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AHA2005/06/07 ANAHEIM, CALIFORNIA ANAHEIM HOUSING AUTHORITY MEETING JUNE 7, 2005 The Anaheim Housing Authority met in regular session in the Council Chambers of Anaheim City Hall located at 200 South Anaheim Boulevard. PRESENT: Chairman Curt Pringle, Authority Members: Richard Chavez, Lorri Galloway, Bob Hernandez and Harry Sidhu STAFF PRESENT: City Manager David Morgan, City Attorney Jack White, City Clerk Sheryll Schroeder. A copy of the agenda for the meeting of the Anaheim Housing Authority was posted on June 3, 2005 at the City Hall outside bulletin board. Chairman Pringle called the regular meeting to order at 5:16 P.M. for a joint session with Anaheim Council and Anaheim Redevelopment Agency. ADDITIONS/DELETIONS TO THE AGENDA: None PUBLIC COMMENTS: No comments offered during the joint Council/Redevelopment Agency/Housing Authority public comment session related to the Anaheim Housing Authority. Following public comments, Chairman Pringle recessed the Housing Authority at 5:49 P.M. to consider the Redevelopment Agency agenda, and reconvened the Authority session at 5:56 P.M. CONSENT CALENDAR: Chairman Pringle removed Item No.5 for separate discussion. Authority Member Hernandez moved to approve the balance of the Consent Calendar, seconded by Authority Member Sidhu. Roll call vote: Ayes - 5; Chairman Pringle, Authority Members: Chavez, Galloway, Hernandez and Sidhu. Noes - O. Motion carried. 6. Approve and authorize the Executive Director to execute a Cooperation Agreement with the City and the Redevelopment Agency for the purpose of acquiring land for future housing projects (OCTA Crescent and Wilshire remnant housing parcels) (related to Agency Item #3 and Council Item #23). 7. Approve minutes of the Authority meeting held April 26, 2005. ANAHEIM HOUSING AUTHORITY MINUTES June 7, 2005 Page 2 END OF CONSENT CALENDAR: 5. Approve and authorize the Executive Director to execute the Disposition and Development Agreement with Habitat for Humanity for the purpose of developing affordable housing. Elisa Stipkovich, Community Development Director, reported the Disposition and Development Agreement was to sell a parcel of property on Julianna Street the Housing Authority had owned for some time. The developer, Habitat for Humanity, would be obligated to build four condominiums which would be sold to very low income families required to contribute sweat equity in order to qualify under Habitat for Humanity guidelines. In addition, the Housing Authority would fund a portion of the fees and any environmental clean-up work necessary on the site. She explained the households would have to purchase the property through a selection process that Habitat for Humanity was involved in and one of the Community Development staff members would sit on the committee. Resale controls on the property require it to remain affordable for 60 years and after 60 years of compliance, Ms. Stipkovich indicated Habitat would not have to repay any of the Housing Authority's land costs. Chairman Pringle asked if Orange County Transportation Authority parcel nine or other parcels in single family neighborhoods could be considered for similar development. Ms. Stipkovich indicated staff would take another look at the OCTA parcels to determine if any were appropriate for a program such as this. Authority Member Chavez noted it had been 13 years since the City had worked with Habitat for Humanity and he concurred in looking for additional sites for similar projects with the organization. Authority Member Chavez moved to approve Item 5, seconded by Authority Member Galloway. Roll Call vote: Ayes - 5; Chairman Pringle, Authority Members Chavez, Galloway, Hernandez and Sidhu; Noes - O. Motion Carried JOINT PUBLIC HEARINGS: At 6:00 P.M., the Anaheim Redevelopment Agency and the Anaheim City Council were reconvened for a joint public hearing with the Anaheim Housing Authority. 8. A joint public hearing to consider an Amended and Restated Cooperation Agreement between the Anaheim Housing Authority, Anaheim Redevelopment Agency, and Anaheim City Council for affordable housing on South Vine Street between East Broadway and East Santa Ana Street. Approve and authorize the Executive Director of the Housing Authority to execute a Cooperation Agreement with the Redevelopment Agency and the City to acquire properties for future affordable housing on South Vine Street between East Broadway and East Santa Ana Street. Elisa Stipkovich, reported Item 8 was an amendment to a cooperative agreement between three entities, the Housing Authority, the Redevelopment Agency and the City Council. She explained the Redevelopment Agency had been acquiring properties on the site on South Vine Street between East Broadway and East Santa Ana Street over the last couple of years finalizing the ANAHEIM HOUSING AUTHORITY MINUTES June 7, 2005 Page 3 acquisition process in October 2004. The Housing Authority was the entity to ultimately own the property acquired for the purpose of constructing very low income multi-family rental housing. She remarked the City had an exclusive right to negotiate with Mercy Housing and had been working with them for some time and the amendment was to allow additional funding, if needed, to go into the project. She explained if extraordinary costs were incurred in the development of this project, $700,000 of HOME funds and $1.4 million of Redevelopment set aside monies would be added. In addition, the property was to be conveyed to the Housing Authority and approval was requested of a Disposition and Development Agreement between the Housing Authority and Mercy Housing. The Agreement would authorize a long-term ground lease to Mercy Housing to develop 60 units of very low income housing for families contingent upon their receipt of tax credits being allocated in July 2005. Ms. Stipkovich further stated if extraordinary costs were incurred and additional funding needed, the agreement authorized the first $350,000 to be taken from the developer fee to be repaid out of cash flow, and authorized the