HomeMy WebLinkAboutRES NO 103-08RESOLUTION NO. 1.0 3 ~ ~ 8
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
BAKERSFIELD APPROVING THE SALE OF REAL
PROPERTY BY THE BAKERSFIELD REDEVELOPMENT
AGENCY FOR $1.00 TO AMCAL MULTI-HOUSING, INC.
WHEREAS, the Redevelopment Plan for the Southeast Redevelopment Project
Area (the "Redevelopment Plan") was approved and adopted by the City Council of the
City of Bakersfield; and
WHEREAS, the Bakersfield Redevelopment Agency (the "Agency") is authorized
and empowered under Community Redevelopment Law to carry out the Redevelopment
Plan, and to enter into agreements for the acquisition, disposition and development of
real property and otherwise assist in the redevelopment of real property within a
redevelopment project area in conformity with a redevelopment plan adopted for such
area, to acquire real and personal property within redevelopment project areas, to
receive consideration for the provision by the Agency of redevelopment assistance, to
make and execute contracts and other instruments necessary or convenient to exercise
its powers, and to incur indebtedness to finance or refinance redevelopment projects;
and
WHEREAS, the Agency owns that certain real property of approximately 2.59
acres within the Southeast Bakersfield Redevelopment Project Area, and located at 701
Union Avenue ("the Property") and is more particularly described in Exhibit "A" ("Legal
Description"), which is attached hereto and incorporated herein by reference; and
WHEREAS, AMCAL MULTI-HOUSING, INC., ("the Buyer") desires to acquire the
Property to develop a 55-unit multi-family affordable apartment complex and a 3,150
square foot commercial building on the Property. The use of the Property is in
accordance with the Redevelopment Plan and the requirements of the City of
Bakersfield; and
WHEREAS, the Agency and Buyer have negotiated a Disposition and
Development Agreement in good faith in order to implement the provisions of the
Redevelopment Plan by providing for affordable housing in a mixed use project; and
WHEREAS, the purchase price negotiated for the Property as part of the DDA is
the amount of One Dollar ($1.00), which price was determined upon a fair reuse
analysis conducted by GRC Associates, Inc.; and
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WHEREAS, pursuant to Section 33433 of the California Health and Safety Code,
the Bakersfield City Council may, after a duly noticed public hearing, authorize the
Agency to sell or lease the Property, for development pursuant to the Redevelopment
Plan upon a determination by the City Council that the disposition of the Property will
assist in the elimination of blight, and is consistent with the implementation plan adopted
for the redevelopment project area pursuant to the Health and Safety Code Section
33490, and the consideration for such disposition is not less than either the fair market
value or fair reuse value of the Property in accordance with the covenants and
conditions governing the disposition and development costs required thereof; and
WHEREAS, the proposed Agreement, and a summary report meeting the
requirements of the Health and Safety Code Section 33433, were available for public
inspection consistent with the requirements of the Health and Safety Code Section
33433; and
WHEREAS, notices of the public hearing before the City Council were duly
published on June 6, 2008 and June 13, 2008, and
WHEREAS, the project qualifies as CEQA exempt under Section 15332 under
Infill Development and therefore will not result in any significant effects relating to traffic,
noise, air or water quality.
WHEREAS, the City Council has reviewed the summary report required pursuant
to the Health and Safety Code Section 33433 and evaluated other information provided
to it pertaining to the findings required pursuant to the Health and Safety Code Section
33433; and
WHEREAS, the City Council has duly considered all the terms and conditions of
the proposed Agreement and believes that the disposition of the Property pursuant
thereto is in the best interest of the City of Bakersfield and the health, safety, and
welfare of its residents, and in accord with the public purposes and provisions of the
applicable state and local laws and requirements; and
NOW, THEREFORE, BE IT RESOLVED, DETERMINED AND ORDERED BY
THE CITY COUNCIL OF THE CITY OF BAKERSFIELD, AS FOLLOWS:
1. The City Council finds and determines that, based upon evidence
provided in the record before it, the consideration for the Agency's
disposition of the Property pursuant to the terms and conditions of the
Agreement, is not less than the fair reuse value in accordance with the
Redevelopment Plan.
2. The City Council hereby finds and determines that the disposition of the
Property pursuant to the Agreement will: (i) assist in the elimination of
blight by providing for the development of affordable housing which will
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serve as a catalyst for the development of other property in the Southeast
Bakersfield Redevelopment Project Area and will also help to create new
employment opportunities, and (ii) is consistent with the implementation
plan for the Southeast Bakersfield Redevelopment Project Area adopted
by the Agency pursuant to the Health and Safety Code Section 33490.
