Resolution-PC 92-70 RESOLUTION NO. PC92-70
A RESOLUTION OF THE ANAHEIM CITY PLANNING COMMISSION
ADOPTING AND RECOMMENDING TO THE CITY COUNCIL ADOPTION OF
GENERAL PLAN AMENDMENT NO. 328 PERTAINING TO THE HOUSING ELEMENT
WHEREAS, the City Council of the City of Anaheim did adopt the Anaheim
General Plan by Resolution No. 69R-644, showing the general description and extent of
possible future development within the City; and
WHEREAS, the City's current Housing Elemen~ was adopted by the City
Council in 1989, amended in 1990, and subsequently certified by the Cal.~ornia
Department of Housing and Commun~ Development (HCD); and
WHEREAS, recent legislation, SB 1019, mandates that an analysis and
program for preserving Iow income housing at risk of being converted to other uses be
completed by cities and counties before July 1, 1992; and
WHEREAS, th,~ ' -~,.h. eim City Planning Commission did hold a public
hearing at the Anaheim Civic. inter, Council Chamber, 200 South Anaheim Boulevard;'
on June 15, 1992, at 1:30 p.m.., r, otice of said public hearing having been duly given as
required by law and in accordance with the provisions of the Anaheim Municipal Code,
to hear and consider evidence for and against said General Plan Amendment and to
investigate and make findings a~d recommendations in connection therewith; and
WHEREAS, said Commission, after due consideration, inspection,
investigation and study made by itself, and after due consideration of all evidence and
reports offered at said hearing, DOES HEREBY FIND:
1. That this Ger~eral Plan Amendment amends the current Housing
Element by providing an assessment of the preservat,on of assisted houslnt:j
developments in the City of Anaheim which are at risk of converting to non-low-income
uses during a ten year planning period and establishes a program to preserve existing
Iow income housing.
2. That the proposed amendment will add a new appendix, Appendix
D, which corltains an introduction, identification/inventory of at risk projects, discussion
and cost analysis of preserving the Iow income housing, analysis of resources for
preservation of the affected housing, quantified objectives, development of programs to
preserve existing Iow income housing and a summary.
CR1516MS.wp -1- PC92-70
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3. That Appendix D i~ con~istent with t~e c~rrent Hausing Eleman! and
supplements it py adding an analysis and program f~r pr~serving low income housing at
risk of being cenverted ta market rate housing.
4. That tho Housing Commission reviewed tha propased General Plan
Amendment at their June 3rd meeting and recommended approval of the Amendment to
the Gity CnuncH.
~q~,~FORNIA ENVIRONMENTAL Q ALI7Y ACT FINDINu: That the Anaheim City
?lanning Commissior~ has review~d the prnpos~l to amend the Housin~ Eiement of the
General Pian by providing an assessment of 4he preservation ~f assisted hr~using
cievelopmants in the City of Anaheim which are at risk of c:or~varting to non-low-income
usos during a tan year planning p9riad and est~blishe~ a prograrn to preserve exisiing
low incom~ housing; and does hereby ap~rove the Neg~4ive Decl~ration upon find(ng that
it has considered the Negative Declaration together with any cammorts receiwed during
the p~blic review procoss ~nd further finding on the basis of the initial study and any
comrne~ts received that there is no evidence that th~ Ceneral Plan Amandment emending
the Hotisin~ Element will have a 3ignificant effect un the environment.
NOW, THEREFORE, BE IT RESOLV~D, th~at pursuant to the above findings,
the Anaheim City Planning Comrnissi~n does r~~reby adopt and recommdnd to tlia City
Council of the Ciry of AnahAim adoption of General Plan Amendment No. 328 pertaining
to the Housing Flemeiit ~dding Appenclix D, addressing the preservation of assisted
housing developments in the City of Anaheim ~r~hich are at risk of converting t~ non-low-
income uses during a ten year planning period.
7NE FOREGOING RCSOLUTiON w~s adopted at ths Planning Commission
moetin~ of June 15, 1992.
,~
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~~1~ •t l~~ / ~
AIRMAN, ANAHEIM i7Y P NNIN C~MMISSIUN
ATl'EST:
` ~Y in c~r~- `~~•~ru;~
SECR~1" RYr . NAHEIM CITY PL4Nf~ING COMMlSSION
-2- PC92-70
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STATE OF CALIF~JRNIA )
COUNTY OF ORbNGE ) ss.
CIS'Y OF ANAI-IEIM )
!, Edith L. Harris, Secrotary of the ~naheim City Planning Commission, do
hereby certify that the forogoing resolution was passed and adopted ~t ~ rn~eting of tho
Anahefm City Plenning Commission held on .lune 15, 1992, by the followrimg vota of the
msmbers tharaof:
AYES: CGMMISSIONERS: 80UAS, BRISTOL, H~LLYE~~, "IENNINGCR, RhESSE,
ZEMEL
NOES: COMMISSIONERS: NONE
AB5ENT: COMPAISSIONERS: PEHAZA
IN WITNESS MIHrREOF, I have hereunto set my hand fhis ~_ day of
~~~ ~t , 1992.
G ~ '~,,~~~~,t ~g~~~~
~/ /(.~/?~~!Ll/C[.~QJ._s: .~ ~•~~~~
SECRETAR~f, A 'AHEIM ~i1Y PLANNING CODAMI~SION
~_ PC92-70
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GITY OF ANAHEIM
HOUSING ELEEVI:~IVT AMENDMEN'T
Assessmsnt of the Preservation of
Assisted ~lousinfl povelo~rnants
in the City of Anaheir~i
Juno 1992
.,..
