08/28/2001 RA RPT 07 - Laserfiche WebLink

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CITY OF RIVERSIDE CITY COUNCIL/REDEVELOPMENT AGENCY MEMORANDUM Honorable Mayor and City Council Redevelopment Agency Date: August 28, 2001 Item No.: 7 Subject: Request Approval for Property Disposition Agreement with the U.S. Department of Housing and Urban Development - 2900 Orange Street and 2901 Lemon Street ("Orange Terrace Site") Background In November of 1998 the City of Riverside Redevelopment Agency purchased approximately 40,200 Square Feet of unimproved property located between Orange and Lemon Streets in the Downtown Neighborhood. The property, previously known as the Orange Terrace Apartments, was the site of thirty-six dilapidated and abandoned apartment units that had been demolished by the previous owner (Universal Bank) when the site lost its preexisting multifamily zoning rights (the site has been rezoned R1 Single Family Residential). It has been the intent of the City of Riverside and the Redevelopment Agency that the site would be reborn as a low density affordable housing site. However, because of difficulties with an adjacent Superfund designated site (Alark Hard Chrome), the City and Agency has been unable to find a developer for the site. The purchase price for the Orange Terrace site was $790,000 in HOME Investment Partnership Act funds. Current Issue According to federal regulations, HOME funds may be used for the acquisition of vacant land only if construction will begin oil an affordable housing project within 12 months of the date of the acquisition. Further, federal law stipulates that HOME funds that are invested in a project that does not create either multifamily or single family affordabIe units must be reimbursed with non-federal funding. In extreme cases, HUD can mandate a grant reduction from the City's HOME fund account. Following federal code, the Orange Terrace site must have been under development by the City and/or Agency no later than November of 1999. Acknowledging problems in developing the Orange Terrace Site, in April and June of this year, Development Department staff began working with the U.S. Department of Housing and Urban Development's (HUD) Los Angeles and Washington offices to form a solution to the problem of developing the Orange Terrace site. From the onset of negotiations, HUD has required repayment from non-federaI funds for the $790,000 invested in Orange Terrace. In order to settle the federal code issues related to Orange Terrace, and preserve the City's affordable housing capital, HUD and staff have tentatively settled on the following settlement points: · The City will pledge it's current allocation of $500,000 in Cal Home funds to make downpayment assistance loans that will be made pursuant to regulations of the HOME Investment Partnership Act Program and other federal requirements; and · The City, will pledge a future allocation of Cal Home (if awarded) in the amount of $290,000 for downpayment assistance following HOME and other Federal requirements. In the event that the City does not receive another Cal Home grant, the Redevelopment Agency must repay the $290,000 with non4ederal funds (most likely the Agency's 20% affordable housing set-aside monies).