Housing Commission Report To: From: Subject: Housing Commission Meeting: July 21, 2016 Agenda Item: 4-B Chair and Housing Commission Barbara Collins, Housing Manager Draft Request for Proposals for Mountain View Mobile Home Park Recommended Action Staff recommends that the Housing Commission review and provide input to the attached draft Request for Proposal (RFP) regarding the transition of Mountain View Mobile Home Park (Park) to non-city ownership. Executive Summary On April 12, 2016 (Attachment A), the City Council authorized staff to issue an RFP for housing organizations to acquire the Park and operate the property as affordable housing. To ensure opportunity for input on the RFP from all stakeholders, staff solicited comments from the Park residents. Resident comments are incorporated in the attached draft RFP (Attachment B), and staff is seeking input from the Housing Commission. Following Housing Commission input, staff will return to Park residents for final comments, and then issue the RFP. Background On May 26, 2016, staff met with Park residents to explain the RPF process, solicit desirable qualities of new owner/management and aspirations for new amenities, and preferences on RFP review opportunities and comment periods. On June 9, 2016, a draft RFP was delivered to the Park residents, which incorporated input from the previous May meeting, and Park residents requested a two-week opportunity to comment on the first draft RFP. First round comments from Park residents are presented in Attachment C. Discussion The Housing Commission may want to consider whether any other conditions, criteria or goals should be included in the RFP. Prepared by: Ava Lee, Senior Development Analyst 1
City Council Report To: From: Mayor and City Council City Council Meeting: April 12, 2016 Agenda Item: 8.B Andy Agle, Director, Housing Division, Housing and Economic Development Subject: Disposition of Mountain View Mobile Home Park Recommended Action Staff recommends that the City Council: 1. Approve a one-time, temporary lot-line encroachment exemption for eight existing households, which impact eleven existing vacant spaces; and 2. Authorize staff to issue a request for proposals from affordable housing organizations to acquire Mountain View Mobile Home Park and operate the property as affordable housing. Executive Summary Mountain View Mobile Home Park is currently owned by the City, with property management contracted to a management company. Recognizing that the City as an owner of residential property is not consistent with the core mission of funding affordable housing rehabilitation and development, staff recommends solicitation of proposals from affordable housing organizations to acquire and operate Mountain View Mobile Home Park as affordable housing. The proposals must preserve affordability, optimize housing opportunities, and operate the property for the benefit of current and future low- and moderate-income households. Mountain View Mobile Home Park has the capacity to house 105 tenant households in designated lots. Currently, eight households occupy more than one designated space because the lots were established long after the park was created. Staff recommends approving a one-time, temporary lot-line encroachment exemption for the eight households to protect and preserve their current homes. 1 of 6
Background Mountain View Mobile Home Park (Park) was built in the 1940 s and privately owned until purchased by the City in 2000 (Attachment A) to preserve the property as an affordable mobile home park for low- and moderate-income households. Restricted housing trust funds were used to acquire the property, requiring the recordation of an affordability covenant (i.e., deed restriction) establishing income eligibility requirements for future occupants. The Park is also subject to the Rent Control law, which limits rent increases and provides eviction protections for the residents. When purchased, the Park had failing infrastructure, roads not designed for emergency access, inadequate drainage with seasonal flooding, and homes that did not meet required minimum separation standards. To address these issues, the City focused attention on reconfiguring the Park and investing in safety and infrastructure improvements. In 2002 (Attachment B), the Santa Monica Rent Control Board approved the City s request to remove 36 vacant home sites to accommodate the reconfiguration of roadways for emergency vehicle access and establish definitive lot lines for individual home sites to conform to statewide standards. On August 16, 2006 (Attachment C), the Planning Commission approved the reconfiguration, and lot lines were established for 105 permanent home sites. The reconfiguration required realignment or relocation of homes throughout the Park. The reconfiguration did not require all residents to relocate their homes, move ancillary structures, or limit yard areas to align with the established lot lines, resulting in the current encroachments of eight households. During 2008 and 2009, the City spent approximately $5 million on infrastructure improvements, including undergrounding electrical, telephone, and cable TV lines, installation of new natural gas, potable water, sanitary sewer, and street lighting systems, and construction of new curbs, gutters, and roadway pavement surfaces (Attachment D). After completing the improvements, 20 City-owned mobile homes at the Park were replaced with new manufactured homes in 2011 and 2012 at a cost of approximately $3 million (Attachment E). Additionally, nine residents participated in the Council-adopted financing program for Park residents (Attachment F), resulting in new manufactured homes installed during 2012 and 2013 at a cost of approximately 2 of 6
