreement was executed on December 4, 2008 and extended on February 4, Description and Project Context The proposed Project is located approximately one-third mile from the North Hollywood Commercial Core and the Metro Red and Orange Line terminals in a transitioning residential neighborhood consisting predominantly of low-rise, multifamily structures interspersed with single family residences. As currently proposed, the Project will create 10 affordable homeownership units. The 3- bedroom units are each approximately 1,454 s.f. of living area with 2-car garages, and private balconies surrounding a landscaped courtyard. The units are designed to consist of 3 levels including a ground level parking area, a second level of common living area and half bath, and a third level with three bedrooms with two full baths (Attachment G). The Project will be designed to Cal Green Standards with the central courtyard landscaped with drought tolerant landscaping and quality irrigation systems. The 10 units will be sold to qualified moderate-income households. The units are estimated to sell for $246,700. The total sale revenue for the Project is estimated to be $2,467,000. The CRA/LA shall have the Right of First Refusal in the event that a homeowner should decide to sell one of the units prior to the expiration of the 45-year affordability covenant. The Right of First Refusal shall be administered by the East Valley Regional Staff. It is Staff's intent to exercise the Right of First Refusal on an ongoing basis to ensure that long term affordability can be preserved for the maximum feasible time period.

8 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE5 Project History The site was conveyed to the CRA/LA in In the 19 years that the site has been owned by the CRA/LA, staff has analyzed several alternatives for the site's development. However, until now, all other alternatives were unsuccessful. In 1991, the CRA/LA Board of Commissioners approved an Acquisition and Predevelopment Loan with Los Angeles Family Housing ("LAFH") to build 14 condominiums on the Property. LAFH acquired the Property and cleared it for construction but was unable to execute the project due to budgetary and staffing limitations. Therefore, the CRA/LA accepted a voluntary re-conveyance of the Property. In 1992, the CRA/LA issued an RFP and selected Robert J. Mills as the developer and executed an ENA. An acceptable agreement was never reached. In 2005, Staff anticipated to develop the site by proposing to assemble a larger 1.3 acre site through the acquisition of 3 adjacent parcels with frontage along Burbank Boulevard. The intent was to develop a mixed use project with 32 condominium units for families and 30,000 S.F. of commercial space fronting Burbank Boulevard. However, additional property acquisition was not successful due to noncooperation of the property owner; therefore, the project did not materialize. In addition, staff analyzed the possibility of turning the site into a park. However due to costs and maintenance issues that alternative was also unsuccessful. As discussed earlier, HHP was selected as the Developer of the currently proposed Project through an RFP process that was initiated in June of The Developer and Staff have been working on this project for the last two years. Through the analysis of various iterations, the proposed 1 0-unit affordable homeownership project has been determined to be the best use for this site and the Project Area. Community Benefits The CRA/LA owned site is currently creating a blighting condition in the neighborhood. It is riddled with graffiti, a dumping site for trash and a magnet for illicit activity. The proposed Project will redevelop this site with high quality homeownership units for families of moderateincome levels. The proposed Project will make homeownership a reality for some of the most underserved households in the Project Area, stabilize the Project Area by increasing the number of owner-occupied units, and create 37 constructions jobs for local residents. The neighborhood is characterized by low levels of homeownership; 80.7% of households are renter-occupied, the median annual household income is $29,555, and more than 20% of households live below the poverty line. Additionally, this Project will be built to Cal Green standards and will result in the elimination of a vacant and blighted parcel that has been undeveloped for the last 19 years. The following CRA/LA policies will be applied to this Project Construction Jobs Hiring Program, Contractor/ Service Worker Retention, Contractor Responsibility, Equal Benefits, Housing Policy, and Prevailing Wage. Variances from CRA/LA Policies and/or Guidelines While the CRA/LA Housing Policy stipulates that homeownership projects with Agency financial assistance shall never have less than 5% of its Assisted Units targeted to low-income households nor more than 15% of its Assisted Units designated to moderate-income households, the proposed project will include 10 moderate income units at 100% of the AMI due to project financial feasibility. Therefore, an exception from the CRA/LA Housing Policy is required. Financial Analysis Elmer Court is a unique high quality affordable homeownership project. The total development cost for the proposed Project is $5,262,000. To make this Project feasible CRA/LA will convey the the land to the Developer for $1 and provide $3,183,000 in financial assistance in the form

