03-05-2002 RA RPT 02 - Laserfiche WebLink

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CITY OF RIVERSIDE Riverside tzez'II AII-America c; , 1111. AGENCY MEMORANDUM People Serving People 1998 HONORABLE MAYOR, CITY COUNCIL AND AGENCY MEMBERS DATE: March 5, 2002 ITEM NO: 2 SUBJECT: PUBLIC HEARING: REQUEST APPROVAL OF A DISPOSITION AND DEVELOPMENT AGREEMENT WITH RIVERSIDE HOUSING DEVELOPMENT CORPORATION FOR THE REHABILITATION AND RESALE OF 7606 FREDA AVENUE: AND APPROVAL OF A RESOLUTION AUTHORIZING THE LAND DISPOSITION AS A PUBLIC BENEFIT TO THE ELIMINATION OF BLIGHT AND PROVISION OF AFFORDABLE HOUSING - CASA BLANCA REDEVELOPMENT PROJECT AREA BACKGROUND: In November of 1994 the City of Riverside Redevelopment Agency made a Casa Blanca Homeownership Assistance Program (CBHAP) fully deferred loan in the amount of $47,514 to David Avila for the purchase a home at 7606 Freda Avenue. The loan was secured by a Second Trust Deed on the house, accrued 5% simple interest, and was to be forgiven incrementally over 30 years. Mr. Avila also received a $7,780 Casa Blanca Rehabilitation Loan in 1997. In the summer of 2000 Mr. Avila defaulted on his First Trust Deed mortgage and the bank foreclosed on the property. A Notice of Default was recorded against the property by Chicago Title in August 2000, and on December 4,2000 the property was sold at public auction. To protect the Agency's monetary investment, and to preserve the unit's affordability to low- income persons, the Redevelopment Agency bought the property for $117,652. At that time the Agency's investment in the property totaled $172,946. CURRENT ISSUE: The house has been in the Agency's inventory for approximately 15 months, and has been subject to vandalism during that time. The house is currently boarded up, and needs rehabilitation before it can be inhabited. Rehabilitation would include replacement of damaged windows and carpets, repainting interior walls, installation of a new toilet, re-hanging of interior doors, repairs to the outside fence, re-Iandscaping of the yard, and other improvements (see Scope of Work, Exhibit A). Staff has considered several options for disposing of this property, including selling the property in-house through Real Property Services. The difficulty with this method is that Real Property Services has no mechanism to rehabilitate or sell a single family house. The entire project would need to be formally bid out to contractors, the rehabilitation would have to be completed (with a developer fee to the contractor), and only then could the Agency look at selling the property. This process would take far longer for the City than for a third party, and meanwhile the property would still be on the Agency's inventory and vulnerable to vandalism. Given this scenario, staff believes that the most effective way to dispose of the Freda property is to enter into a Disposition and Development Agreement ("DDA", see Exhibit B) with the Riverside Housing Development Corporation ("RHDC") for the rehabilitation and sale of the property. The Agency would sell the property to RHDC for $1. RHDC would then take out a private development loan to rehabilitate and sell the property to a low-income homebuyer (the investment of 20% Housing Set Aside Redevelopment Funds mandates a buyer at 120% of Riverside County Median Income or below). Part of the sale profits would be used to pay back RHDC's private rehabilitation loan, and RHDC would receive a $2,000 developer's fee. The remaining sales proceeds would be returned to the Agency. Given the amount of rehabilitation necessary on the property and the anticipated sales price, it is likely that RHDC will be able to payoff the proposed rehabilitation loan. 2-1