HomeMy WebLinkAboutGrant Deed - From Redevelopment Agency to City - Emerald Cov (2) • Not f{--,5ared with "
RECORDING REQUESTED BY:
City of Huntington Beach Recorded in Official Records, County of Orange
Real Estate Services Division Tom Daly, Clerk-Recorder
HI°tBgt n90B/ 2000ch, A 92648 Main eet IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII NO FEE
2003000393089 01:36pm 04109103
WHEN RECORDED MAIL TO: 119 91 GO2 4
Connie Brockway, City Clerk 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
City of Huntington Beach
P.O. Box 190/ 2000 Main Street aW di
Huntington Beach, CA 92648
INCORPORATED AREA GRANT DEED DOCUMENTARY NSFER TAX$EXEMPT
APN(s): 159-441-03 a L
Location: Signature of Declarant or Agen MatEr.x
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Redevelopment
Agency of the City of Huntington Beach, a public agency hereby GRANT(S) to THE CITY OF
HUNTINGTON BEACH, a municipal corporation, the real property in the City of Huntington Beach,
County of Orange, State of California, described as follows:
See Exhibit"A"for legal description
Grantee covenants by and for itself and any successors,'transferees and assignees that there shall be no
discrimination against. or segregation of any person or group of persons on account of race, color, creed, -
religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor shall Grantee itself or any person claiming under or
through it establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees
of the Property. The foregoing covenants shall run with the land.
Grantee shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color,
religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs,
executors, administrators and assignees, and all persons claiming under or through them,
that there shall be no discrimination against or segregation of, any person or group of
persons on account of race, color, creed, religion, sex, marital status, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
land herein conveyed, nor shall the grantee or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants
shall run with the land."
(b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assignees, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry in the
leasing, subleasing, transferring, use, occupancy, tenure, or
Im/erant deed12 13/03
enjoyment of the premises herein leased nor shall the lessee himself
or herself, or any person claiming under or through him or her,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use,
or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(c) In contracts: "There shall be no discrimination against or segregation of, any person, or
group of persons on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the premises, nor shall the transferee himself or herself or any person
claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises."
Dated: /7au Z , 2003 `i= f%4- C1-f`i ° H un+1,11 1 �Fu C Il
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DEED CERTIFICATION—CITY OF. HUNTINGTON BEACF{ del APPROVED AS T�� � +�' ATTORNEY
ft,8 Pi:Osust ir(k+a (\t1(itt,titt1 This is to certify that the interest in real prgperty conveyed by the Deed �-dated tilu ficJ7 (c , 2003, frfrom( -to the CITY OF By; ' 1/1
HUNTINGTON BEACH is hereby accepted by the undersigned officer or Assista �j orney
agent on behalf of the City Council of the City of Huntington Beach {Y sy
pursuant to the authority conferred by Resolution No. 3537 of the City This document is solely for the official business of the City of
Council of the City of Huntington Beach adopted on August 7, 1972, Huntington Beach, as contemplated under Government Code Sec.
and the grantee consents to the recordation thereof by its duly 6103 and should be recorded free of charge.
authorized officer.
CITY OF HUNTINGTON BEACH Dated:,Cf Z l Gn ( ,)003 Tax Exempt Government Agency
CITY OF HUNTINGTON BEACH
Ccnnie Brockway,City Clerk
By: l[J ✓.�+i. G(J By:G=`3
CON
NIE BROCKWAY,CMC CONNIE BROCKWAY,CMC V
CITY CLERK. CITY CLERK
MAIL TAX STATEMENTS TO PARTY SHOWN ON THE FOLLOWING LINE
Connie Brockwa Ci Clerk Ci of Huntin ton Beach P.O. Box 190 2000 Main Street Huntin ton Beach CA 92648
Project Name: APN(s):
Im/erart deed/2/18/03
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
State of Cq // 1 /7 Qh /fq
County of 0 r q ii 9 .e...
Nafq ey /9eiblic
On M Q y' a h 6th before me, 1�'/i Z.DUhe 2 dleT';onall
Datey
Name&Ti a of Officer(i.e,Jape Doe Notary Public)
appeared C DI VI l OQp' d ing �/'�d (D/2 i2/ E R(/td /tC d'Q
Name(s)of Signer(s)
[f(personally known to me -OR- El o be the
perso s hose nam (s is ubscribed to the within
instrument and acknow edge. to me that he/sh=47xecuted
the same in his/her CO.uthorized capaci (0), and V.A. by
his/he OP ignatur: .n the instrument t e persoror the
entity upon behalf of w ich the perso 0:cted, executed the
KELLY LOUISE MANDIC instrument.