7A~el.l~ ~UF CON~'ENT~
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i. INTRpDUCTION ...................................... 2 '
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i!w Gi~~N71FICATiON/IN~J~I~TORY ~F AT RISK
PROJECTS, DISCUSSION AtVD ~CaS'T ANALYSIS . . . . . . . . • . • • • . • 2
ill. AP1AI.YSIS ~DF RESOUR(:ES FOR PRESEFiVA1'lON . . . . . • . . . . • • • • • 13
IV. CIUANTIFIED ORJECTIV~S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
V. DEVELOPDAENT AfF PROGFtAMS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
VI. ~UMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 ' '
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I. ILVjROnUCTiON
Appendix D of the City of Anaheim 198y Housing Element has beon prepared to addreas
hausinp projects at risk of losine af(ordability controls durinp a ten year planninfl period. The
planninV pe~iod corresponcfs with the 5 year ptanninp pcriod of tho 1989 Housinp Element; July
1, 190J through June 30, 1994; and an additional 5 year period frorn July 1, 1994 through
June 30, 1999.
.~s a result oi recent state le~islation ISB101~), Government Code Section 653021c) ~~quires
the preparation of a Housinp F.lom4nt as part of a jurisdiction's General Plan. The City of
Anaheim adopted thoir Housing Elament in 1989 and amonded the elament in 1990, pursuant
to Section 653~2lc). Tlie Element was reviewed by the Planninp C~mmission, adopted by the
C+ty Council and subsequant~y reviewed by the State ot California Department of Flouainp and
Community Oevelopment. 7he Housin~ Element was tound to be in compliance with 1•lousinp
Elerne, t Law IArticle 10.6 of the Government Code1.
In 1~J89 ar. amendment to State Planninp Law (Chapter 145, Statutes of 1989, Amende~
Section 85583 of tf~e Government Code) was passed which mandatNd that an analys!s anri
propram }or preserving low income housing be cumpleted by cities and cuunties. The pui~ose
oi tfie hiousing Element General Plan Amendment No. 328 is tc complete an assessment ui the
prese;vation oi assisted housiry d~velopmonts in the Cit~ oi Anahoi.n. State law requirea that
this mandatory inventory and analysis bo adopted as an amendment to the City Housinp
Elgment betore July 1, 1992. The Nouainp Element Amendment is drafted to be insorted in
the existinfl Housinp Element as Appendix D.
I I. I N V E M LQ ~. Y~ !~~~ L 4[~!
AcsordiRp the Se~tion E55831a1(B) tlie invontory shall include aIl multi•tamily rental unita wl~ich
are assisted under arty nurnber of Federal nepartn ,nt of Housing and Urban davelopinent
(NUDI, state, locat and/or other proLrama, and which are:
• Eligible to thanqe tu nGn•lovv income hausinq uses due to tonnination ot
~ubxidy contract, mortqaqe prepaymant, ~r expirinn use rectrictions; and
~ Elipible within the ten yrar ppriod (ollowinq the statutory acfoption o} tho
hiousing Element Amendment.
Th~ inventory of thrt~e al(acted units ~s shnwn in table 1.
2
Sources: In o~~der to ossoss tho projects which could potentially convart io non•low incoine
housing by loss of aubsidies, use restrictions, Federal contracts, etc., aeveral sourceR wero
usod. For Federally Subsidized or Aasisted projects ilie 1890 updatod Inventory of Federally
Subsidized Rentat Unita at Pisk of Conversion proqarad by the Califomia Housin~ Psnnership
Corporation, tho California Coalition of Rural Housinp and the Calitarnia Department of Housinp
and Community Developmont was utilized. The Villape Canter Apartments Projoat is tl~e only
project at risk ~~f conversion durinp the ten yoar planninp period which recoived Federal
Assistance. The project utilized a FHA Saction 2211p)IA1 laan lNew ConstructEon) and has n
Section a Contract ronewable at fivct year intervals with the ncxt ~ptionai extonsian duo
Aupust 24, 1994.
Other sources reviewed to cumpilo the inventory included primarily Anaheim Community
Develnpment staff involved in the an-a•rinp monitorinp of sitordable housinfl ~nits within the
City. The Community Qevelopmen~- Department amploya one futl-time staft positiore
reaponsible for tax•exempt bond administration of reyulatory aQre~ments Imulti•family revenuu
bonds), as well as atl ather Atfordable yousinp upreementa. 7he bond administratian fees are
sutiicient to allow propram monitorinp ot other afiordable units devbloped undar the D~enaity
Eionus Program and Sc~nior Nousinp Ordina~ce. Therefore, an'up•to-date' inventory of all units
with potential expiration of affordability tartns was easily accoased throuqh the cunent city
data base.
~4~~~~~
P~1e : Viliape Cunter Apanmtnts
200 E. Chartros Sue~t "
Anahtim. Ca 92805
NamelAdAress of Prop~rtY Owner: Villape Cantsr Apartmonts
8383 Wilshire 81vd
88vorty Hilla, G 90Z11
T. ype di C3ovornmenta~ S~ction 221 ~01141 WAH msrket ratt mort0'Oe
Assi:tanc~ RsceivM: and S~ctfon 8 Nsw Conttruction Opt•Out Conu~ct.
~
Earliost Possibl4 Change The Section 8 Now ConsYrur.tion qpt•Out
fram Low-Income Usa: Contract is up for ronewai on August 24, 1894.
Total Number oi Low-Income
Units that cauld be lost: 100
Vcllage Center was constructed in 1979 u~dor a 221(D114) ~i~arket rate mortpape provided by
the Federal Government. Tho loan was tar 82,289,600 to be paid over a 40 year period at a~
896 interest rate. T;~is loan was issued to a t~r•profit orpanization tor tho construction of
elderly housin~ (WAH). WAhI projects reQuire at least one of tho tenants of the unit to bo 62
years oi ape ar older. 7here are no prRpayment penalties connected to the loan. Prepayment
of tho logn does not afiuct the use restrictior±s that are attached t~ the property.
The use rastrictions for Village Center arrt a rosult of the Section 8 New Constructinn Opt•Out
Contract (Section 8 Contractl which was attache~ tc tho property whan 2he market rate
mortgape was issued on August 15, 1979. The purN~se o( the Snction 8 Contract is ta onsure
aNordability of the 100 one•bedroom ~nits as elderty housinp.
