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96-0903_CRA_Minutes_Regular Meeting221 SEPTEMBER 3, 1996 REGULAR MEETING OF THE SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY BOARD OF DIRECTORS The Regular Meeting of the Board of Directors of the City of San Juan Capistrano Redevelopment Agency was called to order by Chairman Swerdlin at 7:22 p.m. in the City Council Chamber. ROLL CALL: PRESENT: David M. Swerdlin, Chairman Carolyn Nash, Vice Chairman Collene Campbell, Director Wyatt Hart, Director Gil Jones, Director ABSENT: None STAFF PRESENT: George Scarborough, Executive Director; Thomas Tomlinson, Deputy Director; Richard K. Denhalter, Agency Counsel/City Attorney; Cynthia L. Pendleton, Finance Officer; Cheryl Johnson, Agency Secretary; William Huber, Engineering and Building Director; Joe Arrafiaga, Public Lands and Facilities Director; Al King, Jr., Community Services Director; Lt. Paul Sullivan, Chief of Police Services; Nancy Bernardi, Recording Secretary. It was moved by Director Jones, seconded by Director Hart, that the staff recommendations be accepted for the following items listed on the Consent Calendar. The motion carried by the following vote: AYES: Directors Campbell, Hart, Jones, Nash, and Chairman Swerdlin NOES: None ABSENT: None 1.APPROVAL QF COh2&jMjY REDEVELOPMENT A - REGULAR MEETING OF AUGUST 6. 1996 The Minutes of the Regular Meeting of August 6, 1996, were approved as submitted. 2. gECEIVE ANp FILE WARRANTS14 1996 (300,3Q) The List of Demands dated August 14, 1996, in the total amount of $157,724.13 was received and filed. CRA Minutes -1- 9/3/96 222 RECEIVE AND FILE CASH BALANCES BY FUND FOR JULY 1996 (330,50) The Finance Officer's Report of Cash Fund Balances for the month of July 1996 in the total amount of $-29,785.87 was received and filed. WOMPUNII UNCOMMON 1 1 .11 •1 Written Communication: Report dated September 3, 1996, from Jennifer Murray, DPA, Assistant to the City Manager, advising that a subcommittee of the City Council had been working to identify issues and solutions to enhance the quality of life and strengthen property values in the Capistrano Villas and the Casa de Capistrano neighborhoods. The Report recommended conceptual approval of a proposed housing program for the Capistrano Villas and Casa de Capistrano neighborhoods which would: 1) permit the Community Redevelopment Agency to acquire vacant homes in targeted neighborhoods from the Federal Housing Administration, 2) lease the units to qualified low-income tenants for short periods of time; and, 3) resell the units to those tenants. The Report also recommended that staff be authorized to solicit the services of a qualified, non-profit housing corporation to provide management oversight of the program. Jennifer Murray made an oral presentation, citing concerns expressed by the neighborhood homeowner associations relating to the impacts of overcrowding brought on by more than one family living in a number of the units. She noted that the program could be structured to place an occupancy limit on units acquired by the Agency while they are rental units. and could then place deed restrictions on the property once it is sold to continue the occupancy cap. She noted that the occupancy standards would be based on federally established guidelines; that the standards could not be applied to the private sale of residential property; and, that the occupancy standards were only available to government programs such as was being proposed. The proposed program estimated that as many as 50 units may be available from the Federal Housing Authority for Agency purchase during the next 3 years. She further noted that a key component of the program was the use of a non-profit housing corporation to assist the Agency; to provide on-site management of the units; and, to undertake a tenant education program. Debbie Dirnu, housing consultant for the City, reported on the technical issues involved with the proposed program. She addressed the following three concerns: CRA Minutes Occupancy Standards: The Fair Housing Enforcement Division indicated there were no concrete standards for occupancy other than those identified in the Uniform Building Code; however, the Fair Housing Enforcement Division provided guidance on acceptable standards for occupancy that local agencies were permitted to adopt; -2- 9/3/96 223 e.g. 1) occupancy based on two persons per bedroom, plus one additional person; or 2) occupancy based on the percentage of a unit's square footage. She felt that the issue of occupancy standards would require further research to determine the kind of occupancy levels the Agency would desire Impact of Program on