~lit~ CRA LA BUILDING COMMUN ITIES

1200 West 7th Street Suite 500 Los Ange les California 900 17-2381

oftbe CITY OF LOS AN GE LES

Honorable Counci l of the City of Los Angeles John Ferraro Council Chamber 200 N. Spring Street Room 340, City Hall Los Angeles, CA. 90012

COUNCIL TRANSMITTAL:

MAR 3 2011 DATE/

F 213 977 1665 www.crala.org

CRA Fi le No. Council District: ~

Contact Person: Jenny Scanlin Phone 213 922 7825

Transmitted herewith, is a Board Memorandum adopted by the Agency Board on March 3, 2011, for City Counci l review and approval in accordance with the "Community Redevelopment Agency Oversight Ordinance" entitled:

VARIOUS ACTIONS RELATED TO: DUNBAR VILLAGE. DISPOSITION, DEVELOPMENT AND LOAN AGREEMENT WITH THE CITY OF LOS ANGELES AND DUNBAR VILLAGE, LP FOR DISPOSITION OF PROPERTY FOR A PROMISSORY NOTE IN THE AMOUNT OF $5,410,000 (CRA/LA PORTION $852,840) AND A CRA/LA LOAN IN AN AMOUNT NOT TO EXCEED $1,500,000 AND OPTI ON AGREEMENT FOR THE DUNBAR VI LLAGE MIXED-USE AND AFFORDABLE HOUSING PROJECT, LOCATED AT 4201-4219, 4225-4233 AND 4251 -4263 SOUTH CENTRAL AVEN UE IN THE COUNCIL DISTRICT NINE CORRIDORS SOUTH OF THE SANTA MONICA FREEWAY RECOVERY REDEVELOPMENT PROJECT AREA. DOWNTOWN REGION (CD 9)

RECOMMENDATION That City Council approve(s) recommendation(s) on the attached Board Memorandum.

ENVIRONMENTAL REVIEW The recommended action is categorically exempt from the provisions of the California Environmenta l Quali ty Act (CEQA), pursuant to Sections 15301 (a) and (d), 15331, and 15332 of the State CEQA Guidel ines.

FISCAL IMPACT STATEMENT There is no fiscal impact to the City's General Fund, as a result of this action.

CRA/LA Building communities

cc: Sharon Gin, Office of the City Clerk (Original & 3 Copies on 3-hole punch) Lisa Johnson Smith , Office of the GAO lvania Sobalvarro, Office of the CLA Steve Ongele, Office of the Mayor Noreen Vincent, Office of the City Attorney

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

MEMORANDUM

DATE: MARCH 3, 2011

12 C91560 100071

TO: CRAJLA BOARD OF COMMISSIONERS

FROM: CHRISTINE ESSEL, CHIEF EXECUTIVE OFFICER

STAFF: DAVID RICCITIELLO, REGIONAL ADMINISTRATOR JENNY SCANLIN, PROJECT MANAGER WILLIAM CIPES, ASSISTANT PROJECT MANAGER

SUBJECT: Dunbar Village. Disposition, Development and Loan Agreement with the City of Los Angeles and Dunbar Village, LP for disposition of property for a Promissory Note in the amount of $5,410,000 (CRA/LA portion $852,840) and a CRA/LA loan in an amount not to exceed $1 ,500,000 and Option Agreement for the Dunbar Village mixed-use and affordable housing project, located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue in the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area. DOWNTOWN REGION (CD 9)

lOAN Approved at Loan Committee on February 23, 2011 COMMITTEE:

RECOMMENDATIONS

1. That the CRAJLA Board of Commissioners hold a Public Hearing and request that the City Council hold a Public Hearing pursuant to Health and Safety Code Section 33433 regarding the proposed disposition of the property located at 4225-4233 South Central Avenue (the "Property") to Dunbar Village, LP for development of an affordable rental housing project.

2. That the CRA/LA Board of Commissioners adopt, and request that the City Council adopt:

A. A Joint Resolution authorizing the sale of the Property and make certain findings pursuant to Health and Safety Code Section 33433, that (i) the conveyance of the Property will provide housing for low income persons; (ii) the conveyance of the Property is consistent with the Five Year Implementation Plan for the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project; and (iii) the consideration to be received by CRA/LA is not less than the fair reuse value of the Property, determined at the use and with the covenants, restrictions and development costs required by the Disposition, Development and Loan Agreement; and

B. A Finding of Benefit Joint Resolution, which finds that the use of $69,300 in Bunker Hill Tax Increment funds and $1,430,700 in Bunker Hill AB1290 funds for the development of the Dunbar Village project is of benefit to the Bunker Hill Redevelopment Project Area.

3. That the CRA/LA Board of Commissioners, subject to City Council review and approval:

DUNBAR VILLAGE DDLA PAGE2

A. Authorize the Chief Executive Officer (CEO) or designee to execute a Disposition, Development and Loan Agreement with the City of Los Angeles and Dunbar Village, LP to sell 4201-4219, 4225-4233 and 4251-4263 South Central Avenue for fair market value, and provide two loans: (a) an Acquisition Loan, in partnership with LAHD, equal to the as-is value of the property ($5,410,000, with the CRA/LA portion equal to $852,840) and; (b) a CRA/LA Loan for up to $1,500,000 to fund predevelopment and construction costs related to the Project, and to take such other actions as may be necessary to carry out the transaction.

B. Authorize the Chief Executive Officer or designee to execute an Option to Purchase Agreement with Dunbar Village, LP to sell 4201-4219, 4225-4233 and 4251-4263 South Central Avenue for $5,438,000.

C. Amend the FY2011 CD9 Project Area budget and work program to receive $1,430,700 of Bunker Hill AB1290 funds (BH2990) and $69,300 of Bunker Hill Tax Increment Funds (BH1100) in Budget line items ''Economic Development" and "Affordable Housing" respectively and transfer said funds to the CD9 Project (C91560) in budget line item "Affordable Housing" for the development of the Dunbar Village Project.

4. That the CRA/LA Board of adopt a Resolution making the findings that an economically feasible alternative of financing on substantially comparable terms but without subordination of the CRA/LA Deed of Trust, covenants and use restrictions is not reasonably available, and authorize the subordination of the CRA/LA Deed of Trust, covenants and use restrictions to the construction and permanent loans provided for the Project.

5. That the CRA/LA Board of Commissioners request that the City Council:

A. Authorize the General Manager of the Los Angeles Housing Department or designee to execute a Disposition, Development and Loan Agreement with the CRA/LA and Dunbar Village, LP for the disposition and rehabilitation of a mixed-use affordable residential and commercial project located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue, subject to the approval of the City Attorney as to form.

B. Authorize the General Manager of the Los Angeles Housing Department or designee Authorize the Chief Executive Officer or designee to execute an Option to Purchase Agreement with Dunbar Village, LP to sell 4201-4219, 4225-4233 and 4251-4263 South Central Avenue for $5,438,000.

SUMMARY

The recommended actions authorize the execution of a Disposition, Development and Loan Agreement ("DDLA") with Dunbar Village, LP ("Developer") for the redevelopment of the Dunbar Hotel (4225-4233 S. Central Avenue), Somerville I (4251-4263 S. Central Avenue), and Somerville II (4201-4219 S. Central Avenue) properties (collectively, the "Site"). The Dunbar Hotel is jointly-owned by CRA/LA and the City, acting by and through its Los Angeles Housing Department ("LAHD"). Somerville I and ll are owned solely by LAHD. All three properties are currently managed by LAHD, who is also a party to the DDLA.

The recommended actions also authorize the execution of an Option to Purchase Agreement (the "Option") with the Developer for the Site, which is necessary to demonstrate site control for the Developer's application to the California Debt Limit Allocation Committee (CDLAC), due March 18, 2011. Because the Replacement Housing Plan for the Site was approved on February 17, 2011, the earliest the CEO can execute the DDLA is March 19, 201 i. The only purpose of the Option is to provide evidence of Site control pending the execution of the DDLA. The Option provides the Developer with the right to purchase the Site from LAHD and CRA/LA

DUNBAR VILLAGE DDLA PAGE3

for $5,438,000 (equal to the appraised fair market value of the Dunbar Hotel, and as-is value of Somerville I & II), contingent upon the negotiation of a Purchase Agreement between the parties. The Option period expires upon the earlier of July 17, 2011, or the date the parties enter into a DDLA

The DDLA provides for the rehabilitation of the historic Dunbar Hotel and renovation of Somerville I & II to knit the three properties together into Dunbar Village: an 83-unit mixed-use intergenerational community for seniors and families (the "Project"). A new 55-year covenant will be recorded against the Site, restricting 40 units at the Dunbar Hotel to low- and very-low income seniors, and 41 units at Somerville I & II to occupancy by low and very-low income families. Two units will be reserved for an on-site property manager and maintenance person. Covenanted affordability levels will be for lower-incomes than those required by existing covenants, and the renovation will result in larger, more livable units than those provided in the current floor plan. The Project will also revitalize ground floor retail and provide a new plaza on Central Avenue, reactivating street life and enhancing public safety.

Through the DDLA, CRA/LA will provide a $1.5 million predevelopment, construction and permanent loan ("CRA/LA Loan") for the Project. LAHD will enter into a separate loan agreement ("LAHD Loan") with the Developer to provide $7.87 million in construction and permanent financing in the form of Neighborhood Stabilization ("NSP") funds. In addition, CRA/LA and LAHD will take back a $5,41 0,000 note for the as-is value of the Site ("Acquisition Loan"). The CRA/LA's portion of the Acquisition Loan will be $852,840.

Due to restrictions on the use of NSP funds, the disposition of the Site to the Developer will take place approximately 30 days after the execution of the DDLA Construction is expected to start in September 2011, and be completed by December 2012.

PREVIOUS ACTIONS

February 17, 2011 - CRNLA Board approval of a Replacement Housing Plan for the Dunbar Village Project.

December 17, 2010- Council authorization for CRA/LA and LAHD to enter into an ENA with Thomas Safran & Associates (CF#10-1886).

December 2, 2010 - CRNLA Board authorization to enter into an ENA with Thomas Safran & Associates for the disposition and rehabilitation of a mixed- use affordable residential and commercial project located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue.

June 10, 2010 - Council authorization for LAHD and CRAJLA to issue an RFP to sell, rehabilitate, and develop mixed-use affordable housing projects on City-owned properties located at 4201-4219, 4225 and 4251-4263 S. Central Avenue (CF#10-0920).

November 19, 2009 - Report to CRA/LA Board on intent to issue an RFP for a mixed-use affordable residential and commercial project located at 4201-4219, 4225-4233 and 4251-4263 S. Central Avenue.

August 7, 2008 - CRNLA Board Authorization to enter into a Cooperation Agreement with LAHD to own, manage and dispose of the Dunbar Hotel and provide funds for consultant costs related to the ownership management and disposition of the Dunbar Hotel. (CF#08-2118)

DUNBAR VILLAGE OOLA

DISCUSSION & BACKGROUND

Location & History

PAGE4

The Site consists of three separate mixed-use buildings located on the 4200 block of Central Avenue. The Dunbar Hotel was built in 1928 as a luxury hotel for the African American community, at a time when Central Avenue thrived as a mecca for west coast jazz. In its heyday during the 1930s and 1940s, the hotels' guests included such luminaries as W.E.B Ou Bois, Thurgood Marshall and Louis Armstrong.

