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Home My WebLink AboutCC RES 01-077RESOLUTION NO. 01-77 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM DESERT APPROVING THE SALE OF PROPERTY BY THE PALM DESERT REDEVELOPMENT AGENCY TO PALM DESERT DEVELOPMENT COMPANY FOR DEVELOPMENT OF MULTIFAMILY AFFORDABLE HOUSING UNITS PURSUANT TO THE REDEVELOPMENT PLAN FOR PROJECT AREA NO. 3, AND LOAN BY THE AGENCY FOR CONSTRUCTION AND DEVELOPMENT COSTS OF THE PROJECT THE CITY COUNCIL OF THE CITY OF PALM DESERT HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS: Section 1. In order to effectuate the provisions of the Redevelopment Plan (the "Redevelopment Plan") for Project Area No. 3 (the "Project Area"), the Palm Desert Redevelopment Agency (the "Agency") proposes to enter into a Disposition and Development Agreement (the "DDA") with the Palm Desert Development Company, a California corporation ("PDDC"), pursuant to which DDA the Agency will sell to PDDC approximately 12.39 acres of certain real property located in "Section 16" between Avenue 42 and Merle Drive west of Cook Street in Palm Desert, California (the "Property"), currently owned by the City, for the construction of 162 multifamily affordable housing units (the "Project"). In addition, the Agency will loan to PDDC up to — the total amount of Seven Million Six Hundred Fifty Nine Thousand Four Hundred Thirty Seven Dollars ($7,659,437.00), consisting of the following components: (a) Fifty Thousand Dollars ($50,000.00) to be disbursed upon execution of the DDA for architectural, legal, and related fees (the "Architectural Fees"); (b) Six Hundred Fifty Three Thousand Seven Hundred Nineteen Dollars ($653,719.00) for additional construction costs related to certain energy savings features as are more particularly described in the DDA (the "Energy Savings Features"); and (c) the balance of Six Million Nine Hundred Fifty Five Thousand Seven Hundred Eighteen Dollars ($6,955,718.00) for other costs and expenses related to the construction and development of the Project (the "Agency Loan"). The Agency Loan is to be amortized for 55 years at one percent (1 %) interest with a final/balloon payment due in thirty (30) years. Further, in addition to the Agency Loan, the Agency shall contribute to PDDC an amount sufficient for the purchase and installation of a fuel cell in each residential building of the Project as part of the Energy Savings Features and for no other purposes (the "Agency Energy Contribution") in order to create an energy efficient project and to decrease energy costs for tenants. The Agency Energy Contribution is estimated to be Ninety -Six Thousand Dollars ($96,000.00), which amount shall be finalized at a later date and paid directly by Agency to the fuel cell manufacturer. The annual amount in energy costs to be reduced by the Energy Savings Features is to be calculated as described in the DDA and shall be paid to the Agency on an annual basis P6402\0001 \656396.1 -1- RESOLUTION NO. 01-77 for the benefit of the Palm Desert Housing Authority (the "Energy Savings Payment"). Also, under the DDA, the Agency shall undertake, at its expense, (a) mass grading of the Property to deliver the Property to PDDC fully graded and compacted, and improved with a finished superpad; (b) extending all utilities necessary for the Project to be stubbed to the boundary of the Property at such locations as are described in the DDA; and, (c) extending an access roadway from the Property to Avenue 42 (the "Grading and Off -Site Improvements"). The cost of the Grading and Off -Site Improvements is estimated to be One Million Twenty -One Thousand Eight Hundred Forty Five Dollars ($1,021,845.00). Finally, under the DDA, in addition to an annual payment on the Agency Loan (the "Annual Payment"), commencing on the date the first Annual Payment is due, PDDC shall make a "Payment in Lieu of Property Tax" to the City in the initial amount of $80,000.00 per year (the "PILOT"). The PILOT shall increase each year at the rate of two percent (2%) annually. PDDC shall pay the PILOT to the City annually, prior to payment of the Annual Payment to Agency. Section 2. On June 14, 2001, the City Council of the City of Palm Desert (the "City Council") and the Agency held a duly noticed public hearing on the approval of the Agency's proposed sale of the Property to PDDC pursuant to the DDA, at which time all persons desiring to comment on, or ask questions concerning, the DDA were given the opportunity to do so. Prior to the public hearing, information concerning the Agency's proposed sale of the Property to the PDDC was available for public inspection in office of the City Clerk in accordance with Health and Safety Code Section 33433. Section 3. Also on June 14, 2001, the City Council and the Agency held a duly noticed public hearing on the approval of a Negative Declaration for the Project finding that the Project, as conditioned, will not have a significant effect on the environment. At such time all persons desiring to comment on, or ask questions concerning, the Negative Declaration were given the opportunity to do so. Prior to the public hearing, a copy of the Initial Study of Environmental Impact and the proposed Negative Declaration were available for