9 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE6 of a $509,563 unsecured forgiveable predevelopment loan and $2,673,437 in the form of a construction loan, a portion of which will be forgiveable and the remainder will be converted to second trust deeds for homebuyers. The Developer will also obtain a $1,800,400 conventional construction loan from a conventional lender anticipated to be Mutual of Omaha Bank. The unsecured predevelopment loan has a 3 year term and 0% interest rate that will be forgiven at a rate of 10% as each unit is sold. The predevelopment loan will will cover cost of appraisals, architecture and engineering, legal fees, permits and fees, the administrative fee portion of the Developer Fee, and a soft cost contingency. The predevelopment loan will be disbursed in three phases: at DDA signing, plan check submittal, and when permits are ready to be issued. The $2,673,437 construction loan has a 3-year term with a 0% interest rate that will finance direct costs, indirect costs, permits and fees, developer fee, and the financing costs. The difference between the market rate sales prices at the time of sale and the affordable prices calculated at the time of sale will be transferred to the homebuyers as a silent second trust deed. Based on the current market rate and affordable sales prices, it is estimated that approximately $1,253,000 will be transferred to the homebuyers, or $125,300 for each moderate income qualifying homebuyer. The remaining balance of the construction loan will be forgiven at a rate of 10% as each unit is sold. The forgiveable portion of the construciton loan is currently estimated at $1,420,437. Funds will be disbursed as construction costs are incurred up to $3,183,000. The conventional construction loan will be disbursed once 100% of the CRA/LA Construction Loan is disbursed. The financial gap for this project is the result of existing site constraints, the high quality of design for a homeownership Project, and the affordability gap as described below: The Property has a storm water easement that runs down the center of the Property. This easement complicated site planning for the Project. The Developer estimates the financial impact of the easement to be $25,000. The small scale and scope of the Project do not allow for economies of scale. The Developer estimates that 10% ($46,600) of the on-site improvement costs are attributable to loss of cost efficiencies. The high quality of the Project design is relative to this being a homeownership Project. Some features that enhance this project are the higher quality of landscaping and irrigation design that was integrated in order to minimize the maintenance cost to homeowners which quantifies to $22,000. Hycrete, a moisture and corrosion control additive, will be used to reduce the long-term risk of concrete being damaged by the elements. The Developer estimates this cost at $170,000. The use of wood inside and outside of the units contributes to an aesthetic quality typical for the Developer, estimated costs are $129,500. While typical market rate 2-3 bedroom attached units are 1,100 square feet in size, the Project will consist of ten (1 0) 1,454 square-foot 3-bedroom units that are 32% larger than the standard affordable unit size thus increasing costs by approximately 8%. The Developer will obtain a conventional loan, at this time anticipated to be from the Mutual of Omaha Bank ("MOOB"). MOOB is currently financing a similar project for the Developer in the City of Glendale. The loan terms assume a 6.25% interest rate, an 18-month loan term and a first trust deed. It is anticipated that the construction loan will not begin disbursements until 100% of the CRA/LA Loan is disbursed. The disbursement schedule will enable the Project to save on construction loan interest costs. It is the intent of the Developer to reduce the CRA/LA investmc;nt for this Project. To that end, the Developer is committed to seeking a variety of leveraging sources that will reduce the

