TURNING AGING PROPERTY INTO TREASURE: Public/private partnership between the City of La Habra and City Ventures and highlights economic impacts, legal framework and explore the relationship between how the two entities made it work. April 27, 2016 California Economic Development Conference
ABOUT CITY OF LA HABRA 2 General Law, Full Service City in North Orange County bordering Whittier, La Mirada, Buena Park, Fullerton, and Brea. Incorporated in 1925. La Habra means The Pass Through the Hills. City Motto: A Caring Community. Bedroom Community with no freeway access and some big-box retailers. Downey Collection Downey
ABOUT CITY VENTURES 3 Leaders in infill development in coastal supply constrained counties with vast experience in project design, entitlements, land development, and homebuilding. Fully integrated developer/builder specializing in mixed use, townhomes, single family detached and podium flats/townhomes. City Ventures works exclusively in California and has extensive experience with public/private joint ventures in Azusa, Alhambra, Bellflower, Buena Park, Long Beach, Morgan Hill, and Santa Ana. Downey Collection Downey
THE BIG IDEA! 4 Public agency owned assets are great opportunities for redevelopment in a post-redevelopment world. Public agency partnerships with private developers to execute challenging projects. Catalytic developments that enhance the community and encourage further private development.
OPPORTUNITIES AFTER RDA s 5 Cities and other public agencies across California have real property assets that are inefficient and/or outdated: Not historic, but old and built when land was not scarce. Types of real property assets: Civic Centers/City Halls Public Works Municipal Yards (city or school districts) Libraries Parking lots
CITY HALL OPPORTUNITIES IN CA 6 483 incorporated cities in CA 124 incorporated after 1950 (25% of all cities). Assume that at least 60% of these have City Halls built between 1950 and 1980. Approximately 75 359 incorporated before 1950 Assume that 15% have City Halls built between 1950 and 1980. Approximately 50 City Halls Approximately 125 City Halls across the State that could be included in a redevelopment project.
SURPLUS PROPERTY REQUIREMENTS 7 Government Code 54220-54233 Local agencies disposing of "surplus land" must offer to sell the land to other public agencies an entities for lowmod housing, parks and recreation, school facilities, enterprise zones, and infill/transit projects. Required 90 day good faith negotiating period with interested buyers. What is "surplus land"? Public agency property that is no longer necessary for the agency's use, except property held for exchange.
8 EXPENDITURE OF PUBLIC FUNDS FOR ECONOMIC DEVELOPMENT Constitutional prohibition on "Gift of Public Funds" may restrict public agency sale of land for less than its fair market value. Best practice is to obtain appraisals for land sales. There is little statutory authority for local expenditures for economic development purposes. SB 470 of 2013 expresses legislative intent that economic development is a "public use and purpose", allows local governments to spend public funds to promote "economic opportunity," including agreements producing one job per $35K spent, agreements increasing property tax by 15%, affordable housing, sustainable community strategies projects, or transit projects. SB 562 of 2013 requires public hearing and report for "economic development subsidies" of $100,000 or more, including land price subsidies.
PREVAILING WAGES 9 Public agency assistance to a project may require the developer to pay prevailing wages for the project, including: Transfer of an asset of value for less than fair market price. Rents which are reduced or charged at less than fair market value.
10 ABOUT LA HABRA
11 ABOUT LA HABRA
12 ABOUT LA HABRA
ABOUT LA HABRA 13 Area 7 square miles Population 61,653 Median Income $60,954 Operating Budget $38,273,904 (FY 15/16) Full-time Positions 265
14 AERIAL OF EXISTING CIVIC CENTER
EXISTING CIVIC CENTER 15 Civic Center City Hall Police Station Library Post Office Veteran s Hall Historical Museum
EXISTING CITY HALL STATS 16 Old and Antiquated Built in 1969 45+ years old (not historic) 21,110 square feet Outgrown Facilities: Deferred maintenance Lack of storage Limited office space Outdated infrastructure
17 PHOTO OF EXISTING CITY HALL
18 PHOTOS OF EXISTING CITY HALL
19 PHOTOS OF EXISTING CITY HALL
20 PHOTOS OF EXISTING CITY HALL
21 PHOTOS OF EXISTING CITY HALL
22 PHOTOS OF EXISTING CITY HALL
23 AERIAL OF TOWN CENTER (PRIOR)
TOWN CENTER STATS (PRIOR) 24 Town Center (2.0 acres) Office Building (0.72 acres) Bank Building (0.24 acres) Parking Lot (1.04 acres) (City Owned)
25 TOWN CENTER PRIOR TO CONSTRUCTION
26 TOWN CENTER PRIOR TO CONSTRUCTION
THE DEAL 27 Land Swap City buys existing buildings and land for $3.7 million. City Ventures buys 3.8 acre parcel for $5.5 million. Benefits City gets to expand City Hall from 21,000 to 47,000 sq. ft. City Ventures residential project grows from 47 to 71 units. Additional upgrades to the Civic Center area.
