Office of the Executive Officer To: From: Honorable Chairperson and Members of the Redevelopment Agency Phil Kamlarz, Executive Officer Submitted by: Stephen Barton, Director, Housing Department Subject: Fund Allocation: Oxford Plaza Apartments RECOMMENDATION Adopt a Resolution amending a previous fund allocation of $1,544,546 which was adopted by Resolution No. 1,230, to increase the $1,544,546 fund allocation by $399,960 for a new amount of $1,944,506 in order to fund a revocable grant to Resources for Community Development from the Redevelopment Agency s Low and Moderate Income Housing Fund monies to assist in the development of the Oxford Plaza Apartments and authorizing the Executive Officer to execute a revocable grant agreement and any amendments and all other documents related to this grant amount. SUMMARY In March 2006, the Redevelopment Agency Board approved a $1,544,546 revocable grant to Oxford Plaza, L.P. for the Oxford Plaza Apartments. Resources for Community Development (RCD) is the general partner of Oxford Plaza, L.P., and has requested that the grant be increased in the amount of $399,960 and be made directly to RCD. This increase will enable RCD to close on the construction financing with Well Fargo Bank for the development of the affordable housing parcel of the Oxford Plaza and David Brower Center project at 2200 Oxford Street. FISCAL IMPACTS OF RECOMMENDATION Both the initial $1,544,546 approved to fund the Agency Grant in March 2006 and the proposed additional $399,960 are allocated from the Agency's Low and Moderate Income Housing Fund account and are the remaining proceeds of the Agency's West Berkeley 2005 Refunding Tax Allocation Bonds. Because the funds are tax-exempt bond proceeds, they must be granted rather than loaned to the project. Use of these funds to increase the Agency Grant will not increase the total local funding assistance to RCD for the Oxford Plaza Apartments, because the requested funds will replace Housing Trust Funds previously allocated to the project but which are not available until after July 1, 2007. If the Redevelopment Agency approves the amendment of $399,960, the amount of City and Agency fund assistance will remain at $6,244,546 or approximately 15% of the $40,700,000 total development cost for the apartment building. The remaining financing will be provided from Wells Fargo Bank; the State of California s Multifamily Housing Program; the Alameda 2180 Milvia Street, Berkeley, CA 94704 Tel: (510) 981-7000 TDD: (510) 981-6903 Fax: (510) 981-7099 E-Mail: manager@ci.berkeley.ca.us Website: http://www.ci.berkeley.ca.us/manager
Fund Allocation: Oxford Plaza Apartments County HOPWA Program; the Federal Home Loan Bank; Foundation Grants; Deferred Developer Fee; General Partnership equity; and the Low Income Housing Tax Credit Program. CURRENT SITUATION AND ITS EFFECTS Since the additional $399,960 is available for affordable housing projects, staff is requesting that these funds, which are currently in the Redevelopment Agency s Low and Moderate Income Housing Fund be allocated at this time for the Oxford Plaza project. If this increase in the Agency Grant is approved, the Housing Department will then reduce the amount of the Housing Trust Fund loan by the same amount, from $4,700,000 to $4,300,040. Consequently, this Agency action will not increase the amount of local funds allocated to Oxford Plaza project, but will permit needed local funds to used at this time. Granting the funds directly to RCD rather than Oxford Plaza, L.P. allows RCD to purchase the air rights parcel and then transfer it to limited partnership in which it is general partner. By approving the Resolution, the Agency will increase the revocable grant in the amount of $399,960, resulting in a total grant in the amount of $1,944,506 from the Agency s Low and Moderate Income Housing Fund, and authorize making the grant directly to RCD. The Agency grant will be a revocable grant secured by a deed of trust on the Housing Air Rights parcel. RCD will use the grant funds to assist in the acquisition of the air rights parcel on which the apartments will be constructed. Finding of Benefit Pursuant to Community Redevelopment Law, Redevelopment Low and Moderate Income Housing Funds must be used by the Agency for the purposes of increasing, improving and preserving the City s supply of housing for persons and families of very low, low or moderate income. These funds may be used inside or outside a redevelopment project area provided, however, that funds maybe used outside a Project Area only if findings of benefit to the Project Area are made as required by Section 33334.2 of the California Health and Safety Code. The