$1.5 million. Finally, staff coordinated the relocation of 12 residents displaced from Village Trailer Park (VTP) into the Park from 2014 to 2015, along with the installation of new manufactured homes paid for by the VTP developer. Lot Line Encroachment The minimum setback required by the State between homes is at least six feet with each home located at least three feet from the lot line or street. Non-conforming occupancies encroach into adjacent, vacant home sites, narrowing the usable building footprint and resulting in unusable home sites. Currently, eight households have encroachments into 11 adjacent, vacant home sites. Residents of the eight households own their homes and have lived and remained at the same locations in the Park for decades. Many of the eight households have expressed concern that the lot lines established by the City are not consistent with the area they have occupied for decades. Though one or more adjacent sites are effectively unusable, the eight households pay rent for one home site. Disposition At its December 11, 2012 meeting (Attachment G), Council directed staff to explore disposition of all City-owned properties managed by the Housing Division, including Mountain View Mobile Home Park. Pursuant to Council direction, the City has disposed of most properties managed by the Housing Division, with the Park as one of the final disposition opportunities. Owning and operating the Park requires significant staff resources, including property management company selection and oversight, preparing and monitoring property budgets and expenditures, assisting with resolving tenant issues, and conferring with the City Attorney s Office regarding landlord / tenant legal matters. Transitioning the Park to non-city ownership would allow staff to focus more directly on its core mission of increasing affordable housing opportunities, while preserving the Park as affordable housing. Discussion The City s affordable housing priorities strongly support preservation of existing affordable housing and protection of tenant rights. Consistent with those priorities, staff 3 of 6
recommends that an affordable housing organization be identified to own and operate the Park. A change in ownership would not affect tenancies, as the Park is subject to the Rent Control law, which provides eviction protections. Existing affordability covenants require the Park to be operated as affordable housing for low- and moderateincome households through 2062. Additional covenants associated with transfer of the Park could include deeper income targeting, longer deed-restriction terms, and an option for the City to repurchase the Park for $1 prior to the expiration of affordability covenants. Encroachments of homes onto adjacent lots resulted from the establishment of measurable lot lines in conjunction with achieving safety standards in the Park. Lot lines in the Park prior to the safety improvements were not documented and are unavailable. Currently, eight home sites effectively occupy more than one lot. Given the age of some of the homes, several may not structurally withstand relocation. Moreover, some homes are too large to fit on one home site. Therefore, staff proposes a one-time, temporary encroachment exemption that would be voided with major alterations to the home, or when the existing tenants terminate residency at the Park. Additionally, staff proposes that the exemption be non-transferable. One consideration related to the exemption is that affordable housing opportunities on the eleven affected lots will be delayed, potentially for decades. In addition, the financial feasibility for a new owner-operator would be impacted by the reduction in potential rental income. The recommended actions regarding encroachment exemption and Park disposition were presented to the Housing Commission on March 17, 2016 (Attachment H). The Commission generally supported the recommended concept and the Commission s specific concerns and recommendations have been incorporated into this report. Several members of the Park attended the Commission meeting and supported the recommended encroachment exemption. Park residents in attendance expressed mixed support for transitioning the Park to a new entity, with some valuing the security they feel with the City as owner. With Council authorization to seek proposals, staff would share a draft request for proposals (RFP) at a public Housing Commission meeting, as well as at a meeting with Park residents, to ensure opportunity for input from all 4 of 6
stakeholders. Prior to staff preparing a recommendation for Council regarding the selection of a new owner-operator, staff would solicit feedback from the Housing Commission. Request for Proposals If Council directs staff to proceed with the recommended approaches, staff would issue an RFP targeted to affordable housing organizations with appropriate experience to own and operate affordable housing and mobile home parks. The RFP would seek proposals to acquire the property, install new, sustainable manufactured homes on vacant home sites (currently vacant and as sites become available), and operate the Park as affordable housing for the benefit of low- and moderate-income households. The RFP would be evaluated on: thoroughness, completeness, and responsiveness; financial feasibility of the proposal; approach to managing and operating the properties; financial capacity of the organization;. demonstrated experience and capacity in owning and operating affordable housing and mobile home parks; approach to customer service in a multi-cultural and multi-lingual community; demonstrated knowledge and compliance with regulatory safety compliance requirements; and commitment to local hiring practices. Alternatives An alternative to transferring the Park to non-city ownership would be a ground lease to an owner-operator rather transferring ownership. A ground lease could achieve City goals of transferring operations of the Park to a qualified affordable housing provider while retaining City ownership. However, a ground lease may not provide the same degree of arms-length independence from property management responsibilities that a 5 of 6