Commission# 1372899 WIT SS hand and offs ial seal. ,
�',����.� Notary Public i
Z 4r Oran a County
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g 1971"2151(ie--1°
-
My Comm.Expires Sep 1,2C06 r Signature of Notary
OPTIONAL
Though the data below is not required by law,it may prove valuable to persons relying on the document and could prevent fraudulent
removal and reattachment of this form to another document
Description of Attached Document
Title or Type of Document &Vtq' ri 7 h. .,g..cil 7-- E: iv-eir‘t? jej C(7,..e
•
Document Date: mgY'ci.h £ h J d 08 Number of Pages 3 pQ 5-e S Q ��,i 1d 12
4/074Qr v fQ'
Signer(s) Other Than Named Above: ✓' �-
Capacity(ies) Claimed by Seller(s)
Signer's Name Conn, r lrCc.(6-L;A-1 ; Signer's Name Con int E bC..rl)rna yi
El Individual ❑ Individual
® Corporate Officgr � ! Corporate 0 rcer ,^
Title(s): C / 7") C.. f.e 0 k Title(s): Q k Q Y
El Partner ❑ .Limited El General • ❑ P• artner ❑ Limited ❑ General,
❑'Attorney-in-Fact Right Thumbprint of ; ❑ A• ttorney-in-Fact Right Thumbprint of;
Signer Signer
El Trustee � El Trustee
El Guardian or Conservator ❑ Guardian or Conservator
El Other + ❑ .`�`�
tik O• ther
Signer Is Representing: , r.:: ; Signer Is Representing: -Nt
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CAA ii VAi C?illfiil1 iI1 (=ci
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Im/grant deed/2/18/03
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EXHIBIT A
Legal Description
LOTS 1, A AND B OF TRACT NO. 12060, IN THE CITY OF HUNTINGTON. BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 707, PAGES 5 TO 8
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
LOTS 1 AND A OF TRACT NO. 12063, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 707, PAGES 9 TO 12
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT FROM A PORTION OF SAID LAND AN UNDIVIDED 1/6 INTEREST IN ALL OIL,
PETROLEUM, ASPHALTUM, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN, ON
OR UNDER SAID LAND AS RESERVED IN THE DEED RECORDED AUGUST 15, 1921 IN BOOK 401,
PAGE 356 OF DEEDS.
ALSO EXCEPTING THEREFROM ALL MINERALS, GAS, OIL, PETROLEUM, NAPTHA AND OTHER
HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, TOGETHER WITH ALL NECESSARY
AND CONVENIENT RIGHTS TO EXPLORE FOR, DEVELOP, PRODUCE, EXTRACT AND TAKE THE
SAME SUBJECT TO THE EXPRESS LIMITATION THAT ANY AND ALL OPERATIONS FOR THE
EXPLORATION, DEVELOPMENT, PRODUCTION, AT LEVELS BELOW THE DEPTH OF 500 FEET
FROM THE SURFACE OF SAID LAND BY MEANS OF MINES, WELLS, DERRICKS AND/OR OTHER
EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND LYING
OUTSIDE THE ABOVE DESCRIBED LAND AND SUBJECT FURTHER TO THE EXPRESS LIMITATION
THAT THE FOREGOING RESERVTION SHALL IN NO WAY BE INTERPRETED TO INCLUDE ANY
RIGHT OF ENTRY IN AND UPON THE SURFACE OF SAID LAND, AS RESERVED IN THE DEEDS
RECORDED JANUARY 31, 1984 AS INSTRUMENT NO. 84-043025 AND JANUARY 10, 1994 AS
INSTRUMENT NO. 94-019792 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFORM THE SUBSURFACE WATER RIGHTS WITHOUT THE RIGHT OF
ENTRY TO THE SURFACE OR TO THE SUBSURFACE ABOVE THE DEPTH OF 500 FEET, AS
DEDICATED TO THE CITY OF HUNTINGTON BEACH BY RECITAL ON THE MAP OF TRACT NO.
12063, RECORDED IN BOOK 707, PAGES 9 TO 12 OF MISCELLANEOUS MAPS.
in CITY OF HUNTINGTON BEACH
2000 MAIN STREET CALIFORNIA 92648
OFFICE OF THE CITY CLERK
CONNIE BROCKWAY
CITY CLERK
March 18, 2003
Tom Daly, Recorder
County Clerk-Recorder
P.O. Box 238
Santa Ana, CA 92702
Enclosed please find the Grant Deed — Emerald Cove to be recorded and returned to the City
of Huntington Beach, Office of the City Clerk, 2000 Main Street, Huntington Beach, CA 92648.
We are enclosing a copy of this deed to be conformed. Please return the conformed copy of
the Grant Deed when recorded to this office in the enclosed self-addressed stamped envelope.
Brockway,y, CMC
City Clerk
Enclosures: 1. Original Deed and 2. Copy of the deed to be conformed.
Re: Grant Deed Emerald Cove Tract No 12063 APN 159-441-03
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Council/Agency Meeting Held: 3/��i
Deferred/Continued to: auicivtAkl,
pproved ❑ Conditionally Approved ❑ Denied City Clerk's SignatClre
Council Meeting Date: March 3, 2003 Department ID Number: AS 03-12
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CITY OF HUNTINGTON BEACH -
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTIOO -:_
0
SUBMITTED TO: HONORABLE MAYOR/CHAIRMAN AND CITY COUNCIL _D ` ,".
y .
MEMBERS/REDEVELOPMENT AGENCY MEMBERS
SUBMITTED BY: RAY SILVER, City Administrator/Executive Director, D
PREPARED BY: DAVID C. BIGGS, Director of Economic Development/Deputy / I
Executive Director
JIM B. ENGLE, Director of Community Servic`
CLAY MARTIN, Director of Administrative Sery esC.
SUBJECT: REVIEW EXISTING RENT STRUCTURE AT EMERALD COVE AND
MAKE APPROPRIATE RECOMMENDATIONS FOR FUTURE RENT
INCREASES
Statement of Issue, Funding Source, Recommended Action,Alternative Action(s),Analysis, Environmental Status,Attachment(s)
Statement of Issue: Project revenues are insufficient to cover the total operating expenses
of the Emerald Cove senior housing project. Revisions to the rent structure will result in the
project becoming more financially viable. In addition, this report presents a summary of other
issues facing Emerald Cove.
Funding Source: Emerald Cove Enterprise Fund Unreserved Undesignated Fund Balance
in account 503.31100.1999 in the amount of$743,000.
