BURBANK REDEVELOPMENT AGENCY
Tuesday, September 23, 2003
AGENDA
CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE
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5:00 P.M. CLOSED SESSION IN CITY HALL BASEMENT LUNCH ROOM/ CONFERENCE ROOM.
a. Conference with Legal Counsel � Anticipated Litigation (Agency as possible plaintiff):
Pursuant to Govt. Code �54956.9(c)
Number of potential case(s): 2
b. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Community Development Director/Susan M. Georgino.
Property: 3606 and 3614 West Magnolia Boulevard and 934 North Hollywood Way at the corner of Magnolia Boulevard
and Hollywood Way (Fischer); 920 North Hollywood Way (Wallace).
Parties With Whom Agency is Negotiating: Kenneth Fischer 2313 West Burbank Boulevard, Burbank, California and
Bruce W. Wallace, 1430 North Niagara Street, Burbank, California.
Terms Under Negotiation: Purchase of Properties (Price and Terms of Payment).
c. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Community Development Director/Susan M. Georgino.
Property: 700 South San Fernando Boulevard (Waisler); 206 East Cedar Avenue (Owens).
Parties With Whom Agency is Negotiating: Max and Mariam Waisler, 1565 Reeves Street, Los Angeles, CA 90035,
Craig and Linda Owens, 837 University Avenue, Burbank, CA 91504.
Terms Under Negotiation: Price and Terms of Payment.
d. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Community Development Director/Susan M. Georgino.
Property: 700 South San Fernando Boulevard; 704-722 South San Fernando Boulevard; 206 East Cedar Avenue.
Parties With Whom Agency is Negotiating: Mark Buckland, The Olson Company, 3020 Old Ranch Parkway, Suite 400,
Seal Beach, CA 90740.
Terms Under Negotiation: Price and Terms of Payment.
e. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Community Development Director/Susan M. Georgino.
Property: 221 North Third Street (Ben�s Deli Restaurant)
Parties With Whom Agency is Negotiating: Behzad Shiralian, 271 East Orange Grove Avenue, Burbank, CA 91502
Terms Under Negotiation: Purchase of Property.
f. Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Community Development Director/Susan M. Georgino.
Property: 301 North San Fernando Boulevard (Former Crown Bookstore).
Parties With Whom Agency is Negotiating: Len Borden, Roberts Department Stores, 3002 Midvale Avenue, Suite 208,
Los Angeles, CA 90034
Terms Under Negotiation: Purchase of Property.
When the Agency reconvenes in open session, the Agency may make any required disclosures regarding actions taken in Closed Session or adopt any appropriate resolutions concerning these matters.
6:30 P.M.
INVOCATION: Angie Zyganewicz, Intern, First Presbyterian Church.
The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted under the
Constitution.
FLAG SALUTE:
ROLL CALL:
JOINT PUBLIC HEARING WITH THE CITY COUNCIL:
1. DISPOSITION AND DEVELOPMENT AGREEMENT FOR THE PEYTON-GRISMER REVITALIZATION PROJECT:
The purpose of this report is to provide information to the Redevelopment Agency Board (Agency) and Council to consider a Disposition and Development Agreement (DDA) between the Agency and the Burbank Housing Corporation (Nonprofit). The proposed DDA conveys via a lease, ten Agency-owned residential buildings located at 1801, 1807, 1811, 1813 and 1815 Grismer Avenue; an unimproved property at 1819 Grismer Avenue; 1729A, 1729 B and C, 1731, 1733 and 1735 Elliott Drive (Property) to be rehabilitated and operated by the Nonprofit as a mixed-income residential project with an affordability component for very low-income and lower-income persons.
The Peyton-Grismer neighborhood has been considered for a number of years as one of several blighted neighborhoods within Burbank characterized by individual buildings suffering from deferred maintenance and fluctuating rates of criminal activity. Historically, this neighborhood has been on the Police Department�s top three areas for calls received. In addition, past conversations with officials from the Burbank Unified School District (BUSD) have indicated that students from this area tended not to be as engaged as the general school population. Staff speculates that the socio-economic challenges and living environment puts stress on the entire family.
This project is predicated upon a proven strategy for upgrading a neighborhood in decline. As with the Elmwood neighborhood, the approach is to acquire and rehabilitate several key distressed properties affecting the immediate neighborhood, have the Nonprofit operate the site as a mixed income project with an affordability component, and to construct an activity center from which to provide services that will integrate tenants into the community.
The proposed DDA will implement the aforementioned strategy in the Peyton-Grismer focus neighborhood. Under the DDA, the Nonprofit will mitigate the following identified problems that blight the Property:
� While probably structurally sound, the buildings are substantially deteriorated.
� Parking is significantly substandard, with a ratio of approximately one space per unit and is well below current code requirements for an R-4 zone.
�
The layout of the buildings, the location of parking and the configuration of the vehicular access points to buildings and parking areas is contorted and confusing, creating a dangerous condition in the event that emergency services are required within the larger parcels.
�
There is very little usable recreation space available to the tenants. Except for one swimming pool area (which is not maintained, and contains stagnant water), most of the outdoor spaces are paved for parking and driveway use.
�
Bedroom sizes do not correspond to a need identified in the City�s housing needs assessment for family units affordable to very low and larger, lower-income households.
The DDA is a joint agreement between the Agency, City and the Nonprofit that describes the terms and conditions for the disposition (via a lease) of the Agency�s properties to the Nonprofit and the rehabilitation and operation of the Property. The DDA provides for financial assistance lent from Agency Low Moderate-Income (LMI) funds, establishes the conditions for disbursement of the LMI loan and sets forth the requirements for the operation of the Property. Summarized below are the salient provisions of the proposed DDA.
