HomeMy WebLinkAboutResolution No. 95-C99 s
RESOLUTION NO. 95-C99
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF AZUSA AUTHORIZING SUBMISSION OF AN
APPLICATION FOR A SECTION 108 LOAN GUARANTEE
TO THE UNITED STATES DEPARTMENT OF HOUSING -
AND URBAN DEVELOPMENT THROUGH THE LOS
ANGELES COUNTY COMMUNITY fiEVELOPMENT
COMMISSION
THE CITY COUNCIL OF THE CITY OF AZUSA DOES HEREBY DETERMINE
AND RESOLVE AS FOLLOWS:
Section 1. The City Council of the City of Azusa("City")finds, determines and declares
as follows:
WHEREAS, the Council adopted the Redevelopment Plan for a redevelopment
project known and designated as the"Central Business District Redevelopment Project
Area" ("Project Area")by Ordinance No. 2062 of the City adopted on September 18,
1978, amended by Ordinance No. 2077 by the City on July 2, 1979, Ordinance No. 2113
on July 20, 1981, Ordinance No. 2197 on November 28, 1983, Ordinance No. 2249 on
December 17, 1984, and by Ordinance No. 2250 on December 17, 1984, and amended
and merged by Ordinance No. 3282 adopted by the City on November 8, 1988,and all
requirements of law for and precedent to the adoption and approval of the
Redevelopment Plan have been compiled with; and
WHEREAS, the adopted objectives of the Redevelopment Plan are:
(a) Eliminate the conditions of blight existing in the Project Area;
(b) Encourage the cooperation and participation of residents, business persons, public
agencies and community organizations in the revitalization of the Project Area;
(c) Encourage private sector investment in the development of the Project Area;
(d) Promote the economic well-being of the Project Area by encouraging
diversification and development of its commercial base and employment
opportunities;
(e) Provide for the development of distinct commercial districts, to attain a consistent
image and character, and to enhance their economic viability:
(f) Provide for the expansion, renovation, and relocation of business within the
Project Area to enhance their economic viability;
(g) Encourage the development of residential, commercial, and industrial
environments which positively relate to adjacent land uses and upgrade and
stabilize existing uses;
(h) Remove impediments to land assembly and development through acquisition and
reparcelization of land into reasonably sized and shaped parcels;
(i) Expand the resource of developable land by making underutilized land available
for redevelopment;
(j) Coordinate revitalization efforts in the Project Area with other public programs of
the City and the surrounding area;
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(k) Achieve an environment reflecting a high level of concern for architectural,
landscape and urban design principles appropriate to the objectives of the
Redevelopment Plan;
(1) Improve traffic circulation through the reconstruction and improvement of
existing streets in the Project Area.
WHEREAS, on September 19, 1994 the Redevelopment Agency of the City of
Azusa approved an Exclusive Agreement to Negotiate a Disposition and Development
Agreement with Lewis Homes to redevelop a 12-acre parcel located within the
Redevelopment Project Area; and
WHEREAS, the site, generally bounded by Foothill Boulevard to the south,
Stein Way to the west, the railroad tracks to the north and Edwards Drive In Theater to
the east is blighted area currently comprised of underutilized commercially zoned
properties, deteriorated structures and vacant lots; and
WHEREAS, the proposed project consists of the construction of approximately
104 single family detached homes; and
WHEREAS, the proposed project will encourage a more rational utilization of
land in the Project Area and eliminate the blighting influences contributing to the
deterioration of the City's commercial area, and
WHEREAS,the proposed project will provide additional housing opportunities to
area residents and will become a strong complement to revitalizing residential properties
to the north, and
NOW, THEREFORE, THE CITY OF AZUSA(City), a municipal corporation, finds,
determines and declares:
SECTION I. As part of its financing plan for the acquisition of said property,the City
approves submitting a Section 108 Loan Guarantee Application to the United States Department
of Housing and Urban Development through the County of Los Angeles Community
Development Commission to assist in funding the purchase of said property.
SECTION H. Before submission of the application, the City certifies that it has:
(A) Furnished citizens with information required by Section 570.704(a)(2)(i);
(B) Held at least one public hearing to obtain the views of citizens on community
development and housing needs; and
(C) Prepared its application in accordance with Section 570.704(a)(1)(iv) and
made the application available to the public.
SECTION III. It is following a detailed citizen participation plan which meets the
requirements described in Section 570.704(a)(2).
