Housing Successor Agency
MEETING DATE: 11/16/2015
TITLE:
Title
Termination and Mutual Release of Disposition and Development Agreement with Southern California Housing Development Corporation
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FROM:
Tami E. Scott, Administrative Services Director
RECOMMENDATION:
Recommendation
Staff recommends the City Council, in its capacity as the Housing Successor, authorize the execution of a Mutual Release and Termination Agreement of a Disposition and Development Agreement to include execution of a Second Amended and Restated Note by and between the City of Cathedral City, in its capacity as the Housing Successor and Southern California Housing Development Corporation (CORE)
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BACKGROUND:
The former Redevelopment Agency entered into a Disposition and Development Agreement with Southern California Housing Development Corporation (the “Developer”) in September 2007 which contemplated either an 84-unit or 91-unit affordable rental project with a community center to be constructed on land acquired by the former Cathedral City Redevelopment Agency in the Dream Homes neighborhood. The DDA contemplated that substantial partial funding for the development of this project was to come from both redevelopment agency housing funds and State housing funds. This DDA was subsequently amended in August 2010 when it became evident that due to State budgetary issues, the Developer was unable to secure the balance of State funding needed to develop the project in a timely fashion. As such, the First Amendment rescinded all business terms contained in the original DDA while extending the term of the DDA through December 2015 in order to provide the Developer with time to secure additional financing for the project. The Developer was to come back to the Agency prior to June 30, 2015 with a new financing scheme in order to finalize an amended DDA prior to December 31, 2015.
DISCUSSION:
The City’s ability to financially participate in this $20 million project to the extent anticipated in the original Disposition and Development Agreement (approximately $6.9 million) became impossible due to the Statewide dissolution of redevelopment agencies as of February 1, 2012. Since then, the Developer and staff have researched and explored numerous other funding sources, but none have proven adequate to enable this project to become financially feasible. As such, the Developer has requested that the City, in its capacity as the housing successor to its former redevelopment agency, authorize the mutual termination of the DDA. Additionally, the Developer has requested that the $280,000 promissory note covering pre-development assistance to the Developer be fully forgiven in that the Developer has invested thousands of dollars as well as hundreds of staff hours in attempting to move this project forward. Under the terms of the First Amendment, all Agency assistance other than $100,000 was to be forgiven- if development did not occur, provided the Developer submitted all plans and studies it had completed on the site.
Staff recommends as a condition of forgiving this loan in full, the Developer or a related entity, be required to invest $100,000 in specific capital improvements to Cathedral Palms, another project it owns and operates at 31-750 Landau Boulevard. Cathedral Palms is a 231-unit senior project located at 31-750 Landau Boulevard and was a troubled project acquired and rehabilitated by the Developer many years ago. The $100,000 in investment cannot be made from other City funds or from actual project reserves but, instead, must be from other funds available to the Developer. The investment must be made within three years. Additionally, the Developer will be required to submit all plans and studies it has conducted on the Dream Homes site upon request of the Housing Successor.
FISCAL IMPACT:
Forgiveness of this loan will result in the Housing Successor not receiving $100,000 in repayment of this outstanding note, but it will also mean that $100,000 of needed capital improvements will be made in another affordable project within the City limits without further investment from the Housing Successor.
ATTACHMENTS:
None