Yhe Section 8 Controct for Village Center is a typical Soction 8 rent subsidy arranp6ment. The
senior citiznns pay their portion of +he rent, which is 3~94 of their adjusted pross monthly
income, to the ow~ar or manaper of the dovelopment and the Federal Govemment, throu0h the
Cepanment of Housinp and Urban Oevelopment (HUD) (processed by th~ Anaheim Hoessinp
Au;hority), pays the remairtinfl 70% oi the Isir market rent. 1'ho Sectiori 8 Contratt is due to
expire Aupuat 24, 19~J4. The property owner will hs~~e the option to renow the Section 8
Contract with FlilD at this dato for an additional 5 year term. •~
It the propeny owrter detarminas that it is nu lonper in their beat interest economically to
continue the Section 8 ContrACt, tl~gn one year prior to th~ expirotion of the Controct they an
~equir•od to file e Notice of Intant lN~JII with HUD to indicate their intention of ¢onvartinp ths
units irom a lovN•incoma use.
Once e N01 ha4 been filed with HUD, thoro are e number of steps the proporty owner mu~t po
throuph to s~ccesstully opt•out of ch4 Section A Controct. Durinfl this procas~t H110 will offor
.he ptoperry owner incentivas to maintoin the Section 8 ContraCt. The ineentives could
potentfally Inchide refinancinp their mortpape ot a tower intareat rate, or renepotiatinp the nnti
d
charged for thA ~nits. If at any point durinp the procass, the proporty owner fails to complete
a step HUD has outlinod as necossary for tho opt-out to occur, the Section $ Cantract rolls over
automaticaliy for the additEonal 5 year period. If the property owner chooses to opt-out of the
Section 8 Contract, this will represent a decroase of 13% of tho rent restricted affordable
senior housinq stock in the City of Anaheim (100 of 748 aftordable unitsl.
Ric~ of Conversion
According to analysis and survey information obtained by the Anaheim Community
Developmont Departm~nt, it is unlikely thar, in the next two Years (when N01 m~st be filed) that
the proporty owner wil~ dncide to opt•out of the Section 8 Contract. 7ho current real ostate
market in Oranpe County and Southarn Califurnia is not expected to substentially increase in
value or market rents in tho neat two Years. Furthor, a significant amount af senior housinp
has been constructed in Anaheim sinc.e tha adoption o4 a senior housinp ordinance in 1985
(1,842 unitsl. Therefore, this represgnts a very competitive m~rkot sepment. Becauso uf other
ur.e rnstrictions requirin4 4his housinfl projact. to remain ~vailabie tor seniurs, it is cltrarly in the
owners bost economic intsrest to continue to participate in the Section 8 Propram and receivo
fair ma~ket ront and a atronp occupancy rate.
~t~nal~sis
Accordinp to Section 65583(nll8)IBI the r.ost of producinp nuw rental housinq comparable in
size and rent levets to replace thA unita which could convert and the cost of prosorvinp all of
the deveiopments at risk af ~onvonEnO must be incliided in the Housinp Clement Amendmen+t•
If theao costa cannot be estimated direct~y it is permi~sibte to describe whether such costs ore
anticfpated to bs hi0har or lower thon tha rcplacoment oatimates, and tor what reason, as well
as tho mopnitude o1 the difturences in the estimatea. "
genl~coment
In order to con:truct a now a~rnors hu~iainp project, a cost of i64.00 per square foot ot
~~ildinp area is estimated usf~p Craft:sman Buiidinp Cont oatim~tor (usinp tocational indext. Tho
projaci consist of approximatety:
600 sq. tt. units x 100 units ~ 60,000 sq. h.
209G edditional floor area lf.u., corr~dors) ° 1~Q ~Q• ~•
Total buildinp area « 72,OOa sq. ft.
6
1) Cor.struction Cost: 72,000 sq. ft. x 864.00 = S4,6Q8,Q00
2) Soft Costs lfinancinp costs, architectural, enpineerinpl = S859,95U
31 Land C~st, site araa: 1.5 acros x S75U,000 °~--`'~~
S6,59?.,950
Continpency 209u s~~ ~ 8" Q
Total Replacoment Cost m ~7,911,540
~rg~ ~ i
In urdor to preserve the units at the rent levels currentlY chargod to the eldorly tenants, a direct
roplacement subsidy woufd 'ae ngcessary. 'fhis could be accomplished in one of the followinQ
manners:
1) Continue to pay the ront differentiai from a funding source other than the Soction 8
Propram, i.e., Hodavelopmnnt Hou~inp Sot-Aside funds:
q) 1Q0 units x 5400 (ave. I~lllJ NAP payment fur proj~ct) 1lousing Assistance
Payment : S4U,000 per mo~th x 12 n Sb80,000 per year.
~- From 1~9A through 1999 total subsidy roquired 5 Years x 480,000 ~
52,400,000.
2- Asaist a n~n•profit housinp corporation to purchaag the project with an oatimat9d value
assuminp market ~ata rents:
Assumptions: 8°6 inturest rate
$7K0 per month rent "
2Q96 management reserves, etc.
~Q vstatJo n - .~.
Sa,17%,009 value
Givon the option discuased above, it would be very diftic~dt ~a efther construct a new ~enfor
projoct of l00 units or assis: s non•profit corporation to acquiro the existinp projoct bocause
both af theae opUOns are basad on the ability to racaive msckot rate rsnu. The poel of
continuinp the affordabte rents w4utd take o much prestqf capi4a~ investment beyond the c~rts
ssaociated directlY with davelop~np the unfu to mest th~ rertt levela currently in place.
6
Therefore, the gaal of maintaininp affordable rents ~.Q~Id anlv be oconomicaliv achieved hrouah
~~orvatiSm of tho units ~y a renla~Q~,p~r suh~~c~v oroaram; by the reduction of tho principle
amount of the mortgape; ~r by loworing the interast rate on the prosent loan. If these options ~
are not feasible, a rent subsidy could be paid monthly, pnnually or less frequentlY to adjust
ronts to an affordable level. These optians would appoar ta be acceptable to the property
~wner due to tho competitive nature of sonior housine in Anaheim. Sincu ttie entitlemonis for
this projoct were issued as a variancA (No. 2Fi351, tho use is restricted to tl~e elderly for th~ life
ot the project and thorafore the fair market rent received by tha ownor is an incontive to
continue tl~e projoci with affordablo rents.
