CITY OF SIGNAL HILL - File #: 24-451

Date	Action By	Action	Result	Action Details	Meeting Details	Video
8/20/2024	Planning Commission	Received and filed	Pass	Action details	Meeting details	Not available

AGENDA ITEM

TO:

HONORABLE CHAIR

AND MEMBERS OF THE PLANNING COMMISSION

FROM:

COLLEEN T. DOAN

COMMUNITY DEVELOPMENT DIRECTOR

SUBJECT:

title

UPDATE REGARDING WALNUT AND ORANGE BLUFF HOUSING DEVELOPMENTS

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Summary:

Earlier this year, the City Council authorized the City Manager to negotiate and enter into an Exclusive Negotiation Agreement (ENA) with the City’s selected development partner, National Community Renaissance (National CORE). National CORE is actively working on the development of the two proposed workforce housing sites, known as Walnut Bluff and Orange Bluff. National CORE has made substantial progress in its due diligence phase of the Walnut Bluff site and in its negotiations with the property owner for site control. National CORE also confirmed that the Walnut Bluff site is financially feasible as an affordable housing project and structured its proposed capital stack to confirm available funding sources, despite changes to the State budget. The Orange Bluff property, given substantially more complex and cost intensive site remediation issues, will require additional time for due diligence and for National CORE to determine its financial feasibility. At the July 23, 2024 City Council/Housing Authority meeting, National CORE presented its findings as part of an interim status update. Staff will present this update to the Planning Commission.

At the July 23, 2024 Council meeting, the City Council and Housing Authority Board directed staff to renegotiate the Exclusive Negotiation Agreement to establish separate performance schedules for the Walnut Bluff and Orange Bluff properties. The City Council and Housing Authority Board also authorized staff to negotiate an Affordable Housing Agreement for the development of the Walnut Bluff property.

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, water system, and recreational spaces.

recommendation

Recommendation:

1. Receive a presentation from staff regarding the City’s affordable housing development partner, National Community Renaissance, regarding its progress on the Walnut Bluff and Orange Bluff workforce housing sites.

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Background:

Workforce Housing Sites

The City’s Certified Housing Element identifies two sites owned by Signal Hill Petroleum for the future development of workforce housing. As part of the Housing Element update process, the City Council entitled both sites to collectively accommodate up to 380 units. These sites, along with two additional market-rate sites, achieve the City’s goals of meeting its Regional Housing Needs Assessment allocation. Once constructed, the two properties would fulfill the City’s broader housing goals by increasing the available inventory of housing for low- and moderate-income residents.

Similar to properties found throughout Signal Hill, the workforce housing sites have active and abandoned oil wells and significant topography issues that need to be addressed as part of the site preparation process. The Notice Of Funding Availability (NOFA) issued by staff included substantial discussion regarding the associated challenges so that prospective developers could account for these factors as part of their financial assessment of the sites. As the owner and development partner, Signal Hill Petroleum would provide its technical expertise throughout the process.

For the Planning Commission’s reference, the section below provides a description and conceptual site plan for both sites. The first site is known as “Orange Bluff” and comprises approximately 8.6 acres of property located on the south side of East 28^th Street between Orange Avenue and Gundry Avenue. The City entitled the site to accommodate up to 290 workforce units in a village cluster setting of six 3 to 5-story structures around a common open space with internal private drives for circulation. The property has two access points onto public streets, at East 28^th Street and at Gundry Avenue. The second site is known as “Walnut Bluff” and is a 2-acre property located at the northwest corner of East Willow Street and Walnut Avenue. The site is entitled to accommodate up to 90 workforce units in three 3- to 4-story structures clustered around an internal parking area and open space.

Funding Sources and Restrictions:

As noted, the City and the Housing Authority collectively have access to multiple potential sources of funding (totaling approximately $10 million) that can only be utilized for the development of affordable housing. The Housing Authority has a fund balance of $6.4 million which is held in the Affordable Housing Trust Fund. Additionally, there is a projected $2.8 million balance due to the Housing Authority from a Successor Agency loan that is expected to be fully repaid in 2028. The City also has $750,000 related to affordable housing in-lieu fees from a prior Development Agreement. Lastly, the City has access to PLHA funding that could be used to offset the cost of site remediation; the City is in the process of securing additional funding through this program. 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.

Analysis:

After a competitive process to select a qualified developer, the City Council selected National CORE as its development partner. Earlier this year, the City Council confirmed the selection of National CORE and directed staff to negotiate an Exclusive Negotiation Agreement (ENA) for the development of the Orange Bluff and Walnut Bluff workforce housing sites. The purpose of the ENA is to set aside the City and Housing Authority’s available funding for the selected developer and establish performance milestones consistent with the City’s desired development timeframe. Since the execution of the ENA, National CORE has continued to actively work on the development of the two proposed workforce housing sites.

National CORE has made substantial progress in its due diligence related to the Walnut Bluff site and in its negotiations with the property owner for site control. Given substantial changes to the State budget to address its multibillion-dollar operating deficit, the State Legislature and the Governor have temporarily suspended funding for programs such as the Infill Infrastructure Grant and other affordable housing programs. Nonetheless, National CORE developed an economically feasible capital stack to advance the Walnut Bluff development. Given the substantial progress on the Walnut Bluff site, staff recommended the City Council continue advancing these efforts.

The Orange Bluff property has substantially more complex and cost intensive site remediation issues that will require additional time for National CORE to complete its due diligence and determine the financial feasibility of this site. Depending on the outcome of additional environmental studies and financial analysis, the Orange Bluff property may require the City to modify its overall approach to the development of this site. Staff and National CORE will provide a future update once the due diligence process is complete.

Staff will present National CORE’s findings as part of this status update to the Planning Commission, including the Council and Housing Authority’s decision to authorize the City Manager to renegotiate the Exclusive Negotiation Agreement to provide time beyond the initial negotiation period to complete additional due diligence related to the Orange Bluff property and to negotiate an Affordable Housing Agreement with National CORE for the development of the Walnut Bluff site. Staff will also present the revised conceptual plan which was changed from the initial building arrangement due to site constraints and the desire to bring the Boys and Girls Club facility to the Walnut Bluff site, allowing it to begin serving the community sooner than later. Finally, staff will present the design concept for Walnut Bluff, presented at the City Council meeting and will share Council comments and solicit Commission design comments. Items circled below represent to locations of the Boys and Girls Club (1^st floor southern building), the community room (1 of 2 on the right) and the case management offices (1 of 2 on the left). Conceptual elevations are also provided for design comment.

Revised Walnut Bluff Conceptual Site Plan

Walnut Bluff Proposed Conceptual Design

Legislation Details