Recommended Action:
Redevelopment Agency:
1 . Authorize the Agency Chair and Secretary to execute a Grant Deed transferring title
of Emerald Cove from the Redevelopment Agency to the City of Huntington Beach;
C':y Council:
1 . Authorize the City Clerk to accept, record and file the Grant Deed transferring title of
Emerald Cove from the Redevelopment Agency to the City of Huntington Beach;
Emerald Cove Rents -- 2/20/2003 10:07 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
2. Appropriate $500,000 in Unreserved Undesignated Fund Balance from the Emerald
Cove Enterprise Fund for deferred maintenance of Emerald Cove buildings and
grounds;
3. Transfer $243,000 from the Emerald Cove Enterprise Fund to the Park Acquisition
and Development Fund in the form of debt repayment by the Redevelopment
Agency. Since this debt originated via Redevelopment Agency assistance,
$243,000 will be credited against the Redevelopment Agency's debt owed the Park
Acquisition and Development Fund;
4. Direct the City Attorney's office to prepare Conditions, Covenants and Restrictions
which restrict one-half of all units to residents earning 50% or less than the area
median income (Very-Low) and restricts one-half of all units to residents earning
80% or less than the area median income (Low), provided that existing tenants be
"grandfathered" from having to meet income affordability restrictions;
5. Approve a new rent schedule, effective April 1, 2003, for existing and new tenants,
as discussed herein;
6. Direct staff to work with the County of Orange Housing Authority to apply for tenant
and/or project-based Section 8 Housing certificates to prevent economic
displacement of tenants in the event of a future sale.
Alternative Action(s):
Add, delete or modify any of the above recommendations.
Analysis:
In July 2002, the City Council's Economic Development Committee (EDC) received a report
on several non-performing real estate assets, including Emerald Cove. The goal of this
research was to determine if any of the properties could be declared surplus and made
available for sale. In August 2002, the EDC recommended that Emerald Cove be considered
for sale. The City Council concurred, with the stipulation that rent levels at Emerald Cove
would remain affordable for current senior residents.
Since that time, staff has analyzed the following issues related to Emerald Cove: 1)
ownership of the property; 2) economic restrictions relating to the affordability of the units to
persons of Very-Low and Low- income; 3) the rental income derived from Emerald Cove; and
ultimately, 4) the potential for net revenues to the General Fund in the event of a sale. A
preliminary report was presented to the EDC in January 2003 and a study session was
conducted with the City Council on February 3, 2003. Staff also met with the Council on
Aging and held a community meeting for residents of Emerald Cove on February 6, 2003.
This report summarizes the issues presented at the study session.
-2- 2/20/2003 10:07 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
I. Ownership of the Property and Existing Debt
In 1984, the Redevelopment Agency (Agency) issued $4.6 million in Certificates of
Participation (COPs) to construct the Emerald Cove senior citizen apartment complex
(Attachment #1). The objective was to provide non-Federally subsidized housing for senior
citizens with restricted incomes. Emerald Cove was part of a 1984 Disposition and
Development Agreement between the Agency and the William Lyon Company, and consists
of 164 units, of which 32 are studios and 132 are one-bedroom units. The units are grouped
into nine two-story buildings and the project also contains a central recreation building for use
by all tenants.
As part of the overall financing plan, Emerald Cove was leased by the Agency to the City in
exchange for monthly lease payments equal to the debt service payments due on the COPs.
At the end of the lease, the COPs would be repaid (through the City's ongoing lease
payments) and title to the project would automatically vest with the City. In 1991, the COPs
were refinanced to take advantage of more competitive interest rates. The 1984 lease
between the Agency and the City was amended at the same time. Annual rental payments
were also revised to reflect the 1991 COPs amortization schedule.
In.2000, the COPs were defeased, or paid off, as part of a larger financing package for
various capital projects throughout the City. The defeasement of the COPs triggered a
requirement to transfer title of Emerald Cove from the Agency to the City. The transfer of title
was never finalized due to the pending resolution of several issues associated with the
overall financing of the project. Since these issues have now been resolved, staff is now
recommending that the Agency Board and the City Council transfer title to the City.
II. Emerald Cove Enterprise Fund
Since it opened in April 1985, the City has maintained Emerald Cove rents at levels
significantly lower than the standards established by the U.S. Department of Housing and
Urban Development (HUD) for residents earning less than 50% (Very-Low) or 80% (Low) of
the area median income. Balancing the need to provide affordable housing for senior
citizens with the need to generate sufficient revenue to pay for operating expenses has
restricted past rent increases (Attachment #2). Over time, this has lead to insufficient
operating revenue to properly maintain and operate the project. The result has been a
reduction in regular maintenance, elimination of virtually all capital improvements, a decrease
in operating expenses and the use of other revenue sources (such as Agency housing set-
aside funds) as a way to offset the insufficient rent revenues. Today, the project has
substantial deferred maintenance and no operating reserves to allow for the most basic of
repairs.
Staff is recommending that the City Council appropriate $500,000 in Unreserved
Undesignated Fund Balance from the Emerald Cove Enterprise Fund to be immediately
allocated for deferred maintenance. These funds are available and have traditionally been
used to earn interest income, which was then applied annually to help balance the operating
expenses of the Emerald Cove Enterprise Fund. Approximately $1.4 million in Unreserved
Undesignated Fund Balance would remain in the Emerald Cove Enterprise Fund for
-3- 2/20/2003 10:07 AM
REQUEST FOR CouNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
continued generation of interest earnings. Staff does not recommend further use of the $1.4
million in Unreserved Undesignated Fund Balance until such time that operating revenues
are sufficient to cover ongoing maintenance and operational costs.