NROJECTS 2, 3, 4, 5 6, 7
Projects 2 through 7 all reccived assi:.tanco through multi•family tax oxempt bond financi~p
with repulatory apreements expirinp during tho ten-yoar planninp period. Project Number 1
(Hacborcliffe) and Project Numb~ar 7(West Anaheim Royale! receivcd bond financi~~g throuph
tltie Anaheim Hcusing Authority while projects 3, 4, 5 and 6 received bond atlocations via ths
Anaheim Housing Authori~y's participation in a County of Orange Pooled Bond ~ssue as
indicated bolow:
Projec.K No. 2 Harborcliffe Anahcim liousinp Authority
2170 S. Harbcr Blvd Bond Issuo
Anaheim, Ca 82801
Project No. 3 South Ohio Stree4 Apts County Poolad Bond Issue
205 S. Ohio St.
Anaheim, Ca 92F~05
Project No. 4 Linco~n Court Apts County Pooled Issue
2570 W. lincoln Ave
Anaheim, Ca 92801
Project No. 5 WestRaR Villas County I oolod Issue
2300 Westport Dr.
AnahAim, Ca 92806
.t
.~
Projoct No. fi 127 W. Cypr~SS St. Cuunty Pooled Issuo (Elderly) ~
Anaheim, Ca 92805 •
~
,
projACt No. 7 Wost Anah~fm ~oyate Anaheim Housinp Authoriry
641 S. Baach Blvd. Bond Issue ':
~
Anaheirn, Ca 92804
r
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All of the above bond issuas with tt~e exception of West Anaheim RAyale were constructed in
1985 ~nd 19fi6, and utilized pre•tax rotorm affordability requirements. This results in shorter :
;
term oi affordability, ten yoars, and Is~s rnstrictive affordable r~quiremants; housoholde earning !
$0'#r or I~ss of the median incame with rents not to exceod 30°J6 of 6596 of the median income I
adjusted for housohold size. Because projACt numbers 2 througn 6 were constructdd at _
ro(ativ~ly the same time and have identicat terrns and conditions of atfordability, they will
reccive onb analysis. West Anaheim RoyalF was constructAd more recontly (1988) and is a
con6regate caro facility for thd olderly N~itt~ different cerms and conditions of affardability trom
the oiher bond issue projects and will thorefore be analyzed separately.
PROJECTS 2, 3, 4, 5, 6 ~
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Name and Address of Propeny Owner: See Table 1 ~
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Type of Govarnmental Assistance: Multi•Family 1'ax ~xempt Bond Issuo ,
Earliost Possible Chanpe from Low-Income Usa: Project 2
t~roject 3
Projoct 4
Project 5
Project ~3
Total Number of Low•Income Units that c4uld be Losx: 48
7/9f3
•~ 7188
b/96
2/98
3I95
Tho five bo~~d issue praiecta ~esult in the poten~ial loss of 48 lower incorne u~its. Ti~is loss of
aHordabl~ unita is not as sipnificant as Ptoject N~~mbor 1 becauas the affordable rent paid bW
the tenant is only mareirtally less than the market rate tent within the same project. This
margin betwecn affordable rant and market rent has boen steadily reduced durinp tho past three
a
years due to the surplus of available (market rate) apartment units in the area. Mark6t rato
rents have essentially leveled off since 1987 while the afford~bl~ units under the tax exempt
program have boen allowed annual a~justmdnts upward. 7he result is a comparaiive rent
structure between market rate and affordablo rents with the ~ffordable ronts either uqual to the
markRt rents or only slightly bdlo~, ~ay 550.00 - 575.00 per month less for a comparable unit.
Thi , inequity has been addressed on nRwor projects in two areas: new band issue projects
have 30 year affordability, rents ~re established at 30 of 5096 madian incon~o; occupancy
limitPd to househalds not earning more than 5U% of the median incomo; rent adjustments ta
be the lasser of the Section 8 annua~ adjustmant factor or the avorage increase in market ~ate ,
rents of similar units within the project during the precodinp 12 months. ~
Tha bond units li~ted abovo may again become a valued affordable housing product if market
rents escalate at moro than 10°6 per year through the expiration of the regulatary aarAaments.
If this were to occur, tl~en the rent restrictions would maintain the cap on the affordable rents
resultinfl in a truly betow market rat9 affordable unit.
Risk of Conversion ~
When these rogulatory agreements expire the owners will have the opportun~ty to canvert tho !
units to market rate units. This will {ikety occur and will neither have a positive nar negative
oconomic impact on the propertY owner since t;he rental income will most likely remain ,
conatant. liowove~, an increase in the owner's propo-ry value for the prolect will surely occur ~
with th9 expiratian of restrictions 3nd covenants peRaini~ti to the maximum rr~nt c:har~ed and
occupancy. It is daubtful that a publia a4ency will be interusted in maintaininp the curront '
atfordability cantrols due to th~ evidenced lack of res~~l~a caused by cortain mevket eonditions.
Howover, it is possible ~hat new affordability rostri~Kior~s coulcl be neqotiated in return 3ar a
reiundinp nf the bond issue for oach project. Interest ratea have dacreased aince the oripinal
bond iasuo and therofore a retundin0 at a Inwer interest rate may be an incentive to increase
the terms and conditions of aft~rdability utilizinp the Housinp Autharity's current proqram.
ost F~nalvsis:
L~.~~~/~.u.LLL~i4~
A tota~ ~~f 48 unito could be lost ta conversion durinq the ten-year ptanninp penod wh;r•h
receive~:; multi-family tax oxempt bond financinp. Tha diroat repluc~mont throu~h ~1BtN
9
construction cnuld be accomplishod as part of ona pruject comarised of 250 units (20 of units
affordable undar a new tax oxempt bond issuol. The 48 units would be for very low incoma
tenants and be part of a mixed income p-~iect.