3. The City Council hereby approves the proposed sale of the Property by
the Agency to the Buyer upon the terms and conditions set forth in the
DDA.
I HEREBY CERTIFY that the foregoing Resolution was passed and adopted by
the Council of the City of Bakersfield at a regular meeting thereof held on
JUN 2 5 2008 , by the following vote:
AYES:. COUNCIL MEMBER HANSON, BENHAM, CARSON, COUCH, IVNgQSULLIVAN, WE R
COUNCIL MEMBER
ABSTAIN: COUNCIL MEMBER hj~0
ABSENT: COUNCIL MEMBER h ,fky o
CITY CLERK and Ex Officio Clerk ~f the
Council of the City of Bakersfield
APPROVED: JUN 2 5 2008
By:
Mayor
APPROVED AS TO FORM:
VIRGINIA GENNARO
City Attorney
By: ~ ~~
JOSHUA H. RUDNICK
Deputy City Attorney II
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EXHIBIT "A"
LEGAL DESCRIPTION
THE LAND REFERRED TO HEREiN BELCIW IS SITUATED I(V THE CI?Y OF BAKERSFIELO, COUfYIY OF KERN,
STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS:
PARCEL 1: APN 049-471-15
Parcel 1 ~ Parcel Map No. 5694, in the City of Bakersfield, County of Kern, State of Califarnla, as per map
recorded September 34, 19$4 in Book Z5, page 15l of Parse! Maps, in the afifite of the County Recorder of
said County.
PARCEL Z: APfJ'S 004-471-12. 13 and 14
Parcel 2 of Parcel Map Na. 5694., in the City of Bakersfield, County of Kern, State of California, as per map
recorded September 34, 19$4 in Book 2S, page 152 of Partael Maps, In the office of the County Recorder of
said County.
PARCEL 3: APN 009-471-21
The South half of Lot 3, in Block 3 of California Avenue Park Tract,, in the City of Bakersfield, County of Kern,
State of California, as per map regarded April 12, 1920, in Book ~, Page 29 of Maps, in the office of the County
R.ecor~der of said County.
APN: 449-47'1-14,15,21,12,13
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SUMMARY REPORT PERTAINING TO THE AGREEMENT BY AND BETWEEN THE
BAKERSFIELD REDEVELOPMENT AGENCY AND
AMCAL MULTI-HOUSING, INC., A CALIFORNIA CORPORATION
This report has been prepared in compliance with Section 33433 of the California
Community Redevelopment Law (Health and Safety Code Section 33000 et seg.), which
provides in part:
"Before any property of the agency acquired in whole or in part, directly or indirectly, with
tax increment moneys is sold or leased for development pursuant to the redevelopment
plan, the sale or lease shall first be approved by the legislative body by resolution after
public hearing. Notice of the time and place of the hearing shall be published in a
newspaper of general circulation in the community for at least two successive weeks prior
to the hearing.
The Agency shall make available for public inspection and copying at a cost not to
exceed the cost of duplication:
a. A copy of the proposed sale or lease;
b. A summary, which describes and specifies...:
1. The cost of the agreement to the agency, including land acquisition costs,
clearance costs, relocation costs, the costs of any improvements to be provided by
the agency, plus the expected interest on any loans or bonds to finance the
agreements; and
2. The estimated value of the interest to be conveyed or leased, determined at
the highest and best uses permitted under the plan; and
3. The estimated value of the interest to be conveyed or leased, determined at
the use and with the conditions, covenants, and development costs required by the
sale or lease. he purchase price or present value of the lease payments that the
lessor will be required to make during the term of the lease. If the sale price or total
rental amount is less than the fair market value of the interest to be conveyed or
leased, determined at the highest and best use consistent with the redevelopment
plan, then the agency shall provide as part of the summary an explanation of the
reasons for the difference; and
4. An explanation of why the sale or lease of the property will assist in the
elimination of blight."
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A. PROPOSED AGREEMENT
A copy of the proposed Agreement ("Agreement") between AmCal Santa Fe Fund,
L.P., a California Limited Partnership ("Developer") and the Bakersfield Redevelopment
Agency ("Agency") is attached for public review. The Agreement sets forth the
responsibilities of the Developer, Agency, and City of Bakersfield ("City") and specifically
establishes the parameters, restrictions and limitations of the proposed redevelopment
project ("Project"). The proposed Project represents a key component of the Southeast
Redevelopment Area in Bakersfield.