While the interest earned from the Unreserved Undesignated Fund Balance has allowed the
Emerald Cove Enterprise_Fund to balance annually, it should be noted that the project
receives indirect subsidies from the General Fund and the Redevelopment Agency.
Currently, the Agency transfers $35,000 a year from its Housing Set-Aside fund to the
Emerald Cove Enterprise Fund. In addition, maintenance or repair costs are regularly
absorbed by the Community Services Department's General Fund budget, and range from
the cost of replacing a sprinkler system to the cost of repairing a balcony. Lastly, the General
Fund and the Park Acquisition and Development (PA&D) Fund indirectly subsidize the
Emerald Cove Enterprise Fund through lost rent potential, which would in turn be used to
repay existing debt.
When Emerald Cove was originally constructed, the project deferred payment of $243,000 to
the City for development fees. Since the debt is to be repaid to the PA&D Fund, staff
recommends that the Agency's debt to the PA&D Fund be reduced by $243,000. Since this
debt originated via Agency assistance to the project's developer, $243,000 will be credited
against the Agency's debt owed to the PA&D Fund.
III. Eligibility Requirements
Redevelopment agencies have always had a responsibility to assure that, when agency
monies are spent to make the cost of housing affordable to Very-Low, Low- or Moderate-
income persons, the agency's objectives are met. In 1987, legislation was passed that
required all new or substantially rehabilitated housing units developed or otherwise assisted
with Housing Set-Aside fund monies to remain available at affordable rates to persons of
Very-Low, Low- or Moderate income. This legislation required an agency to record a
covenant or restriction, which runs with the land, for each housing unit subject to these
affordability requirements.
While Emerald Cove was constructed with the intent to provide non-Federally subsidized
housing for senior citizens on limited incomes, it was developed prior to the 1987 legislation,
and covenants providing for affordability restrictions were never recorded against the
property. In order to ensure the future affordability of these units, staff recommends that half
of all units (82) be restricted to individuals earning 50% or less of the area median income
(Very-Low), and the remaining 82 units be restricted to individuals earning 80% or less of the
area median income (Low). These restrictions would maintain affordability restrictions on
Emerald Cove for a minimum of 60 years. If approved by the City Council, staff will apply
these income affordability restrictions to the project effective April 1, 2003, while
simultaneously working to record the appropriate covenants.
Additionally, staff recommends that an annual review of income eligibility be undertaken for
all tenants. Since income verification previously occurred at the time of move-in, staff does
not want to penalize existing tenants who may now exceed income limits. Therefore, in order
-4- 2/20/2003 10:07 AM
REQUEST FOR CANCIL/REDEVELOPMENT AG NCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
to prevent displacement of long-term tenants, staff further recommends that regardless of the
results of the annual income verification, existing tenants be "grandfathered" from having to
meet and maintain income affordability restrictions, and that only tenants who move in after
April 1, 2003, be required to maintain income affordability or be subject to removal. These
changes to the allowable rents for Emerald Cove will not impact either the Agency's or City's
reporting requirements for the production and maintenance of affordable units.
IV. Existing Rents
If the City Council elects to utilize the above-mentioned $500,000 in Unreserved
Undesignated Fund Balance for deferred maintenance, it would alleviate many long-term
maintenance issues. However, the basic structural inequity of insufficient operating revenue
(from rents and subsidies) compared to the cost of operating and maintaining the project will
continue unabated. Based on City Council direction in August 2002, staff conducted an
analysis with the assistance of Keyser Marston Associates (KMA) to determine the economic
potential of the project in the event of a sale. A key component of the project's economic
value is directly attributed to the level of rents and the income derived from rents.
As stated earlier, the City has maintained rents at levels significantly lower than the
standards established by HUD for residents earning less than 50% or 80% of the area
median income. While there are no covenants requiring the City to operate the project at a
specific income level, it has effectively operated Emerald Cove as a mixed income project for
persons in the Very-Low and Low- income range. The City is currently charging rents that
are $269 to $419 per month lower than the Very-Low income rents allowed,. and $402 to
$571 per month lower than the allowable Low- income rents. At a minimum, the project's
gross income is approximately $600,000 to $900,000 per year less than would be achieved if
the rents were fully maximized (Attachment#3).
In addition to reviewing the rents, KMA reviewed the project's current operating budget and
found that the City operates Emerald Cove at a cost of approximately $2,000 per unit per
year, while the industry standard for a comparable project is $3,000 per unit per year. This
difference in operating cost is exhibited in the lack of reserves for capital repairs and the lack
of regular maintenance. A prospective buyer would apply operating expense assumptions
that are in line with industry standards.
All of these actions, while maintaining extremely low rents for the senior citizens, diminish the
project's ability to support itself which, in turn, diminishes its desirability to prospective
buyers. However, it is important to acknowledge that the residents of Emerald Cove are all
on restricted incomes and that any dramatic increase in their rents is likely to have a
significant impact on their financial stability.
-5- 2/20/2003 10:07 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
Instead of suggesting immediate rent increases to the HUD standard for Very-Low and Low-
income residents, staff is recommending ,a phased-in approach to rent increases as follows
(Attachment#4):
• Rents are increased to Federal restricted rent levels for Very-Low and Low- income
residents based on unit turnover or vacancy. Staff conservatively estimates that unit
turnover or vacancy occurs at a rate of 10% a year. At this rate, all units would charge
maximum restricted rents within 8 to 10 years. This action would not affect existing
residents.
• Increase monthly rents for existing tenants on an annual basis by 2%. This nominal
amount will prevent further rent disparity in the future.
