City of Culver City, California
Agenda Item Report
Meeting Date: 06/13/2011 Item Number: J-2
CITY COUNCIL/REDEVELOPMENT AGENCY BOARD AGENDA ITEM: 1) Selection
of Habitat for Humanity of Greater Los Angeles for the Development of the
Agency-Owned Site Located at 4044-4068 Globe Avenue for Low and Moderate
Income Ownership Housing; and 2) Direct Staff to Negotiate the Terms and
Conditions of an Exclusive Negotiation Agreement for the Preparation and
Execution of a Disposition and Development Agreement.
Contact Person/Dept.: Tevis Barnes/
John Fisanotti
Phone Number: (310) 253-5782
(310) 253-5767
Fiscal Impact: Yes [X] No [] General Fund: Yes [] No [X]
Public Hearing: [] Action Item: [X] Attachments: [X]
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification:
(USPS) All Property Owners and Occupants Within a 500 Foot Radius of the Site
(approximately 200 recipients) (05/23/11 and 06/06/11); (E-Mail) Meetings and Agendas –
City Council (06/08/11); Meetings and Agendas - Redevelopment Agency
(06/08/11);Posting of Site (05/23/11)
Department Approval:
Sol Blumenfeld: (06/01/11)
Agency General Counsel Approval:
Murray Kane: (06/02/11)
Chief Financial Officer Approval:
Jeff Muir (06/08/11)
City Manager/Executive Director Approval:
John Nachbar (06/08/11)
RECOMMENDATION:
Staff recommends that the City Council and Culver City Redevelopment Agency
Board (Agency Board):
1. Select Habitat for Humanity for Greater Los Angeles (Habitat) for the
development of 4044-4068 Globe Avenue (Globe Property) for low- and
moderate-income ownership housing; and,
2. Direct staff to negotiate the terms and conditions of an Exclusive Negotiation
Agreement (ENA) for the preparation and execution of a Disposition and
Development Agreement (DDA).
BACKGROUND:
In 2005, the Culver City Redevelopment Agency (Agency) purchased the Globe
Property from the California Department of Transportation (Caltrans) for $3.1 million.
The properties had been acquired by Caltrans for the purpose of widening the 405
Freeway. Pursuant to Government Code Section 54235, Caltrans was (and
remains) required to dispose of surplus residential property at less than fair market City of Culver City, California
Agenda Item Report
value to a housing entity that will use the property for low- and moderate- income
housing purposes. Consistent with the requirements of California Redevelopment
Law, Agency Housing Set Aside Funds were utilized to purchase the Globe
Property.
The proposed development is consistent with the Agency Board approved
Comprehensive Housing Strategy (CHS)
1
and facilitates meeting the Agency’s
obligation to expend the Housing Set Aside Fund and the City’s obligations under
the Regional Housing Needs Assessment (RHNA).
2
DISCUSSION:
Request for Proposals
On November 22, 2010, the Agency Board authorized the release of a Request for
Proposals (RFP) to solicit qualified housing developers for the Globe Property. The
RFP sought developers to develop, market, and monitor quality ownership housing
designed to complement the existing surrounding neighborhood. The RFP
requirements include demonstrated experience in multi-family ownership housing
projects. Once identified, staff recommends the Agency and City enter into an ENA
with the selected developer for the purpose of negotiating a DDA for the purchase
and development of the site. The RFP submission deadline was 5:00 pm January
20, 2011. The Agency received proposals from the following two developers:
• City Ventures
• Habitat for Humanity of Greater Los Angeles
Proposals were evaluated utilizing the below criteria. The maximum total points a
proposal could receive was 100.