Property Values: A Federal Housing Administration representative had indicated that units purchased through this type of program were not typically used by appraisers to determine market values and there should be no impact on market values of properties in the targeted areas. Agency Ownership of the Units: Ms. Dirnu explained that under the proposed program, the Agency would purchase a unit, which would then be leased to a tenant for 12 to 18 months; after that time, the unit would be sold to the tenant who would obtain a new loan. The Agency would then be removed from the loan, but would retain a second mortgage on the unit to bridge the financial gap between the first mortgage the tenant could afford and the actual value of the property at the time of purchase. When the owner decided to move or to sell the unit, the Agency would then recoup all of its money, which funds would be allocated for other affordable housing projects in the City. She further advised that there would be no requirement that the unit be sold to an income qualified family. Mr. Scarborough explained that the reason for the required 12- to 18 -month tenancy was to provide training, education, and counseling for the tenant and monitoring by the Agency to ensure that the tenant would be an asset to the neighborhood when the unit was purchased. Public Comments: (1) Pauline Leonard, 27589 Brookside Lane, commended the Agency for developing the proposed program. She noted that the Executive Board of the Mary Erickson Foundation reviewed the program and found it to be a reasonable plan. However, she felt it was unrealistic to expect the tenants to be able to purchase their units within the proposed 12- to 18 -month timeframe. She felt that affordable rental units were needed in the City and urged that some of the units in the program be retained as rental units. She suggested that the program be studied further to allow input from residents who would be impacted by the program, to reconsider the proposed timeframe, to consider the economic impacts on the current owners, and to ensure a committed funding source. She noted that the City of San Clemente has been successful in acquiring properties for low- to moderate -income housing. (2) Jessica Dean, 27032-C Paseo Burledero, member of the San Juan Housing Advocates and the Mary Erickson Foundation Board of Directors, concurred with the comments :made by Ms. Leonard. (3) Gillian Cannon, 26467 Calle San Luis, felt that instead of additional rentals, the neighborhoods needed more dedicated homeowners who exhibited pride in ownership. She urged that the proposed program be adopted and put into effect CRA Minutes -3- 9/3/96 224 immediately to eliminate problems with overcrowding. She complained that many homeowners purchase their units from HUD with only $100 down, save a lot of money by not making their mortgage payments or association dues, then move out. She emphasized the importance of the program being able to control the number of people that can live in one unit, provide education to the tenants about home ownership, and retain a management company to address problems. ^' (4) Dr. Ken Friess, 31506 Paseo Christina, noted he owns property in both the Capistrano Villas and Casa de Capistrano. He felt it was important for the Agency to provide direction to staff and the housing consultant to ensure some degree of flexibility in the proposed program. He expressed concern with the program's potential impact on property values, stating that appraisers do use foreclosure values in determining property values. He suggested that the Agency could tie its recorded purchase both to the FHA -recorded deed and the second trust deed to have some basis of record to be able to provide additional guidelines for real evaluation of property values. He felt that the Agency needed to address additional recapture after the first trust deed, particularly since taxpayer money was being used. He felt that property values would eventually increase for properties that have been severely depressed, which would allow the Agency to recoup some of its money. He emphasized the need to preserve rental stock and provide affordable housing in the City for families, noting that Capistrano Pointe, which was subsidized by the Agency to provide affordable housing, was now at market rate. He suggested that a portion of the units proposed for the program be maintained as controlled rental units. Director Nash felt that the proposed program would greatly benefit the two neighborhoods targeted, as well as other areas facing similar problems in the City. In response to concerns regarding preservation of rental housing in the