AGENDA ITEM
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: CARLO TOMAINO
CITY MANAGER
BY: ALFA LOPEZ
ASSISTANT TO THE CITY MANAGER/
ECONOMIC DEVELOPMENT MANAGER
SUBJECT:
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EXCLUSIVE NEGOTIATION AGREEMENT (ENA) WITH NATIONAL COMMUNITY RENAISSANCE (NATIONAL CORE)
summary
Summary:
In October 2023, the City Council and Housing Authority Board selected National Community Renaissance (National Core) as the preferred developer partner for the Orange Bluff and Walnut Bluff workforce housing sites. As a component of the selection process, the City Council directed staff to negotiate an Exclusive Negotiation Agreement (ENA). Over the past few months, staff worked with all parties to negotiate the terms, conditions, and project milestones of the ENA (Attachment A). The ENA is a contract that sets aside funds proposed as part of the City’s Notice of Funding Availability (NOFA) specifically for National CORE in conjunction with the proposed workforce housing projects. The ENA prescribes a specific timeframe for National CORE to complete various performance requirements that, if achieved, would result in the City and National CORE negotiating an affordable housing agreement (“AHA”). Staff recommends the City Council and Housing Authority Board approve the ENA between the City of Signal Hill and National Community Renaissance substantially in the form presented for the development of the Orange Bluff and Walnut Bluff sites.
Strategic Plan Goal(s):
Goal No. 1 Financial Stability: Ensure the City’s long-term financial stability and resilience.
Goal No. 3 Economic Development: Improve the local economy, support local businesses, and create a vibrant downtown core.
Goal No. 4 Infrastructure: Maintain and Improve the City’s physical infrastructure, waste system, and recreational spaces.
recommendation
Recommendation:
Staff recommends the City Council and Housing Authority Board approve the Exclusive Negotiation Agreement (ENA) between the City of Signal Hill, the Signal Hill Housing Authority, and National Community Renaissance (“National CORE”) substantially in the form presented for the development of two proposed workforce housing projects known as Orange Bluff and Walnut Bluff.
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Fiscal Impact:
The City and the Housing Authority have access to multiple sources of funding, totaling approximately $10 million, restricted to the development of affordable housing. This projected amount includes the fund balance in the Housing Authority, the repayment of a Successor Agency loan through 2028, Affordable Housing In-Lieu Fees from a prior Development Agreement, and Permanent Local Housing Allocation (PLHA) funding. The City’s financial contribution will require the units to remain income-restricted pursuant to affordability covenants as required by State law for a minimum of 55 years.
Background:
The City’s Certified Housing Element identifies two sites owned by Signal Hill Petroleum (SHP) for the future development of workforce housing. Known as Orange Bluff, an 8.6-acre property located on the south side of East 28th Street between Orange Avenue and Gundry Avenue and Walnut Bluff, a 2-acre property located at the northwest corner of East Willow Street and Walnut Avenue. The City Council entitled both sites to collectively accommodate 85 units of workforce housing at Walnut Bluff and 297 units at Orange Bluff, which helps the City meet its Regional Housing Needs Assessment (RHNA) allocation for the current Housing Element cycle.
On April 25, 2023, the City Council and Housing Authority Board authorized staff to proceed with a Notice of Funding Availability (NOFA) to solicit interest from affordable housing developers. Staff conducted this process through a Request for Proposals (RFP) to evaluate the qualifications of each developer, their respective design concepts, professional team, development history, and their financial capacity to carry out a project of this magnitude. An evaluation committee comprised of staff and a representative from Signal Hill Petroleum (SHP) reviewed the proposals specific to the housing goals outlined in the NOFA.
Following the evaluation process, staff returned to the City Council and Housing Authority with the recommended next steps. At the October 10, 2023, City Council Meeting, staff presented the results of the RFP and provided a recommendation for the City Council and Housing Authority Board’s consideration. Subsequently, the City Council and Housing Authority Board approved the selection of National CORE as the City’s development partner for the Orange Bluff and Walnut Bluff workforce housing sites and directed staff to move forward with the negotiations.
Analysis:
The proposed ENA between the City of Signal Hill and National CORE commits funds identified in the NOFA and establishes contractual obligations during the established negotiation period. The ENA also establishes mutual performance requirements to advance the entitlement and development of the two projects. The ENA is a contract that sets aside funds proposed as part of the City’s Notice of Funding Availability (NOFA) specifically for National CORE in conjunction with the proposed workforce housing projects. Under the ENA, the initial negotiation period is three hundred sixty-five days (365) unless mutually extended by the City Manager. As with any significant and complex development project, potentially exigent circumstances may require the City and National CORE to agree to extend the terms of the ENA. The ENA prescribes a specific timeframe for National CORE to complete various performance requirements that, if achieved, would result in the City and National CORE negotiating an affordable housing agreement.
National CORE submitted conceptual site plans and financing site plans as part of the NOFA process. During the negotiation period, the City would work with National CORE to process the remaining elements of the entitlements necessary for the development of the properties. The City is not obligated to reimburse National CORE for any fees and expenses incurred for engineers, architects, financial consultants, legal, planning, or other consultant costs related to the obligations of the ENA. All costs associated with any formal submittals and all costs associated with the preparation of environmental documents under the California Environmental Quality Act (“CEQA”) shall be borne by National CORE.
As part of the terms of the ENA, National Core would provide the City with a detailed financial plan for the development of the property, including documentation of grant funding requests. For the City Council and Housing Authority Board’s information, staff is highlighting key clauses of the ENA. The entire legal document, which the City Attorney’s Office prepared, is attached to this report (Attachment A).
• Deposit: A $30,000 deposit to be utilized to defray third-party costs during the Negotiation Period. Reasonable costs include consultant and attorney fees.
• Community Outreach: Conduct community outreach with advance notice to all residents and property owners located within five-hundred feet of the property.
• Evidence of Financing: Within the time set forth in the schedule, National CORE shall provide the sources and uses of funds and financial pro-forma for the development.
• Site Control: Signal Hill Petroleum is the property owner of the two subject sites; National CORE is required to negotiate the terms of site control with the property owner within 60 days of the effective date of the ENA.
• Infill Infrastructure Grant (IIG): As an initial step in securing financing to allow the project to proceed, Developer shall prepare an application for an IIG in the amount up to $30.0 million. The IIG shall be used to address existing shortcomings at and around the site, including utility and frontage improvements, demolition, grading, retaining wall construction, wet and dry utilities, and erosion control. Developer shall implement and administer the IIG for the City if funds are awarded to the City.
• Development Plans, Entitlements, and Environmental Review: National CORE will begin the entitlement process associated with the two projects, including any environmental review legally required under the California Environmental Quality Act. The developer is responsible for all costs related to the entitlement process. The City and National CORE will work closely to advance and finalize this process.
• Affordable Housing Agreement (AHA): City and National CORE shall negotiate the terms of an AHA or other form of agreement(s) for the development of the properties with a multifamily affordable housing development. The City and National CORE would negotiate the AHA once the entitlement process is complete.
The effective date of the Exclusive Negotiation Agreement marks the starting point for a clear timeline outlined in the proposed project schedule. The full scope of National CORE’s responsibilities under the ENA are outlined within the Schedule of Performance (Exhibit B of the ENA).
Reviewed for Fiscal Impact:
_________________________
Sharon del Rosario
Attachments:
A. National CORE Exclusive Negotiation Agreement
B. National CORE Development Proposal