• Developer Experience 25
• Project Financing: Feasibility 25
• Project Design and Neighborhood Consistency 20
• Outreach 5
• Marketing/Selection/Monitoring 25
• Total points 100
Community Development Department staff evaluated the proposals and
recommends the City Council and Agency Board select Habitat for Humanity of
Greater Los Angeles based upon the following:
3
1. Extensive experience with developing ownership housing for and working with
low- to moderate-income first-time home buyers; City of Culver City, California
Agenda Item Report
2. Strong experience with community engagement and outreach which includes
securing community partners and includes inviting local residents to be a part of
the homebuyer selection process by serving on the Family Selection Committee;
3. Extensive homebuyer selection process which requires income eligibility and
credit worthiness, background screening, housing needs assessment, in-home
evaluations, and the requirement of 500 hours of sweat equity by the homebuyer
in constructing their own home;
4. In-house mortgage lending program where Habitat acts as the lender;
5. Internal home buyer education program;
6. Commitment to eco-friendly and sustainable building technologies; and,
7. Property management and Homeowners’ Association development experience.
Proposed Project
The proposed project is 12 affordable townhome units (6 duplexes) for ownership.
The area is zoned R-2 and each lot accommodates one duplex. The townhome
driveways retain as much street parking as possible, and the Proposed Project
maintains the existing street trees. The townhomes will have two different floor
plans, 4 bedrooms – 2.5 bathrooms, or 3 bedrooms – 2.5 bathrooms. All homes will
be two stories with the living space and a 2 car tandem garage on the first floor, and
the bedrooms on the second floor. One of the units will be fully accessible with a
downstairs bedroom and full bathroom. All homes will incorporate energy saving
appliances and will be constructed using sustainable materials and environmentally-
friendly building practices. The homes will be built to the LEED Silver residential
standard and will be at least 10% more efficient than Title 24 requirements. A
Tentative Tract Map and a Comprehensive Plan will be processed as part of the
entitlement process.
Six of the homes will be sold to low-income buyers (50%-80% Area Median Income)
and six of the homes will be sold to moderate-income buyers (less than 120% of
Area Median Income). The location of the low- and moderate-income units will be
mixed throughout the development. The low-income buyers will purchase the
property using a zero interest loan provided by Habitat. The moderate-income
buyers will be provided a list of lenders working with Habitat and will also receive
assistance with the mortgage lending process. Each home will carry a 45-year
affordability restriction (per California Redevelopment Law).
If selected, Habitat will be the building contractor for the project. As the City Council
and Agency Board may be aware, Habitat is noted for utilizing volunteer labor in the
construction of homes. Additionally, the families selected to purchase the homes will
be required to contribute 500 “sweat equity” hours toward the construction of their
home and/or other Habitat for Humanity homes.
Affordability Mix
City of Culver City, California
Agenda Item Report
The affordability mix of the proposed Habitat Globe Project will include six low-income
units designated for households at 50%-80% of area median income (AMI) (up-to
$59,560 for a family of four) and six moderate-income households at 81%-120% of AMI
(up-to $75,600 for a family of four). Each of the submitted proposals was reviewed by
the Agency’s financial analyst, Keyser Marston and Associates (KMA). The KMA
analysis of the proposed Habitat Globe Site Project did not note any financial concerns,
however, as initially proposed by Habitat, the six units reserved for the lower level of
affordability were proposed to be sold to those households earning no more than 60%
AMI. This is just 10% above the defined level for low-income households (defined 50%
to 80% AMI). At this level, KMA expressed concern about a household’s ability to fund
long term maintenance, and to fund unexpected and unbudgeted emergency repairs.
Habitat has since agreed to modify certain terms from the initial proposal to restrict
eligible households for the lower level units to households earning 50% to 80% AMI to
address the above concern. In addition, the City and Agency will also take the following
steps to assure each future Globe Project homeowner is a successful homeowner and
properly maintains their home.
4
• Staff will participate on the screening panel to review all purchase applications;
• The Affordability Covenant Agreement will require the Agency be notified of both
homeowner delinquency and default on mortgage payments and Homeowners
Association (HOA) dues;
• The City and Agency will have first right of refusal to purchase any home that
may go into foreclosure. The home would be resold to another income eligible
up-to-moderate income household;
• The City and Agency will have a right to attend all HOA meetings and to receive
notification of all scheduled meetings and their minutes;
• The City and Agency will have final approval of all the project design and
construction materials to assure quality construction that will be durable and
result in the long-life of all building systems;
• The proposed project will be linked to the Neighborhood Preservation Program
(NPP) which provides interior and exterior rehabilitation grants to up-to-moderate
income households to help prevent deferred maintenance;
• All subsequent buyers must be income eligible up-to-moderate income.