In 1988 the Dunbar Hotel was redeveloped as affordable housing, with a scope of work that included a seismic reinforcement, replacement for all major systems, and registration as a historic landmark by the National Park Service and the City of Los Angeles. CRA/LA and the City, through the Community Development Department, jointly provided a loan in the principal amount of $2,900,000 for this rehabilitation and covenanted its use for affordable housing and a museum of the African American and Jazz history in the Central Avenue area. The CRA/LA provided $1,200,000 and COD provided $1,700,000 of the original principal balance in the form of a fully amortizing loan (COD transferred their interest in the Loan to LAHD in 1990). The borrower never made a payment on the loan to either CRAILA or LAHD, and by 2006 the property had fallen into disrepair and was cited for code violations. A forbearance agreement executed in 2006 between the borrower, CRA/LA and LAHD failed to remedy the default. CRA/LA and LAHD jointly issued a Notice of Default on the property in 2007, and in December 2008 CRA/LA and LAHD assumed fee ownership of the Dunbar Hotel following a Trustee Sale.

The building has 72 Single-Room Occupancy (SRO) units, 22 of which are currently occupied. The roles and responsibilities of CRA/LA and LAHD in managing and disposing of the Dunbar Hotel are delineated in a Cooperation Agreement, which was approved by Council and the CRAILA Board in 2008.

Somerville I ( 17 units) and Somerville II (24 units) are mixed-use affordable residential properties with ground-floor commercial space fronting on Central Avenue. Both properties were completed in 1996, and are currently fully occupied with income-eligible tenants. In October 2009, the City foreclosed on Somerville I and ll, and the buildings are currently being managed through the LAHD. The City still holds covenants on the property for affordable family housing, which will be extended for 55-years as part of the proposed Project.

Although CRA/LA has no ownership interest in the Somerville properties, once it became clear that Somerville I and ll would become the responsibility of the City, it was cooperatively decided by CRAILA and LAHD management that these two properties along with the Dunbar Hotel would be corrbined into one Request for Proposals (RFP) from developers.

Developer Entity

Dunbar Village LP is a limited partnership consisting of Dunbar Village, LLC and the Coalition for Responsible Community Development ("CRCD"). Dunbar Village, LLC's sole member is Thomas Safran & Associates ("TSA"), a Los Angeles-based firm established in 197 4 which specializes in development and management of both family and senior affordable housing. TSA has developed over 4,500 units, and currently owns and manages over 3,000 units in Southern California. CRA!LA-funded projects include Rittenhouse Square (100 units), Montecito Apartments ( 118 units), Hollywood El Centro ( 88 units), La Brea Franklin ( 40 units) and Strathern Park Apartments ( 169 units). CRA/LA's Asset Management department does not show any defaults recorded against loans to TSA, and all existing loans are generating positive residual receipts. Further, LAHD's loans with TSA area all current. One of the primary reasons the Developer was chosen for the Project was TSA's successful track record providing quality property management in challenging environments, strong financial capacity, and commitment to Central Avenue demonstrated by the successful Rittenhouse Square senior housing project.

DUNBAR VILLAGE DDLA PAGE3

for $5,438,000 (equal to the appraised fair market value of the Dunbar Hotel, and as~is value of Somerville I & II), contingent upon the negotiation of a Purchase Agreement between the parties. The Option period expires upon the earlier of July 17, 2011, or the date the parties enter into a DDLA.

The DDLA provides for the rehabilitation of the historic Dunbar Hotel and renovation of Somerville I & II to knit the three properties together into Dunbar Village: an 83-unit mixed-use intergenerational community for seniors and families (the "Project"). A new 55-year covenant will be recorded against the Site, restricting 40 units at the Dunbar Hotel to low- and very-low income seniors, and 41 units at Somerville I & II to occupancy by low and very-low income families. Two units will be reserved for an on-site property manager and maintenance person. Covenanted affordability levels will be for lower-incomes than those required by existing covenants, and the renovation will result in larger, more livable units than those provided in the current floor plan. The Project will also revitalize ground floor retail and provide a new plaza on Central Avenue, reactivating street life and enhancing public safety.

Through the DDLA, CRA/LA will provide a $1.5 million predevelopment, construction and permanent loan ("CRA/LA Loan") for the Project. LAHD will enter into a separate loan agreement ("LAHD Loan") with the Developer to provide $7.87 million in construction and permanent financing in the form of Neighborhood Stabilization ("NSP") funds. In addition, CRA/LA and LAHD will take back a $5,41 0, 000 note for the as~ is value of the Site ("Acquisition Loan"). The CRA/LA's portion of the Acquisition Loan will be $852,840.

Due to restrictions on the use of NSP funds, the disposition of the Site to the Developer will take place approximately 30 days after the execution of the DDLA. Construction is expected to start in September 2011, and be completed by December 2012.

PREVIOUS ACTIONS

February 17, 2011 - CRAILA Board approval of a Replacement Housing Plan for the Dunbar Village Project.

December 17, 2010 - Council authorization for CRA/LA and LAHD to enter into an ENA with Thomas Safran & Associates (CF#10-1886).

December 2, 2010- CRA/LA Board authorization to enter into an ENA with Thomas Safran & Associates for the disposition and rehabilitation of a mixed- use affordable residential and commercial project located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue.

June 10, 2010 - Council authorization for LAHD and CRA/LA to issue an RFP to sell, rehabilitate, and develop mixed-use affordable housing projects on City-owned properties located at 4201-4219,4225 and 4251-4263 S. Central Avenue (CF#i0-0920).

November 19, 2009 - Report to CRA/LA Board on intent to issue an RFP for a mixed-use affordable residential and commercial project located at 4201-4219, 4225-4233 and 4251-4263 S. Central Avenue.

August 7, 2008 - CRA/LA Board Authorization to enter into a Cooperation Agreement with LAHD to own, manage and dispose of the Dunbar Hotel and provide funds for consultant costs related to the ownership management and disposition of the Dunbar Hotel. (CF#08-2118)

DUNBAR VILLAGE DDLA PAGES

CRCD is a nonprofit community development corporation in the Vernon-Central neighborhood that focuses on: community beautification; workforce development for youth and young adults; and housing and economic development. CRCD is co-developer of CRA/LA-assisted projects 361h and Broadway Apartments (with Little Tokyo Service Center), and 28th Street YMCA (with Clifford Beers Housing).

Selection Process

On June 16, 2010 CRA/LA and LAHD jointly issued a Council-approved RFP to identify and select a qualified and financially capable developer to rehabilitate the Site. The stated goal of the RFP was to accomplish three objectives: 1) maintain the Site's historic designation, 2) continue to provide affordable housing that meets the needs of low-income seniors and families by adding new 55-year covenants to all three properties, and 3) contribute to the revitalization of the Central Avenue commercial corridor.

CRA/LA received six (6) proposals in response to the RFP, which were reviewed by a five­person panel consisting of two CRA/LA staff members, two LAHD staff members, and one community representative (the "Review Panel"). The Review Panel scored all proposals based on the following criteria: development team qualifications; development concept and its responsiveness to the objectives outlined in the RFP and the surrounding community; financial analysis, including developer's financial capacity, reasonableness of cost estimates and other economic assumptions; and proposed business terms, including the amount of public financing necessary relative to the public benefit and risk assumed by CRA/LA and LAHD.

Following this initial review, four (4) development teams were selected for in-person interviews with the Review Panel. Following the interviews, the Review Panel ranked each development team based on their response to the interview questions and proposal as a whole. The Dunbar Village team, consisting of TSA and CRCD, received the highest overall score, and the Review Panel recommended CRA/LA and LAHD enter into an ENA with TSA for the proposed Project. The CRA!LA Board and City Council approved the ENA in December 2010.

Description and Project Context

The Project includes a complete rehabilitation of Dunbar Hotel to restore the buildings historic grandeur, and provide larger, more livable units for residents. Reconfiguration of the existing floor plan will result in 41-units, consisting of a mix of singles, one-bedrooms and two­bedrooms. One two-bedroom unit will be set aside for the building manager. The remaining units will be covenanted for occupancy by low- and very-low income seniors. On-site amenities include a community room with communal kitchen, media lounge, billiard table, library or reading area, laundry room, and fitness area.

Renovation of Somerville I and Somerville II includes major reconfiguration of and upgrades to the common areas and in-place rehabilitation of the residential units. The reconfiguration will result in one additional unit in Somerville I, to provide a total of 42 units between the two buildings. One unit will be set aside for an on-site maintenance person, with the remaining 41 units covenanted for occupancy by low- and very-low income seniors and families. A new bridge will be constructed to connect the common area in Somerville II to the Dunbar Hotel. Other on-site amenities include a new tot lot, built-in barbecue, basketball half-court, and laundry room. Since first being developed, Somerville I and II have been plagued by criminal activity, negatively impacting the residents and surrounding community. To address this issue, the Developer will install security cameras in all three properties, and coordinate with LAPD to address any ongoing security concerns.

The Project also includes major renovation of ground floor commercial space on Central Avenue to revitalize the street and improve public safety. The Developer's retail strategy focuses on retaining community-serving tenants and repositioning vacant retail spaces to attract

DUNBAR VILLAGE DDLA PAGE6

uses that will serve the neighborhood and activate Central Avenue. Existing tenants who will stay in the project include Museum in Black in the Dunbar Hotel, a Head Start child-care facility in Somerville I, and community computer center run by Los Angeles Trade Technical College in Somerville II. In order to attract and sustain new retail tenants, the Developer is proposing to add up to 27 parking stalls by vacating the alley behind the Dunbar Hotel and Somerville II, and acquiring a site across Central Avenue. Retail build-out includes a cafe space in Dunbar Hotel, and a new public plaza between Dunbar Hotel and Somerville II.

Community Benefits

The proposed Project will result in the restoration and rehabilitation of one of Los Angeles' most important historic buildings, preservation of affordable housing that meets community needs, and the revitalization of community-serving retail along Central Avenue. The proposed Project is will also include a pocket park, office space for a local nonprofit organization, and the continued operation of a child care facility and computer learning center on the Site. CRCD will offer construction training and street beautification jobs to local residents as part of the Project.

The Project will be required to obtain Enterprise Green Communities Certification, a standard used by LAHD due to the use of NSP Funds. To achieve this certification, the project must achieve compliance with all mandatory measures with the Enterprise Green Communities Criteria (the "Criteria"), and achieve additional points based on project type. The Criteria contains detailed standards that address all aspects of design and operations, including: integrative design; location and neighborhood fabric; site improvements; water conservation; energy efficiency; materials beneficial to the environment; healthy living environment; and operations and maintenance. The Criteria are aligned with LEED Green Building Rating System.

The sustainable strategy for the Project includes a passive system design, energy efficient design and alternative energy sourcing, use of recycled and sustainably sourced building materials, water conservation techniques and equipment, storm and surface water retention and treatment, and improved indoor air quality.

Applicable CRA/LA Policies include: Construction Careers and Stabilization, Construction Jobs Local Hiring, Living Wage, Contractor Responsibility, Equal Benefits, Housing, and Prevailing Wage.

Variances from CRA/LA Policies and/or Guidelines

The proposed funding requires a variance from the adopted Housing Policy's Section 8.04 that requires any ·:RAILA predevelopment Joan be secured by a first deed of trust. The Developer anticipates construction financing from a conventional lender and the LAHD NSP Loan will be senior to the CRA/LA Loan and the Acquisition Loan.

The State Redevelopment Law was amended in 1989 (Section 33334.14) to allow subordination of income and use restrictions. The subordination is permitted when the CRA/LA makes a finding that an economically feasible alternative method of financing or refinancing without subordination is not reasonably available and when the CRA/LA obtains written commitments reasonably designed to protect the CRA/LA's investment in the event of default.