public inspection in the office of the City Clerk. Section 4. The Property and the proposed Off -Site Improvements are located in the Project Area. The Property is currently unimproved and the development of the Project and related public improvements will assist in the elimination of blight. The City Council has previously determined that the Project Area is an area in which the combination of conditions of blight are so prevalent and so substantial that there is a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical, social and economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private P6402\0001 \656396.1 -2- RESOLUTION NO. 01-77 enterprise or governmental action, or both, without redevelopment. Among other things, the Project Area contains vacant and underutilized properties, properties which suffer from depreciated or stagnant property values and impaired investments, and deteriorated, aged and obsolete buildings. Such conditions tend to further deterioration and disuse because of the lack of incentive to landowners and their inability to improve, modernize or rehabilitate their property while the condition of the neighboring property remains unchanged. In addition, the Project Area is characterized by the existence of inadequate public improvements and utilities, which cannot be remedied by private or governmental action without redevelopment. The development of the Project and related uses on the Property will provide needed affordable housing facilities and will redevelop a vacant, underutilized parcel. Overall, the construction of the Project and related public improvements will help remedy the lack of adequate affordable housing and public improvements, thereby eliminating factors which substantially hinder the economically viable use of property and buildings within the Project Area, and the construction of affordable housing units on a previously vacant, underutilized parcel will assist in the revitalization of the Project Area and create housing opportunities for residents of the Project Area. All of the foregoing will assist in encouraging private sector investment in the Project Area and will assist in eliminating blighting conditions in the Project Area. — Section 5. The budget constraints of the City prevent the City from financing the installation and construction of the public improvements by any means. Traditional methods of financing such as the issuance of general obligation bonds are unavailable as a practical matter because of the extraordinary majority voter approval requirements of two-thirds of the electorate. Assessment financing or special tax financing could overburden benefitting properties with assessments or special taxes and, in addition, special taxes require a two-thirds vote and assessments are subject to a majority protest. Section 6. The Agency has obtained an evaluation of the value of the Property from Real Estate Analysis Services Co., which has determined that the consideration of $1 is not less than the fair reuse value at the use and with the covenants and conditions and development costs at which the Agency is selling the Property to PDDC pursuant to the DDA. Section 7. Based upon the foregoing and other information presented to the City Council, the City Council hereby finds and determines that (i) the transfer of the Property from City to Agency and sale of the Property to PDDC, the Agency Loan to PDDC; the Agency Energy Contribution and the payment of the Grading and Off -Site Improvements by the Agency pursuant to the DDA, are all consistent with the Agency's P6402\0001 \656396.1 -3- RESOLUTION NO. 01-77 implementation plan adopted pursuant to Health and Safety Code Section 33490; (ii) the Project and public improvements will be of benefit to the Project Area and the immediate neighborhood in which the Project is located, (iii) the provision of the Project and related public improvements is necessary to effectuate the purposes of the Redevelopment Plan for the Project Area, (iv) the transfer of the Property from City to Agency and sale of the Property to PDDC, the Agency Loan to PDDC; the Agency Energy Contribution and the payment of the Grading and Off -Site Improvements by the Agency pursuant to the DDA will assist in the elimination of one or more blighting conditions inside the Project Area, (v) no other reasonable means of financing the installation and construction of the public improvements is available to the City and (vi) the consideration for the Property is not Tess than the fair reuse value at the use and with the covenants and conditions and development costs authorized by the sale. Section 8. The City Council hereby approves the transfer of the Property from City to Agency and sale of the Property to PDDC, the Agency Loan to PDDC; the Agency Energy Contribution and the payment of the Grading and Off -Site Improvements by the Agency pursuant to the DDA. The loan of funds may be made from any revenues of the Agency lawfully available for such purposes. PASSED, APPROVED and ADOPTED this 14th day of June, 2001. AYES: BENSON, SPIEGEL, KELLY NOES: NONE ABSENT: CRITES, FERGUSON ABSTAIN: NONE TTEST: Sheila R. GilligaRK City of Palm Des4.t,._.0 ifornisf=` P640210001 \656396.1 -4- RICHARD S. KELLY, MAROR PRO-TEMPORE