V. Current Management
The City is and has been responsible for the maintenance and operation of Emerald Cove
since its inception. In 1984, the City entered into a management agreement with Living
Opportunities Management Company (LOMCO) to perform the daily operation of the project
and to act as the liaison between the City and the residents. LOMCO's contract was
extended on,several occasions and expired in 1999, at which point they were placed on
month-to-month status.
In 2001, the City issued a Request for Proposals for a management company to encourage
competitive bids. As a result of this process, staff recommended, and the City Council
approved, a management contract with Western Seniors Housing (WSH). WSH began
managing Emerald Cove on October 1, 2001. As manager, WSH is required to implement
the rental of units in accordance with City Council-adopted policies, to enforce rules and
regulations for tenants, to collect and manage finances, to oversee maintenance and repairs
using available resources, and to provide recreation and social activities for residents. WSH
recently replaced their on-site manager to meet these objectives.
Staff is working collaboratively with WSH to implement several important management
changes at Emerald Cove to enhance existing operations. These include revising the tenant
application process, the tenant leases and the Residents' Handbook. It should be noted that
WSH (and LOMCO prior to that) operates and maintains the project to the best of their
abilities given available resources. Unfortunately, as discussed above, operating income
from rents have consistently been insufficient to provide for an enhanced level of service or
maintenance.
VI. Options for Sale
While the City's long-term goal may be to sell the project, staff recommends that the City
Council focus on resolving some of the immediate issues related to existing rent disparities
prior to making a decision on the potential sale. These actions should enhance the City's
position in marketing the property for sale and, ultimately, its purchase price. In keeping with
the long-term goal of selling the project, it is recommended that the City Council direct staff to
work towards the eventual sale of the project to a non-profit housing entity and to address the
-6- 2/20/2003 10:07 AM
REQUEST FOR COUNCIL/REDEVELOPMENT AGENCY ACTION
MEETING DATE: March 3, 2003 DEPARTMENT ID NUMBER: AS 03-12
issues of rent restrictions and the potential for economic displacement. Specifically, staff
would work with the County of Orange Housing Authority to apply for tenant and/or project-
based Section 8 housing vouchers when they become available to avoid economic
displacement prior to any further action regarding a potential sale of the asset. In the event
of a sale, repayment of all debt associated with the project should be given priority use of
sale proceeds. Staff would report back to the City Council on its progress to date by the end
of 2003.
In summary, staff believes that the short-term and long-term efforts presented herein will
enhance the quality of life for the residents by providing ongoing maintenance to a City-
owned asset while improving the quality of housing for lower-income residents, maintaining
affordable rents and building livable neighborhoods.
Environmental Status: Not applicable.
Attachment(s):
. F City Clerk's
Page Number No. Description
1 Location ma• of Emerald Cove
2 Summa of •ast rent increases
3 Lost rent •otential and area median income levels
4 Pro•osed rent schedule, effective A•ril 1, 2003
5 Grant Deed between the Redevelo•ment A•enc and the Cit
6 Fiscal I m•act Statement
RCA Author: Bodek x5445
-7- 2/20/2003 10:07 AM
ATTACHMENT # 1
______. 2/3/2003 9:02:38 PM
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City of Huntington Beach ,
Scale: 1"= 189'
ATTACHMENT #2
ATTACHMENT 2
HISTORY OF PAST CITY COUNCIL ACTIONS
REGARDING RENT INCREASES AT EMERALD COVE
April 20, 1987: The City Council discussed the need to adjust the rent structure of
Emerald Cove in order to maintain a reserve fund. The City Council approved a
one-time 7% "across the board" rent increase for all tenants. The City Council
further directed that future rent increases be brought back to the City Council for
approval.
May 16, 1988: The Deputy City Administrator submitted a proposed increase of 4%
in the Emerald Cove rent structure. The City Council did not approve any rent
increase.
August 7, 1995: The City Council adopted a new rent schedule that required new
tenants to pay a higher rent of $10 per month per year. Tenants who moved in
prior to October 1, 1995, did not receive a rent increase.
ATTACHMENT #3
ATTACHMENT 3
LOST RENT POTENTIAL BETWEEN EXISTING RENTS
AND FEDERAL STANDARDS
The current rent differential between existing rents and the allowable federal
standards is shown below.
Studio Unit One-Bedroom Unit
EC Rent Range $254-355 $297-405
Average Rents $323 $363
Max. Very-Low Rents $624 $716
Difference $269-370 $311-419
Max. Low Rents $757 $868
Difference $402-503 $463-571
The City is currently charging rents that are $269 to $419 per month lower than the
Very-Low income rents allowed, and $402 to $571 per month lower than the
allowable Low- income rents.
At a minimum, the project's gross income is approximately $600,000 to $900,000
per year lower than would be achieved if the rents were fully maximized.
MAXIMUM INCOME LEVELS FOR VERY-LOW
AND LOW- INCOME TENANTS
Family Size Median Income Very-Low Income Low Income
(as of 3/6/02)* (50% of median (80% of
income) median
income)
Family of 1 $52,900 $26,450 $38,100
Family of 2 $60,500 $30,250 $43,500
* The median income is current as of March 6, 2002, and is subject to annual
revision by the U.S. Department of Housing and Urban Development.
ATTACHMENT #4
ATTACHMENT 4
PROPOSED RENT SCHEDULE, EFFECTIVE APRIL 1, 2003
For New Tenants:
All new tenants moving into Emerald Cove on or after April 1, 2003, will pay rents
equal to rents allowed by the U.S. Department of Housing and Urban Development
(HUD) for those tenants who earn 50% (Very-Low) and 80% (Low) of median
income. By way of example, the current rents based on HUD median income (as of
March 6, 2002) are as follows:
Studio Unit One-Bedroom Unit
Max. Very-Low Rents $624 $716
Max. Low Rents $757 $868
Rents for new tenants moving into Emerald Cove on or after April 1, 2003 are
increased annually based on HUD guidelines. The annual rent increases will be
effective on the first day of the first full month following receipt of the new rent and
income limits by the management company.