Cost of Oevelopment:
Ave. 750 sq. ft. units x 25~ units ~ 1£i7,540 sq, ft.
2U96 additional floor area (i.o., corridors) = 37,500 sq. ft.
Total building area: = 225,q00 sq. ft.
1) Construction cost: 225,OQ0 sq. ft, x S64.00 = S14,400,000
2) Soft Costs (1inancing costs, archit., c~ng.) = 2,835,000
3) Land cost, site aroa: 6 acres x 750,OQ0 a 4~ O.QOQ
Total replacoment cost = S21,735,000
The new constr~~ction replacement c~st is S21,735,000. Assuming land availability, medium
density xonine, a develo~er capable of achioving a Iqtter af creciit from an "A" rated londer and
suHicient ~yuity, this project could bo achieved. If bond financ~ng is obtained the project
ahould be self-sustaining with little or no additional subsidy by a public ppency. This is a
feasible alternative, howuver, moro co~tly and time cansuming in bringind ihe u~iits tn
completion than the preservation alternativo as discussed below.
,~g rv io
To preserve the 48 units in place, and to reduco the rent and occupancy income to correspond
to the Flousing Autiiority's corrdct policy, a bond rotunding could be used. The Ho~sihp
Authoriry could reissue the full bond emount at a lower interest rate with the cosi savinqs used
to ~educo rents and con4inuo affordability tor an additional 30 years. 7he Wousinp°Authority
has conductad one bond retundin~ to date for a 117 unit seniar housinp project which lawered
the intsrast rate from 7.596 tixed rate to 4.596 variable rato. The cost to the Housinp Autf-ority
is minimized with the owner payi~~p all issuance fees (up to 296 of the bond amountl from the
refundinp amount. This appears to be the most cost effectivo means to continue the
affonlability for these 68 units while revisi~g the tarms and conditions t~ achiove deeper
atfordability. This altarnative would bo based on tno IoOal authority to provide for a bond
refundinp. If prohibited wit!+in the bond documents, this option may be reviewed and a diract
subsidy ppproach used as discussed in projoct 1.
10
Project 7; West Anaheim Royalo
641 S. Beach Dlvd
G~naheim, Co 92804
Name/Address of Property Owner
Goldrich and Kest
5150 Overland Avo
Culver City, Ca 90231
Assistance Receivad:
Earliest Possible Change
from Low Iricome Use;
Total Numbor of Low Income
Unit~ that Could bo Lost:
Multi•Famiiy Tax Exempt Ravenue Bond
Financin~
March, 1999
20
Tho West Anahaim Royalo Praject differs from the other tax•6xempt bond projects as the
housin~ qualifies as a congre4ate caro facility for the elderly. The project was constructed in
1988 and consists of 1 QO units of which 20 are affordable under the State Boar@ and Caro
rate. Tho affordable rents ara the lesser of the Socia~ Socurity Index (SSI) Board and Care rate,
ar 9096 of SSI rate. Current affordable rents within the projent are 3660,00 per room with two
occupants per room (S330 per occupantl. If this project were to convert in March of 1999,
the loss of these units, which include cortain board and care services, would be difficult to
replace elsewht~re in tho City, Therefore, along with the Village Center project, this congregate
care facility shuuld bo a priority for preservation activity.
Risk of ~,Qnversion
The putential conversion of thns~ restricted units is lilcely to occw' due to the market demand
for care sarvices. It is possible to achievo doubla the rent received on the restricted units if
they were to convert to marE:et rate rents, i.e., S1,300 per room, 5650 per occupant monthly.
By doubling *.he rent to S 1,300 per unit for 20 units the gross operating incomo is increasod
by 512,800 per month. This croates a strung incentive to the owner to allow the expiration
of thd affordabilitv terms and conditinns under the regulatory agreement to occur.
11
i.ost Anaivsis
Renlac me
In order 4o replace 20 units af aoneregate care within the City, a lanci area of Ppproximatoly
ona acra wouid be needed. Assumin~ neighborhood support, the projoce could be 109°6
affordabie. Tha cost ta canstruct such project would be approximately as follows:
Ave. 600 sq. n. units x 20 units = '12,000 sq. ft.
~ 2.4Q0 sq. ft.
2096 additional floar area (i.e., corridors)
Total building area = 14,400 sq. ft,
1) Construction cost: 14,400 sq. ft. x 564.00 a S92'1,600
2- Sah costs (fiiiancing co~ts, arch., eng.) = 5250,000
3) Land cost, site arua: 1 acre x 5750,000 ° 5750.0 0
Total repiacement cost = S1,921,600
The new aonstruction replacament cost is 51,921,600 or 8J6,Ofi0 pe~ unit. Aqain, this
assumes land availability, devel~per interesc and community acceptance. Consideriitig those
vAriables and the high cost of naw construction, a ddep subsidy by a qublic agency wuuld be
required to raduce tho rants to the S65U per month affordabie rent ~evel now in placo in the
project. For oxample, with the 'cost to buiid" at S9fi,0A0 per unit the vent lovel to support this
debt, assuming a debt service avarage of 11596, i~ S810 per month. If a 5096 care, property
manapement and resorve fee i~ added t~ the minimum debt servico amount the rent increases
to 51,215. This is prior to ~eceivinp any daveloper profit which at 1296 would apain increa5e
tha unit rent ~esultinp in a rent of 51,360.
.•
7he rent neoded for the new Pro)ect as seen above repiicates the market rents for ti~e gxisti~g
project. Theretore, it would be more efficient to work with the existing pro~~ct to proserve the
20 units rather than co~struct 20 new units resultinp in the a~mo or additionaf ~ubsiAy
requirement.