additional funding up to $2.1 million, if necessary, to be put in the form of a loan to be paid back over the 55-year period. Ms. Stipkovich indicated the total cost for the Redevelopment Agency both for land, demolition and relocation was approximately $3.4 million which included some interest costs on the source of funding for the acquisition and if the $2.1 million was needed, the total would reflect $5.5 million for the project. The Community Development Director recommended approval of the amendment to the Cooperative Agreement and also approval of the Housing Authority Disposition and Development Agreement with the precaution included in the agreement that the Housing Authority would have the right to modify plans and specifications to insure cost containment. Authority Member Sidhu asked why the cost increased from the $700,000 originally estimated to $1.4 million for the project. Ms. Stipkovich did not feel the costs had increased but that the request for additional funding related to the developer's level of confidence in the cost estimate used by Keyser Marston, the City's real estate economist who prepared the estimate. Mercy Housing was concerned that the estimate was too low and costs were difficult to project due to the fluctuation in commodities and labor. In exchange for agreeing to additional funding if needed, Ms. Stipkovich requested the City have the ability to bring the project in as reasonable as possible to which the developer agreed. Authority Member Sidhu questioned whether other bids were received and if not, why the exclusive contract with Mercy Housing. Ms. Stipkovich indicated the City had been working with Mercy Housing for a multi-family project in West Anaheim but due to changes that had occurred, the site was no longer able to accommodate multi-family units. Rather than try to change the overlay zoning for that site, the City indicated they would work with Mercy Housing to locate another suitable site in the City. Authority Member Sidhu asked how the City would know if reasonable costs were received for the 60 units. Ms. Stipkovich indicated this would be an open book project, the City would be reviewing every subcontractor, would work with Mercy Housing on the design development drawings to go out to bid and get on-going cost estimates during the process. Authority Member Sidhu asked what the developer would receive to build the project and Ms. Stipkovich replied Mercy Housing would receive $1.4 million. She indicated she had discussed reducing the developer fee when the costs increased from $700,000 to $1.4 million and Mercy Housing had preferred not to do so at the time. Authority Member Sidhu stated he did not object to Mercy Housing as the developer but preferred a competitive bid process to get the best cost for the City. Ms. Stipkovich indicated ANAHEIM HOUSING AUTHORITY MINUTES June 7, 2005 Page 4 she was recommending approval of the agreement due to the time frame for the State tax credit allocation in July as there would not be adequate time to seek other proposals at this point. Chairman Pringle opened the public hearing. Ben Phillips, Regional Associate Director for Mercy Housing, stated their mission was to provide quality, affordable, program-enriched housing specifically for families who had very low incomes. As to the reason for additional funding for this project, Mr. Phillips pointed to the impact booming economy in China had on construction materials and the impacts of the war in Iraq, as well as increased workers compensation insurance. Because of those increased costs and Mercy Housing's conservative cost estimating practices, the firm had come to an agreement with the City which put control over the cost of the project as much in the City's hand as in Mercy Housing with the total amount being capped and any dollars beyond that amount would be at the risk of Mercy Housing. Scott Darrell, Director of Kennedy Commission, reported that many members of the community were present during the earlier workshop on affordable housing and asked that he express their support for this project. With no other comments offered, Chairman Pringle closed the hearing. Authority Member Hernandez indicated he was pleased with the Mercy Housing work product and felt the final negotiations were inventive and showed the commitment on both parties to come to agreement toward providing affordable housing without imposing constraints on building contractors. Authority Member Chavez thanked staff and Mercy Housing for coming to agreement and moved to approve the Amended and Restated Cooperation Agreement and to authorize the Executive Director to execute the Cooperative Agreement with the Redevelopment Agency and the City. Chairman Pringle remarked that he might not have been supportive of this project if it was not for the innovative elements drafted by Ms. Stipkovich which allowed the City greater oversight as to cost containment. He pointed out over $5 million of property tax dollars would be invested in this single project for 60 units and was necessary for the very low income families but that Council should ensure these kinds of opportunities were available for people all across the housing spectrum. Authority Member Sidhu confirmed that if the tax credit allocation was not received on this go- around, the entire project would go out to bid. Roll Call vote: Ayes - 5; Chairman Pringle, Authority Members Chavez, Galloway, Hernandez and Sidhu; Noes - O. Motion Carried 9. Approve and authorize the Executive Director of the Anaheim Housing Authority to execute the Affordable Housing Agreement with Mercy Housing California, XXVIII for the development of affordable housing. ANAHEIM HOUSING AUTHORITY MINUTES June 7, 2005 Page 5 Council Member Galloway moved to approve Item 9, Council Member Sidhu seconds. Roll Call vote: Ayes - 5; Mayor Pringle, Council Members Chavez, Galloway, Hernandez and Sidhu; Noes - O. Motion Carried Adjournment: There being no further business, Chairman Pringle adjourned the Anaheim Housing Authority Meeting at 6:25 P.~ ~er, CMC Secretary, Anaheim Housing Authority