There will be no rent differential between an upstairs or downstairs unit for tenants
moving in on or after April 1, 2003.
For Existing Tenants:
Effective April 1, 2003, all residents of Emerald Cove who moved in prior to March
1, 2003, will receive a rent increase of 2%. This rent increase will be effective on
the resident's original move-in month (commonly referred to as their anniversary
month), and annually thereafter. This 2% increase will occur regardless of the
unit's size (studio versus one-bedroom) or location (upstairs versus downstairs). A
2% annual increase will occur until the unit rent amount reaches the rent allowed in
accordance with the annual guidelines established by HUD. Thereafter, residents
will receive increases based upon HUD's annual increase.
Residents who currently have a lease agreement after April 1, 2003 will receive a
2% increase at the expiration of their current lease agreement. That expiration
date will then become their anniversary month (these residents will receive
increases on the expiration month annually, and not during the month of their
original move-in).
For New and Existing Tenants:
On the tenant's anniversary date and annually thereafter, all tenants will be
required to provide income verification upon the request of the City and/or
management company.
ATTACHMENT #5
luu ,
Emerald Cove
Rent Structure Analysis
Clay Martin,Director of Administrative Services
David C.Biggs,Director of Economic Development
Jim B.Engle,Director of Community Services
March 3,2003
Background
• August 2002 City Council directive to investigate the
potential of selling Emerald Cove.
• Held a City Council study session on February 3,
2003.
• Community meetings with Council on Aging and
Emerald Cove residents on February 6, 2003.
2
Litt 0 �I Cab()
Goals for Sale of Project
Overall goals are to:
- Protect existing residents from economic displacement.
- Pay off existing debt associated with the project.
- Properly maintain the project and provide a better living
environment for residents.
- Ensure that all 164-units remain income restricted.
3
Original Financing
• In 1983, the City sold land to the Redevelopment Agency(RDA)
for construction of Emerald Cove.
- Purchase price was$2.75 million.
- City accepted Promissory Note payable to the Park
Acquisition and Development Fund (PA&D).
- RDA repaid a portion of the Note to PA&D in 1984 and
1989.
• In 1984, the City borrowed approx. $5 million in the form of
Certificates of Participation (COPs)to finance the construction
of the project.
• The COPs were refinanced in 1991 and again in 2000 to
provide better interest rates.
4
2
Existing Debt Summary
The project is subject to the following debt:
• RDA debt to the PA&D Fund, which totals$4.58 million as
follows:
- $1.74 million in principal
- $250K in deferred development fees
- $2.6 million in accrued interest(to date)
• COP Bonds: $5.13 million
TOTAL: Approx. $9.7 million in outstanding debt
5
Restricted Rents
Very Low Income: 50% of the area median income.
Low Income: 80% of the area median income.
Family Size Median* Very Low Low
Family of 1: $52,900 $26,450 $38,100
Family of 2: $60,500 $30,250 $43,500
*Median income as of 3/6/02.
6
3
Current Rent Levels
Studio 1-BR Unit
EC rent range $254-355 $297-405
Max. very-low rents $624 $716
Rent Differential $269-370 $311-419
Max. low rents $757 $868
Rent Differential $402-503 $463-571
Annual Lost Rent Potential:
Very-low affordability rents: $600,000
Low affordability rents: $900,000
7
Restricted Rent Issues
• Not enough revenue generated from rents to properly operate
housing project($3,000/unit/year industry average for operation
versus City costs of less than$2,000/unit/year)
• No existing covenants on property: need to decide on
appropriate level of affordability restrictions(i.e., Very-Low
income, Low income or a mix of income levels).
• Revenue from potential sale of Emerald Cove is directly related
to the rent levels that the City allows for the project, i.e., the
lower the rent level, the less sale proceeds available to pay off
debt.
8
4
Maintenance Issues
• Unable to make the most basic of repairs without exceeding
operating budget, i.e., water heater replacements, carpeting,
etc.
• No maintenance reserve for larger capital repairs, i.e., roof
repairs, painting, balcony replacement, etc.
• Deferred maintenance currently estimated at$525,000 to
$750,000 and continues to grow.
9
Proposed Rent Increase
• For new tenants: Raise rents to federal standards for preferred
affordability levels based on unit-turnover or unit vacancy
(estimated at 10% per year).
• For existing tenants: Raise rents by 2%annually, based on the
tenant's anniversary date.
10
5
c zl
Short Term Recommendations
• Transfer title of property from RDA to City.
• Prepare covenants for preferred affordability levels.
Staff recommends:
- 50% of all units for Very-Low income residents
- 50% of all units for Low income residents
13
Short Term Recommendations
• Transfer$243,000 from the Emerald Cove Fund to
the PA&D Fund in the form of debt repayment by
the RDA.
• Appropriate $500,000 from the Emerald Cove Fund
for immediate maintenance repairs.
14
7
Example of Proposed Rents
FOR NEW TENANTS (based on federal guidelines)
Studio 1-BR
Max. Very-Low rents $624 $716
Max. Low rents $757 $868
Thereafter, rents will increase annually according to federal
guidelines.
11
Example of Proposed Rents
FOR EXISTING TENANTS (based on 2% increase annually)
Existing Rent 1st Year 2nd Year
$297/mo. $303/mo. $309/mo.
$355/mo. $362/mo. $369/mo.
$415/mo. $423/mo. $432/mo.
