TRANSMITTAL To: Date: 8/17/2017 THE COUNCIL From: THE MAYOR TRANSMITTED FOR YOUR CONSIDERATION. PLEASE SEE ATTACHED. (Ana Guerrero) ERIC GARCETTI Mayor
, irffflhaly' & P d 7 Los Ar.geles HOUSING + COMMUNITY Eric Garcetti, Mayor Rushmore D. Cervantes, General Manager Investment Department Housing Development Bureau 1200 West 7th Street, 8th Floor, Los Angeles, CA 90017 tel 213.808.8638 I fax 213.808.8610 hcidla.lacity.org August 8, 2017 Council File No.: Council District: Contact Persons: 10-1094; 10-1094-SI; 10-i094-S2; and, 14-0694 15 Lasisi Azeez (213) 808-8574 Gloria Torres (213) 808-8930 Helmi A. Hisserich (213) 808-8662 The Honorable Eric Garcetti Mayor, City of Los Angeles Room 300, City Hall 200 N. Spring Street Los Angeles, CA90012 Attention: Mandy Morales, Legislative Coordinator COUNCIL TRANSMITTAL: LOS ANGELES HOUSING + COMMUNITY INVESTMENT DEPARTMENT REPORT BACK REGARDING COUNCIL FILE NO. 10-1094-S2, FOR DEVELOPMENT OF AFFORDABLE SINGLE-FAMILY HOMES BY HABITAT FOR HUMANITY OF GREATER LOS ANGELES ON SURPLUS CITY PROPERTY LOCATED AT 600 EAST L STREET, WILMINGTON SUMMARY On May 8, 2013 pursuant to City Council File #10-1094-S2 the City Council and Mayor directed the City of Los Angeles Department of General Services (GSD) to declare the City-owned property located at 600 East L Street, Wilmington (Property) a surplus property in accordance with the provisions of the City Administrative Code and City Charter. At the same time, the City Council authorized the Property to be sold to Habitat for Humanity of Greater Los Angeles (Habitat LA) at the fair market value, which was estimated to be approximately $560,000 for the development of homes for low income households earning at or below 80% of the Area Median Income (AMI). On July 14, 2017, GSD prepared a memo to the City Administrative Officer and Chair of the Municipal Facilities Committee stating that the surplus property process was completed, and the City could proceed v/ith the sale of the Property to Habitat LA at fair market value. The property was reappraised on March 29, 2017 and is currently valued at $1,064,000. Due to the substantial increase in the cost of land, Habitat LA has revised the income targeting of the project to include moderate income households at or below 120% of the AMI. This change in income targeting serves an unmet need in the City s Housing Element and is more in line with current market conditions. An Equal Opoortunity/ Affirmative Action Employer
L Street Development Page 2 Accordingly, the Los Angeles Housing + Community Investment Department (HCIDLA) proposes to convey the surplus Property to Habitat LA for the current market value, and to enter into a loan agreement on behalf of the City with Habitat LA, which sets forth a clear schedule of performance. Habitat LA will develop the Property into nine single family homes, affordable to first-time low- and moderate-income homebuyers, earning up to 120% of the AMI. Upon construction completion, and at the time of sale of each home, the Habitat LA loan will be divided amongst the eligible low- and moderate-income homebuyers and converted into soft second loans in substantial conformance with HOD LA s existing Low- and Moderate-Income Purchase Assistance Programs. At the conclusion of the sale of each home, and annually thereafter, HCIDLA will service the homebuyer loans and manage the loan repayment proceeds. Neither HCIDLA nor GSD will provide additional cash assistance to Habitat LA for the project. Attached to this transmittal is the Development Budget (Attachment A) and prill 1 nf"pprfnnntmpp ( A ff q r'l'i t"r\ f vixvuvfiv vi x VI XV/XXXXMX1VV v-1 V H UVillilVill L-T ) Recommendations: The General Manager of HCIDLA respectfully requests that: I. II. Your office schedule this transmittal for consideration at the next available meeting(s) of the appropriate City Council committee(s) and forward it to the City Council for review and approval immediately thereafter. The City Council, subject to the approval of the Mayor, take the following actions: A) Authorize HCIDLA to convey the Property at fair market value, which is estimated to be $1,064,000, to Habitat LA; B) Determine that the Property is best suited for the development of single-family homeownership units, affordable to both low- and moderate-income first-time homebuyers earning up to 120% of AMI; and C'\ Authorize the General Mt of HCIDLA, or designee, that upon completion of the development, to re-convey the City loan to Habitat LA by transferring the loan obligation to the nine first-time low- and moderate-income homebuyers earning up to 120 % of AMI, as soft second loans. Background: On March 3, 2011, the City Council approved the sale of the Property to the Community Redevelopment A.gency of Los Angeles (CRA/LA); however, due to the dissolution of CRA/LA. in 2012, the sale of the Property was not completed, and the Property remained in the City s portfolio of properties. On January 15, 2013, Councilmember Joe Buscaino introduced a Motion instructing HCIDLA to evaluate the feasibility of selling the Property to Habitat LA. Pursuant to adoption of the Motion, HCIDLA, GSD, the CAO, the Chief Legislative Analyst (CLA), and the City Attorney reviewed and ultimately approved a plan for sale of the Property to Habitat LA for the appraised amount of $560,000.00 (CF NO.10-1049-S2). On May 8, 2013, HCIDLA submitted a transmittal to City Council requesting authorization for GSD to begin the surplus land designation process, and requesting that HCIDLA begin the process for sale (CF
L Street Development Page 3 No. 10-1094-S2). Furthermore, it was determined that GSD would need to declare the Property surplus before the process of sale could begin. Proposed Financial Structure of the Development/Sale of the Homes to Homebuyers. The Property will be sold to Habitat LA at the current appraised value of $1,064,000 for the construction of nine affordable single-family homes. Habitat LA will not provide cash payment for the Property; instead, HCIDLA will issue a Promissory Note to Habitat LA for the full fair market value of the Property. Upon construction completion and sale of the nine homes, Habitat LA s loan will be divided and assumed (as soft second loans) by the nine first-time low- and moderate-income homebuyers in an approximate amount of $118,000 pci home. The soft second loans will be due and repayable to the City by the homebuyers m at fk^ ^ Anri rvp f mv 1-i^ D yanf 1 nnn C«JL lv_7tiju pvnuu, Ui WllVll UHb/ property is sold or transfencd, whichever occurs first. Resale restrictions will not be imposed upon the homebuyers, in that the City will not require the homes to be sold to other low- or moderate-income homebuyers. However, each homebuyer will be required to pay to the City the principal amount of the loan and shared appreciation at the end of the 30-year loan period, or when the property is sold or transferred, whichever occurs first. Fiscal Impact There is no impact to the General Fund.
L Street Development Page 4 Prepared by: Reviewed by: 4^ LASISI AZEE Finance Development Officer I Reviewed By: GEORIA TORRE: Finance Development Officer II Reviewed By: HELMFHIS SERICH Director V ri ' JL-UL lwivt v i v. vj O Vj ATTD A V OTTCT TTIT AAO Executive Officer tr~l /^y\ Reviewed By: <7 1/ RUSHMORE D. CERVANTES General Manager Attachments: Attachment A - Development Budget Attachment B - Schedule of Performance
Attachment A CITY LOAN AGREEMENT HABITAT FOR- HUMANITY (564 East L Street, Los Angeles, CA 90744) BUDGET i. Land Assemblage Cost Land Closing Costs Total Land Assemblage $1,064,000 i6,00( $118,889 /Unit $1,070,000 II. Direct Costs Construction Management Construction Team Labor 9 units General Conditions Off-site Improvement On-site Improvements2 Landscaping Contingency Total Direct Costs 5% Costs 10,395 number 9 Unit 10% Costs $56,847 /Unit $86.0 /Sq ft $7,000 /Unit $30,000 /Unit $65,699 $511,627 $893,970 $63,000 $150,000 $270,000 $30,000 $195,430 $242,192 /Unit $2,179,725 III. Indirect Costs Fees and permits Tax and Legal, Accounting Insurance Architect (including structural) Engineering Other Consultants, Printing Contingency Total Indirect Costs 2% Direct Cost 4% Direct Cost 2% Direct Cost 4% Indirect+Fin $20,000 /Unit $180,000 $43,595 $5,000 /Unit $45,000 $87,189 $43,595 $40,000 $19,735 $51,013 /Unit $459,113 IV. Financing Costs Const Interest End Closing Costs/sales Total Financing Costs 6% @60% Dir,lnd,Dev Fee $6,000 /Unit $17,822 /Unit $106,398 5,000 $160,398 V. Developer s Fee Habitat LA 12% dir+indir $35,185 /Unit $316,661 VI. [Total Development Costs»Njj>:;+ /Unit $4,185,8978 1 Includes sidewalk, curb and gutter, utilities, and landscaping 2 Includes earthwork, utilities, landscaping, driveways, foundations Habitat for Humanity of Greater Los Angeles L Street Wilmington 9 units 6/15/2017
Attachment B CITY LOAN AGREEMENT HABITAT FOR HUMANITY (564 East L Street, Los Angeles, CA 20744} SCHEDULE OF PERFORMANCE Pre-Development/Entitlement: On-going Concept/Constxuction August 2017 Loan/DDA Approval: Submit for Building Plan October 2017 Check: Permits Issued: April 2018 Construction begins: July 2018 Home Owner's Selection: September 2018 Construction Complete: March 2020