City, Director Nash noted that the City still intends to pursue its rental programs. She felt that program benefits included the ability to stabilize property values in the area, eliminate declining property values, encourage stable home ownership through education, rehabilitate units prior to occupancy that are not up to Code, regulate the level of occupancy in the units, and reduce vacancies and criminal activity. She noted that the UBC regulations which permit local agencies to adopt their own occupancy level standards have been upheld in the courts. Director Jones urged that staff explore the potential for the Agency to recoup some of its money from the interest on the second trust deed. He emphasized that the proposed program would be unique and not like the typical government -run housing project and felt that it would greatly benefit targeted areas throughout the City. - Director Hart spoke in support of the proposed program and expressed appreciation to Directors Nash and Jones for serving on the housing subcommittee. He suggested that this item be continued to allow staff to address the issues that had been raised and to fine-tune the program. CRA Minutes -4- 913196 225 Director Campbell urged that letters be written to Legislators requesting sponsorship of a bill that would regulate occupancy limits. Continuation of Item: It was moved by Director Jones, seconded by Director Hart, and unanimously carried that this item be continued to the meeting of September 17, 1996, or to October 1, 1996, if staff felt an additional two weeks were necessary, to address the issues raised and for staff to provide additional information with regard to the rental program and potential for interest on the second trust deed. The Executive Director advised that staff would address the issues. However, he emphasized that the program was not intended to be a rental program because the neighborhoods are in danger of becoming distressed properties since 60% of the units are rental units; further, that the potential owners needed an incentive to sell their units for more than they paid. 2. AGREEMENT FOR FINANCIAL ADVISOR SERVICES - DEBT ISSUANCE RELATING TO LOW AND MODERATE INCOME HOUSING PROGRAMS (FIELDMAN, ROLAPP AND ASSOCIATES) (600,40) Written Communication: Report dated September 3, 1996, from the Finance Officer, recommending that the formal bid process be waived and that the firm of Fieldman, Rolapp and Associates be retained as the Agency's financial advisor, per Schedule "A," Schedule of Fees, for proposed debt issuance relating to low and moderate income housing. Continuation of Item: It was moved by Director Campbell, seconded by Director Hart, and unanimously carried that this item be continued to the meeting of September 17, 1996, in conjunction with the previous item. The Board recessed to the Council meeting at 8:10 p.m. and reconvened in Closed Session at 8:57 P.M. for: 1. Conference with Real Property Negotiator per Government Code Section 54956.8 for property known as the Old Elementary School site located at the corner of El Camino Real and Acjachema, Parcels A and B on Parcel Map 80-853, and related parcels, with the Capistrano Unified School District as the negotiating parry, to consider price and terms of payment; 2. Conference with Real Property Negotiator per Government Code Section 54956.8 for Assessor's Parcel Nos. 121-240-020 and 121-240-139, with Solag as the negotiating party, to consider price and terms of payment; CRA Minutes -5- 9/3/96 226 3. Conference with Real Property Negotiator per Government Code Section 54956.8 for property known as the Blas Aguilar Adobe located at 31806 El Camino Real, San Juan Capistrano, with David Belardes and foundation as the negotiating party, to consider price and terms of payment, 4. Conference with Legal Counsel, Existing Litigation, per Government Code Section 54956.9, for the case known as McLaughlin, etc., et al v San Juan Capistrano Community Redevelopment Agency, et al; and Conference with Legal Counsel, Anticipated Litigation, per Government Code Section 54956.9(b), for significant exposure to litigation in two cases, and Government Code Section 54956.9(c), the initiation of litigation in two cases. The Agency Secretary was excused therefrom, and the meeting reconvened at 9:45 p.m. Mr. Denhalter advised there was no action to report on any of the items. There being no further business before the Board, the meeting was adjourned at 9:50 p.m. to the next regular meeting date of Tuesday, September 17, 1996, at 7:00 p.m, in the City Council Chamber. Respectfully submitted, CHERYL JOBMOWAGENeY SECRETARY ATTEST: DAVID M. SWERDLIN, CHAIRMAN - CRA Minutes 0 913196