B. SUMMARY OF THE AGREEMENT
The Site. The project Site consists of approximately 2.5 acres of land
located at 701 Union Avenue. The Site fronts on Union Avenue, south of 8th
Street and north of 4th Avenue in the City of Bakersfield ("Bakersfield"). The
Site is located within the Southeast Redevelopment Project Area ("Project
Area") adopted by Ordinance No. 3905 on June 30, 1999 by the City Council
of Bakersfield ("City Council"). Development of the Site is regulated by City
of Bakersfield Zoning Ordinance and the Bakersfield General Plan, which
were amended and approved on December 20, 2007 by the Planning
Commission and approved by the City Council on January 16, 2008.
The Site consists of five parcels that were purchased by the Agency for a
total of $289,900. Four parcels (APNs 009-471-12, 009-471-13, 009-471-14
and 009-471-15) were purchased on May 15, 2006 by the Agency on a tax
default sale from the Kern County Tax Collector. The fifth parcel (APN: 009-
471-21) was purchased by the Agency from the City of Bakersfield.
The Agency intends to convey to the Developer the Site "as is", with no
warranty, expressed or implied, by the Agency.
A site map and legal description of the Site can be found as Exhibit "A" to
the Agreement.
2. Proposed Project. The Project is planned as a mixed-use affordable
housing development, with a small commercial component, which will
provide neighborhood services to the immediate community.
Residential Component: The Project consists of the development of 56
affordable family residential housing units. The unit mix will consist of the
following:
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Units Bedrooms/Baths Living Area
19 2/2 832SF
33 3/2 1,070SF
4 4/2 1,246SF
Total 56 units
Of the 56 units 55 will be income restricted, specifically, in the following
manner:
Persons and Families of 30% of Median Income: 6 units
Persons and Families of 40% of Median Income: 6 units
Persons and Families of 50% of Median Income: 28 units
Persons and Families of 60% of Median Income: 15 units
Sub-Total 55 units
Manager's Unit: 1 unit
Total Residential Units: 56 units
Commercial/Retail Component: There will be approximately 3,150 square
feet of new commercial/retail space that will be developed along Union
Avenue.
The Project's goal is to become a catalyst that would assist in the
revitalization of its surrounding area in Bakersfield. The Project's
revitalization effort includes complementary and compatible uses and
potential generators for future expansion and growth in the immediate
neighborhood.
The development shall be first class and constructed with quality materials.
All construction will be executed in accordance with City specifications,
standards and practices, with all plans approved by the City.
3. Schedule of Performance. The Agreement binds the Developer to a specific
schedule of construction and completing the Project in accordance with the
Agreement on or before the date specified in the Schedule of Performance.
The required dates for completing development milestones are set forth in
the Schedule of Performance attached to the Agreement as Exhibit "C".
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4. Demolition. The Site shall be conveyed from the Agency to the Developer in
a graded condition, absent of any improvements.
5. Purchase Price. The terms of the Agreement require the Agency to convey
the Site to the Developer for a purchase price of One Dollar ($1.00). Said
consideration is to be paid through escrow for the transfer of the Site.
6. City Residual Receipts Loan. The City will provide a residual receipts loan
to Developer of no more than $2 million, at a rate of 3%, simple interest.
The City shall not be obligated to disburse the loan, or pay to the Developer,
any funds until and after the City receives needed funds from the Federal
Government. The Agreement is contingent upon the Developer obtaining
sufficient tax credit financing.
7. Escrow and Title Insurance. Pursuant to the conditions of the Agreement,
the Agency and the Developer shall pay respective escrow fees specified in
the Agreement. The Developer shall pay the premium charged by the title
company for the title insurance policy. Also, the Developer shall pay
recording fees, notary fees, costs of the extended coverage title policy, if
any, documentary transfer taxes and any and all other charges, fees and
taxes levied by a governmental authority relative to the conveyance of the
Site.