10 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE 7 CRA!LA investment by at least $40,000 per unit. The Developer is required to apply for additional funding sources such as Cal Home, and any other funding source that will reduce the CRAILA investment. The Developer had initiated the BEGIN application process in June 2010, however, the application was put on hold by the State pending CRA!LA approval of the DDA. Any additional funding secured by the Developer will reduce CRA!LA financial asssistance on a dollar for dollar basis and be applied to the home buyers soft second mortgages. Land Acquisition and Transfer: The property was purchased by the CRAILA in 1992 with Bunker Hill Housing Trust Fund (BHHTF) dollars. In FY2007, the BHHTF was repaid with North Hollywood non-housing Tax Increment funds in the amount of $1,040,000 based upon appraised market value. The current market value of the property is estimated at $585,000. The reuse value of the Property is estimated at negative $3,183,000. Approximately, $1,253,000 of the $3,763,000 decreases in land value is due to the affordability restrictions proposed to be imposed on the Project. The remaining $2,510,000 of the change in land value is due to the site constraints, larger than typical units, and the prevailing wage requirements. Thus the project economics require the property to be conveyed to the Borrower at no cost. In addition, the Project exhibits a $3,183,000 funding gap, requiring additional funds for financial feasibility. The proposed predevelopment loan will pay a portion of the predevelopment and construction expenses for the purpose of filling this identified funding gap. Construction.is anticipated to begin in January of 2012 with completion by December of 2012, units are anticipated to be sold by mid The afforability covenants will have a 45 year term. Payments will be deferred until the units are sold or refinanced at which time, the outstanding loan balance and a share of appreciation up to 45% will be paid to the CRAILA. The CRA!LA shall have the right of first refusal ("ROFR") to find an eligbile homebuyer or purhcase each unit at the restricted sales price and to sell the unit to another low- or moderateincome-qualifying homebuyer at the affordable sales price and the new homebuyer can then assume the existing loan. However, if the CRA!LA does not exercise the ROFR, then the homeowner can sell the unit on the open market and repay the oustanding balance of the CRA!LA Loan as well as pay the CRA!LA a share of the appreciation, up to 45%. It is Staff's intent to ensure that there is long-term affordability on the site. To that end, staff has drafted Guidelines for the Administration of the Right of First Refusal ("Attachment H"). These guidelines outline the steps that would need to be taken by both the homeowner and the CRA!LA in order for the CRAILA to exercise the Right of First Refusal or allow for a unit to be sold in the open market (with shared appreciation). CRA!LA Staff proposes to set aside $50,000 for the administration of the Right Of First Refusal. When the CRA!LA exercises the Right of First Refusal, Staff will collaborate with a member agency of the Southern California Association of Nonprofit Housing (SCANPH") to identify homebuyer program operators to assist in the administration of the Right of First Refusal. Should one of the homeowners decide to sell their home prior to the expiration of the 45 year affordability covenant, Staff in collaboration with a homebuyer program operator, will identify an income-qualifying candidate to purchase the home. This will safeguard the CRAILA's investment and ensure long-term affordability on the site.

11 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE8 ECONOMIC IMPACT The following table describes the economic impacts estimated to be created by this project. Estimated Construction Jobs Created 37 Estimated Permanent Jobs Created 1 SOURCE OF FUNDS North Hollywood Redevelopment Project Area Low and Moderate Income Housing Funds and Tax Increment. PROGRAM AND BUDGET IMPACT This action will amend the FY2011 budget and work program to transfer $200,000 from budget line item Economic Development (NH2030) to budget line item Affordable Housing (NH1180). Sufficient funds are available in budget line item Affordable Housing (NH1180) and budget line item Economic Development (NH2030) to fund this action. There is no impact on the City's General Fund as a result of this action. ENVIRONMENTAL REVIEW The proposed Project is exempt from the provisions of California Environmental Quality Act ("CEQA") pursuant to Section (In-fill Development Projects) of the CRAILA and State CEQA Guidelines. AUTHORITY GRANTED TO CEO OR DESIGNEE If the DDA is approved, the CRAILA Chief Executive Officer or designee would be authorized to take such actions as may be necessary to carry out the DDA, including, but not limited to, executing the CRAILA DDA and taking the following actions: (1) extending the Initial Term of the Loan by up to one additional year for a total not to exceed three years; (2) approving revisions to the Project Budget, so long as the changes do not increase the amount of the CRAILA Loan or otherwise have a material adverse impact on the feasibility of the project; (3) negotiating and executing subordination agreements meeting the requirements of California Health and Safety Code Section , and making reasonable modifications to the CRAILA Loan Documents that may be requested by any Senior Lender or Tax Credit Equity Investor, so long as such changes do not adversely affect the receipt of any material benefit by CRA!LA; (4) negotiating and executing Inter-creditor Agreements with and Estoppel Certificates to other lenders, to the extent such Inter-creditor Agreements and Estoppel Certificates are consistent with the terms of the Loan Agreement; and (5) approving certain non-material revisions to the terms of the Loan Agreement reasonably requested by a Permitted Lender or Tax Credit Equity Investor.

