HomeMy WebLinkAboutMINUTES - 02121991 - 2.5 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
Adopted this Order on February 12, 1991 by the following vote:
AYES: Supervisors Fanden, Schroder, Torlakson, Powers
NOES: None
ABSENT: Supervisor McPeak
ABSTAIN: None
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SUBJECT: Status Report on A.T.A.P. Project
James Kennedy, Redevelopment Director, presented the
attached report on the A.T.A.P. International infill housing
project in North Richmond.
IT IS BY THE BOARD ORDERED that the report from the
Redevelopment Director is ACCEPTED.
IT IS FURTHER ORDERED that the Redevelopment Director is
DIRECTED to continue to monitor the project and report back to the
Board.
cc: Redevelopment Director
Community Development Director
County Administrator
1 hereby certify that this is a true and correct copy of
an actbn taken and entered on the minutes of the
Board of Supervleota on the date shown.
ATTESTEn. % ���-y / / / _
PHIL BATCHELORgoeik of the Board
Of Supervisors and County Administrator
By - .OePutY
Redevelopment Agency Contra Tom Poowerswersners
om
T
County Administration Building Cont 1st D strict
651 Pine St.,4th Fir.,North Wing J`Q Nancy C.Fanden
Martinez,California 94553County 2nd District
Phil Batchelor Robert t.Schroder
3rd Distad
Executive Director
Harvey E.Bragdon Sunne 4th D etwcght McPeak
Assistant Executive Director
Tom Torlakson
James Kennedy 51h District d
Deputy Director-Redevelopment
(415)646-4076
February 12, 1991
TO: Redevelopment Agency
FROM: Jim Kennedy
Deputy Director ' - Redevelopment
SUBJECT: North Richmond A.T.A.P. Project
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I. ' BACKGROUND
On February 28, 1989', the Agency entered into a Disposition
and Development Agreement (DDA) with A.T.A.P. International to
undertake a seven unit affordable infill housing project for
lower income homebuyers. The Agency has used $206, 000 in
community Development Block Grant (CDBG) funds to acquire land
and to provide at I mortgage subsidy to the lower income
homebuyers. The use ;of CDBG funds mandates that lower income
benefits must be achieved.
The DDA provided for the following:
A. Sale of the land to A.T.A.P. at cost, payable upon the
close of escrowlto the ultimate homebuyer;
B. Construction of ,-seven units by A.T.A.P. - 4 3-bedroom/2
bath and 3 4-bedroom/2 bath homes at affordable prices to
lower income homebuyers;
C. A restricted sales price of $101, 000 for the 3-bedroom
units and $103 , 000 for the 4-bedroom unit;
D. An Agency subsidy in the form of a land writedown and
additional mortgage assistance sufficient to reduce the
mortgage amountjof the homebuyer to approximately $70, 000
($30, 000 per unit average subsidy; subsidy to vary from
unit to unit) ; and
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E. Provision of below market rate bond . financing to the
homebuyers by the County.
Construction still has not commenced and the Agency is now
afforded the following rights to remedy under law (Section 6.4
of the DDA) :
(a) terminating the DDA;
(b) prosecuting an action for damages or specific
performance; and/or
(c) right of Agency to re-enter and take possession of
the property and all improvements thereon and to
reinvest in the Agency the estates of Developer in
that property.
The Agency is currently working with A.T.A.P. , the
construction lender,1 and prospective replacement construction
lenders to minimize further delays and protect. the interests
of the developer, but not require impairment of Agency
affordability goals, or require the Agency to expend
additional funds that it does not possess.
II. A.T.A.P. DEFAULT
Since October, 1990 A.T.A.P. has been in default under the
terms of the DDA. A.T.A.P. 'S construction lender had
initiated foreclosure proceedings, which resulted in the
suspension of construction. The construction lender's
foreclosure process will close February 27, 1991. The Agency
notified A.T.A.P. of the DDA default on , November 29, 1990.
A.T.A.P. was provided with 30 days to commence to cure, and 30
days from commencement to effect a cure.
III. A.T.A.P. ISSUES
A.T.A.P. has raised the following issues relative to the
County's responsibility in the upcoming foreclosure process.:
A. Outstanding Department of Housing and Urban Development
(HUD) issues leading to the inability to secure FHA
project approval.
First California Mortgage wrote to A.T.A.P.
requesting supplementary information for the FHA
package on' several occasions (Agency files contain
said correspondence dated June 15, June 27 , August
2 , and August 14 , 1990. ) Even though A.T.A.P. was
aware it would take a minimum of six weeks to
process the package, they finally responded to
First Cal on August 24th and did not submit
additional materials until August 29 , 1990.
Since submission of the package, VA loan approval has
been granted and HUD has requested clarification of three
items pertaining to the bond documents. Agency staff has
been diligently working with HUD officials and lawyers to
remedy these issues, and believe they have been resolved
subject to final review.
B. Flood plain problems resulted in a stop-work order and
delayed construction.
While Wildcat and San Pablo Creeks were recently
improved tio' 100-year flood standards, FHA and
County Departments rely on FEMA maps for
determining ., flood plain zones and applicable
building standards. Since it typically takes 3-5
years before improvements are mapped, A.T.A.P. was
subject to building standards associated with the
previously mapped flood plain designation for this
area. Two of the homes were not built high enough
as per those standards resulting in a stop-work
order being issued on July 23, 1990.
A stop-work order is issued to have developers comply
with standards, but does not preclude them for continuing
on the project (work performed at developer's
discretion) . To expedite project completion, County
staff granted a variance and the stop-work was released
on August 9, 1990 (13 working days later) .
C. Agency's inability to support an increase in the total
selling price of homes in the project by $190, 000 to
$906, 000, and unwillingness to subordinate into third
position.
The $206, 000 in CDBG funds are the funds with which
the Agency can work. All seven CDBG eligible
homebuyers must be able to receive an appropriately
sized subsidy to realize the desired homeownership
of the AIT.A.P. project. The initial three
applicantsI (chosen through a lottery) require an
aggregateisubsidy of $118, 000 at the original
selling prices - leaving only $88, 000 available for
the other four homebuyers. These homes are only to
be sold toj lower income households (not exceeding
80% of median) , therefore, a minimum of $57 , 000
would be required for the remaining four homebuyers
(assuming all four households earn at the 80% of
median level) , let alone at a lower income.
Therefore, $31, 000 may be available to subsidize a
higher selling price. Even if the Agency were to
exhaust all other sources of funds for this project
($61, 000 total; $7, 000 in low/moderate income
. housing fund and $54 , 000 from the EBMUD project) ,
it cannot guarantee enough available revenue to
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support a $906, 000 total selling price. A.T.A.P.
has been advised of this, and the related urgency
to process applicants to identify funding
potential, for many months.
The Agency, however, has indicated that it would
contemplate subordinating into third position if A.T.A.P.
is able to secure financing to finish the project. This
process would also require the current construction under
to subordinate Ito second position; something they would
only do reluctantly and with assurance that a reputable
third party oversee the funds.
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