transfer of ownership would provide. A ground lease could negatively impact the ability to access traditional financing for the Park should the need arise. Another approach would be for Council to provide alternate direction relating to the encroachment issue and the disposition of the Park. Financial Impacts & Budget Actions There is no immediate financial impact or budget action necessary as a result of the recommended action involving a Request for Proposals. No budget action is necessary as a result of the approval of the encroachment exemption for the eight households, as the City s financial impact would remain the annual loss of approximately $41,000 in potential rent revenue. Prepared By: Ava Lee, Senior Development Analyst Approved Forwarded to Council Attachments: A. Council Staff Report 11.14.2000 B. Rent Control Board Removal Permit Decision 7.11.2002 C. Planning Commission Staff Report 8.16.2006 D. Council Staff Report 1.22.2008 E. Council Staff Report 9.28.2010 F. Council Staff Report 12.14.2010 G. Council Staff Report 12.11.2012 H. Housing Commission Staff Report 3.17.2016 I. Written comments 6 of 6
ATTACHMENT B Request for Proposals Acquire / Operate / Install New Homes at a Rent-Controlled, Deed-Restricted Mobile Home Park INTRODUCTION / PURPOSE The City of Santa Monica (City) seeks proposals from qualified affordable housing organizations to acquire a rent-controlled, income-restricted, mobile home park for the purpose of preserving and operating the property as affordable housing. Installation of new, sustainable, manufactured homes on vacant home sites will be necessary and proposals should reflect a goal toward maximizing operations and achieving long-term preservation of these affordable housing resources. Proposals are due by no later than 3:00 PM on TBD, 2016. This RFP contains the following information: Property Description Affordability Goals RFP Process Schedule Submission Requirements Evaluation Criteria Onsite Inspection of Property Submission Procedure Information Packet PROPERTY DESCRIPTION and AFFORDABILITY GOALS The property is located at 1930 Stewart Street, commonly referred to as Mountain View Mobile Home Park (Park). The Park consists of 105 home sites, 29 City-owned rental homes, 52 owner-occupied homes, and 13 vacant home sites immediately available for new homes. The balance of 11 home sites are currently encroached by legal, nonconforming use, and will only become available for installation of new homes through attrition. The Park is subject to the City s Rent Control Ordinance, which limits rent increases and provides eviction protections for the residents. The Park is also subject to an affordability covenant (deed restriction), as well aswhich established income eligibility restrictions, rent limits, leasing preferences, and maintenance of records, to preserve affordability. The Park s infrastructure was improved in 2009 with underground electrical, telephone, and cable television lines; newer natural gas, potable water, sanitary sewer, and street lighting systems; and modern curbs, gutter, and roadway pavement surfaces. 1 Mountain View Mobile Home Park RFP DRAFT July 156, 2016
The goals for the Park include: providing permanent affordable housing to households ranging from 30% - 80% of the area median income level; installing new, sustainable, manufactured homes to maximize operations and achieve long-term preservation of the homes, including implementing sustainable and accessibility features where feasible; and operating the Park in a financially feasible manner which allows for maintaining the Park consistent with neighborhood standards; and ooperating the Park with respect for the residents and inclusivity of their perspectives, ideas, and needs. The City will convey the Park to a qualified affordable housing organization in conjunction with deed restrictions requiring the: property be operated as affordable housing at agreed-upon affordability levels; compliance with the local preference policy of the City regarding rental homes, which provides priorities in leasing to Santa Monica residents and persons working in Santa Monica; long-term affordability of the Park, with a minimum of 55 years, but longer and in perpetuity if permissible; option for the City to purchase the property for $1 each at the end of any negotiated affordability period; and reporting of operational outcomes, if with the City provides financial assistance, including: o new owner to submit annual reports to the City regarding available occupancy information, and the financial operation, draws from reserves in excess of $ of the property, audits; and o residual receipts (i.e., net revenue) from operation of the Park, if any, be split with the City subject to Housing Trust Fund Guidelines. RFP PROCESS SCHEDULE The following information represents the anticipated schedule concerning this RFP: DATE ACTION TBD Issue RFP TBD Indicate interest in onsite visit TBD Onsite visit TBD Questions submittal deadline 2 Mountain View Mobile Home Park RFP DRAFT July 156, 2016