12 ELMER COURT DISPOSITION DEVELOPMENT AND LOAN AGREEMENT PAGE9 Christine Essel Chief Executive Officer By: Dalila Sotelo Deputy Chief of Operations There is no conflict of interest known to me which exists with regard to any CRAILA officer or employee concerning this action. ATTACHMENTS Attachment A: Attachment B: Attachment C: Attachment D: Attachment E: Attachment F: Attachment G: Attachment H: Location/Property Map Project Term Sheet Affordable Housing Information Sources and Uses Resolution and Summary Report Resolution Conceptual Development Plans Proposed Right of First Refusal Administrative Guidelines

13 Attachment A: Location/Property Map Elmer Avenue, North Hollywood

14 ATTACHMENT B PROJECT TERM SHEET (check all applicable categories) X Acquisition Predevelopment/Soft Costs Relocation Construction/Hard Costs CRAILA Lien Prio.ritv' Subordination of Housing Covenant? Other Project Funding Sources: X X Yes or TCAC-9% CDLAC-4% CDLAC/Bond Only (no tax credits) LAHD MHSA HCD: TOO ; INFILL ; MHP_; GHI_ City of Industry AHP Other: Cal Home, BEGIN, etc. _Developer to Apply precedent or subsequent? Examples: Allocation by TCAC within how many rounds; commitment from other funding sources (may include commitment of equity factor); timing of CRAILA funding; non-disturbance agreement if it is a leasehold deal; any unique, Policy? X Yes No (if No, brief justification for deviation): All units at 100% AMI Project Term Sheet - Affordable Housing

15 ATTACHMENT C AFFORDABLE HOUSING INFORMATION SHEET Project Name: Elmer Court Project Address: 5623 Elmer Avenue ProJect Developer: Heritage Hous!ng Partners Redevelopment Project Area: North Hollywood Date of Pro Forma: April19, 2011 LM!HF Expendt\.ttes (2002 to Present)

16 ATTACHMENT D Project Name: Elmer Court Project Address: 5623 Elmer Avenue Project Developer: Heritage Housing Partners SOURCES AND USES INFORMATION SHEET Project Area: North Hollywood Date of Pro Forma: April19, 2011 Number of Units: 10 ACQUISmON & PREDEVEI.OPMENT Acquisition & Closing Costs $0 $0 Direct Construction Costs 0 0 Permits & Fees 1,606 0 Indirect Costs 407,957 0 Financing Costs 0 0 Sales Costs 0 0 Developer Fee Developer Profit 0 0 Total Acquisition I Predevelopment $509,563 $0 Per Unit $50,956 $0 % Total Costs; 95% 0% $0 $ , $0 $25,000 $0 $2,500 0% 5% $0 $0 $ $0 $0 $0 $0 $0 $0 0% 0% 0% $0 $0 $0 0% % 0 26,606 2,661 5% 0 407,957 40,796 76% % % 0 100,000 10,000 19% % $0 $534,563 $53, % so $53,456 0% 100% CONSTRUCTION cquisition & Closing Costs $0 Direct Construction Costs 0 2,183,585 Permits & Fees 1,606 80,394 Indirect Costs 407, Financing Costs 0 24,000 Sales Costs 0 0 Developer Fee 100, ,400 Developer Profit 0 0 otal Construction $509,563 $2,673,437 Per Unit: $50,956 $267,344 % Total Costs: 10% 53% $0 $ , $0 $25,000 $0 $2,500 0% 0% $0 $0 1,497, , , $1,800,400 $0 $0 $180,040 $0 $0 36% 0% 0% $0 $0 $0 0% 0 3,681, ,100 73% 0 107,000 10,700 2% 0 860,000 86,000 17% 0 94, % % ,640 5% % $0 $5,008,400 $500, % $0 $500,640 0% 100% PERMANENT Acquisition & Closing Casts $0 $0 Direct Construction Costs 0 2,183,585 Permits & Fees 1,606 80,394 Indirect Costs 407, ,058 Financing Costs 0 24,000 Sales Costs 0 0 Oevelo:cer Fee 100, ,400 Developer Profit 0 0 Total Permanent $509,563 $2,673,437 Per Unil: $50,956 $267,344 %Total Costs: 9% 47% $0 $ $0 $0 so $0 0% 0% $0 $0 $ , , , , , ,000 $0 $0 $2,467,000 $0 $0 $246,700 0% 0% 44% $0 $0 so 0% 0 3,681, ,100 65% 0 107,000 10,700 2% 0 860,000 86,000 15% 0 94,000 9,400 2% 0 187, % 0 333,000 33,300 6"/i 0 388,000 38,800 7% $0 $5,850,000 $565, % $0 $565,000 0% 100%