8. Condition of the Site. Reme_ diation of the Site. The Developer shall
indemnify the Agency and/or City on any suits (hazardous, environmental
and other) resulting from the development or use of the Site. The
Agreement requires that the Developer accept the Site in "as-is" condition,
with no warranty expressed or implied by the Agency, including without
limitation, the presence of hazardous materials or the condition of the soil, its
geology, the presence of known or unknown seismic faults, or the suitability
of the Site for its intended purposes. The Developer shall have the right, at
its sole cost, to make such investigations, as the Developer deems
necessary. If the Developer reasonably disapproves of the environmental
condition of the Site, then the Developer has the right to terminate the
Agreement. Once escrow closes, the Developer takes the property "as is"
and assumes all responsibility and liability for hazardous materials of every
kind found on the Site, including, but not limited to, clean-up costs.
9. Use Covenants. The Developer covenants and agrees for itself and its
successors and assigns, and every successor in interest to the Site, that
during construction and thereafter, Developer and such successors and
assigns shall devote the Site to low and very-low income housing for families
for a period of 55 years. The small retail component shall be consistent with
the City's General Plan, zoning ordinances and all other applicable laws,
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regulations, orders and conditions of each Governmental Agency with
jurisdiction over the Site or the Project.
10. Maintenance Covenants. The Developer covenants and agrees that it shall
maintain the Site in good repair and in a neat and orderly condition, ordinary
wear and tear excepted. Live vegetatitive matter shall cover no less than
75% of the required landscaped area at maturity. The Developer shall
maintain the Site and all improvements thereon in compliance with all
applicable provisions of the City of Bakersfield Municipal Code.
11. Transfers of Interest in Site. Transfers are permitted only as expressly
described in the Agreement. Any assignment will be subject to such terms
and conditions as City may choose to impose.
12. Permitted Encumbrances. The City shall have the right of reasonable review
and approval of any lender from which the Developer proposes to obtain any
loan, whether or not such Loan is secured by a lien against the Site or any
portion thereof. The Agency shall not unreasonably withhold, condition or
delay its approval of any proposed lender or loan.
13. Obligation to Refrain from Discrimination. The Developer covenants 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, sexual orientation, national origin or ancestry in the sale, lease,
sublease, transfer, use, occupancy, tenure or enjoyment of the Site. The
anti-discrimination covenants shall run with the land.
14. Insurance. The Developer is required to maintain automobile, general
liability and builder's all risk insurance. The commercial general liability
insurance coverage shall have minimum limits for bodily injury and property
damage liability of $1,000,000 for each occurrence. In addition, the
Developer needs to provide builder's all risk coverage on an occurrence
basis for fire and other building risks in a form to be approved by the Agency
in the amount equal to the replacement cost of all improvements. The
Agreement also requires Workers' Compensation insurance with a standard
waiver of subrogation clauses in favor of indemnified parties identified in the
Agreement. The Developer must furnish proof of insurance to the Agency
prior to the close of escrow.
15. Prevailing Wages. Pursuant to the conditions of the Agreement, the
Developer shall carry out construction of the improvements in conformity
with all applicable federal and state labor laws. The Developer, if applicable,
shall pay prevailing wages on all phases of construction of the Project.
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16. Indemnification. The Agreement contains a comprehensive hold harmless
clause that requires the Developer to indemnify, upon closing, Agency
and/or City from and against any such claim resulting from, arising out of,
connected with, or caused by Developer, Developer's employees, agents,
independent contractors, companies, or subcontractors, in the performance
of, or in any way arising from, the terms and provisions of the Agreement.
17. Fees and Permits. The Developer is required to secure any and all land use
and other entitlements, permits and approvals required for the
improvements. It is the Developer's responsibility to pay the cost of all such
fees and permits. The approval of the Agreement does not bind the City
Council or the Planning Commission of the City regarding approvals of the
Project required by such bodies. The Agency shall provide reasonable, non-
financial assistance to Developer in securing such entitlements.
18. Enforcement of the Agreement. The Agreement provides that if either party
defaults on requirements within the Agreement, then the injured party shall
send a written notice to the defaulting party. If the defaulting party
commences to cure, correct or remedy the situation within thirty (30)
calendar days after receipt of written notice from the injured party such party
shall not be deemed to be in default under the Agreement.
C. SUMMARY OF AGENCY EXPENDITURES
The Agency has incurred the following expenditures to acquire the Site:
Property Acquisition and Demolition. Expenditures of $289,000 were
incurred to acquire the five parcels that comprise the Site. In addition, the
City has budgeted up to an additional $2,000,000 in construction assistance
in the form of a residual receipts loan. In total, the Agency will contribute up
to $2,289,000 to assist in the development of the subject Project.