12
6
Short Term Recommendations
• Effective April 1, raise rents for new tenants to
federal guidelines for Very-Low and Low income
tenants.
• Effective April 1, raise rents for existing tenants by
2% on their anniversary date, and annually
thereafter.
15
Long Term Recommendations
• Direct staff to work with the County of Orange
Housing Authority to secure project and/or tenant
based Section 8 housing certificates.
• Report back to the City Council in a year to decide
whether to pursue a sale or to retain ownership of the
project.
16
8
RECORDING REQUESTED BY:
City of Huntington Beach
Real Estate Services Division
P.O. Box 190/ 2000 Main Street -
Huntington Beach, CA 92648
WHEN RECORDED MAIL TO: L\
Connie Brockway, City Clerk
City of Huntington Beach
P.O. Box 190/ 2000 Main Street
Huntington Beach, CA 92648
APN(s): 159 CO OORATED AREA GRANT DEED DOCUMENTARY NSFER TAX$IXE
iL- -
Location: Signature of Declarant or Agen janiEtEr ax
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the Redevelopment
Agency of the City of Huntington Beach, a public agency hereby GRANT(S) to THE CITY OF
HUNTINGTON BEACH, a municipal corporation, the real property in the City of Huntington Beach,
County of Orange, State of California, described as follows:
See Exhibit"A"for legal description
Grantee covenants by and for itself and any successors, transferees and assignees that there shall be no
discrimination against or segregation of any person or group of persons on account of race, color, creed,
religion, sex, marital status, national origin or ancestry in the sale, lease, sublease, transfer, use,
occupancy, tenure or enjoyment of the Property, nor shall Grantee itself or any person claiming under or
through it establish or permit any such practice or practices of discrimination or segregation with reference
to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees
of the Property. The foregoing covenants shall run with the land.
Grantee shall refrain from restricting the rental, sale or lease of the Property on the basis of race, color,
religion, sex, marital status, ancestry or national origin of any person. All such deeds, leases or contracts
shall contain or be subject to substantially the following nondiscrimination or nonsegregation clauses:
(a) In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs,
executors, administrators and assignees, and all 'persons claiming under or through them,
that there shall be no discrimination against or segregation of, any person or group of
persons on account of race, color, creed, religion, sex, marital status, national origin or
ancestry in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
land herein conveyed, nor shall the grantee or any person claiming under or through him
or her, establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the land herein conveyed. The foregoing covenants
shall.run with the land."
(b) In leases: "The lessee herein covenants by and for himself or herself, his or her heirs,
executors, administrators, and assignees, and all persons claiming under or through him or
her, and this lease is made and accepted upon and subject to the following conditions:
"That there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed,
religion, sex, marital status, national origin, or ancestry in the
leasing, subleasing, transferring, use, occupancy, tenure, or
im/grant deed/2/18/03
enjoyment of the premises herein leased nor shall the lessee himself
or herself, or any person claiming under or through him or her,
establish or permit any such practice or practices of discrimination or
segregation with reference to the selection, location, number, use,
or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the premises herein leased."
(c) In contracts:. "There shall be no discrimination against or segregation of, any person, or
group of persons on account of race, color, creed, religion, sex, marital status, national
origin, or ancestry, in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the premises, nor shall the transferee himself or herself or any person
claiming under or through him or her, establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location, number, use or
occupancy of tenants, lessees, subtenants, sublessees or vendees of the premises."
Dated: , 2003 ,11 CCYct4-{ur1+4 Fa cl)
EAEu >a
alVt)--U 04-'&0-4/\--
c h \ (A- C- t K --- --------
DEED CERTIFICATION—CITY OF HUNTINGTON BEACH Jo i APPROVED AS TA j 4„ 1 to CITY ATTORNEY
rf,R REv}.u8/0t.�a.ir``� Attoeuey
f
This.is to certify that the interest in real property conveyed by the Deed
dated Ala itch , 2003, from' -'to the CITY OF By: l�`03
HUNTINGTON BEACH is hereby accepted by the undersigned officer or Assists mey 111
agent on behalf of the City Council of the City of Huntington Beach 'y
pursuant to the authority conferred by Resolution No. 3537 of the City This document is solely for the official business of the City of
Council of the City of Huntington Beach adopted on August 7, 1972, Huntington Beach, as contemplated under Government Code Sec.
.and the grantee consents to the recordation thereof by its duly
authorized officer. //J / 6103 and should be recorded free of charge.
CITY OF HUNTINGTON BEACH Dated:/l Cf- (),,40O3 Tax Exempt Government Agency
CITY OF HUNTINGTON BEACH
Connie Brockway,City Clerk
By: f i/iir Le. �C l.(.) By:Z6`iL/ -e.- 7�G
CONNIE BROCKWAY,CMC CONNIE BROCKWAY,CMC
CITY CLERK CITY CLERK
MAIL TAX STATEMENTS TO PARTY SHOWN ON THE FOLLOWING LINE
Connie Brockway,City Clerk City of Huntington Beach P.O. Box 190/ 2000 Main Street Huntington Beach,CA 92648
Project Name: APN(s):
Im/grant deed/2/18/03
ATTACHMENT #6
% , CITY OF HUNTINGTON BEACH
INTERDEPARTMENTAL COMMUNICA TION
To: Ray Silver, City Administrator
From: Clay Martin, Director Of Administrative Services
Subject: FIS 2003-20 - Review Existing Rent Structure at Emerald
Cove and Make Appropriate Recommendations for Future Rent
Increases
Date: February 12, 2003
As required by Resolution 4832, this Fiscal Impact Statement has
been prepared for "Review Existing Rent Structure at Emerald Cove
and Make Appropriate Recommendations for Future Rent Increases".