' Currently, no domestic lending institutions are willing to provide conventional financing without subordination of covenants, as well as CRA/LA loans and ground leases. Prior to agreeing to such subordination, the CRAJLA will require that the Subordination Agreement contains notice and cure provisions which reasonably protect the CRA/LA's covenant in the event of the Developer's default under any of the senior loans (Subordination Resolution, Attachment H).

DUNBAR VILLAGE DDLA PAGE 5

CRCD is a nonprofit community development corporation in the Vernon-Central neighborhood that focuses on: community beautification; workforce development for youth and young adults; and housing and economic development. CRCD is co-developer of CRA/lA-assisted projects 36th and Broadway Apartments (with little Tokyo Service Center), and 28th Street YMCA (with Clifford Beers Housing).

Selection Process

On June 16, 2010 CRA/lA and lAHD jointly issued a Council-approved RFP to identify and select a qualified and financially capable developer to rehabilitate the Site. The stated goal of the RFP was to accomplish three objectives: 1) maintain the Site's historic designation, 2) continue to provide affordable housing that meets the needs of low-income seniors and families by adding new 55-year covenants to all three properties, and 3) contribute to the revitalization of the Central Avenue commercial corridor.

CRA/lA received six (6) proposals in response to the RFP, which were reviewed by a five­person panel consisting of two CRNLA staff members, two LAHD staff members, and one community representative (the "Review Panel"). The Review Panel scored all proposals based on the following criteria: development team qualifications; development concept and its responsiveness to the objectives outlined in the RFP and the surrounding community; financial analysis, including developer's financial capacity, reasonableness of cost estimates and other economic assumptions; and proposed business terms, including the amount of public financing necessary relative to the public benefit and risk assumed by CRA/lA and lAHD.

Following this initial review, four (4) development teams were selected for in-person interviews with the Review Panel. Following the interviews, the Review Panel ranked each development team based on their response to the interview questions and proposal as a whole. The Dunbar Village team, consisting of TSA and CRCD, received the highest overall score, and the Review Panel recommended CRA/lA and lAHD enter into an ENA with TSA for the proposed Project. The CRA/lA Board and City Council approved the ENA in December 2010.

Description and Project Context

The Project includes a complete rehabilitation of Dunbar Hotel to restore the buildings historic grandeur, and provide larger, more livable units for residents. Reconfiguration of the existing floor plan will result in 41-units, consisting of a mix of singles, one-bedrooms and two­bedrooms. One two-bedroom unit will be set aside for the building manager. The remaining units will be covenanted for occupancy by low- and very-low income seniors. On-site amenities include a community room with communal kitchen, media lounge, billiard table, library or reading area, laundry room, and fitness area.

Renovation of Somerville I and Somerville II includes major reconfiguration of and upgrades to the common areas and in-place rehabilitation of the residential units. The reconfiguration will result in one additional unit in Somerville I, to provide a total of 42 units between the two buildings. One unit will be set aside for an on-site maintenance person, with the remaining 41 units covenanted for occupancy by low- and very-low income seniors and families. A new bridge will be constructed to connect the common area in Somerville II to the Dunbar Hotel. Other on-site amenities include a new tot lot, built-in barbecue, basketball half-court, and laundry room. Since first being developed, Somerville I and II have been plagued by criminal activity, negatively impacting the residents and surrounding community. To address this issue, the Developer will install security cameras in all three properties, and coordinate with lAPD to address any ongoing security concerns.

The Project also includes major renovation of ground floor commercial space on Central Avenue to revitalize the street and improve public safety. The Developer's retail strategy focuses on retaining community-serving tenants and repositioning vacant retail spaces to attract

DUNBAR VILLAGE DOLA PAGE 7

Findings

As required by section 33433 of the Health and Safety Code, the City Council is required to make findings that the conveyance of the Property will: (i) provide housing for low income persons; (ii) the conveyance of the Property is consistent with the Five Year Implementation Plan for the CD9 Project Area; and, that the consideration to be received by CRAJLA is not less than the fair reuse value of the Property, determined at the use and with the covenants, restrictions and development costs required by the DDLA. A report analyzing the economics of the DDLA, as required by section 33433, is included in Attachment E. The 33433 Report only analyzes the Dunbar Hotel disposition, as only the Dunbar Hotel was acquired/developed with tax increment and CRA/LA has no ownership interest in the Somerville I and Somerville II properties

The Finding of Benefit Joint Resolution (Attachment G) is required to expend Bunker Hill Tax Increment Funds in the CD9 Project Area.

Finally, prior to agreeing to subordination of CRA/LA covenants, a finding is required that economically feasible alternative of financing without subordination of the CRA/LA Deed of Trust, covenants and use restrictions is not reasonably available.

Financial Analysis

Total development costs for the Project are estimated to be $29,340,179 ($353,496 per unit). CRA/LA's participation is in the form of an Acquisition Loan equal to the as-is value of the Properties Uointly held with LAHD, with the CRA/LA portion being $852,840), and a $1.5 million Predevelopment, Construction and Permanent Loan. LAHD will provide $7.87 million in NSP funds through a separate loan agreement, which is referenced in and included as an attachment to the DDLA

Both the Acquisition Loan and the CRA/LA Loan will be for 55 years, at 1. 75% interest, with residual receipts payments. Residual receipts payments will be made to LAHD and CRA/LA based on each agency's respective share of the total amount of residual receipts loans. While it is CRA/LA's policy to charge 3% simple interest on residual receipts loans, given the rent structure required by NSP funding, and the extraordinary circumstances leading to the foreclosure on the Dunbar Hotel by the two City public entities, a lower interest rate of 1. 75% has been agreed upon by both LAHD and CRA/LA as necessary to facilitate the development of the Project in a timely manner.

Based on the initial loan amounts (as described above), CRA/LA owns 41.4% of the Dunbar Hotel. The appraised as-is value of the Dunbar Hotel is $2,060,000, so CRA/LA's share is equal to $852,840. The appraised as-is value of Somerville I & II is $3,350,000. Therefore, CRA/LA's share of the total Acquisition Loan is 15.8%. The CRA/LA Loan and CRA/LA's share Acquisition Loan represent 8% of total development costs, and is equal to $28,347 per unit ($29,047 per restricted unit).

The Acquisition Loan is based-on the "as-is" value, rather than the fair market value, due to California Tax Credit Allocation Committee (TCAC) regulations regarding eligible basis for Low­Income Housing Tax Credits. The appraised as-is value of the Dunbar Hotel ($2,060,000) is approximately 1.3% less the appraised fair market value ($2,088,000). Given that the Acquisition Loan only required residual receipts payments, and the fair-reuse value of the property at the use and with the covenants, restrictions and development costs required by the DDLA is effectively $0, this variation in values is immaterial.

As required by section 33433 of the Health and Safety Code, the consideration to be received by CRA/LA for the Dunbar Hotel is not less than the fair reuse value of the property, determined at the use and with the covenants, restrictions and development costs required by the DDLA.

DUNBAR VILLAGE DDLA PAGE8

The 33433 Report (Attachment E) only analyzes the Dunbar Hotel disposition, as CRA/LA has no ownership interest in the Somerville I and Somerville II properties.

The Acquisition Loan will be subordinate to the LAHD Loan and construction financing during construction and a permanent loan once the Project is complete. The $1,500,000 CRA/LA Loan will be in fourth position, behind the construction or permanent financing, LAHD Loan, and Acquisition Loan.

ECONOMIC IMPACT

The following table* describes the economic impacts estimated to be created by this project.

, ••.•••••••.••.•. < ):"········· ·.·:.· .....

•····.···• ·•··• fi~jfm~~~c)';f$c:i»nomic.lmf.l~~~s.¢te~te~ ijy:thiS; Pfi:>i~~j~···••-•.·•····: ·•·· ······ ". . : . . . .· .. ~ ·: ... ::: _ _.-:;::~::).;:~<.:.'::: ·.: .. . ·.·; .... . :·. ,·.~" \

..

Estimated Construction Jobs Created 158

Estimated Permanent Jobs Created 15

Estimated Gross Property Tax Increment (TI) Revenue $0 (Year 1 of Tax Increment Generated)

Estimated Net Present Value (NPV) of Net Property Tl Generated (Revenue to the CRA/LA Project Area through the last Tax Increment $0 Receipt Date)

Estimated NPV of Property Tl for Affordable Housing (25% set-aside towards the CRA/LA Low and Moderate Income Housing $51,000 Fund throuqh the last Tax Increment Receipt Date)

Estimated NPVof Utility User Tax Revenue $74,000 (Revenue to City of Los Angeles)

Estimated NPV of Sales Tax Revenue $543,000 (1% portion of taxable sales to City of Los Angeles)

Estimated NPV of Business Tax Revenue $78,000 (Revenue to City of Los Anqeles)

*The figures provided in the table about are for estimation purposes only; actual fiscal impact or job creation may be higher or lower than these estimates. Standardized formulas were used to generate these figures and are based on accepted econometric practices and basic tax calculations taken from research performed by a variety of sources, including the Los Angeles Economic Roundtable, California Redevelopment Association, US Department of Housing and Urban Development, CRA/LA, and the City and County of Los Angeles.

SOURCE OF FUNDS

Bunker Hill Tax Increment and AB1290 Funds.

PROGRAM AND BUDGET IMPACT

Approval of this item will amend the FY2011 C9 Budget and Work Program to receive $1,500,000 of AB1290 ($1 ,430,700) and Tax Increment ($69,300) Funds in budget line items "Affordable Housing" (BH1100) and "Economic Development" (BH2990) from the Bunker Hill Redevelopment Project to the Council District Nine Project in budget line item "Affordable Housing" (C91560) for the development of the Dunbar Village Project.

As part of the FY11 Budget process, it was determined that AB 1290 funds will continue to be retained by the CRA/LA for use in the Council Districts in which the funds are generated. This project has been directed by the Council office as a "planned use" of its AB1290 funds.

Following the approval of this item, the following will remain in the Bunker Hill project area: $2,964,187 of $3,311,987 for Affordable Housing and $1,688,149 of $6,301,300 for Economic Development.

Sufficient funds are available to make any legally-required State ERAF payments. There is no impact on the City's General Fund as a result of this action.

DUNBAR VILLAGE DDLA PAGE 7

Findings

As required by section 33433 of the Health and Safety Code, the City Council is required to make findings that the conveyance of the Property will: (i) provide housing for low income persons; (ii) the conveyance of the Property is consistent with the Five Year Implementation Plan for the C09 Project Area; and, that the consideration to be received by CRAJLA is not less than the fair reuse value of the Property, determined at the use and with the covenants, restrictions and development costs required by the DDLA. A report analyzing the economics of the DDLA, as required by section 33433, is included in Attachment E. The 33433 Report only analyzes the Dunbar Hotel disposition, as only the Dunbar Hotel was acquired/developed with tax increment and CRAJLA has no ownership interest in the Somerville I and Somerville IJ

properties

The Finding of Benefit Joint Resolution (Attachment G) is required to expend Bunker Hill Tax Increment Funds in the CD9 Project Area.

Finally, prior to agreeing to subordination of CRA/LA covenants, a finding is required that economically feasible alternative of financing without subordination of the CRAILA Deed of Trust, covenants and use restrictions is not reasonably available.

Financial Analysis

Total development costs for the Project are estimated to be $29,340,179 ($353,496 per unit). CRA/LA's participation is in the form of an Acquisition Loan equal to the as-is value of the Properties Uointly held with LAHD, with the CRA/LA portion being $852,840), and a $1.5 million Predevelopment, Construction and Permanent Loan. LAHD will provide $7.87 million in NSP funds through a separate loan agreement, which is referenced in and included as an attachment to the DDLA.