TBD Responses to Questions posted on the Housing Division website http://www.smgov.net/departments/hed/housing_an d_redevelopment/housing/housing_division.aspx TBD Proposal submission deadline TBD Staff Evaluation of Proposals TBD Housing Commission review of staff recommendations TBD Council Consideration of Proposals and Deal Terms SUBMISSION REQUIREMENTS Proposals must include the following information: 1. Overall approach in meeting affordability goals and preserving current and future: a) rental homes; b) transfers/sale of owner-occupied homes; and c) home sites as affordable housing; 2. New home installation scope of work, budget and timeline; 3. Property management plan; 4. Financial Structure: proposed financing structure should be reflected in detailed pro forma budgets and should include the following: A. New home installations w/annotations regarding assumptions for each line item; B. Operating expense budget; C. Cash flow analysis for first 30 years; D. Sources and uses; and E. Total amount of City assistance requested, if any. 5. Affordable Housing Organization: documentation of the organization s commitment to provide affordable housing to low- and moderate-income households and a demonstrated track record in owning/operating/installing similar affordable, sustainable, manufactured homes, including: A. Evidence of business structure eligible to conduct business in the state. Please submit applicable formation documents; B. Description and listing of prior experience in owning, developing, and operating similar rent-controlled, affordable, rental housing in mobile home parks; C. Description and listing of experience in managing mobile home parks and affordable, subsidized rental housing, including description of experience with tenant organizations; D. Audited Ffinancial statements for the past three years; and D.E. Qualifications and experience of proposed principals, including project manager, including percentage of their time available for this property.; 3 Mountain View Mobile Home Park RFP DRAFT July 156, 2016
Consideration will also be made for proposals with specific recommendations for transition and additional improvements at the Park. Recommendations may include, but are not limited to: 1. Transition meetings with existing management staff. 2. Retention of existing management staff. 3. On-site manager who lives at the Park. 4. Rule enforcement procedure. 5. Improvements to community space. 6. Improvements to trash enclosures. 7. Ingress / egress surveillance. 8. Solar heating for community pool. 9. Design standards for new homes. 10. Rent-to-own programs. 8.11. Emergency disaster plan. EVALUATION CRITERIA A. Thoroughness, completeness and responsiveness to this RFP; B. Financial feasibility of the proposal; C. Approach to managing and operating the Park; D. Financial capacity of the organization, including recent financial history and current outlook, and the scope of the project in relationship to the financial capacity of the organization; E. Demonstrated experience and capacity in owning and operating of affordable housing and mobile home parks; F. Approach to customer service in a multi-cultural and multi-lingual community; G. Demonstrated knowledge and compliance with regulatory and safety compliance requirements from all jurisdictions with authority over the Park; H. Commitment to local hiring practices; and I. Commitment to participate in the City s sustainability efforts. ONSITE INSPECTION OF PROPERTIES AND SUBMISSION PROCEDURE The Housing Division will coordinate access for prospective respondents to the Park and view the common areas to facilitate respondent proposals regarding rehabilitation and operation of the Park. Access to the Park will be allowed only for those prospective respondents who contact the Housing Division via email (at TBD) by 3 PM, TBD indicating 4 Mountain View Mobile Home Park RFP DRAFT July 156, 2016
an interest in viewing the Park. The date for access to the Park is TBD beginning at 10 am. Five (5) complete hard copies of your proposal must be submitted by TBD. Providing a digital version of the proposal (e.g., pdf) is appreciated but does not replace the requirement for the hard copies. Proposals will be reviewed and scored by City staff based on thoroughness and responsiveness to this RFP. and tthe top-rated proposal will be recommended for consideration by the City Council for approval. By submitting a response to this Request for Proposals, proponents waive all rights to protest or seek any legal remedies whatsoever regarding any aspect of this Request for Proposal. The City reserves the right to select any of the qualified affordable housing organizations. In addition, the City reserves the right to issue written notice to all participating organizations of any changes in the proposal submissions schedule, should the City determine at is sole and absolute discretion that such changes are necessary. Acceptance of any proposal submitted pursuant to this Request for Proposal shall not constitute any implied intent to enter into a contract or agreement. The City reserves the right to reject any and all proposals. Questions should be directed to TBD. The questions and answers will be posted publicly on the Housing Division s webpage. ATTACHMENTS: Information Packet - TBD 5 Mountain View Mobile Home Park RFP DRAFT July 156, 2016