Additionally, Habitat is recommended as the developer for the Globe Project based
on their extensive experience screening for readiness and educating first-time home
buyers the responsibilities of homeownership and neighborhood expectations.
FISCAL ANALYSIS:
The total project budget is $3,708,000. Habitat is seeking the donation of the
property and $158,550 per unit for each low income unit, and $47,100 per unit for
each moderate income unit. Habitat is proposing that the units be split equally City of Culver City, California
Agenda Item Report
between moderate and low income buyers (6 each). So the total amount of subsidy
requested from the City and Agency is $1,233,900. Habitat will draw project funding
from three other sources: 1) Corporate/Faith Sponsorship, 2) the Federal Home
Loan Bank Affordable Housing Program (AHP) Program, and the SHOP program.
Corporate/Faith Sponsorship are grants funds that are awarded Habitat. These
sponsors also will participate in building the homes. The Federal AHP is a down
payment assistance program that provides $20,000 per unit toward the purchase of
the home. One fifth of the loan is forgiven each year for five years. The SHOP
program is a US Department of Housing and Urban Development (HUD) funded
grant that is administered through Habitat for Humanity International. The program
funds projects with a “self-help” component (the future buyer helps build their home).
A summary of the proposed source of funds for the project follows:
Corporate/Faith Sponsorship $692,700
Mortgage Revenue $1,511,400
Affordable Housing Program $180,000
Culver City/Redevelopment Agency $1,233,900 (plus the land)
SHOP $90,000
Total $3,708,000
The Agency purchased the Globe Avenue Properties from Caltrans in 2005 for $3.1
million. The Housing Set Aside Fund (Account Number 48297410.613100) will be
used to support the development of the proposed Globe Avenue project. At the
beginning of Fiscal Year 2010/2011, there was a little more than $17,000,000 of
Housing Set Aside Funds available. The Housing Set Aside Fund cash flow over the
next five fiscal years can support the proposed Globe Avenue project. The proposed
project will require various City and Agency approvals and extensive outreach to the
surrounding neighborhood. If approved, during the ENA negotiation process, KMA
will review the project pro forma and site plans to determine the financial viability of
the proposed project and the approximate amount of City/Agency financial
assistance.
ATTACHMENTS:
1. Copy of the Globe RFP
2. City Ventures Proposal
3. Habitat for Humanity of Greater Los Angeles Proposal
MOTION:
City of Culver City, California
Agenda Item Report
That the City Council and Agency Board:
1. Select Habitat for Humanity of Greater Los Angeles as the Developer of
4044-4068 Globe Avenue for Low and Moderate Income ownership housing;
and
2. Direct staff to negotiate the terms and conditions of an Exclusive Negotiation
Agreement for the preparation and execution of a Disposition and
Development Agreement.
NOTES:
1.
In March 2008, the Agency Board reviewed and approved the implementation of Years 1-2 of the
Comprehensive Housing Strategy (CHS). The CHS intends to improve the City’s affordable housing
stock and meet housing production requirements under the Regional Housing Needs Assessment
(RHNA) through the use of Redevelopment Agency Housing Set Aside Funds. The purpose of the
Housing Set Aside Fund is to “preserve, improve and increase the supply of affordable housing”
(Health and Safety Code Section 33334.2(a)).
Culver City’s RHNA requirement over the next 7 years is 504 housing units, with 294 units designated
for very-low, low and moderate income households.
The CHS is based on the concept of mixed-income, low-density, scattered site affordable housing
developments. Based upon the RHNA requirements, the City must annually develop approximately
17 units of very-low income, 10 units of low-income and 11 units of moderate income housing. During
the last RHNA cycle, the City only produced 29% of its allocation of 650 units. Since 2000, the City,
on average, only creates 8.1 units of multi-family housing per year and has only created twenty-three
(23) units of affordable housing.