Both the Acquisition Loan and the CRAILA Loan will be for 55 years, at 1. 75% interest, with residual receipts payments. Residual receipts payments will be made to LAHD and CRA/LA based on each agency's respective share of the total amount of residual receipts loans. While it is CRAILA's policy to charge 3% simple interest on residual receipts loans, given the rent structure required by NSP funding, and the extraordinary circumstances leading to the foreclosure on the Dunbar Hotel by the two City public entities, a lower interest rate of 1. 75% has been agreed upon by both LAHD and CRA/LA as necessary to facilitate the development of the Project in a timely manner.

Based on the initial loan amounts (as described above), CRAILA owns 41.4% of the Dunbar Hotel. The appraised as-is value of the Dunbar Hotel is $2,060,000, so CRA/LA's share is equal to $852,840. The appraised as-is value of Somerville I & II is $3,350,000. Therefore, CRA/LA's share of the total Acquisition Loan is 15.8%. The CRA/LA Loan and CRA/LA's share Acquisition Loan represent 8% of total development costs, and is equal to $28,347 per unit ($29,047 per restricted unit).

The Acquisition Loan is based-on the "as-is" value, rather than the fair market value, due to California Tax Credit Allocation Committee (TCAC) regulations regarding eligible basis for Low­Income Housing Tax Credits. The appraised as-is value of the Dunbar Hotel ($2,060,000) is approximately 1.3% less the appraised fair market value ($2,088,000). Given that the Acquisition Loan only required residual receipts payments, and the fair-reuse value of the property at the use and with the covenants, restrictions and development costs required by the DDLA is effectively $0, this variation in values is immaterial.

As required by section 33433 of the Health and Safety Code, the consideration to be received by CRA/LA for the Dunbar Hotel is not less than the fair reuse value of the property, determined at the use and with the covenants, restrictions and development costs required by the DDLA.

DUNBAR VILLAGE DDLA PAGE9

ENVIRONMENTAL REVIEW

The recommended action is categorically exempt from the provtsrons of the California Environmental Quality Act (CEQA), pursuant to Sections 15301(a) and (d), 15331, and 15332 of the State CEQA Guidelines).

HOUSING INCLUSIONARY AND PROPORTIONALITY REQUIREMENTS

As indicated in Attachment C, Affordable Housing Information, with the approval of Dunbar Village, the CD9 Redevelopment Project will be on target to comply with the 15% lncluslonary Housing Requirement.

As indicated in Attachment C, Affordable Housing Information, with the approval of Dunbar Village the C09 Project Area will not have spent funds from the Low and Moderate Income Housing Fund (LMIHF) in proportion to need, in that the amount of LMIHF spent to date of Moderate Income exceeds the allowable percentage. Staff expects to come into compliance on or before the December 31, 2014 statutory compliance deadline by future LMIHF for Low- and very low income housing. There are currently 7 projects in the pipeline totaling approximately $15 million in funding, including 291

h Street Crossings, Figueroa Apartments, Florence Mills Housing, Paradise Baptist, Slauson-Wall, and Washington Boulevard-Mercy Housing.

AUTHORITY GRANTED TO CEO OR DESIGNEE

If the Disposition, Development and Loan Agreement is approved, the CRNLA Chief Executive Officer or designee would be authorized to take such actions as may be necessary to carry out the Agreement, including, but not limited to, executing the CRNLA Loan Documents and taking the following actions: (1) extending the Initial Term of the Loan by up to one additional year for a total not to exceed three years; (2) approving revisions to the Project Budget, so long as the changes do not increase the amount of the CRNLA Loan or otherwise have a material adverse impact on the feasibility of the project; (3) negotiating and executing subordination agreements meeting the requirements of California Health and Safety Code Section 33334.14, and making reasonable modifications to the CRA/LA Loan Documents that may be requested by any Senior Lender or Tax Credit Equity Investor, so long as such changes do not adversely affect the receipt of any material benefit by CRNLA; (4) negotiating and executing Inter-creditor Agreements with and Estoppel Certificates to other fenders, to the extent such Inter-creditor Agreements and Estoppel Certificates are consistent with the terms of the Loan Agreement; and (5) approving certain non-material revisions to the terms of the Loan Agreement reasonably requested by a Permitted Lender or Tax Credit Equity Investor.

Christine Essel Chief Executive Officer

~;)/ Calvin E. Hollis Chief Operating Officer

DUNBAR VILLAGE DDLA PAGE10

There is no conflict of interest known to me which exists with regard to any CRA/LA officer or employee concerning this action.

ATTACHMENTS

Attachment A: Attachment B: Attachment C: Attachment 0: Attachment E: Attachment F: Attachment G: Attachment H: Attachment 1:

Location/Site Map Project Term Sheet Affordable Housing Information Sources and Uses 33433 Report 33433 Resolution Finding of Benefit Resolution Subordination Resolution Project Summary Report

DUNBAR VILLAGE DDLA PAGE 9

ENVIRONMENTAL REVIEW

The recommended action is categorically exempt from the prov1s1ons of the California Environmental Quality Act (CEQA), pursuant to Sections 15301(a) and (d), 15331, and 15332 of the State CEQA Guidelines).

HOUSING INCLUSIONARY AND PROPORTIONALITY REQUIREMENTS

As indicated in Attachment C, Affordable Housing Information, with the approval of Dunbar Village, the CD9 Redevelopment Project will be on target to comply with the 15% lnclusionary Housing Requirement.

As indicated in Attachment C, Affordable Housing Information, with the approval of Dunbar Village the CD9 Project Area will not have spent funds from the Low and Moderate Income Housing Fund (LMIHF) in proportion to need, in that the amount of LMIHF spent to date of Moderate Income exceeds the allowable percentage. Staff expects to come into compliance on or before the December 31, 2014 statutory compliance deadline by future LMIHF for Low- and very low income housing. There are currently 7 projects in the pipeline totaling approximately $15 million in funding, including 291

h Street Crossings, Figueroa Apartments, Florence Mills Housing, Paradise Baptist, Slauson-Wall, and Washington Boulevard-Mercy Housing.

AUTHORITY GRANTED TO CEO OR DESIGNEE

If the Disposition, Development and Loan Agreement is approved, the CRA/LA Chief Executive Officer or designee would be authorized to take such actions as may be necessary to carry out the Agreement, including, but not limited to, executing the CRA/LA Loan Documents and taking the following actions: (1) extending the Initial Term of the Loan by up to one additional year for a total not to exceed three years; (2) approving revisions to the Project Budget, so long as the changes do not increase the amount of the CRA/LA Loan or otherwise have a material adverse impact on the feasibility of the project; (3) negotiating and executing subordination agreements meeting the requirements of California Health and Safety Code Section 33334.14, and making reasonable modifications to the CRA/LA Loan Documents that may be requested by any Senior Lender or Tax Credit Equity Investor, so long as such changes do not adversely affect the receipt of any material benefit by CRA/LA; (4) negotiating and executing Inter-creditor Agreements with and Estoppel Certificates to other lenders, to the extent such Inter-creditor Agreements and Estoppel Certificates are consistent with the terms of the Loan Agreement; and (5) approving certain non-material revisions to the terms of the Loan Agreement reasonably requested by a Permitted Lender or Tax Credit Equity Investor.

Christine Essel Chief Executive Officer

d?dL Calvin E. Hollis Chief Operating Officer

ATTACHMENT A

LOCATION I SITE MAP

Dunbar Village 4201-4219,4225 and 4251-4263 South Central Avenue, Los Angeles, CA 90011

Downtown Region, CD9 Project Area

1. Dunbar Hotel (4225-4233 S. Central Avenue)

2. Somerville I (4251-4263 S. Central Avenue)

3. Somerville II (4201-4219 S. Central Avenue)

Location I Site Map

CRAILA loan Amount:

CRAILA lien Priority? Subordination of Housing Covenant?

Other Project Funding Sources:

Any special provisions/conditions precedent or subsequent?

Consistent with CRA/LA Housing Policy?

ATTACHMENT B PROJECT TERM SHEET

CRA/LA Loan: $ 1,500,000 Acquisition Loan share: $ 852,840 (CRAILA 's portion of$ 5,41 0, 000 Acquisition Loan for Dunbar Hotel and Sometville 1&11 properties)

Total CRA/LA contribution: 840 28,347 29 047

Acquisition Loan: position (subordinate to private construction financing/permanent loan, and LAHD Loan) CRA/LA Loan: 4th position (subordinate to private construction financing/permanent loan, LAHD, and Acquisition Loan) x Yes or u No

o TCAC-9% x CDLAC -4% u CDLAC/Bond Only (no tax credits) x LAHD (Neighborhood Stabilization Funds) D MHSA D HCD: TOO __ ; INFILL __ ; MHP_; GHI_ n City of Industry x AHP x Other: Historic

• Disposition to occur one-month after execution of agreement to accommodate NSP funds provided by LAHD- prior to securing all construction funds and permits.

x Yes D No (if No, brief justification for deviation): __

Project Term Sheet- Affordable Housing

ATTACHMENT C AFFORDABLE HOUSING INFORMATION SHEET

Project; Dunbar Vilf.age

Address: 4201-42-63 S. Central Avenue

Developer: Dunbar Viti age, LP

CRA/lA Region: -;:D:;:oc_:w:.:.n:;;tow=n'------­

CRA/lA Projeot A reo: -,:Cc:Dc:9_----cc::--:-:------­Date: Februmy 22, 2011

The CRMA go~;~/ is to produce e.xfreme/y lowrincome unils wile never fe~slbJe. No project :shall be funded in which !he only assJsted units are for moderate income house hoi

ATTACHMENT D SOURCES & USES

SOURCES ' " " " " ., " ' ~ ' "

Construction

2,406,000 1,500,000 1,500,000 4,571,518 7,868,467 5,410,000 5,410,000

820,000 14,950,000

197,770 835,792

100

Per

Restricted Unit

28,988 29,704 18,072 18,519 94,801 97,142 65,181 66,790

9,880 10,123

23,828 24,416 100,698 103,184

1 1

SUMMARY REPORT PREPARED PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF THE

CALIFORNIA COMMUNITY REDEVELOPMENT LAW

ATTACHMENT E

4225D4233 S. CENTRAL AVENUE DISPOSITION COUNCIL DISTRICT NINE REDEVELOPMENT PROJECT AREA THE LOS ANGELES COMMUNITY REDEVELOPMENT AGENCY

I. Purpose and Report Organization ............................................................................. 2

II. Description of the Project .......................................................................................... 3

Ill. Developer and Agency Responsibilities ..................................................................... 4

IV. Cost of Agreement to Agency .................................................................................... 5 a. Project Gross Agency Cost .................................................................................. 6 b. Projected Net Revenue to the Agency ................................................................. 6 c. Net Costs to the Agency ..................................................................................... _ 6

V. Highest and Best Use Value ofthe Property .............................................................. 7

VI. Reuse Value of the Property ............................ _ ...... _ .................................................. 7

VII. Purchase Price Compared to Reuse Value ................................................................ 8

VIII. Blight Alleviation ........................................................................................................ 8

IX. Conformance with Implementation Plan .................................................................... 8

Community Redevelopment Agency of Los Angeles

4225-4233 South Central Avenue

CRL Section 33433 Summary Report March 2011

ATTACHMENT E

I. PURPOSE AND REPORT ORGANIZATION

The Community Redevelopment Law (CRL) Section 33433, requires that if a redevelopment

agency seeks to sell or lease agency-owned property that was acquired in whole or in part with tax increment funds, the agency must first secure approval of the proposed sale or lease

agreement from its local legislative body after a public hearing. In addition, the agency must make available for public inspection the proposed sale or lease agreement and a summary report that describes specific financing elements of the proposed transactions, prior to the public

hearing. As required by CRL 33433(a)(2)(8), the following information must be included in the summary report (italicized text is excerpted from the CRL):

i. The cost of the agreement to the redevelopment agency, including land acquisition costs, clearance costs, relocation costs, the costs of any improvements to be provided by the agency, plus the expected interest on any loans or bonds to finance the agreement.

ii. The estimated value of the interest to be conveyed or leased, determined at the highest and best use permitted under the plan.

iii. The estimated value of the interest to be conveyed or leased, determined at the use and with the conditions, covenants, and development costs required by the sale or

lease. The purchase price or present value of the lease payments which the lessor will be required to make during the term of the lease. If the sale price or total rental

amount is less than the fair market value of the interest to be conveyed or leased, determined at the highest and best use consistent with the redevelopment plan, then the agency shall provide as part of the summary an explanation of the reasons for the difference.

iv. An explanation of why the sale or lease of the properly will assist in the elimination of blight, with reference to all supporling facts and materials relied upon in making the explanation.

