Disposition of Hotel Metro June 25, 2013 Ann Kern Director, Housing Development and Finance Real Estate Division Ted Miyahara Manager, Real Estate Division San Diego Housing Commission
Slide #2 Hotel Metro Disposition Location Map
Hotel Metro Disposition Existing Conditions Site Photo 434 13th Street 435 13th Street Slide #3
Hotel Metro Disposition Existing Conditions Site Photo East View West View Slide #4
Slide #5 Hotel Metro Disposition Existing Conditions Site Photo
Hotel Metro Disposition Historical Minimum Wage 1988-Present Effective Date New Minimum Wage Amount of Increase Percentage Change January 1, 2008 $8.00 $0.50 6.70% January 1, 2007 $7.50 $0.75 11.10% January 1, 2002 $6.75 $0.50 8.00% January 1, 2001 $6.25 $0.50 8.70% March 1, 1998 $5.75 $0.50 11.65% Sept. 1, 1997 $5.15 $0.15 3.00% March 1, 1997 $5.00 $0.25 5.26% October 1, 1996 $4.75 $0.50 11.76% July 1, 1988 $4.25 - - Minimum wage rates published by the Industrial Welfare Commission (IWC) Slide #6
Hotel Metro Disposition Very Low Income Rent Calculations 1990 Rent Calculation Minimum Wage $4.25 Annual Income $4.25 x 40 hours x 52 weeks = $ 8,840 Annual Rent Calculation $8,840 x 90% x 30% = $ 2,387 Monthly Rent Calculation $2,387 / 12 months = $ 199 2013 Rent Calculation Minimum Wage $8.00 Annual Income $8.00 x 40 hours x 52 weeks = $ 16,640 Annual Rent Calculation $16,640 x 90% x 30% = $ 4,493 Monthly Rent Calculation $4,493 / 12 months = $ 375 Slide #7
Staff Recommendations 1) Approve the Housing Commission to enter into an option agreement in favor of the City of San Diego (City), which will grant the City of San Diego the option (which may not be exercised until the conditions described herein are satisfied) to purchase the Housing Commission s fee simple interest in the land located at 434 and 435 13 th Street for an amount equal to the appraised fair market value less estimated demolition costs, which will be paid for by the assignment of a note and deed of trust on Alpha Square from the City to the Housing Commission. 2) Transfer and amend the affordability restrictions from Hotel Metro to Alpha Square upon project completion and occupancy. Affordability will be extended to 55 years and rent and income restrictions will comply with proposed Alpha Square tax credit rents. 3) Reduce the current Hotel Metro ground lease payments to $100 per year until the termination of the ground lease or January 1, 2017, whichever occurs first. 4) Terminate the ground lease with San Diego SRO Limited Partnership upon transfer of the affordability restrictions from the Hotel Metro to Alpha Square upon project completion and occupancy in exchange for cancellation of the existing indebtedness owed by San Diego SRO Limited Partnership to the Housing Commission. 5) Authorize the Housing Commission to pay 1/3 of the cost to relocate tenants from the Hotel Metro, provided that the amount paid by the Housing Commission shall be capped at a maximum of $450,000 for relocation of the tenants one time. 6) Authorize the President & Chief Executive Officer of the Housing Commission, or a designee, to execute all necessary documents, in a form approved by General Counsel to implement these approvals. Slide #7
Slide #9 QUESTIONS?
Hotel Metro Disposition Outstanding Loan Balances Loan Balance as of 6/1/13 Residual Receipt Loan Beneficiary Loan Date Principal Amount Accrued Interest SDHC Outstanding Loan Amount First Position former RDA 11/01/89 344,200 $148,159 - Second Position SDHC 02/22/95 $98,700 54,337 153,037 Third Position SDHC 12/14/95 $457,137 242,740 699,877 SDHC 1 st Position Accrued Interest* SDHC - - 492,130 492,130 Total $1,345,044 *First position note sold to the former Redevelopment Agency for $344,200. San Diego Housing Commission retained the right to collect interest on the note accrued to the date of the sale. Slide #10