17 ATTACHMENT E THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA THE LOS ANGELES CITY COUNCIL RESOLUTION NO A JOINT RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES AND THE LOS ANGELES CITY COUNCIL AUTHORIZING THE SALE OF CRA/LA OWNED SITE LOCATED AT ELMER AVENUE IN THE NORTH HOLLYWOOD REDEVELOPMENT PROJECT AREA THROUGH A DISPOSITION DEVELOPMENT AND LOAN AGREEMENT FOR THE CONSTRUCTION OF A 10-UNIT AFFORDABLE HOMEOWNERSHIP PROJECT BY THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, AND MAKING CERTAIN FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION REGARDING THE TRANSFER OF PROPERTY AND DEVELOPMENT OF THE ELMER COURT PROJECT WHEREAS, the City Council (the "City Council") of the City of Los Angeles (the "City") has adopted a redevelopment plan, as amended from time to time (the "Redevelopment Plan"), for redevelopment of the North Hollywood Redevelopment Project Area (the "Project Area"); and WHEREAS, the Community Redevelopment Agency of the City of Los Angeles ("CRAILA") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area; and WHEREAS, CRAILA intends to convey an approximately half-acre property located at Elmer Avenue in North Hollywood (the "Site"); and WHEREAS, CRAILA desires to cause redevelopment of the Site through construction of approximately 1 0 town-home style homeownership units with a centralized landscaped courtyard (the "Project"); and WHEREAS, CRAILA desires to enter into a Disposition Development and Loan Agreement ("DDA") with Heritage Housing Partners (the "Developer"), substantially in the form on file with the City Clerk and CRAILA, under which the CRAILA would sell the Site to the Developer and upon such conveyance the Developer would develop the Project on the Site in accordance with the DDA; and WHEREAS, the Project will benefit the Project Area and serve major Redevelopment Plan goals and objectives by alleviating blight in the Project Area by replacing the underutilized vacant property with 10 affordable units that will create a pathway to homeownership for households of moderate- qualifying incomes and by creating stability in the Project Area; and WHEREAS, the CRAILA has placed on file a copy of the DDA and the summary called for in Health and Safety Code Section (the "Section Summary"), and has 1

18 made the DDA and the Section Summary available for public inspection and copying pursuant to Health and Safety Code Section The Section Summary is incorporated in this Resolution by this reference; and WHEREAS, the CRA/LA and the City Council have conducted a duly noticed public hearing on the DDA pursuant to Health and Safety Code Section for the purpose of receiving the input and comments of the public on the DDA; and WHEREAS, by staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"), CRA/LA and the Los Angeles City Council have been provided with additional information upon which the findings and actions set forth in this Resolution are based. accurate. Section 1. CRA/LA and the City Council find that the above recitals are Section 2. Pursuant to Health and Safety Code Section 33433, CRA/LA and the City Council hereby find that the consideration to be paid by the Developer under the DDA is not less than the fair reuse value of the Site determined with the covenants and conditions imposed by and development costs authorized by the DDA. This finding is based on the facts and analysis set forth in the Staff Report and the Section Summary accompanying this Resolution. Section 3. Pursuant to Health and Safety Code Section 33433, CRA/LA and the City Council hereby find that the conveyance of the Site pursuant to the DDA will assist in alleviating blight in the Project Area, is consistent with the implementation plan adopted pursuant to Health and Safety Code Section 33490, and does hereby approve the sale. These findings are based on the facts and analysis set forth in the Section Summary and the Staff Report accompanying this Resolution. ADOPTED: 2