2. Public Improvements. The Agency has not paid for any public
improvements related to this Project.
3. Bond Interest. The Agency did not use the proceeds of any tax allocation
bonds for the acquisition of the subject properties. Consequently, the
Agency did not incur any bond interest payments.
D. ESTIMATED FAIR MARKET VALUE
1. Highest and Best Use
The California Health and Safety Code requires disclosure of the highest and best use of
the property to be sold as permitted under the redevelopment plan. The Southeast
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Redevelopment Project Area Plan relies on the City's General Plan for land use guidance.
The highest and best use of the Site is mixed-use commercial and residential.
2. Fair Re-Use Value
Typically, the fair market value of a proposed project reflects the maximum possible value
of the property that would allow development at the highest and best use of the Site. In
this case, the General Plan provides very strict use guidelines as to possible development,
without specifically encouraging affordable housing development on the Site.
The proposed Project reflects the land use changes identified in the General Plan
Amendment.
The value of the Site represents the fair re-use value and the value as primarily vacant
land. The value of the Site suitable for mixed-use development would represent the fair
market value.
To determine the fair re-use value of the Site as restricted by the amended General Plan
and the Agreement, it is necessary to take into account the development costs and
revenues associated with the Project, assign a reasonable return on investment to the
Developer and calculate the residual land value.
Total development costs for the mixed-use Project are estimated at $11.2 million. The
figures include hard, soft and contingency costs for both the retail and housing
components. Residual land value was estimated to be $0, given the 55-year affordability
constraints of the Agency on the subject property. If the property were not constrained, it
is likely that the Project would have been developed mostly with market rate residential
and/or commercial components. However, given that the Site was sold at a Tax Collector
sale, it is reasonable to assume that without Agency assistance, the Site would have
remained vacant and underutilized.
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In addition to the affordable housing component, a small amount of commercial space is
planned to be developed on the Site. The lack of new retail development by the private
sector in the community demonstrates that there may be a perceived level of lack of
market demand for retail uses. The Agency, because of its vision and goals for the
community, determined that there was support for affordable housing and a small amount
of new retail space.
In order to be a catalyst for economic development in the community, the Agency
assembled five parcels on Union Avenue, researched market conditions, contacted the
development community and after a series of negotiations, chose a developer for the
subject site.
The development concept chosen by the Agency is not the Site's highest and best use,
which would be either commercial or a mixed-use project with market rate housing and
retail space.
The fair re-use value is the value of the Site, as restricted by Agency conditions. To
calculate fair re-use value, it is necessary to take into account the development costs and
revenues associated with the project, assign a reasonable return on investment to the
Developer and calculate the residual land value.
Costs to develop the housing and retail components totaled $11.2 million, without
including land and land assemblage costs. The value of the project on the Site was
estimated at just $2.3 million, assuming a 7.5% capitalization rate of the net operating
income. Subtracting costs of $11.2 million less a value of $2.3 million would result in a
very large project gap. For this reason, it was necessary for the Agency to contribute $2
million in a residual receipts loan, in addition to providing the Site for $1.00, in order to
develop the project -assuming tax credits and other financing will be able to be procured.
The Agency has determined that the Site is being sold for not less than its fair re-use
value at the highest and best use permitted under the Redevelopment Plan and the
proposed Agreement. In contrast, the unrestricted fair market value of the site, if vacant
and not subject to the constraints of the Agreement, would be worth much more.
Given the restrictions of the Project, as identified in the Agreement, the Site is worth less
than the $1.00 being paid by the Developer.
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E. ELIMINATION OF BLIGHT
The disposition of property under current law requires that the Agency explain how the
disposition will assist in the elimination of blight. The Site exhibits characteristics of both
economic and physical blight, since the Site has been underutilized for several years and
the private market has not been able to put the properties to productive use.
The Site was previously occupied by a motel that had many code enforcement problems.
It attracted transient activity and was condemned. Subsequently, it was demolished and
the private sector did not buy the vacant parcel. The Agency believes that the proposed
mixed-use project on the Site would have two main benefits: 1) Revitalize Union Avenue,
and 2) provide much needed affordable housing for families.
The proposed disposition will allow the development of the Site, which will result in a use
that meets the requirements of the Bakersfield Land Use and Development Code, the
Redevelopment Plan, and the amended General Plan. Furthermore, the proposed Project
is also consistent with the goals of the adopted Implementation Plan for the
Redevelopment Project Area. Redevelopment of the Site will eliminate adverse economic
and physical conditions, create jobs and generate additional tax revenues to the City and
Agency.