P!~l~ation
P~esnrvation is the preferred altornative for this pr~ject as discussed above. The most likely
alternativo for preservation would be a bond refunding as discussed for 1'~ojects 2 throuph 6
if lepally foasible. Other alternatives may include a monthly subsidy or an up•front subsidy for
a specified period of time as discussed for P~aject 1. Sale of the projoct to a non•profit is also
12
.. ~.
an aiternativo, howover, a subsidy rr~ay still be necessary due to tho aosts associated with a ,
well run and managed congrogata care fac:ility. i
ill, en~al YSiS OF RESC~JRCES FOR P~ESERVATION
Accarding ta Soction C55831a)1811c), the Housing Element Amendm~nt stinuld idoncify public
and private nanprofit corporatinns which have lepal and managorial capacity to acquire a~d
manago assisted hausinq developrnents. Inclusion on this list should be based on a
corporation's expressian of intorest in acquiring and managing such projects,
Pul~lic Aaencv and ~lan Profit Corporatiqr~ I
The City of Anaheim operates an extnnsive variety of housing proflrams through thp Housing i
Authority and Affordab~e Housine Development psogram. In addition to existing Frograms, as 1
~ resaurco far preservation, the Community Dev9lopment Dapartment will includa the following ~
activities:
~ 1) Evaluation of lagal and procedural framework for presarvation of at risk units within the
City. .
?.) Identification and moniforing of threatenecl projects.
3) Analysis of factors that influence an owrer's deciaion tu terminate the operation of tho
units at risk ot converting,
' 4) Determination af tho feasibility af an entity eayuiring and preserving tfie units at risk cf
canversion.
5) Analysis of Federal, State and lacal financinl incentives available to deter the conversion
and assist with the acquisition and presorvation of units at risk of conversion.
6) Provision of tecF~nical assistance to devolopers, nonprofit corporaYions and residetlt cou~cils
interested in noflatiating the ~cquisition of units at riak of conversion.
In order ta ensure the effectivdness of this resource, it is the intent of the City to identify all
interested public agencies and nonprofit housinp corporatio~s that have IeAa! end manaA6rial
capacity to acquire and manafle assisted hausln~ developments. The followlnp QrouFs havo
bean included on the State Department of'HCD's list of entities intorested in Right of Frst
RRfusal program for Orange Coun4y:
1! H:O,M.E.S. Inc 1905 E. 17th St., ~1217
Santa Ana, Ca 92701
{714-836-6543
13
2) Twelv~ Pak Enterprises P.O. Box 544
Pasadena, Ca 91102
(g18i440•0969
3) H~~meaid 1330 S. Valley Vista Qr.
Qiamoncl 8ar, Ca 91765
(~14139G-9993
A) Soutt~ern Presbyterian Homes 1111 N. Brand Bivd., Ste 300
~ Glendale, C.a 91202
l818124"1-0426
5i G~Iden State Mobilehom~ 1479 Moreno Blvd., +0819
Owner~s Leag~~e, Inc. San Diaao, Ca 92110
1819)276-1621
6) Ralph F. Cunico 15107 Hwy 173
Hesperi~, Ca 52345
l61 g)389•2413
71 Flory, Olson & Van Osdel 1'i711 Slurtinp Ave., Ste 13
Riversid~, Ca 8~503
('7 t 4)887•54$4
A) CountV of Oranpe/5t. Vincent Do Psul 180 Cypnss "
Oranpe, Ca 92886
. 1714154~-5586
91 Zucluir Systoms 3911 Califani~ St.
5sn Uiey~. Ca 8211Q
18191487-7297
101 Jamba~s Housinp Corp. 17200 J~mbortt Rord, Sta O
Irv~ne, Co 8271~
{7141263•8ti78
14
~AY
In addit+on to these groups, there are presantly two cammunity based nonprotit housinp
devclopment corqo~ations operatinp in Anaheim which may have a~tronp interast and capacity
to acquire and manape subsidized housing and other housing at risk ot conversion. These
qroups include:
1) Oranpe County Commu~ity
Housinfl Corporation
1833 E. 17th St., ~te ~07
Santa Ana, (:a 9?701
17141558-8i B1
2) 5holter ior the Homeless
82~J1 We~tminster Blv~. Ste. 170
Westminster, Ca 92683
17141897-322 i
Whilo tho City ot Anaheim operatea its own Housinp Authbrity nnd implements fiousinp
proprams financed throuph the Anaheim Redevelopmcnt Aflancy, these povermm~ntal agencies
;gs well es tne City oi Anaheim) do not c~rrently own or operata any housin0 development.
-lowaver, contacts with other public apencies that ha~e an intetest in acquirinp and manaflin0
subsidizod housinp and other housinp at risk ~f conversion will ba conductod by the City.
Publi~.~~l.~~ ^nd _ ~bsidv Proarams
Undar the provisions ot the Low•Income Housinp Presorvati4n and Restdent Nomeownership
Act of 1 y90 {the Act1, ~he owners ot Isdoral mortpa0e aubsidized sNordabla hausinp interast~d
in continuing to operate ths h~usinp are antitlad to incantives quHicient to yiel~ eipht peresnt
ot tho pre:ervetion equity of the pro~act, limked by the tad~rol cost lim~ta an0 subj~ct to
sppropriations. Incentives availsbto includA rent fncroasea, incrsssts in S~ction ~8 contnct
ronts, sdAitionat Seetion 8 cs-tifir.atet, ~ccsss to ~xc~ss nservea, or reaiduol nceipu, 11Axibl~
subofdfes, or Section 241Id) insuraneo for eapkal improvemanta, oQuity taka~out loans undor
Seetion 2A1 p), end pos~ibl~ redirection ot Soction 236 interest r~d~uticm payment to ~~cond
rt-orsA~9e• ~se incsntives ~re nepotiated by tho ownar in4 th~ U.S. D~psKmsnt ot Mousinp
•nd Urban Osvefopment ond mu:t bt sut(icienc to cover tho annusl ~uthori:od return, d~bt
service on sny rshabilitstion loan, d~b+t servioa on the HU~ mortpape, o,~erotin0 exp~nsAS ond
adequate resarves.