28 RESIDENTAL COMMUNITY
29 RESIDENTIAL ELEVATIONS
30 RESIDENTIAL ELEVATIONS
RESIDENTIAL OVERVIEW 31 Total Site: 3.8 acres 62 - Attached Townhomes 1,263 to 2,001 square feet 2-3 bedrooms 9 - Single Family Homes 1,575 to 1,941 square feet 3 bedrooms Ventura 19 homes per acre 2.5 Parking Spaces per home Santa Barbara
COMMUNITY FEATURES 32 Architectural style compatible with Community Center, new City Hall design, Children s Museum, and the La Habra Blvd. Specific Plan guidelines. Vibrant new walkable design that embraces the neighborhood rather than being walled off from Euclid and La Habra Blvd. Enhanced connection between El Centro Lions Park and Veteran s Hall/ Historical Museum with the Orange Street closure and improvements. All homes will be equipped with solar panels as a standard feature. Preservation of the mature Jacaranda trees next to the current City Hall. Housing solutions aimed at young professionals and Millennial homebuyers.
33 PLAN FOR NEW CITY HALL
34 NEW CITY HALL ELEVATIONS
NEW CITY HALL OVERVIEW 35 Audio/visual upgrade of Council Chambers Additional conference rooms for community use Room for growth Modernized office environment Multi-function lobby and events center Integration of U.S. Post Office Public open space for events
STRUCTURE OF EXCHANGE 36 Exchange closes prior to City Hall renovation City needs to lease old City Hall while constructing new City Hall. Developer provides promissory note for difference in land prices. Exchange closes after City Hall renovation City needs to lease new City Hall during construction, or Developer delivers a turnkey renovated new City Hall.
37 NON-SIMULTANEOUS EXCHANGE City purchases new City Hall parcel first. Developer purchase of old City Hall closes upon completion of renovation. Developer deposits $500,000 to minimize risk that second sale does not close.
38 RELOCATION ISSUES City leases portion of City Hall to U.S. Post Office and a nonprofit art association. City to negotiate relocation. Developer needs vacant old City Hall portion to develop the housing project.
CITY FINANCING 39 One-Time, Non-Reoccurring Funds Short Term Financing
PROJECT COST 40 1) Final Guaranteed Maximum Price $ 15,006,410 2) Furniture, Window Coverings & Interior Finishes $ 800,000 3) Library Parking Lot $ 59,919 4) New Monument Signs $ 14,708 5) File Storage Systems $ 142,000 6) Project Feasibility Analysis $ 632,654 7) Land Cost $ 3,696,000 8) Lease Financing Fees and Interest $ 100,000 9) Additional Project Contingency $ 300,000 Total Project Cost $ 20,751,691
FUNDING SOURCES 41 1) Sale of existing Civic Center Property $ 5,582,565 2) Cost Allocation to Park Impact Fees $ 2,367,487 3) FY 12/13 General Fund Capital Projects Funds $ 2,206,667 4) FY 13/14 General Fund Capital Projects Funds $ 1,713,033 5) FY 14/15 General Fund Capital Projects Funds $ 2,117,540 6) Sale of Women's Club $ 740,000 7) Allocation to non-general Fund Operations $ 659,456 8) IT Replacement Fund $ 300,000 9) Capital Improvement Fund $ 250,000 10) Special Revenue Funds $ 250,000 11) Permit/Plan Check Fees $ 977,293 12) City Ventures (Veteran's Hall/Museum Improvements) $ 86,734 13) Utility Authority Loan $ 2,000,000 14) General Fund Reserves $ 1,500,916 Total $ 20,751,691
CHALLENGES/LESSONS LEARNED 42 Time City wanted time to explore property swap. City Ventures accommodated and worked with City to bring this idea to fruition. City needed time to build City Hall. City Ventures willing to wait. Entitlement Risk City Ventures processed two residential development plans at once Finances City cobbled together one-time, non-reoccurring funds and City Ventures helped by contributing to the Veterans Hall. Development Agreement City needed to maintain cash flow and save money. City Ventures willing to sell their property in a non-simultaneous exchange to accommodate.
CHALLENGES/LESSONS LEARNED 43 U.S. Postal Services Negotiations with Post Office to relocate. Orange County Library Satisfying Library parking needs vs. wants. Scope Creep Managing layering on of additional items to the project. Consensus Getting senior staff/council onboard with a big project among many staff changes Relocation Risk Prior owner clearing tenants and City Ventures taking title to reduce City risk
44 PRIOR TO CONSTRUCTION
45 CONSTRUCTION PROGRESS
46 PRIOR TO CONSTRUCTION
47 CONSTRUCTION PROGRESS
QUESTIONS AND COMMENTS Andrew Ho Director of Community & Economic Development andrewh@lahabraca.gov Ryan Aeh Vice President of Land Acquisitions ryan@cityventures.com Jon Goetz, Attorney at Law JGoetz@kmtg.com