finding of benefit for the use of Agency Housing Funds outside the project area for the Oxford Plaza Apartments was made by City Council and Agency Resolutions in March 2006, and suffices for the proposed increase in Agency funding proposed in this report. BACKGROUND The Oxford Plaza and David Brower Center is a proposal for the construction of a mixed-use development that will cost approximately $80 million dollars. Oxford Plaza will bring together 96 rental units of affordable housing for extremely, very low, low, and moderate-income households and approximately 8,300 square feet of retail space. The David Brower Center (DBC), a unique environmental center housing non-profit environmental groups, will combine office, conference, gallery and restaurant uses totaling 53,000 square feet of space. Additionally, a surface parking lot comprising 41 spaces will serve the residential tenants, and a below-grade (one level) parking garage will include up to 97 public parking spaces and will replace the loss of the existing surface parking currently on the site. Page 2
Fund Allocation: Oxford Plaza Apartments The project site will be divided into four distinct land parcels comprising the affordable housing, retail/residential parking, David Brower Center, and the parking garage components, respectively. The Developer, OSDLLC, includes both Resources for Community Development (RCD) and the David Brower Center, Inc. of which each organization has a 50% interest in the limited liability company. Equity Community Builders is the Developer s representative for the project. After the Oxford lot site is transferred by the City to the proposed owner (OSDLLC), the owner will use project funds to complete the construction of the parking garage and transfer the parking garage to the City at project completion for a cost of one dollar ($1.00). The Oxford Plaza will consist of a new mixed-used building that provides 96 affordable housing units. The units will consist of 24 studios, 21 one-bedroom, 23 two-bedroom and 29 threebedroom apartment units to accommodate the needs of a variety of household types from disabled or seniors to large low-income families. Ten of the total units will be specifically set aside to provide housing for very-low income individuals with special needs. Twenty-four of the units will be Project-Based Section 8 certified. All of the units will be accessible to the disabled. Designed to accommodate families, over 50% of the units will be two and three-bedroom units and the courtyard will also feature a tot lot to provide a protected play area for smaller children. Parking for 41 cars will provided on the ground level and will be located behind the retail and residential entry lobby. Oxford Plaza will provide 8,300 square feet of retail space on the street level. Prior to this time, the Agency refinanced its 1996 and 1997 Tax Allocation Bonds and this action resulted in a generation of bond proceeds. Through its approval of the bond refinancing and adoption of the Five Year Implementation Plan, the Redevelopment Agency Board authorized the use of the bond proceeds for affordable housing projects. In March 2006, the Agency approved a revocable grant $1,544,546 to Oxford Plaza, L.P. (a limited partnership with RCD as the general partner) from a portion of these funds. In December 2006, the Oxford Plaza closed on it bond financing after securing commitments for all of its financing and to prepare for the construction loan closing financing. The construction requires this prior to City s transfer of the property at 2200 Oxford to the Developer. In December, 2006, the commercial portion of the project which includes the first floor retail parcel of the housing building, the David Brower Center, and the parking garage, closed on the New Markets Tax Credits (NMTC) funded portion of the project. The DDA time schedule anticipated that the Developer would close on the financing just prior to the transfer of the land by the end of April 2007. However, given the compressed time frame for closing on the funding for the project, the Developer was not able to complete all of its DDA submittals within the time frame required under the DDA and permit the City the time to review the submittals. The staff worked with the lenders and Developer to arrive at an agreement whereby the transfer of the property would be delayed until approximately March 31, 2007 and the final review of the submittals required by the DDA could be completed in timely fashion. The Developer anticipates they will start construction shortly thereafter. Page 3