If the City Council approves this request (total appropriation $743,000
of which $243,000 is debt repayment and $500,000 for new
expenditures), it will reduce the estimated working capital of the
Emerald Cove Fund at September 30, 2003 to $1 ,201 ,000.
Clay Martin
Director of Administrative Services
L
CALIFORNIA ALL-PURPOSE ACKNOWLEDGEMENT
State of Cqi, fovnig
County of 0 r1� q -e
NatolAy ,eihi.
On M 4 r 1 h g th a°before me, /C'11,/ L.2(f/�S 42 , drpe onally
Date Name&Tit(e of Officer(i:e,Jane Doe Notary Public)
•
appeared C onn r &9Qi4d1,?qjl and (7or112r e Rk1cV' l'i/JQ)/
Name(s)of Signer(s)
LCJ personally known to me -OR- ❑ o be the
perso s hose nam (s is ag ubscribed to the within
instrument and acknow edge. to me that he/shz executed
the same in his/her Lei.uthorized capaci (00, and th/ by
his/he CP ignatur:�•n the instrument t e persor s or the
entity upon behalf of w ich the perso 6P:cted, executed the
instrument.
KELLY LOUISE MANDIC
a ,`., Commission# 1372899 WIT SS hand and offs ial seal. , rffiekiv(ie:i
z "s � ,a Notary Public - California F.
* `,' Orange County
My Comm.Expires Sep 1,2006 Signature of Notary
OPTIONAL
Though the data below is not required by law,it mayprove valuable to persons relying on the document and could prevent fraudulent
removal and reattachment of this form to another document.
Description of Attached Document
Title•orType of Document &V' — E. CD
� n� Md . � �q N � �-e
Document Date: /nogY'tz rl 6 -0 j ctO3 Number of Pages , , 'Q .g Q r)o, !• (fd�125
Signer(s) Other Than Named Above:
Noti^,,r P9 . _.
Capacity(ies) Claimed by Seller(s)
Signer's Name Conn, €. lroc -�.u!�-1 Signer's Name Con v1�E �bCxrt)ma✓1
❑ Individual ❑ Individual
® Corporate r Offic ` _ � El Corporate O icer
Title(s): C j y C_/e vi // Title(s): 0
El Partner El Limited ❑ General ❑ Partner ❑ Limited ❑ General
❑ Attorney-in-Fact Right Thumbprint of ❑ Attorney-in-Fact Right Thumbprint of
Signer Signer
❑ Trustee ❑ Trustee
DI Guardian or Conservator ❑ Guardian or Conservator _4 3
CI Other ❑ Other o _,,..
Signer Is Representing: -;=wry= - Signer Is Representing: r"'°`'
cska of 1-kkho \l ��k ` %% k F of L/r'i I lYI��A���(Cb►
Im/grantdeed/2/I8/03
EXHIBIT A
Legal Description
LOTS 1, A AND B OF TRACT NO. 12060, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 707, PAGES 5 TO 8
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
LOTS 1 AND A OF TRACT NO. 12063, IN THE CITY OF HUNTINGTON BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 707, PAGES 9 TO 12
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.
EXCEPT FROM A PORTION OF SAID LAND AN UNDIVIDED 1/6 INTEREST IN ALL OIL,
PETROLEUM, ASPHALTUM, GAS, MINERALS AND OTHER HYDROCARBON SUBSTANCES IN, ON
OR UNDER SAID LAND AS RESERVED IN THE DEED RECORDED AUGUST 15, 1921 IN BOOK 401,
PAGE 356 OF DEEDS.
ALSO EXCEPTING THEREFROM ALL MINERALS, GAS, OIL, PETROLEUM, NAPTHA AND OTHER
HYDROCARBON SUBSTANCES IN AND UNDER SAID LAND, TOGETHER WITH ALL NECESSARY
AND CONVENIENT RIGHTS TO EXPLORE FOR, DEVELOP, PRODUCE, EXTRACT AND TAKE THE
SAME SUBJECT TO THE EXPRESS LIMITATION THAT ANY AND ALL OPERATIONS FOR THE
EXPLORATION, DEVELOPMENT, PRODUCTION, AT LEVELS BELOW THE DEPTH OF 500 FEET
FROM THE SURFACE OF SAID LAND BY MEANS OF MINES, WELLS, DERRICKS AND/OR OTHER
EQUIPMENT FROM SURFACE LOCATIONS ON ADJOINING OR NEIGHBORING LAND LYING
OUTSIDE THE ABOVE DESCRIBED LAND AND SUBJECT FURTHER TO THE EXPRESS LIMITATION
THAT THE FOREGOING RESERVTION SHALL IN NO WAY BE INTERPRETED TO INCLUDE ANY
RIGHT OF ENTRY IN AND UPON THE SURFACE OF SAID LAND, AS RESERVED IN THE DEEDS
RECORDED JANUARY 31, 1984 AS INSTRUMENT NO. 84-043025 AND JANUARY 10, 1994 AS
INSTRUMENT NO. 94-019792 OF OFFICIAL RECORDS.
ALSO EXCEPTING THEREFORM THE SUBSURFACE WATER RIGHTS WITHOUT THE RIGHT OF
ENTRY TO THE SURFACE OR TO THE SUBSURFACE ABOVE THE DEPTH OF 500 FEET, AS
DEDICATED TO THE CITY OF HUNTINGTON BEACH BY RECITAL ON THE MAP OF TRACT NO.
12063, RECORDED IN BOOK 707, PAGES 9 TO 12 OF MISCELLANEOUS MAPS.