SECTION IV. The City will affirmatively further fair housing, and the guaranteed loan
funds will be administered in compliance with:
(A) Title VI of the Civil Rights Act of 1964 (Pub. L. 88-352,42 U.S. C. 2000d et
seq.); and
(B) The Fair Housing Act(42 U.S.C. 3601-20).
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SECTION V. In the aggregate, at least 70 percent of all CDBG funds, as defined in
Section 570.3(e), to be expanded during the one, two, or three consecutive years specified by the
public entity for its CDBG program will be for activities which benefit low- and moderate-
income persons, as described in criteria at Section 570.208(a).
SECTION VI. It will comply with the requirements governing displacement, relocation,
real property acquisition, and the replacement of low and moderate income housing described in
Section 570.606.
SECTION VII. It will comply with the requirements of Section 570.200(c)(2)with
regard to the use of special assessments to recover the capital costs of activities assisted with
guaranteed loan funds.
SECTION VIII. It will comply with other provisions of the Act and with other
applicable laws.
SECTION IX. Certification regarding debarment, suspension, and other responsibility.
(1) The prospective primary participant certifies to the best of its knowledge and belief,
that it and its principals:
(a) Are not presently debarred, suspended, proposed for debarment, declared
ineligible or voluntarily excluded from covered transaction by any Federal department or
agency;
(b) Have not within a three-year period preceding this proposal been convicted of
or had a civil judgment rendered against them for commission of fraud or a criminal offense in
connection with obtaining, attempting to obtain, or performing a public(Federal, State or local)
transaction or contract under a public transaction; violation of Federal or State antitrust statutes
or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records,
making false statements, or receiving stolen property;
(c) Are not presently indicted for or otherwise criminally or civilly charged by a
governmental entity (Federal, State or local)with commission of any of the offense enumerated
in paragraph(1) (b)of this certification; and
(d) Have not within a three year period preceding this application/proposal had
one or more public transactions (Federal, State, or local)terminated for cause or default.
SECTION X. Certification of Efforts to Obtain Other Financing
The City hereby assures and certifies with respect to its application for a loan guarantee pursuant
to Section 108 of the Housing and Community Development Act of 1974, as amended, that it
has made efforts to obtain financing for the activities described herein without the use of such
guarantee, that it will maintain documentation of such efforts for the term of the loan guarantee,
and that it cannot complete such financing consistent with the timely execution of the program
plans without such guarantee.
SECTION XI. Certification regarding lobbying and drug-free workplace requirements.
To the best of its knowledge and belief, the City certifies;
1. No Federal appropriated funds have been paid or will be paid, by or on behalf of it, to
any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal contract, the
making of any Federal grant, the making of and Federal loan, the entering into of any or
cooperative agreement, and the extension, continuation, renewal amendment or
modification of any Federal contract, grant, loan or cooperative agreement;
MSOASec_I08.
2. If any funds other than Federal appropriated funds have been paid or will be paid to any
person for influencing or attempting to influence an officer or employee of any agency, a
Member of Congress, an officer or employee of Congress, or an employee of grant, loan,
or cooperative agreement, it will complete and submit Standard Form-LLL, "Disclosure
Form to Report Lobbying," in accordance with its instructions; and
3. It will require that the language of paragraph(n) of this certification be included in the
award documents for all subawards at all tiers (including subcontracts, subgrants, and
contracts under grants, loans, and cooperative agreements) and that all subrecipients shall
certify and disclose accordingly;
It will or will continue to provide a drug-free workplace by;
1. Publishing a statement notifying employees that the unlawful manufacture, distribution,
dispensing, possession, or use of a controlled substance is prohibited in the grantee's
workplace and specifying the actions that will be taken against employees for violation of
such prohibition;
2. Establishing an ongoing drug-free awareness program to inform employees about
(a) The dangers of drug abuse in the workplace;
(b) The grantee's policy of maintaining a drug-free workplace;
(c) Any available drug counseling, rehabilitation, and employee assistance programs;
and
(d) The penalties that may be imposed upon employees for drug abuse violations
occurring in the workplace;
3. Making it a requirement that each employee be engaged in the grant be given a copy of
the statement required by paragraph 1;
4. Notifying the employee in the statement required by paragraph 1 that, as a condition of
employment under the grant, the employee will
(a) Abide by the terms of the statement; and
(b) Notify the employer in writing of his or her conviction for a violation of a
criminal drug statute occurring in the workplace no later than five calendar days
after such conviction;
5. Notifying the agency in writing, within ten calendar days after receiving notice under
subparagraph 4(b) from an employee or otherwise receiving actual notice of such
conviction. Employers of convicted employees must provide notice, including position
title, to every grant officer or other designee on whose grant activity the convicted
employee was working, unless the Federal agency has designated a central point for the
receipt of such notices. Notice shall include the identification number(s)of each affected
grant;
6. Taking one of the following actions, within 30 calendar days of receiving notice under
subparagraph 4(b), with respect to any employee who is so convicted
(a) Taking appropriate personnel action against such an employee, up to and
including termination, consistent with the requirements of the Rehabilitation Act
of 1973, as amended; or
roswlsec 108 rea
(b) Requiring such employee to participate satisfactorily in a drug abuse assistance or
rehabilitation program approved for such purposes by a Federal, State, or local
health, law enforcement or other appropriate agency;
7. Making a good faith effort to continue to maintain a drug-free workplace through
implementation of paragraphs 1, 2, 3, 4, 5, and 6.