The Agency proposes to advance $13.12 million in Low and Moderate-Income (LMI) funds comprised of two components:
� The Agency funds all land assemblage costs. The estimated cost to the Agency for its land assemblage is $9.674 million (assemblage costs are anticipated to increase marginally subject to the settlement cost for 1729-1735 Elliott Drive).
� The Agency extends $3.441 million in rehabilitation financing to the Nonprofit. This expenditure will be partially repaid when the Nonprofit takes out a permanent loan at the time of Property stabilization. A residual receipts note with a 55-year repayment term will repay the gap between the amount of rehabilitation costs and the amount of a conventional loan obtained for by the Nonprofit.
Agency funds are to be partially repaid through an Agency lease, a private loan and an Agency loan as follows:
1. Once the Property stabilizes (completion of rehabilitation), the Nonprofit is to secure a permanent loan from a commercial bank to partially repay the Agency�s $3.441 million rehabilitation loan. The lender�s security will be based upon the Agency�s leasehold interests and precedent to the Agency�s lease and loan.
Example:
Agency�s rehabilitation Loan $3.441 million
Less: Funds from conventional loan $2.322 million
Balance paid through residual receipts $1.119 million
2. The Nonprofit leases the Property at one dollar per year until the Agency residual receipts loan is repaid, after which the lease is 100 percent of the residual receipts from the Property.
3. The balance of the Agency loan is repaid from 100 percent of the Property�s residual receipts after operating expenses and permanent loan debt service payments.
Example: 2. Agency Loan 3. Agency Loan
Payment Retired
Nonprofit�s rental income $630,000 $630,000
Less: annualized conventional loan $200,000 $200,000
Less: operating expenses $400,000 $400,000
Less: Agency loan $30,000 0 Less: Agency lease $ 1 $30,001
The Nonprofit will enter into a 55-year lease with the Agency for one dollar per year plus contingent annual payments predicated on the residual receipts generated by the Property. The use of a lease instead of selling the Property to the Nonprofit would allow the Agency (and ultimately the City if the Agency ceased) to retain the Property at the end of the 55-year affordability period. Otherwise, the Agency would
need to convey the Property to the Nonprofit at no cost. Given the development restrictions imposed by the Agency, the Property�s residual land value (also known as reuse value) is a negative $1.07 million, which means that the Agency would need to give the land to the Nonprofit (a 100 percent land write-down) plus $1.07 million in additional Agency assistance.
As noted by the economic consultant for the Property, Keyser Marston Associates (KMA), the DDA imposes extraordinary controls on the Project. KMA�s analysis points out that the Nonprofit must eliminate 29 units (reducing the total number of units from 99 to 70 units) and reconfigure 12 units; impose income and affordability restrictions on 33 units in the Project; construct an activities center community room to serve the Project; and to pay for resident services. The extraordinary costs associated with these requirements reduce the value of the site from $7.66 million at the highest use allowed by the site�s zoning, to the established fair reuse value of negative $1.07 million.
KMA concluded that the Agency received �fair consideration for the interests being conveyed� to the Nonprofit, noting, �the present value of the lease payments will total $669,000, which is $1.74 million greater than the established fair reuse value.�
Rehabilitation will include improvements and repairs that have been deferred for many years including: repairing leaks, dry rot, mold, termite damage, asbestos and lead-based paint abatement and fire protection (e.g. smoke detectors and sprinkler system). More specifically, rehabilitation will include remodeling kitchens and bathrooms with specific improvements focusing on health and safety issues and may include fixtures, cabinets and flooring, upgrading the electrical, plumbing and heating, ventilation, air conditioning (HVAC) systems, new carpeting, interior and exterior painting, new exterior doors and windows; and re-roofing. In addition, the Nonprofit is to construct a single-story activity center (used to provide family and youth services, as well as the administrative offices of the Nonprofit) and on-site improvements.
The Nonprofit is to make available, restrict occupancy to, and rent 14 of the apartment units to very low-income households and 19 of the apartment units to lower-income households predicated upon a distribution of 20 percent of all units reserved for very low-income and 27 percent of all units reserved for lower-income households.
In summary, the DDA provides for the City and Agency in cooperation with the Nonprofit to upgrade the Property that, without public intervention, would continue to show signs of decline characterized by poorly maintained rental units and by residents disconnected from the larger community. The Peyton-Grismer Revitalization Project entails the Agency using its authority to assemble property blighting a neighborhood and expending its LMI funds to advance affordable housing. The Project accomplishes a set of housing objectives that include continuing geographical targeting of resources into focus neighborhoods and working with the Nonprofit to rehabilitate substandard units and operate them as a mixed-income project with affordable rents.
The Project also requires the building of an activity center to accommodate service-enriching programs designed to emulate the results experienced at the Elmwood Achievement Center, where deep-seated changes have occurred to the neighborhood fabric. Similar to Elmwood, the Peyton-Grismer Activity Center will offer family services intended to integrate residents into the larger community and after-school and mentoring activities for local youth.
Recommendation:
1. Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AMENDING THE FY 2003-2004 ANNUAL BUDGET IN THE AMOUNT OF $2,700,000.
2. Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE AGENCY AND BURBANK HOUSING CORPORATION.
3. Adoption of proposed Council resolution entitled:
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AND BURBANK HOUSING CORPORATION.
RECESS to conclude the City Council meeting.
ADJOURNMENT.