This report is the Summary Report required by section 33433 of the CRL for the proposed Disposition, Development and Loan Agreement (DDLA) between the Community

Redevelopment Agency of the City of Los Angeles (CRA/LA), the Los Angeles Housing Department (LAHD) and Dunbar Village, L.P. (Developer) for the acquisition of real property located at 4225-4233 S. Central Avenue (Site). The DDLA also includes the conveyance of LAHD-owned property located at 4201-4219 and 4251-4263 S. Central (Adjacent Property).

However, since CRAJLA does not have any ownership interest in these parcels, this report is limited to the Site. The Site is located in the Council District 9 Corridors South of the Santa

Monica Freeway Project Area (Project Area), and the purpose of the DDLA is to effectuate the Recovery Redevelopment Plan for the Project Area (Redevelopment Plan).

Community Redevelopment Agency of Los Angeles 4225-4233 South Central Avenue

ii CRL Section 33433 Summary Report

March 2011

SUMMARY REPORT PREPARED PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 OF THE

CALIFORNIA COMMUNITY REDEVELOPMENT lAW

ATTACHMENT E

4225m~t233 S. CENTRAL AVENUE DISPOSITION COUNCIL DISTRICT NINE REDEVELOPMENT PROJECT AREA THE LOS ANGELES COMMUNITY REDEVELOPMENT AGENCY

I. Purpose and Report Organization ............................................................................. 2

IL Description of the Project. .......................................................................................... 3

Ill. Developer and Agency Responsibilities .................................................................... .4

IV. Cost of Agreement to Agency .................................................................................... 5 a. Project Gross Agency Cost .................................................................................. 6 b. Projected Net Revenue to the Agency ................................................................. 6 c. Net Costs to the Agency ...................................................................................... 6

V. Highest and Best Use Value of the Property .............................................................. 7

VI. Reuse Value of the Property ...................................................................................... 7

VII. Purchase Price Compared to Reuse Value ................................................................ 8

VIII. Blight Alleviation ........................................................................................................ 8

IX. Conformance with Implementation Plan .................................................................... 8

Community Redevelopment Agency of Los Angeles 4225-4233 South Central Avenue

CRL Section 33433 Summary Report March 2011

Under the DDLA, CRA/LA will convey the 1 0,408 square foot Site and Adjacent Property to the

Developer for $5,190,000. Existing covenants on the title require continued operation of

transitional housing on the Site through the year 2017.

This report outlines the relevant components of the proposed DDLA between CRA/LA and the

Developer, and it analyzes the elements required by Section 33433. The report is based on

information contained within the DDLA, and is organized into the following eight sections:

e Section 1- Background and Purpose describes the report purpose and organization.

e Section II - Description of the Project summarizes the activities to be undertaken

pursuant to the DDLA.

• Section m - Developer and Agency Responsibilities outlines the Developer and

CRA/LA responsibilities under the DDLA.

111 Section IV- Cost of Agreement to Agency summarizes net cost of the DDLA,

equivalent to the total cost to CRA/LA less any revenues it will receive.

• Section V.- Highest and Best Use Value of Property presents value of the Site at its

highest and best use, as determined by an independent appraisal.

• Section IV- Reuse Value of Property estimates the value of the Site to be conveyed,

determined at the use- and with the conditions, covenants, and development costs

required for the sale and development of the Site under the DDLA (referred to as the

"reuse value" of the Site).

• Section VII - Purchase Price Compared to Reuse Value discusses the relationship

between the purchase price under the DDLA and the estimated reuse value.

• Section VIII - Blight Alleviation explains why the sale and redevelopment of the Site

pursuant to the DDLA will assist in the elimination of blight

• Section IX - Conformance with Implementation Plan explains why the sale and

redevelopment of the Site pursuant to the DDLA is in conformance with the CRA/LA's

2011-2015 Five-Year Implementation Plan for the Council District 9 Corridors South of

the Santa Monica Freeway Redevelopment Project Area.

II. DESCRIPTION OF THE PROJECT

Site The Site is a 10,408 square foot parcel located at 4225-4233 S. Central Avenue, at the

northwest corner of Central Avenue and 42nd Place in the City of Los Angeles. The Site is

located in the Project Area_ The Site, identified as Assessor's Parcel Numbers (APN) 5115-501-

906 and 5115-501-907, is current jointly owned by the CRA/LA and LAHD. The Site is improved

with Dunbar Hotel, a 72-unit, 34,025 square foot residential hotel, which was built in 1928. The

Dunbar Hotel is listed on the National Register of Historic Places and is a Los Angeles Historical

and Cultural Monument. CRA/LA and LAHD acquired the Site by foreclosing on the previous

owner, who was in default of loan agreements with CRA/LA and LAHD dating from a 1987

rehabilitation of the building. As part of that loan agreement, the Site was encumbered with a

Page 3

covenant restricting occupancy of all units to elderly, and/or handicapped and/or single persons

of low and moderate income, as defined by California Health and Safety Code Section 50093.

CRA/LA and LAHD are the beneficiaries of the covenant, which expires in 2017.

Developer The Developer of the Site, Dunbar Village LP, is a limited partnership consisting of Dunbar

Village, LLC and the Coalition for responsible Community Development {CRCD). Dunbar

Village, LLC's sole member is Thomas Safran & Associates (TSA). TSA is a Los Angeles-based

firm established in 1974 which specializes in development and management of both family and

senior affordable housing. TSA has developed over 4,500 units, and currently owns and

manages over 3,000 units in Southern California.

CRCD is a nonprofit community development corporation in the Vernon-Central neighborhood

that focuses on: community beautification; workforce development for youth and young adults; and housing and economic development.

Project Description The DDLA provides for the sale of the Site and Adjacent Property to the Developer, substantial

rehabilitation and renovation of existing buildings on the Site and Adjacent Property, and the

continued provision of affordable housing for low-income and very-low income seniors and

families (Project). A new 55-year covenant will be recorded against the Site and Adjacent

Property restricting 40 units at the Site to occupancy by low and very-low income seniors, and

41 units at the Adjacent Property to occupancy by low and very-low income families. The

renovation will restore key historic elements, and result in larger and more livable units at the

Site that those provided in the current floor plan. The Project will also revitalize ground floor

retail and provide a new plaza on Central Avenue, reactivating street life and enhancing public safety.

Ill. DEVELOPER AND CRA/lA RESPONSIBILITIES

The proposed DDLA outlines responsibilities for both the Developer and the CRA/LA. This

section sumrr.arizes the major responsibilities of the Developer and CRA/LA, as outlined in the proposed DDA.

The Developer will:

• Accept title to the Site and Adjacent Property at a cost of $5.4 million at the use and with

the conditions, covenants and development costs set forth in the DDLA.

• Agree to accept the Site "as is," in its current physical condition.

• Execute and deliver to the CRA/LA all documents, instruments, policies, resolutions and

certificates, as outlined in the DDLA.

• Complete renovation of the Site and Adjacent Property as set forth in the Scope of

Development contained in the DDLA, within all timeframes set forth in the DDLA.

Page 4

Under the DDLA, CRA/LA will convey the 1 0,408 square foot Site and Adjacent Property to the Developer for $5,190,000. Existing covenants on the title require continued operation of transitional housing on the Site through the year 2017.

This report outlines the relevant components of the proposed DDLA between CRA/LA and the Developer, and it analyzes the elements required by Section 33433. The report is based on information contained within the DDLA, and is organized into the following eight sections:

• Section I- Background and Purpose describes the report purpose and organization.

• Section II - Description of the Project summarizes the activities to be undertaken pursuant to the DDLA.

• Section Ill- Developer and Agency Responsibilities outlines the Developer and CRA/LA responsibilities under the DDLA.

• Section IV- Cost of Agreement to Agency summarizes net cost of the DDLA, equivalent to the total cost to CRA/LA less any revenues it will receive.

• Section V- Highest and Best Use Value of Property presents value of the Site at its highest and best use, as determined by an independent appraisal.

• Section IV- Reuse Value of Property estimates the value of the Site to be conveyed, determined at the use- and with the conditions, covenants, and development costs required for the sale and development of the Site under the DDLA (referred to as the "reuse value" of the Site).

• Section VII - Purchase Price Compared to Reuse Value discusses the relationship between the purchase price under the DDLA and the estimated reuse value.

• Section VIII - Blight Alleviation explains why the sale and redevelopment of the Site pursuant to the DDLA will assist in the elimination of blight.

• Section IX - Conformance with Implementation Plan explains why the sale and redevelopment of the Site pursuant to the DDLA is in conformance with the CRAILA's 2011-2015 Five-Year Implementation Plan for the Council District 9 Corridors South of the Santa Monica Freeway Redevelopment Project Area.

II. DESCRIPTION OF THE PROJECT

Site

The Site is a 10,408 square foot parcel located at 4225-4233 S. Central Avenue, at the northwest corner of Central Avenue and 42nd Place in the City of Los Angeles. The Site is located in the Project Area. The Site, identified as Assessor's Parcel Numbers (APN) 5115-501-906 and 5115-501-907, is current jointly owned by the CRAILA and LAHD. The Site is improved with Dunbar Hotel, a 72-unit, 34,025 square foot residential hotel, which was built in 1928. The Dunbar Hotel is listed on the National Register of Historic Places and is a Los Angeles Historical and Cultural Monument. CRA/LA and LAHD acquired the Site by foreclosing on the previous owner, who was in default of loan agreements with CRAILA and LAHD dating from a 1987 rehabilitation of the building. As part of that loan agreement, the Site was encumbered with a

Page 3

• Operate and maintain the Site in accordance with the DDLA and recorded covenants restricting the use of the Site and Adjacent Property to affordable rental housing for low­income and very-low income seniors and families for 55 years.

• Ensure that the Site and Adjacent Property is well maintained, as to both external and internal appearance of the buildings, landscaped areas, and parking areas.

• Ensure professional 24-hour staffing and security for the Site.

• Carry commercial liability insurance, worker's compensation, employer's liability

insurance, and property insurance, as outlined in the DDLA.

e Assess the Site for the presence of hazardous materials, remove or mitigate any hazardous materials if necessary, and release CRNLA from any liability related to hazardous materials discovered before or after the transfer of title.

• Pay or cause to be paid to all workers employed in connection with the development of the Site not less than the prevailing rates of wages, and comply with CRNLA's Construction Careers and Stabilization Policy.

• Bear all costs and expenses incurred in connection with the construction and maintenance of all improvements to the Site and Adjacent Property.