SECTION XII. This Resolution shall be effective immediately upon its adoption.
SECTION XIII. The City Clerk shall certify the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED THIS 7th DAY OF August 1995.
���_ _ d'-
Mayor
I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the City Council of
the City of Azusa, at a regular meeting thereof, held on the 7th day of August
1995 by the following vote of the Council:
AYES: COUNCILMEMBERS: Hardison,Madrid,Beebe,Alexander
NOES: COUNCILMEMBERS: None
ABSENT: COUNCILMEMBERS: Naranjo
/y//
24 , 1 A
City Clerk/Depuly City Clerk
(0808\800 U MS
CITY OF AZUSA
SECTION 108 LOAN GUARANTEE FOR
KREMS SITE ACQUISITION/
LEWIS HOMES DEVELOPMENT
CITY OF AZUSA
SECTION 108 LOAN GUARANTEE
FOR
KREMS SITE ACOUISITION/LEWIS HOMES DEVELOPMENT
LOAN REQUEST
The City of Azusa is requesting a 108 Loan Guarantee in the amount of$5.0 million to finance the
acquisition of the 11.83 acre site (515,315 square feet). The site is located at 587-647 East Foothill
Boulevard,Azusa,California The site is the location of the former neighborhood shopping center known
as the Azusa Square Shopping Center. Remaining on the site are vacant shells of a strip mall anchor
tenant buildings of approximately 60,000 square feet; the vacant shell of a bowling alley building of
approximately 23,800 square feet;the vacant shell of a self-serve gas station;the partial remains of a fast
food restaurant;and partial remains of a self service car wash. Once the site is cleared,the Agency will
sell the property to Lewis Homes Development who will pay$3.4 million for the acquisition of the site.
That$3.4 million will be applied immediately to reduce that$5.0 million loan amount which will leave
a balance of$1.6 million. The City proposes annual payments of$250,827 from our allocation of CDBG
funds. The interest rate proposed would be 7.5%for a nine year term
PROJECT DESCRIPTION
The primary component of this project is the acquisition of the existing 11.83 acre site. The site consists
of a flag shaped site, commercially zoned parcel, which was formally improved as a neighborhood
shopping center It has been a long term neighborhood blight in the community. Remaining on the site
are vacant shells of a strip mall anchor tenant buildings of approximately 60,000 square feet,the vacant
shell of a bowling alley building of approximately 23,800 square feet;the vacant shell of a self-serve gas
station; the partial remains of a fast food restaurant, and an operating self service car wash. The
immediate goal is to acquire the subject property and demolish existing blighting improvements. Once
this is accomplished,the next step is to vacate Stein Way which is an existing public thoroughfare going
north and south from Foothill Boulevard to Eighth Street. These two parcels will be assembled for the
eventual housing development by Lewis Homes.
LEWIS HOMES DEVELOPMENT
Lewis Homes Development was selected out of 4 proposals received by the Redevelopment Agency.
Lewis Homes is proposing to develop 104 single family detached units. The unit size will vary from 3
bedroom to 4 bedroom and in size from 1,400 square feet to 1,900 square feet. The housing development
will be phased according to market demands.
