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20-0317_JAMBOREE HOUSING CORPORTATION_Agenda Report_F1aCity of San Juan Capistrano Agenda Report TO : Honorable Mayor and Members of the City Council FROM : ~njamin Siegel, City Manager SUBMITIED BY: Joel Rojas , Development Services Director PREPARED BY: Laura Stokes, Housing Supervisor I Associate Planner DATE : March 17, 2020 3/17/2020 F1a SUBJECT: Exclusive Negotiation Agreement Between the City of San Juan Capistrano and Jamboree Housing Corporation for Potential Development of an Affordable Housing and City Hall Project at the City-owned Property Lo cated at 32400 Paseo Ade lanto (Portion of Assessor Parce l N umber 668-101-23) RECOMMENDATION: Approve and authorize the City Manager to execute an Exclusive Negotiation Agreement ("ENA") with Jamboree Housing Corporation, substantially in the form attached, for the potential development of an affordable housing project and City Hall facility on a 2.5-acre portion of City-owned property. EXECUTIVE SUMMARY: In 2016, the City Counci l changed the zoning and General Plan Land Use Designat ion of 2.5 ac res of the 5.7-acre City Hall property fr om Commercial Manufacturing and Quasi- Indu st ri a l to Very High Density Residential (Attachment 1 ). The purpose of this change was to accommodate additional housing units to meet the City's Regional Housing Needs Assessment (R HN A) of 638 housing units for the 2013-2021 planning period. Subsequently, in 2017, the City Council amended the City's Gene ral Plan Hous ing Eleme nt to ident ify th e 2.5 -a cre City Hall property as an affordab le housing site capable of accommodating up to 61 affordab le housing un its. S i nce that time, staff has been contacted by several affordable housing develope rs that have expressed an interest in the site. After reviewing various concept proposals with different approaches to product type and relocation of City Hall , staff is recomm end ing that the City Council enter into an Exclus ive Neg otiation Agreement (ENA) with Jamboree Hous ing Corporation (Jambore e) City Council Agenda Report March 17, 2020 Page 2of6 to explore the feasibility of developing the site with up to 40 units of permanent supportive affordable housing, integrated with a new City Hall facility (Attachment 2). The proposed ENA would establish a four-month period for the City and Jamboree to assess the viability of this innovative concept, conduct outreach with neighbors and the community and, if warranted, negotiate the key terms of a Disposition and Development Agreement. Approval of the ENA would not bind the City in any way to a specific project or future sale of the property to Jamboree. DISCUSSION/ANALYSIS: Pursuant to state law, the Southern California Association of Governments (SCAG) is responsible for developing the Regional Housing Needs Assessment (RHNA) for the six- county SCAG region. Taking into account population projections and economic forecasts, SCAG calculates the future housing need for every city and county within its jurisdiction for a specified eight-year planning period. The calculated RHNA represents the existing and future housing need of different income groups in each city. Below is the City of San Juan Capistrano's RHNA calculated by SCAG in 2012 for the current eight-year planning period of October 2013 through October 2021: RHNA 2013-2021 Income Group Percentage of Family of Four Income 2013 Total Percentage of County Area Categories (2018) Housing Units Units Median Income Allocated ExtremelvNerv Low 0-50% $0-$54,650 147 23% Low 51-80% $54,651-$87,450 104 16% Moderate 81%-120% $87,450-$111,250 120 19% Above Moderate 120%+ $111,251 + 267 42% Total 638 100% City's Housing Element State law requires that each city plan for the existing and future housing need identified in its RHNA allocation. This is done through the Housing Element of a city's General Plan. Once a city receives its RHNA allocation from SCAG, it must amend its Housing Element to demonstrate that the projected housing needs identified in its RHNA can be accommodated for all income groups. In order to accommodate San Juan Capistrano's RHNA allocation, the City Council amended the City's Housing Element in 2014 and 2017 to identify a list of sites where the City's RHNA allocation (638 housing units) could be built (Attachment 3). The list includes four sites that could accommodate the 371 "affordable" housing units designated for Very Low, Low, and Moderate income groups. As part of this effort, the City Council approved General Plan Amendments and Rezones to allow very high density residential City Council Agenda Report March 17, 2020 Page 3of6 development on the following three sites: Ventanas (which is proposed to be developed with a 132-unit market rate residential project referred to as Tirador), the Groves {which was approved by the City Council and anticipated to be developed this year with a 75- unit senior affordable housing project), and a 2.5 acre portion of the current City Hall site. The City Hall Site The City Hall site is a 2.5-acre portion of the larger 5. 7-acre City-owned property that was acquired by the City in the mid 1960s. The 2.5-acre site is bounded by Trabuco Creek on the west, railroad tracks on the east, the Groundwater Recovery Plant and Descanso Park on the south, and private office/industrial buildings to the north. Across Trabuco Creek from the site is a mobile home park, and across the railroad tracks from the site is a commercial center. City Hall itself has been considered a temporary facility on the site for the past thirty years, and there have been various efforts to identify a suitable site in the community to allow for relocation of City Hall. In 2016, the City Council changed the zoning and General Plan Land Use Designation of the 2.5-acre site to Very High Density Residential and identified the site in the City's Housing Element as being able to accommodate 61 affordable housing units. Since that time, staff has had informal conversations with affordable housing developers regarding potential development of an affordable housing project on the site. However, one of the primary challenges in developing the site with affordable housing has been finding an alternative location for City Hall that would meet the City's needs and be financially viable. Jamboree's Proposal Jamboree is a full-service real estate development company with more than 30 years of experience, specializing