• Not sell, transfer, convey, assign or lease the Site or buildings or improvements without

prior approval of CRA/LA and LAHO, except as permitted by the DDLA.

CRA/LA will:

• Transfer fee interest ln the Site and Adjacent Property to the Developer, subject to certain conditions outlined in the DDLA, for the as-is value of $5.4 million. The appraised

as-is value of the Site is $2.06 million.

• In partnership with LAHD, hold a note equal to the fair market value of the Site and

Adjacent Property (Acquisition Note).

• Provide a $1.5 million loan to the Developer, subject to certain conditions outlined in the

DDLA.

• Record additional covenants on the Site and Adjacent Properties prior to the conveyance of title that will require the use of the Site and Adjacent Property as rental housing affordable to low- and very-low income seniors and families for 55 years. The

covenants will be secured by a deed of trust as an encumbrance against the Developer's fee interest in the Site and Adjacent Properties.

IV. COST OF AGREEMENT TO CRA!lA

The cost of the DDLA to CRA/LA is defined as the net cost to the CRA/LA resulting from:

1. CRA/LA expenditures for acquisition and transfer of the Site, including closing costs. 2. CRA/LA expenditures on administration and underwriting of the transaction, including

disbursements for outside consultants.

Page 5

3. CRAJLA revenue derived from the sale of the Site and anticipated tax increment receipts.

The following sections describe the anticipated CRAJLA expenditures and revenues pursuant to the DDLA with the Developer. By nature of the DDLA with the Developer, not all costs and

revenues can be accurately predicted. Therefore, the CRAJLA's projections should be considered best estimates based upon analysis of the date provided by the Developer, CRA/LA staff and consultants. In fact, the actual costs and returns to CRAJLA may vary from those projections.

A. Projected Gross CRAJLA Cost

CRAJLA acquired the Site through foreclosure. In 1987, the CRAILA and the City, through its Community Development Department (COD), provided a loan in the principal amount of $2.9 million to Dunbar Economic Development Corporation (Dunbar EDC) for the rehabilitation of the Site. CRA/LA provided $1.2 million, and COD provided $1.7 million of the original principal balance to LAHD in 1990). Dunbar EDC never made a payment on the loan to either CRAJLA or LAHD. CRAILA and LAHD jointly issued a Notice of Default on the Site in 2007. In December 2008, CRA/LA and LAHD assumed fee ownership of the Site following a Trustee Sale. Based on the initial loan amounts, CRAILA's owns 41.4% of the Site.

Since acquiring the Site, CRAILA has spent a total of $71,644 on property management, maintenance and labor associated with the management and disposition of the Site. In addition, CRAJLA anticipated spending approximately $450,000 on relocation costs.

Therefore, the projected gross costs to CRA/LA are $1,721,644.

B. Projected Revenue to CRAJLA

CRA/LA and LAHD will transfer the Site and Adjacent Property to the Developer for the as-is value of $5.4 million (equal to $2.06 million for the Site and $3.35 million for the Adjacent Property). Rather than receiving funds directly, CRA/LA and LAHD will carry an Acquisition Note equal to this amount, with a 55-year term and 1.75% interest rate, payable only from Residual Receipts associated with the Project. Based on these values and the initial loan amounts described above, CRA/LA's share of the Acquisition Note is $852,840. Given the low rents required by the covenants being recorded against the Site, CRA/LA does not expect to receive any revenue from the Acquisition Note.

The Developer is expected to receive a welfare exemption from the State Board of Equalization for the Site, which will result in little or no property tax revenue to CRA/LA.

Therefore, the total projected revenue to CRA/LA is $0.

C. Net Costs to CRAJLA

The net cost to CRA/LA is the difference between projected revenues and costs:

Projected Revenue to CRA/LA $0

Page6

• Operate and maintain the Site in accordance with the DDLA and recorded covenants restricting the use of the Site and Adjacent Property to affordable rental housing for low­

income and very-low income seniors and families for 55 years.

• Ensure that the Site and Adjacent Property is well maintained, as to both external and

internal appearance of the buildings, landscaped areas, and parking areas.

I@ Ensure professional 24-hour staffing and security for the Site.

e Carry commercial liability insurance, worker's compensation, employer's liability

insurance, and property insurance, as outlined in the DDLA.

* Assess the Site for the presence of hazardous materials, remove or mitigate any

hazardous materials if necessary, and release CRA/LA from any liability related to

hazardous materials discovered before or after the transfer of title.

• Pay or cause to be paid to all workers employed in connection with the development of

the Site not less than the prevailing rates of wages, and comply with CRA/LA's Construction Careers and Stabilization Policy.

• Bear all costs and expenses incurred in connection with the construction and

maintenance of all improvements to the Site and Adjacent Property.

• Not sell, transfer, convey, assign or lease the Site or buildings or improvements without prior approval of CRA/LA and LAHD, except as permitted by the DDLA.

CRA/LA will:

• Transfer fee interest ln the Site and Adjacent Property to the Developer, subject to certain conditions outlined in the DDLA, for the as-is value of $5.4 million. The appraised

as-is value of the Site is $2.06 million.

m In partnership with LAHD, hold a note equal to the fair market value of the Site and

Adjacent Property (Acquisition Note).

• Provide a $1.5 million loan to the Developer, subject to certain conditions outlined in the

DDLA.

• Record additional covenants on the Site and Adjacent Properties prior to the conveyance of title that will require the use of the Site and Adjacent Property as rental housing affordable to low- and very-low income seniors and families for 55 years. The

covenants will be secured by a deed of trust as an encumbrance against the Developer's fee interest in the Site and Adjacent Properties.

IV. COST OF AGREEMENT TO CRA/lA

The cost of the DDLA to CRA/LA is defined as the net cost to the CRAJLA resulting from:

1. CRA/LA expenditures for acquisition and transfer of the Site, including closing costs.

2. CRA/LA expenditures on administration and underwriting of the transaction, including disbursements for outside consultants.

Page 5

Less: Projected Gross Costs to CRA/LA Net Financial Gain/(Cost)

$t721,644 ($1 '721 ,644}

The net cost to CRA/LA for the purchase and transfer of the Site for continued transitional housing is $1,721,644

V. HIGHEST AND BEST USE VALUE OF THE PROPERTY

The highest and best use of the Site as improved is as a market-rate Single-Room Occupancy hotel, which reflects the current configuration. This conclusion is based on an appraisal

commissioned by CRA/LA and prepared by Villegas Appraisals. According to the appraisal the building would require certain interior renovation prior to be being used as a single room occupancy hotel, including a complete renovation of the kitchen, a complete renovation of the bathroom located on the second level, new point in various rooms/bathrooms, new flooring

throughout the building, and a general cleaning and removal of rubbish. The Site is zoned C2-1VL commercial.

The appraised value of the site at $2,088,000 is based on comparable sales and comparable

market rents for market-rate Single Room Occupancy hotels in the general area, less the

estimated rent loss and cost of renovations required before the vacant apartments and retail space could be occupied.

VI. REUSE VALUE OF THE PROPERTY

The reuse value of the Site is determined based on the specific uses, covenants and

development costs required under the DDLA. The highest and best use of the Site as improved is a market-rate Single Room Occupancy hotel as described above. However, the highest and

best use valuation assumes no restrictions on the use of the building or occupants, and it also assumes that tenants pay a market rental rate or the owner receives an equivalent value from

the ownership of the property. As described in Section II of this report, the Site will be encumbered with a covenant restricting occupancy to low and very-low income tenants for a period of 55 years.

Typically, the market value of a property is based on the capitalized net operating income (NOI) of the property, or the rent less any expenses for ownership and operation, divided by a capitalization rate. Given the tow rents required by the covenants to be recorded against the Site and Adjacent Property, debt service payments for loans needed to finance the Project, and

deferred developer fees, the projected NOI for the Site and Adjacent Property is $0 per year. Therefore, the fair reuse value of the Site determined based on the specific uses, covenants

and development costs required under the DDLA is $0.

Page 7

VII. PURCHASE PRICE COMPARED TO REUSE VALUE

The DDLA required the Developer to purchase the Site and Adjacent Property for $5.4 million,

but provides CRA/LA and LAHD financing equal to this amount. Therefore, the Developer is effectively acquiring the Site at no cost, which is equal to the fair reuse value.

The CRA/LA and LAHD acquisition financing is based on the "as-is" value, rather than the fair

market value, due to California Tax Credit Allocation Committee (TCAC) regulations regarding eligible basis for Low-Income Housing Tax Credits. The appraised as-is value of the Dunbar Hotel ($2,060,000) is approximately 1.3% less the appraised fair market value ($2,088,000). Given that the Acquisition Loan only required residual receipts payments, and the fair-reuse value of the property at the use and with the covenants, restrictions and development costs required by the DDLA is effectively $0, this variation in values is immaterial.

VIII. BLIGHT AlLEVIATION

The transfer of the Site to the Developer will facilitate improvement of the existing buildings, creation of new construction and permanent jobs, and the provision of affordable housing to low

and very-low income households. In addition, the DDLA requires that the Site be maintained at high standards during the duration of the recorded covenant.

IX. CONFORMANCE WITH IMPLEMENTATION PLAN

Implementation of the DDLA and the transfer of the Site will help meet the goals and objectives set forth in the Project Area's 2011-2015 Implementation Plan, adopted on December 16, 2010.

Relevant goals of the Implementation Plan include:

• Job retention and generation by supporting existing employers and attracting new employers.

• Housing for all income levels to be provided along with the preservation of existing single family housing stock.

• Preserve and promote the area's cultural heritage.

In conformance with these goals, the conveyance of the Site to the Developer, rehabilitation of the Site, and Jperation of the Site as affordable housing for low- and very-low income housing is

projected to create 158 new construction jobs during the renovation phase and 28 permanent jobs. It will also improve, preserve and enhance existing affordable housing stock and preserve and important historical and cultural landmark in the community. Thus, the DDA will conform with the Implementation Plan, and will achieve the goals specifically defined in the Implementation Plan.

Page 8

Less: Projected Gross Costs to CRA/LA Net Financial Gain/(Cost)

$1,721,644 ($1, 721 ,644)

The net cost to CRA/LA for the purchase and transfer of the Site for continued transitional housing is $1,721,644

V. HIGHEST AND BEST USE VALUE OF THE PROPERTY

The highest and best use of the Site as improved is as a market-rate Single-Room Occupancy

hotel, which reflects the current configuration. This conclusion is based on an appraisal commissioned by CRA/LA and prepared by Villegas Appraisals. According to the appraisal the building would require certain interior renovation prior to be being used as a single room

occupancy hotel, including a complete renovation of the kitchen, a complete renovation of the bathroom located on the second level, new point in various rooms/bathrooms, new flooring throughout the building, and a general cleaning and removal of rubbish. The Site is zoned C2-1 VL commercial.

The appraised value of the site at $2,088,000 is based on comparable sales and comparable

market rents for market-rate Single Room Occupancy hotels in the general area, less the estimated rent loss and cost of renovations required before the vacant apartments and retail space could be occupied.

VI. REUSE VALUE OF THE PROPERTY

The reuse value of the Site is determined based on the specific uses, covenants and

development costs required under the DDLA. The highest and best use of the Site as improved is a market-rate Single Room Occupancy hotel as described above. However, the highest and best use valuation assumes no restrictions on the use of the building or occupants, and it also assumes that tenants pay a market rental rate or the owner receives an equivalent value from

the ownership of the property. As described in Section II of this report, the Site will be encumbered with a covenant restricting occupancy to low and very-low income tenants for a period of 55 years.