Regional Housing Needs Assessment Goals for Culver City
Number
of Units
Income Category % of Area
Median
Income*
Max. Income
Limits+
129 Very-low 50 $$41,400
80 Low 80 $$66,250
85 Moderate 120 $$75,600
211 Above Moderate
(Market)
Above 120 Unrestricted
*2010 Los Angeles Median Income = $63,000
+Income Limits based upon a household size of four (4) persons
2.
Under RHNA, over the next seven years, the City must create 504 units of housing with 294 of those
units being designated for very-low, low and moderate households. The Agency-owned site located at
4044-4068 Globe Avenue is one of three sites identified under Years 1-2 of the CHS .
The housing production sites approved for implementation under Years 1 -2 of the CHS are depicted
in the chart below. These sites have the potential to yield 73 units which include 56 units designated
for very-low, low and moderate income households. On July 26, 2010, the Agency Board approved
an Affordable Housing Agreement for the development of the 4043 Irving Site. This project will yield
28 units of housing with 12 units of affordable housing. On March 21, 2011, the Board approved a
Disposition and Development Agreement (DDA) for the development of 32 units of very-low, low and
moderate income affordable housing units and 10,700 sq/ft of commercial space with Los Angeles
Housing Partnership. City of Culver City, California
Agenda Item Report
CHS – Years 1 – 2
SITE UNITS HOUSING TYPE AFFORDABILITY
4044-4068
Globe
Avenue
12 Townhomes/
Ownership
8 moderate
4 low
4043 Irving
Place*
28 Rental Housing
Units
16 market
9 moderate
3 low
11042-
11056
Washington
Blvd.
33 Mixed-use/Rental 12 moderate
6 low
14 very low
1 manager
Total 73 16 market
29 moderate
13 low
14 very low
*Replaces 4075 Lafayette
3.
Habitat for Humanity International is the largest non-profit home builder in the United States. Its most
noted volunteer and spokesperson is former President Jimmy Carter. Habitat was formed on July 1, 1990
and has constructed and rehabilitated over 360 homes in Los Angeles County and 300 homes
internationally. Based on a philosophy of involving the local community in their projects, Habitat engages
over 10,000 volunteers annually. Habitat has raised $30 million dollars in private donations and
sponsorships and been awarded $50 million dollars in Federal, State and local funding. Currently, they
hold approximately $18 million in assets. Uniquely, Habitat also acts as a mortgage lender and provides
in-house no-interest mortgages to very-low and low income home buyers. Through their in-house
mortgage lending program, 200 mortgages have been issued with a default rate of less than 1% within
the past 20 years. The revenue from these loans is use to fund additional loans. In 1995 and 2007,
Habitat hosted two Jimmy Carter Work Projects, the marquee annual building event for Habitat for
Humanity International, drawing thousands of people from around the world into greater Los Angeles to
build affordable homes. In 2000, Habitat, created the Hollywood for Habitat for Humanity program where
celebrities, athletes, and entertainment industry employees build homes locally and internationally.
4.
Homeownership at all income levels creates wealth and stability for the homeowner and creates strong
communities. There is limited information that supports low-income homeowners inability to maintain their
homes and there are numerous examples of successful homeownership projects which include very-low
and low-income homeowners throughout California.
MEETING DATE: 06.13.11
AGENDA ITEM: CITY COUNCIL/REDEVELOPMENT AGENCY BOARD
AGENDA ITEM: 1) Selection of Habitat for Humanity
of Greater Los Angeles for the Development of the
Agency-Owned Site Located at 4044-4068 Globe
Avenue for Low and Moderate Income Ownership
Housing; and 2) Direct Staff to Negotiate the Terms
and Conditions of an Exclusive Negotiation
Agreement for the Preparation and Execution of a
Disposition and Development Agreement.
ATTACHMENTS
Pages
1. Copy of the Globe RFP 1-19
2. City Ventures Proposal 20-72
3. Habitat for Humanity of Greater Los Angeles Proposal 73-148