in the construction, acquisition, and management of affordable housing for lower income households. Jamboree has developed, managed, and maintained ownership of over 9,000 residential units for lower income families and seniors throughout California. Jamboree has evaluated the 2.5-acre City Hall site and is proposing to construct a three- story, 40-unit affordable housing development project that would include a new City Hall facility. Based on preliminary design concepts submitted by Jamboree {Attachment 4), a 15,000 square foot two-story City Hall building could be constructed in the general location of the current City Hall, with a three-story affordable housing component located behind the new City Hall. The affordable housing component would involve two levels of residential units above a garage level, as well as residential amenities such a courtyard and community garden. The preliminary proposal would provide a total of 144 parking spaces {there are currently 119 parking spaces on site) and maintain access to the Groundwater Recovery Plant, public works yard, and police services building. The 40 residential units are proposed as permanent supportive housing for very low income City Council Agenda Report March 17, 2020 Page4 of6 households (earning below 50% of the county's median income, or less than $59,350), and one on-site manager. The permanent supportive housing units would be occupied by individuals identified by the County of Orange and Jamboree as previously being homeless or at risk of becoming homeless, and who have a high likelihood of success in long term housing. The tenants of permanent supportive housing would also receive 24n support services through Jamboree management and County social services staff with offices onsite. Additionally, Jamboree has informed the City that tenant selection for the proposed development could include a "local preference" so that San Juan Capistrano residents have a higher priority for vacancies. Based on Jamboree's preliminary financial analysis, the project would cost roughly $23 million to construct. Jamboree provided the City with their anticipated financing structure, which includes approximately $12,300,000 from state tax credits and $5, 100,000 as a permanent loan from a third-party lender that is to be determined. This financing structure results in an anticipated $5.6 million gap in financing, which Jamboree proposes to cover using the City's available housing funds. The City currently has approximately $5.9 million of unencumbered Successor Agency housing bond monies, which can only be spent on the provision of affordable housing in the community. Proposed Exclusive Negotiation Agreement The City Attorney's office has drafted an ENA that has been reviewed and approved by Jamboree. The proposed ENA provides that the City and Jamboree would negotiate diligently and in good faith toward the goal of producing a mutually acceptable Disposition and Development Agreement (DOA). The proposed ENA includes the parameters for negotiations, a $25,000 deposit from Jamboree to cover staff and legal costs, term of the agreement, milestone schedule, City and Jamboree obligations, and a provision requiring Jamboree to fund a third party consultant to conduct an independent review of the City Hall component's design and cost in order to assess feasibility. Staff recommends that the City Council enter into an ENA with Jamboree due to the quality of similar Jamboree developments throughout the region, the proposed product and financing structure, and the schedule proposed by Jamboree's development team. The City is in a unique position to advance its housing goals as there is available land, sufficient funding, and a highly qualified developer. Furthermore, timely construction of the proposed project and inclusion of forty units for very low income households would assist the City in meeting its RHNA. With that said, an action by the City Council to enter into an ENA should not be interpreted as an intent to approve such a housing project. Entering into the proposed ENA would allow staff and Jamboree to explore the feasibility of this project concept, conduct meetings with neighboring property owners, tenants and interested community members, and negotiate a DOA, which would then have to be approved by the City Council. If and when a DOA is approved by the City Council, Jamboree would then file the appropriate City Council Agenda Report March 17, 2020 Page 5of6 development applications which would undergo review for compliance with the California Environmental Quality Act (CEQA) as well as review by the Design Review Committee, Cultural Heritage Commission and Planning Commission. FISCAL IMPACT: Approval of the ENA would have no fiscal impact to the City. All expenses during the term of this ENA for consultants and other professional planning/engineering services, as well as any costs associated with CEQA documentation, would be the sole responsibility of the applicant. Jamboree would also provide a $25,000 deposit to cover initial staff and City Attorney costs. ENVIRONMENTAL REVIEW: In accordance with the California Environmental Quality Act (CEQA) the recommended action is exempt from CEQA per Section 15061 (b)(3), the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. Where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, the activity is not subject to CEQA. Should the development project move forward for discretionary actions, the appropriate documentation will be provided consistent with CEQA Guidelines. PRIOR CITY COUNCIL REVIEW: On May 3, 2016, the City Council changed the zoning and General Plan Land Use Designation of a 2.5-acre portion of the City Hall site from Commercial Manufacturing and Quasi-Industrial to Very High Density residential, and identified the site in the City's Housing Element as being able to accommodate 61 affordable housing units. COMMISSION/COMMITTEE/BOARD REVIEW AND RECOMMENDATIONS: Not Applicable. NOTIFICATION: • Jamboree Housing • Milestone Housing Group • Alipaz Community HOA • Spaulding Properties • Plaza Del Rio c/o Westwood Financial Corp. • C&C Development Co., LLC • Meta Housing Corporation • San Juan Mobile Estates HOA • Millennium Housing City Council Agenda Report March 17, 2020 Page6 of6 ATTACHMENT: Attachment 1 -Site Map Attachment 2 -Exclusive Negotiation Agreement Attachment 3 -Housing Opportunity Sites Attachment 4 -Jamboree Proposed Site Plan & Elevations