Typically, the market value of a property is based on the capitalized net operating income (NOI) of the property, or the rent less any expenses for ownership and operation, divided by a

capitalization rate. Given the low rents required by the covenants to be recorded against the Site and Adjacent Property, debt service payments for loans needed to finance the Project, and

deferred developer fees, the projected NOI for the Site and Adjacent Property is $0 per year. Therefore, the fair reuse value of the Site determined based on the specific uses, covenants and development costs required under the DDLA is $0.

Page 7

ATTACHMENT "F"

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA

THE LOS ANGELES CITY COUNCIL

RESOLUTION NO. ____ _

A JOINT RESOLUTION OF. THE CITY COUNCIL OF THE CITY OF lOS ANGELES AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA AUTHORIZING SALE OF CERTAIN PROPERTY BY THE COMMUNITY REDEVELOPMENT AGENCY, AND MAKING CERTAIN FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33433 REGARDING THE TRANSFER OF PROPERTY FOR USE AS AFFORDABLE HOUSING FOR LOW INCOME AND VERY LOW INCOME HOUSEHOLDS.

WHEREAS, the City Council ("City Council") of the City of Los Angeles ("City") has adopted a redevelopment plan, as amended from time to time (the "Redevelopment Plan"), for redevelopment of the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area ("Project Area"); and

WHEREAS, the Community Redevelopment Agency of the City of Los Angeles ("CRA/LA") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area; and

WHEREAS, the CRA/LA and the City acquired through foreclosure 4225-4233 South Central Avenue within the Project Area ("Site"); and

WHEREAS, the CRA/LA desires to cause the rehabilitation and continued use of the Site, with 6,025 square feet of lot area containing a 34,025 square foot historic residential hotel, as affordable housing for low income and very low income households; and

WHEREAS, the Dunbar Village, l.P., a California limited partnership (the "Developer"), proposes to rehabilitate, maintain and improve the building on the Site as 41 units of housing, of which 40 units will be affordable to low income and very low income senior households, and 1 unit will be for ("Project"); and

WHEREAS, the Project will benefit the Project Area and serve major Redevelopment Plan goals and objectives through the rehabilitation of the existing property and by preserving affordable housing; and

WHEREAS, the proposed Project furthers the goals of the Five-Year Implementation Plan for the Project Area by providing housing for low and very low income seniors; and

WHEREAS, the CRA/LA has placed on file on the 2nd Floor of the CRA/LA Offices, located at 1200 W. ylh Street, Los Angeles, CA 90017, a copy of the Disposition, Development and Loan Agreement ("DDLA") and the Summary Report as required by

Health and Safety Code Section 33433 ("Section 33433 Summary Report"), and has made the DDLA and the Section 33433 Summary Report available for public inspection and copying pursuant to that Section, which is incorporated in this Resolution by this reference; and

WHEREAS, the City Council and the CRA/LA have conducted a duly noticed public hearing on the DDLA pursuant to Health and Safety Code Section 33433 for the purpose of receiving the input and comments of the public on the Section 33433 Summary Report and the DDLA; and

WHEREAS, by the CRA/LA staff report accompanying this Resolution and incorporated into this Resolution by this reference ("Staff Report"), the City Council and the CRAILA have been provided with additional information upon which the findings and actions set forth in this Resolution are based.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LOS ANGELES AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CAliFORNIA DO HEREBY RESOLVE AS FOLLOWS:

1. The City Council and CRA/LA find that the above Recitals are accurate.

2. Pursuant to Health and Safety Code Section 33433, the City Council and CRAILA hereby find that the consideration to be paid by the Developer under the DDLA is not less than the fair reuse value of the Site, determined at the use and with the covenants and restrictions and development costs required by the DDLA. This finding is based on the facts and analysis set forth in the Staff Report and the Section 33433 Summary Report accompanying this Resolution.

3. Pursuant to Health and Safety Code Section 33433, the City Council and CRA/LA hereby find that the conveyance of the Site pursuant to the DDLA will assist in the provision of housing for low and very low income persons in the Project Area, and is consistent with the Implementation Plan adopted pursuant to Health and Safety Code Section 33490. These findings are based on the facts and analysis set forth in the Section 33433 Summary Report and the Staff Report accompanying this Resolution.

ATTACHMENT "F"

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELESt CALIFORNIA

THE LOS ANGELES CITY COUNCIL

RESOLUTION NO.-----

A JOINT RESOLUTION Of' THE CITY COUNCil OF THE CITY OF LOS ANGELES AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGElES, CALIFORNIA AUTHORIZING SALE OF CERTAIN PROPERTY BY THE COMMUNITY REDEVELOPMENT AGENCY, AND MAKING CERTAIN FINDINGS PURSUANT TO HEAlTH AND SAFETY CODE SECTION 33433 REGARDING THE TRANSFER OF PROPERTY FOR USE AS AfFORDABlE HOUSING FOR lOW INCOME AND VERY lOW INCOME HOUSEHOlDS.

WHEREAS, the City Council ("City Council") of the City of Los Angeles ("City") has adopted a redevelopment plan, as amended from time to time (the "Redevelopment Plan"), for redevelopment of the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area ("Project Area"); and

WHEREAS, the Community Redevelopment Agency of the City of Los Angeles ("CRA/LA") is responsible for administering the Redevelopment Plan to cause redevelopment of the Project Area; and

WHEREAS, the CRA/LA and the City acquired through foreclosure 4225-4233 South Central Avenue within the Project Area ("Site"); and

WHEREAS, the CRA/LA desires to cause the rehabilitation and continued use of the Site, with 6,025 square feet of lot area containing a 34,025 square foot historic residential hotel, as affordable housing for low income and very low income households; and

WHEREAS, the Dunbar Village, L.P., a California limited partnership (the "Developer''), proposes to rehabilitate, maintain and improve the building on the Site as 41 units of housing, of which 40 units will be affordable to low income and very low income senior households, and 1 unit will be for ("Project"); and

WHEREAS, the Project will benefit the Project Area and serve major Redevelopment Plan goals and objectives through the rehabilitation of the existing property and by preserving affordable housing; and

WHEREAS, the proposed Project furthers the goals of the Five-Year Implementation Plan for the Project Area by providing housing for low and very low income seniors; and

WHEREAS, the CRA/LA has placed on file on the 2nd Floor of the CRA/LA Offices, located at 1200 W. 71

h Street, los Angeles, CA 90017, a copy of the Disposition, Development and Loan Agreement ("DDLA") and the Summary Report as required by

I HEREBY CERTIFY that the foregoing Resolution was introduced at a regular meeting of The Community Redevelopment Agency of the City of los Angeles held on March 3, 2011, by who moved its adoption and passage by the following vote:

SECONDED:

AYES:

NOES:

ABSENT:

APPROVED

ATTEST:

I HEREBY CERTIFY that the foregoing Resolution was introduced at a regular meeting of the los Angeles City Council held 2011, by ______ _ who moved its adoption and passage by the following vote:

SECONDED:

AYES:

NOES:

ABSENT:

APPROVED

ATTEST:

ATTACHMENT "G"

THE LOS ANGELES CITY COUNCIL AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CA

RESOLUTION NO. __ _

A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA AND OF THE LOS ANGELES CITY COUNCIL TRANSFERING $1,430,700 IN BUNKER HILL AB1290 FUNDS AND $69,300 IN BUNKER HILL TAX INCREMENT FUNDS INTO THE COUNCil DISTRICT NINE CORRIDORS SOUTH OF THE SANTA MONICA FREEVVAY RECOVERY REDEVELOPMENT PROJECT AREA LOVV AND MODERATE INCOME HOUSING fUNDS TO ASSIST IN THE REDEVELOPMENT OF AFFORDABLE HOUSING LOCATED AT 4201-4219, 4225-4233 AND 4251-4263 SOUTH CENTRAL AVENUE OUTSIDE OF THE BUNKER HILL REDEVELOPMENT PROJECT AREA AND MAKING THE FINDING THAT THE DEVELOPMENT OF THIS PROPOSED AFFORDABLE HOUSING PROJECT IS OF BENEFIT TO THE BUNKER HILL REDEVELOPMENT PROJECT AREA

WHEREAS, the CRA/LA desires to provide for the enhancement and preservation of dwelling units restricted to low and very-low income families during the existence of the Council District Nine Corridors South Of The Santa Monica Freeway Recovery Redevelopment Project Area ("CD9 Project Area") implementation; and

WHEREAS, the CRA/LA has established the Bunker Hill Redevelopment Project Area, from which funds may be appropriated and expended by the CRA/LA to develop dwelling units for low and moderate income families; and

WHEREAS, the CRA/LA has established the CD9 Project Area Low and Moderate Income Housing Fund into which funds may be appropriated and expended by the Agency to develop dwelling units for low and moderate income families within said Project Area.

NOW, THEREFORE, THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY Of LOS ANGELES, CALIFORNIA, AND THE LOS ANGELES CITY COUNCIL DO HEREBY RESOLVE AS FOLLOWS:

1. By adopting this resolution, the City Council and the CRAILA hereby find that the housing described in this Resolution to be located in the CD9 Project Area is of benefit to the Bunker Hill Redevelopment Project Area in conformity with the legal requirements of Health & Safety Code Sections 33334.2, 33334.6 and 33413 to the extent set forth herein. The payment of funds into the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area Low and Moderate Income Housing Fund as required by this Resolution pursuant to said Sections 33334.2 and 33334.6 shall constitute an obligation and indebtedness of the CRA/LA for the CD9 Project Area Low and Moderate Income Housing Fund to the extent of providing for the development as generally described in Section 3.

2. The City Council and the CRA/LA hereby find, determine and resolve that the use of Bunker Tax Increment Funds and AB1290 Funds outside of the Bunker Hill

Redevelopment Project area as described in this Resolution is of benefit to the Bunker Hilt Redevelopment Project Area. This finding is based on the finding and declaration of the California State Legislature set forth in said Section 33334.2 that the provision of affordable housing pursuant to said Section 33413 is always of benefit to a project.

3. Such funds shall be held in the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area Low and Moderate Income Housing Fund until expended by the CRA/LA for the rehabilitation and long-term preservation of affordable housing for low and very-low income households located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue in the CD9 Project Area.

5. The CRA/LA's Chief Executive Officer or designee is hereby authorized to retain or pay all interest income earned on this appropriation into the CD9 Project Area Low and Moderate Income Housing Fund. The Chief Executive Officer or designee is further authorized to pay all other income, loan repayments, sale proceeds or revenues received by the CRA/LA arising from the expenditure of the funds appropriated by this resolution, into the CD9 Project Area Low and Moderate Income Housing Fund.

PASSED AND ADOPTED THIS _ DAY OF MARCH, 2011.

I hereby certify that the foregoing Resolutions were adopted by the City Council of the City of Los Angeles, California, at its regular meeting held , 2011.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City of Los Angeles on this , 2011.