Fund Allocation: Oxford Plaza Apartments Staff continues to work with the both RCD, the David Brower Center (DBC), Inc., and the Developer s representative Equity community Builders (ECB) on completing final costs estimates, conducting peer reviews of both the construction costs, water proofing, and constructability. The staff will complete a final report on these items for City Council in March 2007 to permit for the orderly transfer of the land soon thereafter. By approving the Grant Amendment Resolution, the Agency will increase the amount of the revocable grant to RCD by $399,960 for a total grant in the amount of $1,944,506 from the Agency s Low and Moderate Income Housing Fund. The Agency s Grant will be a revocable grant secured by a deed of trust on the Housing Air Rights parcel. Staff continues to work with the City Attorney s Office, other City Departments, the City s financial consultant, outside legal counsel, and its consultants to assist in structuring the City financing and conditions of its financing assistance to this development. RATIONALE FOR RECOMMENDATION The increased grant amount is an important part of the overall financing for the Oxford Plaza Apartments and, if approved, will permit RCD to acquire the air rights parcel, transfer the parcel to Oxford Plaza, L.P., and close the Oxford Plaza construction financing with the goal of commencing construction of the Apartments in the next several months. ALTERNATIVE ACTIONS CONSIDERED The staff s original intention was to utilize HOME funds to finance this portion of RCD's acquisition of the air rights parcel. However, HOME funds will not be available to the HTF until after July 1, 2007. Increasing the Agency Grant and decreasing the HOME funding will enable RCD to close its construction financing in late March and commence construction shortly thereafter. CONTACT PERSON Stephen Barton, Director, Housing Department, (510) 981-5400 Attachments: 1: Resolution Page 4
RESOLUTION NO. ##,###-N.S. ALLOCATING ADDITIONAL FUNDS IN CONNECTION WITH THE BERKELEY REDEVELOPMENT AGENCY'S GRANT TO RESOURCES FOR COMMUNITY DEVELOPMENT WHEREAS, the Berkeley Redevelopment Agency (the "Agency") has adopted and amended, from time to time, the Agency Implementation Plan for the West Berkeley Project Area (the "Implementation Plan") which set forth plans for redevelopment of the West Berkeley Redevelopment Project Area (the "Project Area"); and WHEREAS, a central objective of the Implementation Plan, the City's General Plan, and the California Community Redevelopment Law, Health and Safety Code 33000 et seq. (the "Redevelopment Law"), is the creation of new housing to provide long-term affordable housing opportunities for low and moderate income households; and WHEREAS, the Agency has established an Affordable Housing Fund (the "Housing Fund") pursuant to Health and Safety Code Section 33334.2; and WHEREAS, the provisions of the Redevelopment Law applicable to the establishment and use of proceeds of the Housing Fund (Health and Safety Code Sections 33334.2 and 33334.3) expressly contemplate and permit the use of proceeds from the Housing Fund outside the Project Area upon findings by the City of Berkeley (the "City") and the Agency that such use will be of benefit to the Project Area; and WHEREAS, by Resolution No. 1,230, adopted by the Agency Board on March 21, 2006, the Agency authorized a grant in the amount of One Million Five Hundred Forty-Four Thousand Five Hundred and Forty-Six Dollars ($1,544,546) (the "Initial Grant") to Oxford Plaza, L.P., a California limited partnership (the "Partnership"), the general partner of which is Resources for Community Development ("RCD"), for the development of a 97 unit affordable multi-family rental housing development (the "Housing Development"); and WHEREAS, the funds for the Initial Grant consist of the tax-exempt bond proceeds from the issuance by the Agency of the West Berkeley Redevelopment Project 2005 Refunding Tax Allocation Bonds (the "Tax-Exempt Bonds"), which proceeds the Agency deposited into the Housing Fund; and WHEREAS, by Resolution 1,230, adopted by the Agency Board on March 21, 2006, and by Resolution No. 63,243-N.S., adopted by the City Council on March 21, the Agency and the City Council, respectively, found that the Initial Grant for the Housing Development will be of benefit to the Project Area in accordance with Health and Safety Code Section 33334.2(g)(1); and WHEREAS, the Partnership has requested that the Agency provide the Initial Grant to RCD and RCD has requested additional financial assistance from the Agency for the Housing Development; and