Qwnera of focl~al mortOsao subsidiied ailordabls housi~ip int~ros;ad in a voluntary s,le to a
priority purchsser, f.e., tenant covncil, nonpro(it corpo~tion ur stst~Aocal ~gen .ry, esn triO~B~
1G
the av~ilability of HUU financial assistanco subjact to apFropriations. Throuph this approach
HUb must pravide assistance sutficiant tc enable acquisitfon at a purchnse price not proater
than the project's prosArvation value, to pay tl~e dob: servico on the mortpage, and debt t~ervice
on any rehab laan, to meat proJnct operating expense~ and adequate reserves and to receive
an adequate raturn on any cash invostment made to acquire the project. Priority purchaser..
have access to the following assistance, somo of which is unavailable to othor qualified
purchasers: 1) In.urance for financinp up to 95 porcent of the presorvation equity undor the
5ection 241(i) program; 2) Grants up to the Fresent value of the to~al uf projected published
tair marknt rents for Section S~existinp housing for the next tnn years; and 31 Roimbursamant
for certain transaction expensas.
The Low-Income Nousinp F'reservation and Rosident Fiamoownership Act of 1990 does not
cover Section 8 opt-outs and expirations, and owners retain tha decision whether or not to
remain in the propram afier receivinp an ofter from WUD to increase the contract rents up to
the 5ection 8 existing fair maiket rent.
Additional rosource~ available to aasist in praservinp units at risk af conversion include the
tollowinp:
1) t!Ql~.~n"~stment Pannershin <~ct_IHQMEI
?he City ot Anaheim expecta to receive 41,437,000 for tiscal yea~ 1992-93. To the
extont pormissible unde~ federal repu~ationa, the City is prepared to sllocate a ponfon af
this lundinp towatd preaervation of ANordable units. 7he use oi this resource would
requira'.nclusion oi e propram deacription for preservation durin~ tho fiscal Year in whitA
issi:tance i: anticipated. This lundinp levet is expscced to sontinue tor the fi~+A and tan-
year plonninp p~rlod but fs baaed o~ conpressional and sxecutive action and is thareforo
not guarantood.
2) Co munitv Davefooment Block Granc ICDB~l
Tf+o Cit~r of MahoEm is an entitlemont City and for tiscat year 1992•93 wil! receivo
i~,629,000 irom the todorsl povamment to implams~t this proprrm. Typicatly, srtsa
rocaivfnp finar-cisl sssiatancs include housinp rohabilibtian; public servie~; neiphba.hood
eublic tactlitfes improvam~nc~; citiz~n participation; ~nd administrAtion. Giv~n ths p~fority
sstablisl~ed in recont lepislstion tor tho pns~rvstion ot oNo~d~ble housinq IosinO aubsiAie:
,~i~d ~eatrictiona, it is t~ir to assume diet the C~BG propram will allow firwncinq to be used
~c
to presorva units at risk af conversinn. 7herefore, thi~ fundinp source could bg accessed
to preserve units at risk. This fundin~; source is similar to Nurt~ber 1 and is an entit~ement
which is ~ssantially a year-to-yeor allor,stion.
3! ~tial Section S Certiticalg~. and Rer~tal Vouchors
'~hrough the (:ity's Flousing Authority with fundinq provided by the fedRral government,
certificates nnd vouchers are provided for lovo income families and individuals. Thv
Housinp Authority may dir~ct rental ceitificates and vouchors towards proservinp units et
risk of co~version.
41 Hou~ins! Set•Asido Funds
The Analieim Redevolopment Apenay operates an active Housinp Snt-l-side propram. The
annual budget is approximatoly A4 million artd the agencY has expended its annual budpet
each year since the propram's inception in 1989. This housing tund is an appropriate end
allowablo source of funds to preserve units at risk of cunverxiun. Ane of the six proprams
established is entitled 'Aftordable HausinQ Incentivos'. This proflram, whiCh receives
approximately 5700,000 annually, could be utilized to address expiring afiordable housinA
units.
61 ~ ~w.lncomo Housinu Tax ~teQiu~~l
The availability ot ted~ral and atate tax crodits may assist replacemont housinp
afforAability or preservation of exiatinp housinp if substantial rehabilitation takes place.
The avallability of this rosource ia dependont upon continuinp lepislat'vo oxtdnsiona.
8) To Examot Bons) Fi~,p~ "
The Aneheim Housin~ Authorhy aa well as thd Counr/ of OranOe has the cap~city to feauo
multi-lami;y revenue bond~. The Anaheim Hou:inp Authoritv has recsntiy completed its
itrst refundinp bond issue which subatantially reduced the debt Rervice requ(rements for
a 117 unit aifordablo sanior citi:ens' spartment project.
It is antEcip.ted that tha Nousin0 Authority and County of Oranqe tthrouph pooled ~ond
isaues) wilt be activa in utili=inp thi= rasAUres to oHor incentivos for pnt~rvation ot
expirtng bond iasue unfts (refundin0) and s: sn economic incentive to roplac~ convsntiona{
financinp tor other unita st risk ot conversion.
17
7) @eLLd_E~.~
The Anaheim Housinp Autharity provides bond administration servi :e Im~nitorinp of
repulatory aflreoments) for a 1ee of 1/f3 of 196 of tha bond amount. This fee is usad for
staff and administrativo costs as woll as for affordable hou3inq development. The curront
reserve i$ estimated at 5300,000 during FY 1932-93.
8) Secti~n 8 Qaeratinn Rese~vg
The Housing Authority ~aceives administrative tunds to implement the Soction 8 prapram.
When a housing authority is wel~ manafled at an administrative cost less than tho amount
received from HUD, tlie housing authority may retain the excess amount in an operatinp
reserve account. A minimum balanr,e is required, but at certain timea the housinp
autl~ority utilizes the axcess reuerve for t~fi~ordablo housin9 dovalopment.
The omount available is difficult to establisli pivon rocent administrativo costs incurred by
the Housing Authority in moving to a now building location. As funda arc~ available, this
resource may be made av~ilablo to preservo units at risk of conversion.