A summary of the conditions of blight and an explanation of how the Agreement
addresses these conditions is as follows:
a. Physical Blight. The characteristics of physical blight are readily apparent at
the Site. The motel was demolished and the pool was filled in, leaving a
problematic property that has not been able to be sold or leased.
b. Economic Blight. There are two characteristics of economic blight at the
Site: 1) vacancy; and 2) underutilization. The Site has been unused and
underutilized for years. Redevelopment of the Site will contribute to the
economic health of the surrounding area and is anticipated to provide both
business and housing opportunities for the community.
F. SUMMARY STATEMENT
The full Agreement and this disclosure report prepared in compliance with Section 33433
of the California Community Redevelopment Law (Health and Safety Code Section 33000
et seq.) are available for public review at the City Clerk's Office located at 1501 Truxtun
Avenue, Bakersfield, CA 93301 and at the Economic and Community Development
Department located at 1600 Truxtun Avenue, Ste. 300, Bakersfield, CA 93301. A
photocopy of these documents may be obtained from the Agency Secretary/City Clerk by
paying the usual photocopy fee regularly charged by the Agency and City.
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Memorandum
ECONOMIC DEVELOPMENT T~: Ms. Rhonda W. Barnard
REDEVELOPMENT From: Mr. Robert G. Vasquez & John N. Oshimo
Date: May 7, 2008
REAL ESTATE CONSULTING
Santa Fe Apartments Housing Project (701 Union Avenue) --
Subject:
AFFORDABLE HOUSING Re-Use Analysis
GRC Associates ("GRC") reviewed the proposed Santa Fe Apartments
Housing Project ("Project") located at 701 Union Avenue, Bakersfield
("Project Site") and completed a re-use analysis. In order to complete the
analysis, GRC reviewed local real estate market conditions, assessed
comparable vacant land properties available for sale and estimated the subject
property's value.
Purpose
The purpose of the reuse analysis is to assess the value of the Site with the
covenants, conditions and restrictions set forth in the Disposition and
Development Agreement ("DDA") and the planning entitlements. In order to
determine the level of land value that it can support, the analysis considers
land acquisition, zoning and land use controls, and the real estate market. The
analysis makes a determination of the highest and best use under the
Bakersfield Redevelopment Agency's ("Agency") goals for the Project Site.
AMCAL Multi-Housing, Inc. ("Developer") has been working with the
Agency to develop the mixed-use affordable housing project.
Methodology/Approach
GRC Associates performed the following steps in analyzing the potential uses
and reuse values of the Project Site:
A. Reviewed the permitted uses of land based on the revised Zoning,
General Plan, Municipal Code, and DDA.
858 OAK PARK ROAD B. Assessed the opportunities and constraints existing on the Project
Site, such as the type and capacity of the existing infrastructure,
SUITE 280 environmental conditions and site configuration.
COVINA, CA 91724
T: (626) 331 - 6373
F: (626)331 -6375 o~0F11((l`~~
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701 Union Avenue
May 7, 2008
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C. Estimated Project costs and revenues under the above conditions, restrictions and
covenants. The estimated cost of the Project improvements is approximately $11.2
million.
D. Calculated the residual land value.
Project Description
The Project Site consists of approximately 113,000 square feet, or approximately 2.5 acres of
land located at 701 Union Street. The Project consists of a 56-unit affordable housing
complex and mixed-use commercial development. The commercial component is estimated
at 3,150 building square feet, with the residential component consisting of 68,127 building
square feet. The two-story project is planned with on-grade parking. The architect retained
for this Project, Architect Scott Vincent of The Vincent Group in Fresno, California, has
extensive experience in the design of multi-family housing, and in particular affordable
housing, according to the Developer.
The Project Site is located on the west side of Union Avenue, on a block bordered by 8`"
Street on the north, 4`h Street on the south and V Street on the west in the City of Bakersfield.
Please see Figure 1. From a regional perspective, the Project Site is located east of the SR-99
Freeway and north of the SR-58 Bakersfield-Tehachapi Highway. Figures 2 and 3 show the
regional location of the Project Site.
The Site consists of mostly of a vacant land parcel formerly occupied by a motel. The motel
had numerous code violations and attracted transient activity. Most of the improvements
were demolished, and only small portions of the previous motel foundation remain.