19 Attachment E: Summary Report SUMMARY REPORT PURSUANT TO SECTION OF THE CALIFORNIA HEALTH AND SAFETY CODE ONAN DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT BY AND BETWEEN THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES AND HERITAGE HOUSING PARTNERS The following Summary Report has been prepared pursuant to California Health and Safety Code Section (Section 33433). The report sets forth certain details of the proposed Disposition, Development and Loan Agreement (Agreement) between the Community Redevelopment Agency of the City of Los Angeles (CRNLA) and Heritage Housing Partners (Developer). The purpose of the Agreement is to effectuate the Redevelopment Plan for the North Hollywood Redevelopment Project Area (Redevelopment Plan). The Agreement requires the CRNLA to convey the 0.50-acre parcel located at Elmer Avenue (Site), which is located in the North Hollywood Project Area (Project Area) to the Developer. In turn, the Developer is required to construct 10 affordable owner occupied townhome units (Project). The following Summary Report is based upon the information contained within the Agreement, and is organized into the following seven sections: I. Salient Points of the Agreement: This Section summarizes the major responsibilities imposed on the Developer and the CRNLA by the Agreement. II. Ill. IV. Cost of the Agreement to the CRNLA: This section details the total cost to the CRNLA associated with implementing the Agreement. Estimated Value of the Interests to be Conveyed Determined at the Highest Use Permitted under the Redevelopment Plan: This section estimates the value of the interests to be conveyed determined at the highest use permitted under the Redevelopment Plan. Estimated Reuse Value of the Interests to be Conveyed: This section summarizes the valuation estimate for the Site based on the required scope of development, and the other conditions and covenants required by the Agreement. V. Consideration Received and Comparison with the Established Value: This section describes the compensation to be received by the Agency, and explains any difference between the compensation to be received and the established value of the Site JLR:gbd Page 1 May 4, 2011

20 VI. VII. Blight Elimination: This section explains how the Agreement will assist in alleviating blight in the Project Area. Conformance with the Five-Year Implementation Plan: This section describes how the Agreement achieves goals identified in the CRAILA's adopted Five-Year Implementation Plan. This report and the Agreement are to be made available for public inspection prior to the approval of the Agreement. I. SALIENT POINTS OF THE AGREEMENT Project Description The Project consists of the new construction of 10 residential town homes which will be sold to moderate income first-time homebuyers. Each unit will contain three-bedrooms and two-and-ahalf bathrooms, and will be approximately 1,454 square feet. The complex will be three residential stories and will incorporate 26 partially subterranean parking spaces, which includes six guest parking spaces. Additionally, the Project will include a landscaped courtyard and. private patios for each unit. CRAILA Advance Loan Terms The Agreement requires the CRAILA to provide an up to $509,563 predevelopment loan (CRAILA Advance Loan) which will have the following terms: 1. A three year term; 2. A 0% interest rate; 3. The loan proceeds are to be applied to predevelopment costs including indirect costs, permits and fees and $100,000 of the Developer fee. The following summarizes disbursement schedule: a. At the Agreement execution, up to $322,478 will be disbursed including $100,000 to be used towards the Developer fee and $222,478 in other soft costs; b. At the submittal to Plan Check, up to $108,342 in soft costs will be disbursed; and c. When the permits are ready to be issued, up to $78,743 will be disbursed. 4. While the loan will be unsecured, if the Developer defaults, the plans and reports for the Project will be provided to the CRA/LA. 5. The loan will be forgiven by 1/10 as each unit is sold JLR:gbd Page2 May 4, 2011