IV. Q~A,NTiF1EQ OBJ . IV
Accordinq to Sec4ion 65583181, localities are required to establish in their housinp elements
quantified objectives for the maximum number ot housing units that can be constructed,
rehabilitated and annserved over a five-year time frome. Tho objective fa~ units to be
con~erved ahould include a subtotal tor the number nf at risk units developed pursuant ta ~
Sectlon 8S5831a1181(AI.
.~
Durinp the cunent tive•yuar planninq period, Juty 1989 to J~rIY 1994, no houainQ projeata an
at risk ot convorsion and, therefore, the number ct conservation units is limited to other
activitiea, Flow~ver, dur~np the second tive•year plnnniny period, seven projects, oa Ifstsd in
tabls 1, arg at risk ot convertinp to non•effordable housinp. It stl ceven proJecta converted, 168
sffordable unhs woutd be lo~st. It i: the City's ob{ociivo to rstain ol! 188 units as ~Nordabla
housinp throu0h reaources and activities prevfoualy discusaed. Where preservati~n is tound ta
be fessiblo, the City wifl actively pursue ~nd tachnlcally assfat in rntaininfl theaa oifordable
units.
t8
n 'rt' ~~.~.L~
Incomo Group Construct Rehab' Conserve'
Vory Low lup to 60% median incomol 1,4fi9 690 7
Low (5096 - 8096) 2,044 510 16
Moderate l80°h - 12096) 1,Ei34 3,500 36
Above Moderate lover 120°k1 2,865 3,500 ZD
1) The 1989 Housing Element states that 14,300 housing units in the Cit~ are in need of
rehabilitation, oi which 7,000 are occupied by lower income households. The City's objectives
are less than tho prajected "need" based on availability of financiai resourcas necossary to
accommudate tho rehabilitation of 14,300 housinp units. Using CDBG and Redevelopmont
Housin~ Set•Aside funding it is anticipated that $1.5 million couid be oxpandad annually tor
rehabilitation of very luw, law and moderate inccme occupiad units. This results in 57,500,000
tnr fivo years. AssuminA an avera~o rehabilitatio~ loan of 525,000, 3Q0 units could be
rehabifitatod using publ~c resources for low and very low income nccupied units. The private
markut may provide financing for the moderate incume uniis in noed of ~ehabilitation. This
assistance would bo provided in the torm of home equity loans. This numbor is difficult to
quantify since the City does not typicolly monitor this activity. The 7,000 units represents all
non-low income units presonted in the 1989 Housinp Element with 5096 allacated toward
moderata and 50% toward obave moderate.
!n addition to CDBG end Housinp Set-Aaide proprams, the Community Oevelopment Department
will uso Rentat Rehabilitation tundinp os HOME tunds from tho taderal govamment itS availa6le
to accomplish substantial Rehabilitation of lar~e aeanrr+ent projects. Combined with other
svailabie resources, tha ret~abilitation oi throe major projects which inciude Westchestor Square,
.leiireyLy~ne and South of Romneya, may tesult in app~oximbt9ly 800 unlt5 cahabilitated
durinp the planninfl paricd and occupied by very low and (ow income houaehold$. Of the 900
uni!s, G076 cre allocated toward very low and 40~6 tow~rd lower incomo hou:eholCs.
2) The u~its reprosented under the canservation Column are enticipated to ba conserved throuph
tha City's naiphborhood preservation activities, houso "move-ons' and relocations, and
nepotiations and a0raements pertainlny to condominium conv9rsions.
1y
~
V. ~~VF,~.QPMENT OF PPC`GRAMS FOR PRESERVRTION
According to Section 655831c11B1, tho H~usinA ~lement Amendmont should include or reforonce
proprams to preserve the low income use of at rsk projocts listed in the ten•year invantary, with
spocific iocus on units at risk dur9na the five-year plann?ng period.
Tho 198J Nousing Element, pape 48, lists housinp proprams by policy area 1989 -~ 994. 7he
propram3 currently listed which apply to preservation of assisted units includ~ Policy Areas II and 111
with a new Foliay Area IV added to spocifically address proservation. Praservation proflrams under
Policy Areas il and III are raprinted in the foilowi~g table for o~se o1` roforence.
20
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VI. SUMMARY
The two five-ygar pe~io~s of analysis for the City of An~heim's Wousinp Elemont Amandment are July
1 h89 -,lune 'I 994 and July 1994 - Juno 1999, Durinp this time period there are no units at risk of
convertin~ to non•iow income u~o during 4he first five-Year period and seven (71 projects at risk durinp
tho secand five-year period. Only one of tl~e sevon projects has doep affordability tl~rou0h the
pravieton of 100 Section S certificates i~ conneation with a 100 unit senior housinp project - Village
Center. 7he Section 8 contract renewal is duo in August of 1994. It appears that there is sufficiflnt
economic inoentive for the property ownor to renow the contract for anuther tive-yea~ period oiven the
compeLitiveness of market rate senior housinp in Anaheim.
Th6 other six projects consist of multi•family bond issues with expirin0 repulatory agraements. The
current affordable rentg, with the exccption of Wost Anaheim Royale (a conorepaxe care fiacilityl, are
very close to the market rate rents due to previous tax law affordab~~~ty requirements (less restrictive
than currAnt lawl. These units may be preserved through a bond refundinp or other incentive program.
Since many of these unit~ were constructed under a c~unty pooled bond issue, it is feasible that
another pootod issue could be accamplished ta rofinance these projects while raquirin~ deeper and
InnOer term affordability.
The West Anaheim Rnyale project wh!ch provides congregate care to tho elderly could be a sipni4icant
ioss to Anaheim's elderly housirta stock. There appears to be a financiai incentive to cor~vert to market
rate units in March of 1999. 7his project shauld be closely mnnitnred for possible conversion, and
appropriete actions takvn by the CiN to deter conversion throuph 4ho proprams listed in this
amendmeni to the Housinp Element.
23