According to the Developer, the Project will serve families by providing much needed two,
three and four-bedroom affordable units, which are in great demand in the area. The new
units are conveniently located to amenities and to transportation services. The design of the
structure and landscaping will be well appreciated in an area that is currently in blighted and
depressed conditions. In summary, Project will serve low-income families and eliminate
blighted land within the Agency's Southeast Redevelopment Project Area.
The Project location has numerous amenities, such as
schools, entertainment, churches, health care, childcare
amenities within close proximity to the Site include:
^ Food Maxx Supermarket,
^ Lowell Park,
shopping, transportation, public
and recreation. Examples of the
^ McKinley Elementary and Emerson Middle School,
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701 Union Avenue
May 7, 2008
Page 3
^ Golden Empire Transit bus stop, which is located immediately in front of the Project
Site on Union Avenue, and
^ The Central Bakersfield Community Health Center located on Brundage Lane.
The Project consists of the development of 56 affordable family residential units. The unit
mix will consist of the following:
Table 1
Residential Unit Mix
Number of Bedroom / Approximate
Units Bath Count Livin Area
19 2 bedroom / 2 bath 832 SF
33 3 bedroom / 2 baths 1,070 SF
4 4 bedroom / 2 baths 1,246 SF
Total Units: 56 Units
Of the 56 units 55 will be income restricted, specifically, in the following manner:
Persons and Families of 30% of Median Income: 6 units
Persons and Families of 40% of Median Income: 6 units
Persons and Families of 50% of Median Income: 28 units
Persons and Families of 60% of Median Income: 15 units
Sub-Total 55 units
Manager's Unit: 1 unit
Total Residential Units: 6 its
The Developer proposes the following type of construction and design:
^ Conventional wood frame and stucco structures;
^ Concrete slab floors;
^ Gable roof elements;
^ Spacious floor plans;
^ Design appeals to the current residential rental market;
^ Community Room -- at least 1,500 SF which includes a kitchen, lounge, community
laundry facilities, community services room and common restrooms with the
manager's office and community services manager's office;
^ Common Area -- features include landscaping (variety of trees, floral design,
walkways to open recreation area) and swimming pool;
^ Tot lot accommodating children;
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701 Union Avenue
May 7, 2008
Page 4
^ Gated access;
^ Interior designs incorporating wood slab doors, aluminum or vinyl windows, painted
gypsum board walls and ceilings, and window privacy by use ofmini-blinds;
^ All floors will be carpeted except for the entry, kitchens, dining areas and bathrooms,
which will have ceramic the where no-VOC adhesives or backing is used;
^ Cabinets will be ofpre-manufactured wood with laminated countertops;
^ Kitchens will include oven, stove, garbage disposal, dishwasher and refrigerator;
^ Bathrooms will include fiberglass bath/shower units, mirror, vanity, medicine cabinet
and ceramic the flooring;
^ Gas hydronic heating in all units;
^ Exceeds Title 24 energy standards by 15 percent, will use no-VOC interior paint, and
CRI Green-label low-VOC carpeting and pad and low-VOC adhesive, and in all
bathrooms will use fans that exhaust to the outdoors and are equipped with either a
humidistat sensor or timer;
^ Owner paid utilities: water, sewer, trash; and
^ Tenant paid utilities: gas (cooking, space heating and water heating), and electric air
conditioning.
In summary, the Project is expected to be first class and constructed with quality materials.
All construction will be executed in accordance to City specifications, standards and
practices, with all plans approved by the City.
Land Use Regulation of Site
Land use regulations affecting the Project were reviewed. As illustrated in Figure 4, the
Project is located within the Southeast Redevelopment Project Area, which comprises 1,619
acres. The Southeast Redevelopment Project Area was adopted on June 30, 1999. In
addition, the Project Site is included in the City's portion of the existing Southeast
Bakersfield Enterprise Zone. The development of the Project Site is regulated by City of
Bakersfield Zoning Ordinance and the Bakersfield General Plan, as amended to allow high-
density housing and commercial use. The Zoning and General Plan were amended by the
Planning Commission on December 20, 2007 and the City Council approved the
amendments on January 16, 2008. Figures 5 and 6 show the General Plan land use
designations and corresponding zoning for the Project Site, respectively. In summary, the
Project development concept meets current Redevelopment, Zoning and General land use
requirements.