WHEREAS, the Agency desires to increase the amount of the Initial Grant by Three Hundred Ninety-Nine Thousand Nine Hundred Sixty Dollars ($399,960) (the "Additional Grant") for a total of One Million Nine Hundred Forty-Four Thousand Five Hundred Six Dollars ($1,944,506) (the "Total Agency Grant"). The funds for the Additional Grant consist of the tax-exempt bond proceeds from the issuance by the Agency of the Tax-Exempt Bonds, which proceeds the Agency deposited into the Housing Fund; and WHEREAS, the Total Agency Grant will be evidenced by a revocable grant agreement (the "Grant Agreement") with RCD which sets forth the terms and conditions of the Total Agency Grant, including but not limited to the conditions RCD must satisfy to obtain the Total Agency Grant; and WHEREAS, the Housing Development is part of a larger mixed-use development (the "Mixed- Use Development") intended to be constructed on a site currently owned by the City and generally located on Oxford Street between Kittridge Street and Allston Way, outside of the Project Area (the "Site"). RCD intends to construct the Housing Development on an air rights parcel located on a portion of the Site; and WHEREAS, the City, serving as "lead agency" under the California Environmental Quality Act and the applicable state and local implementing guidelines ("CEQA"), has prepared a Negative Declaration with Mitigation Measures that has evaluated a Use Permit for the Site including an evaluation of the ultimate development of the Housing Development and the entire Mixed-Use Development on the Site (the "Mitigated Negative Declaration"); and WHEREAS, the City Council approved the Mitigated Negative Declaration and adopted the Mitigated Negative Declaration mitigation measures on July 25, 2005; and WHEREAS, the Mitigated Negative Declaration, a copy of which is on file with the City Clerk and Agency Secretary, has served as the CEQA document for consideration and approval by the Agency of the Initial Grant and the Additional Grant, the ultimate development of the Housing Development and the entire Mixed-Use Development on the Site, and the related findings and determinations set forth in this Resolution; and WHEREAS, no changes have occurred in the Housing Development, the Mixed-Use Development, or the environment, and no new information has been discovered, which would require subsequent environmental review under State CEQA Guideline 15162; and WHEREAS, by the staff report accompanying this Resolution and incorporated into this Resolution by this reference (the "Staff Report"), the Agency Board has been provided with additional information upon which the actions set forth in this Resolution are based. NOW, THEREFORE, BE IT RESOLVED that the Agency Board hereby finds and determines that the above recitals are true and correct and have served as the basis, in part, for the actions of the Agency Board set forth below.
BE IT FURTHER RESOLVED that the Agency hereby certifies its review and consideration of the Mitigated Negative Declaration in accordance with CEQA. BE IT FURTHER RESOLVED that the Agency Board hereby finds and determines that the Mitigated Negative Declaration adequately addresses the environmental issues pertaining to the use of money from the Housing Fund for the Additional Grant for the Housing Development and properly concludes that, provided the mitigation measures identified therein are implemented, such use will not have a significant effect on the environment, and that no changes have occurred in the Housing Development, the Mixed-Use Development, or the environment, and no new information has been discovered, which would require a subsequent environmental review under State CEQA Guideline 15162. BE IT FURTHER RESOLVED that the Agency Secretary is hereby authorized and directed to file a Notice of Determination in accordance with 14 Cal. Code of Regulations, Section 15075, evidencing the Agency's use of the Mitigated Negative Declaration in connection with its consideration of the use of money from the Housing Fund for the Additional Grant for the Housing Development and this Resolution. BE IT FURTHER RESOLVED that the Agency Board hereby allocates an amount not to exceed Three Hundred Ninety-Nine Thousand Nine Hundred and Sixty Dollars ($399,960) to fund the Additional Grant, and the Agency s fiscal year budget is hereby amended to the extent necessary to provide for such allocation of the Additional Grant. BE IT FURTHER RESOLVED that the Agency Board hereby authorizes the Agency's Executive Director, or his designee, to take such action, and to execute such documents, including but not limited to the Grant Agreement, a regulatory agreement and such other documents and agreements, necessary to provide the Total Agency Grant to RCD. BE IT FURTHER RESOLVED that this Resolution shall take immediate effect upon adoption.