ATTACHMENT "G"

THE LOS ANGELES CITY COUNCIL AND THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF lOS ANGELES, CA

RESOLUTION NO. __ _

A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA AND OF THE LOS ANGELES CITY COUNCIL TRANSFERING $1,430,700 IN BUNKER HILL AB1290 FUNDS AND $69,300 IN BUNKER HILL TAX INCREMENT FUNDS INTO THE COUNCIL DISTRICT NINE CORRIDORS SOUTH OF THE SANTA MONICA FREEWAY RECOVERY REDEVELOPMENT PROJECT AREA LOW AND MODERATE INCOME HOUSING FUNDS TO ASSIST IN THE REDEVELOPMENT OF AFFORDABLE HOUSING LOCATED AT 4201-4219, 4225-4233 AND 4251~4263 SOUTH CENTRAL AVENUE OUTSIDE Of THE BUNKER HILL REDEVELOPMENT PROJECT AREA AND MAKING THE FINDING THAT THE DEVELOPMENT OF THIS PROPOSED AFFORDABLE HOUSING PROJECT IS OF BENEFIT TO THE BUNKER HILL REDEVELOPMENT PROJECT AREA

WHEREAS, the CRA/LA desires to provide for the enhancement and preservation of dwelling units restricted to low and very-low income families during the existence of the Council District Nine Corridors South Of The Santa Monica Freeway Recovery Redevelopment Project Area ("CD9 Project Area") implementation; and

WHEREAS, the CRA/LA has established the Bunker Hill Redevelopment Project Area, from which funds may be appropriated and expended by the CRA/LA to develop dwelling units for low and moderate income families; and

WHEREAS, the CRA/LA has established the CD9 Project Area Low and Moderate Income Housing Fund into which funds may be appropriated and expended by the Agency to develop dwelling units for low and moderate income families within said Project Area.

NOW, THEREFORE, THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY Of LOS ANGELES, CALIFORNIA, AND THE LOS ANGELES CITY COUNCIL DO HEREBY RESOLVE AS FOLLOWS:

1. By adopting this resolution, the City Council and the CRA/LA hereby find that the housing described in this Resolution to be located in the CD9 Project Area is of benefit to the Bunker Hill Redevelopment Project Area in conformity with the legal requirements of Health & Safety Code Sections 33334.2, 33334.6 and 33413 to the extent set forth herein. The payment of funds into the Council District Nine Corridors South of the Santa Monica Freeway Recovery Redevelopment Project Area Low and Moderate Income Housing Fund as required by this Resolution pursuant to said Sections 33334.2 and 33334.6 shall constitute an obligation and indebtedness of the CRA/LA for the CD9 Project Area Low and Moderate Income Housing Fund to the extent of providing for the development as generally described in Section 3.

2. The City Council and the CRA/LA hereby find, determine and resolve that the use of Bunker Tax Increment Funds and AB1290 Funds outside of the Bunker Hill

ATTACHMENT "H"

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGElES, CA

RESOLUTION NO. __

A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY Of THE CITY Of LOS ANGELES, CALIFORNIA REGARDING THE SUBORDINATION Of ITS USE RESTRICTIONS PURSUANT TO SECTION 33334.14 OF THE COMMUNITY REDEVELOPMENT lAW AND THE SUBORDINATION Of ITS DEEDS OF TRUST.

WHEREAS, the Community Redevelopment Agency of the City of Los Angeles, California (the "CRA/LA") proposes to enter into a Disposition, Development and Loan Agreement (the "DDLA) with Dunbar Village, L.P., a California limited partnership (the "Developer"), pursuant to which the CRAILA will provide financial assistance to the Developer for the purpose of rehabilitating 83 units of housing, of which 81 units will be affordable to low income and very low income households (the "Project") and 2 units will be for a Property Manager and maintenance person; and

WHEREAS, the DDLA provides for two separate loans from CRA/LA to the Developer for the Project: (1) a $5,410,000 acquisition loan, in partnership with the Los Angeles Housing Department, and; (2) a $1 ,500,000 predevelopment, construction and permanent loan, each secured by a separate deed of trust (the "Deeds of Trust"); and

WHEREAS, the DDLA requires covenants to be recorded against the Project placing certain limits on the maximum rents that can be charged and the maximum income that can be earned by tenants qualified to rent such housing (the "Income and Rent Restrictions", which term shall include any recorded notice of such restrictions); and

WHEREAS, the Developer has obtained preliminary commitments of financing from lender(s) conditioned upon the subordination of the CRA/LA's Income and Rent Restrictions, the Deeds of Trust; and

WHEREAS, there has been presented to the CRA/LA evidence sufficient on which to find that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without subordination of the Income and Rent Restrictions and Deeds of Trust, is not reasonably available.

NOW, THEREFORE, THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

1. The CRA/LA hereby finds that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without said subordination, is not reasonably available.

2. The CRA/LA hereby authorizes the Chief Executive Officer of the CRA/LA, or such other official of the CRA/LA as the Chief Executive Officer may designate, to take such actions as may be necessary in order to subordinate the CRA/LA's loans, Deeds of Trust, and Income and Rent Restrictions to the lien(s) of lender(s) providing financing for the Project, but only upon receipt by the Chief Executive Officer or such designee of written commitments from such

lender, reasonably designated to protect the CRAILA's investment in the event of default, such as the following:

(a) A right of the CRA/LA to cure a default on the loan;

(b) A right of the CRAILA to negotiate with the lender after the notice of default from the lender;

(c) An agreement that if prior to foreclosure of the loan, the CRA/LA takes title to the property and cures the default on the loan, the lender will not exercise any right it may have to accelerate the loan by reason of the transfer of title to the CRAILA.

(d) A right of the CRA/LA to purchase the property from the Developer at any time after a default on the loan.

ADOPTED: _______ _

ATTACHMENT "H"

THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF lOS ANGELES, CA

RESOLUTION NO.

A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF lOS ANGELES, CALIFORNIA REGARDING THE SUBORDINATION OF ITS USE RESTRICTIONS PURSUANT TO SECTION 33334.14 OF THE COMMUNITY REDEVELOPMENT LAW AND THE SUBORDINATION OF ITS DEEDS OF TRUST.

WHEREAS, the Community Redevelopment Agency of the City of Los Angeles, California (the "CRNLA") proposes to enter into a Disposition, Development and Loan Agreement (the "DDLA) with Dunbar Village, L.P., a California limited partnership (the "Developer"), pursuant to which the CRNLA will provide financial assistance to the Developer for the purpose of rehabilitating 83 units of housing, of which 81 units will be affordable to low income and very low income households (the "Project") and 2 units will be for a Property Manager and maintenance person; and

WHEREAS, the DDLA provides for two separate loans from CRNLA to the Developer for the Project: (1) a $5,410,000 acquisition loan, in partnership with the Los Angeles Housing Department, and; (2) a $1,500,000 predevelopment, construction and permanent loan, each secured by a separate deed of trust (the "Deeds of Trust"); and

WHEREAS, the DDLA requires covenants to be recorded against the Project placing certain limits on the maximum rents that can be charged and the maximum income that can be earned by tenants qualified to rent such housing (the "Income and Rent Restrictions", which term shall include any recorded notice of such restrictions); and

WHEREAS, the Developer has obtained preliminary commitments of financing from lender(s) conditioned upon the subordination of the CRNLA's Income and Rent Restrictions, the Deeds of Trust; and

WHEREAS, there has been presented to the CRNLA evidence sufficient on which to find that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without subordination of the Income and Rent Restrictions and Deeds of Trust, is not reasonably available.

NOW, THEREFORE, THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF LOS ANGELES, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS:

1. The CRA/LA hereby finds that an economically feasible alternative method of financing the Project on substantially comparable terms and conditions, but without said subordination, is not reasonably available.

2. The CRNLA hereby authorizes the Chief Executive Officer of the CRNLA, or such other official of the CRNLA as the Chief Executive Officer may designate, to take such actions as may be necessary in order to subordinate the CRNLA's loans, Deeds of Trust, and Income and Rent Restrictions to the lien(s) of lender(s) providing financing for the Project, but only upon receipt by the Chief Executive Officer or such designee of written commitments from such

CRA/LA BUILDING COMMUNITlES

·(@.

Maps created by CRAILA GIS Team

cornmerci<il ; ~a taiL (sq ft):

Residentiai($q ft)~

Estimated Jobs Created:

Construction Jobs (est.):

Permanent Jobs (est):

Total Development Costs (TDC):

CRAJLA Investment

CRA/lA Investment% of TDC:

Total Housing Units:

Market Rate:

Manager's Unit(s):

Total Affordable Housing Units:

HCD Very Low Income Units:

HCD Low Income Units:

HCD Moderate Income Units:

Undetermined Affordable Units:

86,190

158

15

$29mllllon

$2mi!Hon

8.02%

83

0

2

81

19

62

0

0

Total Development Cost Per Unit: $353,496

CRAILA Investment Per Restricted Unit: $29,047

Project 10: 1 00071 Objective Code(s): C91560

PROJt;;,..;T SUMMARY REPORT

DUNBAR VILLAGE

Board Item Number: Board Date: 3/3/2011

Project Location

Primary Address: 4201-4219 South Central Avenue, Los Angeles, CA 90011

Secondary Addresses: 4225 South Central Avenue, Los Angeles, CA 90011 4251-4263 South Central Avenue, Los Angeles, CA 90011

Proposed CRAJLA Action

Disposition, Development and Loan Agreement with the City of Los Angeles and Dunbar Village, LP for disposilion of property for a Promissory Note in the amount of $5.410,000 (CRAILA portion $852,840) and a CRAILA loan in an amount not to exceed $1,500,000 and Option Agreement for the Dunbar Village mixed-use and affordable housing project, located at 4201-4219, 4225-4233 and 4251-4263 South Central Avenue.

Additional Information

NIA

Elected Officials • Council District 9, Jan Perry • County Supervisor District 2, Mark Ridley-

Thomas ~ State Senate District 22, Kevin De Leon • Congress District 35, Maxine Waters • Assembly District 52, Isadore Hall

Project Description

CRAILA and LAH D are currently owners of the historic Dunbar Hotel, and Somerville I and II mixed-use affordable housing properties. Through an RFP, Thomas Safran & Associates and the Coalilion for Responsible Community Development were selected to rehabilitate all three buildings, preserving long-term affordabi!ity and contributing to the revitalization of Central Avenue.

Project Type

Residential

Construction Category: Rehabilitation

Type of Housing: Rental Housing

Project Features: • Affordable Housing o Childcare Facility I Child Development

Center • Community Room • Gardening I Landscaping • Nonprofit Organization • Playground

Developer I Participant(s)

Developer: Thomas Safran and Associates

Developer Partner(s}: Coalition for Responsible Community Development

Public Agency Partners: City of Los Angeles Housing Department (LAHD)

CRA/LA Project Staff ~ David Ricciliello, Regional Administrator • Jenny Scanlin, Project Manager • William Cipes, Assistant Project Manager

Project Activities Completed Activities:

• Issue RFP, 06116/10 • Commence Negotiation of Deal Points,

11101110

Scheduled Activities: • Board Authorization lo Execute Agreement,

12/02/10

LEED ®Attainment Level, Type

NONE

Community Benefits Area Beautification

o Catalytic project • Construction Local Hiring • Developer contributes to nonprofit organization • Elimination of Blight • Enhanced Pedestrian Environment • Extension of Affordable Housing Covenants • Historic Preservation o Improve Image of Area o Neighborhood serving retail • Neighborhood Stabilization • Prevailing Wage Jobs o Promotes Tourism ~ Provides Childcare • Revitalize key commercial corridor • Upgrade I Rehabilitate Existing Housing Units

Strategic Plan Goals Met • 1.1.1 - Create 40,000 construction career~path

jobs. • 2. 1 A ~ Preserve 1 00 % of affordability

covenants due to expire on non-profit owned units and 20% of...

CRA!LA Policies Applied • Child Care o Construction Careers & Project Stabilization • Construction Jobs Local Hiring Program • Equal Benefits • Housing Policy • Living Wage • Prevailing Wage • Sustai nability Consultation Program (Part of

CRAILA Healthy Neighborhoods Policy)

CRA!LA Policies Not Applied Not Applicable to the Project

• Public Art Policy, Project is low and very-low income housing, and includes substantial Historic Rehabilitation.

• Labor Peace Agreement

Data Las! Updated: 2122/2011 Report Generated: 2/2212011