GAS STATION SITE/CONTAMINATION
One environmental obstacle that we are facing on this site is that the owner, Mr. Nathan Krems, is
currently seeking tank closure of a former gas station. With a change from the Department of Public
Works being the Over Site Committee to no Over Site Committee,that has left the owner in a dilemma
City of Azusa
Section 108 Loan Guarantee for
Krems Site Acquisition/L vm Homes Development
Page 3
of how to get closure of the tank. Their consultants have indicated that they need to wait until an Over
Site Committee has been formed to receive specific direction on what tests and procedures to take in
cleaning the site. To prevent this site from holding the development of the entire 12 acre site, staff is
recommending that the entire 12 acre site be divided into 2 separate parcels with the gas station
contamination site being the smaller parcel. This will allow the Agency to sell the larger site to the
Developer,Lewis Homes,and initiate the development of the site. The Seller, on the other hand, would
provide all the indemnifications and a hold-back of approximately$1.0 million to ensure that adequate
money was available for site clean-up. Mr. Krems will be required to deliver a clean site to the Agency
who, in tum, will be required to deliver a clean site to Lewis Homes,the Developers. The smaller site
will consist of an area of approximately 100 x 200 feet representing 20,000 square feet
RELOCATION RESPONSIBILITIES
Currently,a small car wash tenant is continuing to operate a business on the site. The Agency will take
responsibility to provide all relocation benefits and assistance due the tenant.
SITE CLEARANCE/DEMOLITION
The Agency has set aside an allocation of Community Development Block Grant Funds to use for the
demolition of this site. The estimated demolition site clearance cost is$350,000. The Agency will insure
that the demolition and site clearance is properly bid and follows all Davis Bacon wage requirements.
PROJECT BACKGROUND AND HISTORY
This project is basically divided into two phases. The initial 108 Loan Application is intended to fund
the land acquisition of the proposed 11.83 acre site. The purpose of this project is to eliminate the spread
of slum and blight that this has caused in the community. This blighting condition has lasted for
approximately 16 years. Up until this time the Agency has not had an opportunity, nor resources, to
explore the feasibility of acquiring the site and having it developed. Now, the City has reached
negotiations with the property owner, Mr. Nathan Krems, selected a developer for the proposed
development,and now needs additional revenue for the acquisition of the site. The site will, as a second
phase, be used for the development of a moderate income single family development.
As mentioned earlier,this has been a long-term blighting influence within the City of Azusa. We have
an opportunity now to move forward with the development which will not only enhance the immediate
area, but also will enhance the surrounding neighborhood and increase property values. This site is
located within our Redevelopment Project Area As mentioned earlier, it was once a neighborhood
shopping center known as Azusa Square Shopping Center. The site is practically all vacant, only one
tenant remains which is a self-service car wash. The site consist of vacant buildings consisting of
approximately 60,000 square feet of space, a vacant shell of a bowling alley building of about 23,800
square feet, a vacant shell of a self-service gas station and partial remains of a fast food restaurant.
City of Azusa
Section 108 Loan Guarantee for
Krems Site AcT isition/Lewis Homes Development
Page 4
PROJECT ELIGIBILITY AND NATIONAL OBJECTIVE
The Krems land acquisition project/Lewis Homes Development is an eligible activity under
24CFR570.701(1) - The Acquisition of Improved or Unimproved Real Property in Fee, Including
Acquisition for Development Purposes.
The proposed project meets the Community Development Block Grant (CDBG) Program national
objective of addressing the elimination of slums and blight. The project meets the national objective
criteria under CFR570.208(b)(1)(i)(ii)(iii)(iv). The project has been not only a physical blighting
condition,but its been economically blighting on the community for approximately 16 years and that is
why this has been included in the redevelopment area.
The site consists of a flag shaped 1183 acre site representing 515,315 square feet of commercially zoned
parcel, which was formerly improved as a neighborhood shopping center. Remaining on the site are
vacant shells of strip mall anchor tenant buildings of approximately 60,000 square feet;the vacant shell
of a bowling alley building of approximately 23,800 square feet; the vacant shell of a self-service gas
station;the partial remains of a fast food restaurant;and an operating self-service car wash. The buildings
are obsolete and deteriorated and in the property appraisal,the appraiser appraised the site as if vacant
in raw land condition. They determined no value in the substandard structure improvements.
With the assistance of the Section 108 funds, the$5.0 million will aid in the elimination of slum and
blight by abolishing the unsightly vacant structures, removing unsightly and obsolete structures, by
developing the site to the highest and best use and returning the property to generating property values
that will be beneficial for the community.