21 6. The following summarizes the conditions precedent to the funding of the CRA/LA Advance Loan: a. An executed CRA/LA Advance Note; b. The first submission of evidence of financing; c. Evidence of insurance; and d. Various documents. CRAILA Loan Terms The Agreement also requires the CRA!LA to provide an up to $2,673,437 construction loan (CRAILA Loan) which will have the following terms: 1. A three year term; 2. A 0% interest rate; 3. The funds will be disbursed as the construction costs occur up to $2,673,437. The conventional construction loan will be disbursed once 1 00% of the CRAILA Loan is disbursed. 4. The loan will be secured with a second trust deed.. 5. The difference between the market price and affordable price at the time of sale (Affordability Gap) will be passed on to the home buyers in the form of a silent second trust deed. The difference between the total disbursed CRAILA Loan amount and the Affordability Gap will be forgiven in 1/10 increments as the units are sold. 6. The following summarizes the conditions precedent to the funding of the CRA/LA Loan: a. The Site is transferred to the Developer; b. Completion of appraisal and the Summary Report based on Section of the California Health and Safety Code; c. The Developer is to provide the following: i. ii. iii. iv. Evidence of financing; Evidence of title insurance; An executed CRA/LA Loan Note; Proof of submittal of additional funding source applications; JLR:gbd Page3 May 4, 2011

22 v. Final construction drawings; vi. vii. viii. ix. Construction contracts; Construction bonds; Permits and entitlements; Work force report; and x. A marketing and outreach plan. 7. The disbursement of the remaining Developer Fee will be as follows: a. Upon commencement of construction - $83,200; b. Upon achievement of 50% of construction completion - $83,200; c. Upon issuance of Temporary Certificate of Occupancy- $66,600. Homebuyer Loan Terms When the units are sold to the moderate income households, a portion of the CRA/LA Loan, in the amount of the Affordability Gap, will be transferred to the homebuyers with the following terms: 1. A second trust deed will secure the loan; 2. A 45-year term; 3. A 0% interest rate; 4. Payments on the homebuyer loans will be deferred until the unit is sold or refinanced at which time, the outstanding loan balance and a share of appreciation up to 45% will be paid to the CRA/LA. 5. However, the CRA/LA will have a right of first refusal (ROFR) to purchase each unit at the restricted sales price during the 45 year term or identify an income qualified homebuyer to purchase the unit at the restricted price. If the ROFR is exercised, the CRAILA will either purchase the unit at the affordable price or identify a moderate income homebuyer to purchase the unit directly from the seller. The new homebuyer will assume the existing CRA/LA Loan. However, if the CRAILA does not exercise the ROFR, then the homeowner can sell the unit on the open market and repay the outstanding balance of the CRA/LA Loan as well as pay the CRA/LA a share of the appreciation, up to 45% JLR:gbd Page4 May 4, 2011

23 6. Conditions precedent to funding the loans to the homebuyers are as follows: a. A market price appraisal must be completed prior to the close of escrow; and b. The homebuyer's conventional loan must be approved. Developer Responsibilities The Agreement requires the Developer to accept the following responsibilities: 1. The Developer will purchase the Site for $1 from the CRNLA in the 'as is' condition and then develop the Project in accordance with the Scope of Development and Schedule of Performance. 2. The Developer shall bear all costs and expenses in connection with the Project, including up to $100,000 of Site remediation costs, if necessary. If the costs exceed $100,000, CRAILA and the Developer are to work together to identify additional funding sources, or the Agreement will be terminated. 3. The Developer Profit is capped at $388, However, any Developer Profit in excess of $388,000 will be split on a 50/50 basis with the CRA!LA. The CRA/LA portion of the excess Developer Profit will be applied to the CRAILA Loan. 4. A total of 10 units will be restricted to moderate income homebuyers in accordance with the following: a. The income restrictions will be set by Section 50093; and b. The price setting restrictions will be set by Section (b)(4) of the California Health and Safety Code. 5. It is the intent of the Developer to reduce the CRAILA's subsidy for the Project. The Developer is required to apply for additional funding from including but not limited to BEGIN, CaiHOME, AHP, etc. to secure a target of $40,000 per unit ($400,000). Any additional funding that is secured by the Developer will reduce the CRAILA's subsidy on a dollar-for-dollar basis and be applied to the Homebuyer Loans. 6. The Developer agrees to comply with all applicable ordinances, rules, regulations and policies of the City and CRA/LA. 1 Developer Profit is defined as the difference between the total development costs and the CRA!LA Advance Loan, CRAILA Loan and the sales proceeds J LR:gbd PageS May 4, 2011