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701 Union Avenue
May 7, 2008
Page 5
Site Acquisition Cost
The Site consists of five parcels that were purchased by the Agency for a total of $289,900 or
$2.56 per square foot. Four parcels (APNs 009-471-12, 13, 14 and 15) were purchased on
May 15, 2006 by the Agency on a tax default sale from the Kern County Tax Collector. The
fifth parcel (APN: 009-471-21) was purchased by the Agency from the City of Bakersfield.
Table 2 lists each parcel that comprises the Site area and the Agency's acquisition cost.
Figure 7 shows the parcels on a map.
Table 2
Agency Property Acquisition Costs
Parcel Assessor
Parcel No.
S uare Feet
A enc Cost
Cost /SF
1 009-471-12 18,480 $ 93,600 $ 5.06
2 009-471-13 38,910 96,600 2.48
3 009-471-14 30,056 85,600 2.85
4 009-471-15 6,552 6,100 0.93
5 009-471-21 19,055 $ 8,000 0.42
Total 113,053 $289,900 $ 2.56
Project Costs
The total cost of the Project is estimated at $11.2 million, $199,433 per dwelling unit, or
$169 per building square foot. These cost estimates are reasonable.
Affordable rents range from $305 per month for two-bedroom units rented at 30% of area
median income ("AMI"), to $858 per month for four-bedroom units renting at 60% of AMI.
In total, affordable rents are approximately half of market rents. The affordability covenants
will be in effect for 55 years.
Re-Use Analysis
Given the 55-year affordability constraints of the Agency on the subject property, the
residual land value was less than $0. If the property were not constrained, it is likely that the
Project would have been mostly commercial or market rate residential. However, given that
the Project Site was sold at a Tax Collector sale, it is reasonable to expect that without
Agency assistance, the Project Site would have remained vacant and underutilized for many
years.
In addition to the affordable housing component, a small amount of commercial space is
planned to be developed on the Site. The lack of new retail development by the private
sector in the community demonstrates that there may be a perceived level of lack of market
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701 Union Avenue
May 7, 2008
Page 6
demand for retail uses. The Agency, because of its vision and goals for the community,
determined that the community could support affordable housing units and a small amount of
new retail space.
In order to be a catalyst for economic development in the community, the Agency assembled
the five parcels, researched market conditions, contacted the development community and
after a series of negotiations, chose a developer for the Project Site.
The property's highest and best use most likely would be market rate housing with a small
amount of retail space. The fair re-use value is the value of the Project Site, as restricted by
Agency conditions. To calculate fair re-use value, it is necessary to take into account the
development costs and revenues associated with the Project, assign a reasonable return on
investment to the Developer and calculate the residual land value.
Costs to develop the housing and retail components totaled $11.2 million, without including
land and land assemblage costs. The estimated value of the Project was estimated at
approximately $2.4 million, assuming a 7.5% capitalization rate on net operating income.
Subtracting costs of $11.2 million less a value of $2.4 million would result in a very large
Project gap. For this reason, it was necessary for the Agency to contribute $2 million in the
form of a residual receipts loan, in addition to providing the Project Site for $1.00, in order to
develop the Project and tax credits will be needed, in order to develop the Project. Table 3
shows a summary of the project's key figures.
If the project is able to be awarded tax credit financing, the return on cost to the Developer
would only be $240,000, or a 2.2% annual return. If the Agency decided not to contribute
the land and the $2 million residual receipts loan, the Project would have a negative return
and it would not be possible to develop the Project on the Site.
Based on market conditions in the area, it is the opinion of GRC that the Developer's return
is reasonable and that without Agency assistance the Project would not be built. The Agency
has determined that the Site is being sold for not less than its fair re-use value at the highest
and best use permitted under the Redevelopment Plan and the proposed Agreement.
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70 ] Union Avenue
May 7, 2008
Page 7
Table 3
Income and Expenses
Income/
me from Rents
:r Income
.s Income
~ncy
sted Gross Income
Operating Expenses
Replacement Reserves
Service Providor
Total Expenses
Operating Income
ated Value
Construction Costs
ual Land Value
era/ Tax Equity
erred Developer Fee
Contribution
ncy Land Contribution
Annual Assumption
406,140
6,048$9 per unit per month (laundry)'
412,188
5% 20,609
391,579
184,800
16,800
18,000
219,600
171,979
7.50% $ 2,293,048
3,300 per unit/year
300 per unit/year
321 per unit/year
$11,168,241
$ (8,875,193)
6,519,196
306,291
2,000,000
289,900
9,115,387
not including land
240,194 2.2%
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