PROJECT COSTS
The total project costs represent$5.4 million which will include the land acquisition costs, demolition and
site clearance costs,and tenant relocation. After the acquisition of the properties by the Redevelopment
Agency, the properties will be sold to Lewis Homes for the development of the proposed 104 single
family detached units. The proceeds of the sale of$3.4 million will be used to pay down the 108 Loan
Fund initially.
City of Azusa
Section 108 Loan Guarantee for
Krems Site Acquisition/Lewis Homes Development
Page 5
PROPOSED DEVELOPMENT COSTS
Land/Acquisition Costs $4,924,710 (or 9.56/sf)
Demolition Costs/Asbestos
Abatement 350,000
Relocation-Self Service Car Wash 10,000
Contingency 65,290
Financing Costs
I%Underwriter's Fee 50.000
Total Project Cost $5,400,000
AVAILABILITY OF OTHER FUNDING SOURCES
For the past 3 years the City and Redevelopment Agency have been reviewing various financing sources
for availability of fimding this project and we have determined there are insufficient funds available. At
present,general City funds, Community Redevelopment Agency funds are not available to assist in the
acquisition of this project. We have explored the feasibility of bond financing and we do not have
additional revenues to do this at this time.
The current tax increment on this project is less than$20,000 a year. The anticipated tax increment to
be received upon completion of this project is approximately$150,000 per year.
The City has previously utilized CRA funds for this project to cover various costs including legal,
appraisal reports, development of an Exclusive Agreement to Negotiate, and in the preparation of a
Disposition and Development Agreement as well as various Market Demand Studies.
The City has entered into an Agreement with the City of Walnut to exchange their CDBG funds for city's
unrestricted revenues. Approximately$400,000 is available and this project which will be set aside for
demolition, site clearance costs and relocation costs.
TERM AND REPAYMENT OF LOAN
The City requests $5.0 million from the Section 108 Loan Guarantee Program to be repaid both in
principal and interest first with the$3.4 million received from the sale of the land to Lewis Homes and
than the remaining$1.6 million plus interest will be repaid over a 9 year period in an amount of$250,827
per year. Repayment of this loan will begin the year following the time the 108 fiords are provided.
0
City of Azusa
Section 108 Loan Guarantee for
Krems Site Acquisition/Lewis Homes Development
Page 6
RELOCATION,DISPLACEMENT AND ACQUISITION REQUIREMENT COMPLIANCE
The City will abide by the Uniform Relocation Assistance and Real Property Acquisition Policy Act of
1970(URA)and HUD implementing regulations at 24CFR Part 42;24CFR Section 570.606(b)-Bamey
Frank Amendment: 1 for 1 replacement units;24CFR Sections 570.606(d)(e)(f)(g).
The proposed development will not require disbursement of any housing relocation payments since
property acquisition will not include residential units, and no low and moderate income persons will be
displaced as a result of this acquisition project. The Agency will provide relocation assistance to the
remaining commercial tenant of a self-service car wash.
aQmNUO&M95
NOTICE OF PUBLIC HEARING
CITY OF AZUSA
PROPOSED FEDERAL SECTION 108
LOAN GUARANTEE PROGRAM APPLICATION
The City of Azusa is considering applying for a Federal Section 108 Loan Guarantee Program The
Program is funded under the Federal Community Development Block Grant (CDBG) Program
Participating cities may apply for a Section 108 Loan Program which provides an advanced allocation
of CDBG funds.
The primary objectives of the Community Development Block Grant Program is the development of
viable urban communities by providing decent housing and a suitable living environment,the elimination
of slum and blight, and the expanding of economic opportunities, principally for persons of low and
moderate income, or meet the urgent community need.
The proposed 108 Loan Application is proposed to implement a land acquisition program to acquire
property located on 587 to 647 East Foothill Boulevard,Azusa, California. Staff recommendations will
be presented to City Council at a Public Hearing.
NOTICE IS HEREBY GIVEN that on August 7, 1995, at 7:30 pm in the Civic Auditorium, 213 East
Foothill Boulevard,Azusa,California,the Azusa City Council will hold a public hearing to consider any
oral or written comments, hear staff recommendations, then direct staff to prepare the appropriate
application and agreements. Anyone wishing to submit written comments should submit them to the
Redevelopment Agency,City of Azusa, prior to the meeting.
Adolph Solis, City Clerk
Published: Azusa Herald
July 20&27, 1995
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