24 CRA/LA Responsibilities The Agreement imposes the following responsibilities on the CRA/LA: 1. CRAILA will sell the Site to the Developer in an 'as is' condition for $1 and provide up to $3,183,000 in financial assistance to the Project, which will be structured as loans. 2. The ROFR will be administered by the East Valley Region staff of the CRA/LA. Staff will work with SCANPH member agencies to identify Homebuyer Program Operators to assist with the administration of the ROFR. II. COST OF THE AGREEMENT TO THE CRA/LA The costs incurred by the CRA/LA to implement the Agreement are estimated as follows: Acquisition Cost Project Costs Staff Costs Consultants Costs CRA/LA Loan Total CRA/LA Cost $1,040, , ,000 50,000 3,185,000 $4,754,000 The Agency costs are anticipated to be offset by the Silent Second Trust Deed that will be repaid, with interest at the earlier of the units sold to non-qualified homebuyers and 45 years. However, it would be too speculative to estimate any payments will be received to off-set the $4,754,000 in CRA/LA costs. Ill. ESTIMATED VALUE OF THE INTERESTS TO BE CONVEYED DETERMINED AT THE HIGHEST USE PERMITTED UNDER THE REDEVELOPMENT PLAN Section requires the CRA/LA to identify the value of the interests being conveyed at the highest use allowed by the requirements imposed by the Redevelopment Plan. The valuation must be based on the assumption that near-term development is required, but the valuation does not take into consideration any extraordinary use or quality restrictions that are being imposed on the development by the CRA/LA. In a fair market value appraisal dated March 10, 2011, Ham mad & Associates, Inc. set the fair market value of the Site at $585,000. This equates to approximately $27 per square foot of land area and $45,000 per allowable unit. The existing zoning is Restricted Density Multiple Dwelling 1.5-1VL (RD1.5-1VL), which allows for up to 13 residential units JLR:gbd Page6 May 4, 2011

25 IV. ESTIMATED REUSE VALUE OF THE INTERESTS TO BE CONVEYED The Agreement imposes extraordinary controls on the Project. Specifically, the Developer must restrict 1 00% of the unit to moderate income sales prices and pay prevailing wages to the contractors and subcontractors. In addition, the Project takes into account Site constraints and has planned for larger than typical units. The impacts created by these requirements reduce the $585,000 value of the Site at the highest use allowed by the Redevelopment Plan. Keyser Marston Associates, Inc. (KMA) prepared a reuse analysis based on the Scope of Development and affordability restrictions required by the Agreement. This analysis set the fair reuse value for the Site at negative $3,185,000. This means thatthe Site would have to be donated to the Developer at no cost, and $3,185,000 in direct financial assistance would need to be provided, to make the Project financially feasible. V. CONSIDERATION RECEIVED AND COMPARISON WITH THE ESTABLISHED VALUE The Agreement requires the CRA!LA to convey the Site for $1, and to provide a $509,563 predevelopment loan and a $2,673,437 construction loan to the Developer. The proposed assistance package is equal to the $3,185,000 negative reuse value established for the Site. Therefore, the consideration to be received by the CRAILA is greater than the established fair reuse value. VI. BLIGHT ELIMINATION The Agreement requires the Developer to provide an affordable housing project restricted to moderate income households on the Site. In accordance with California Redevelopment Law, as portrayed in the California Health and Safety Code Section 33433, the conveyance of property that results in the provision of housing for low or moderate income persons satisfies the blight elimination criteria imposed by Section Thus, the Project fulfills the blight elimination requirement. VII. CONFORMANCE WITH THE FIVE-YEAR IMPLEMENTATION PLAN The Project conforms to several objectives defined in the CRA!LA's adopted Five Year Implementation Plan for for the Project Area. The pertinent goals and objectives that are satisfied by the Project are: 1. The achievement of an environment reflecting a high level of concern for architectural, landscape and urban design principals appropriate to the objections of the Redevelopment Plan. 2. To make provisions for housing as is required to satisfy the needs and desires of the various age, income and disabled groups of the community, maximizing the opportunity for individual choice JLR:gbd Page? May 4, 2011