Hunters View Resolution

SAN FRANCISCO HOUSING AUTHORITY 440 Turk Street • San Francisco CA • 94112 • (415) 554-1200

Date:

July 8, 2010

To:

SAN FRANCISCO HOUSING AUTHORITY COMMISSIONERS

Presented By: Barbara Smith, Housing Development & Modernization Administrator Dominica Henderson, Management Analyst Subject: RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR TO EXCUTE A DISPOSITION AND DEVELOPMENT AGREEMENT, GROUND LEASE AGREEMENT FOR PHASE 1A AND INTERIM GROUND LEASE AGREEMENT FOR PHASE 1B AND ANCILLARY DOCUMENTS WITH HUNTERS VIEW ASSOCIATES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, FOR REVITALIZATION OF THE PHASE 1 AREA OF THE HUNTERS VIEW HOUSING DEVELOPMENT IN SUBSTANTIALLY THE FORM ON FILE WITH THE AUTHORITY

Background The San Francisco Housing Authority (Authority) desires to enter into a Phase 1 Disposition and Development Agreement (DDA) and Ground Lease Agreements for the Phase 1A and Phase 1B sites for revitalization of Hunters View. These agreements have been negotiated with Hunters View Associates, L.P. (the “Developer”) in collaboration with the Mayor’s Office of Housing (MOH) and San Francisco Redevelopment Agency (SFRA) as providers of gap financing for the project. The Developer is finalizing agreements for Phase 1 financing and is required to have these agreements in place to complete this process. Since the Commission approved the Master Development Agreement and Predevelopment and Construction Loan Agreement by Resolution Number 5435 at the July 23, 2009 Commission meeting, much progress has been made with predevelopment, including abatement and demolition of the Phase 1 area and securing financing commitments (see Attachment 1: The Revitalization of Hunters View SFHA Commission Update). The Developer’s schedule to start of construction is: • • • •

July 2010 Submit Bond financing & Tax Credit applications for Phase 1A housing.

August 2010 Begin utility back-tie work.

October 2010 Phase 1 grading and infrastructure subject to HCD $30 M loan processing.

January 2011 Begin construction of Phase 1A buildings.

July 8, 2010 Page Two

Analysis As described in the DDA, the Hunters View revitalization project will consist of: demolition of the existing 267 public housing apartment units; new construction of 267 replacement public housing units and 202 mixed income housing units; off street parking; new roadways and sidewalks; the construction of up to 6,500 square feet of neighborhood servicing retail space; and the construction of up to 8,500 square feet of childcare space, community parks, and landscaping to be developed on the property.

Phase 1A consists of construction of approximately 107 multi-family housing units, including 80 replacement public housing, open space and park areas and a portion of street and infrastructure improvements. Phase 1 B, as currently contemplated, consists of development and construction of approximately 112 housing units which may include affordable and for-sale housing and a portion of street and infrastructure improvements. The affordable housing, including the replacement public housing, will be rent-restricted and leased to income qualified tenants at affordable rents pursuant to HUD and Tax Credit requirements. The Authority and the Developer have agreed to cause the Phase 1 development to be developed consistent with renewable energy and green construction practices in public housing.

The Phase 1A ground lease for the affordable housing will be for 75 years. For Phase 1A, the Authority also intends to convey a fee interest for the public street improvements to the City when completed and accepted. The Phase 1B ground lease will have an initial phase of five years, with provisions for a five year extension to facilitate grading and site improvement work for the Phase 1A and Phase 1B areas. The subsequent long term transfer of the Phase 1B parcels will be similar to the Phase 1A transfer.

The DDA delineates the responsibilities for community building activities, including economic development, revitalization planning, self-sufficiency and supportive services, and affirms that this is a core part of the revitalization effort in order to assist current and future low income residents to gain self-sufficiency and in order to support the revitalization of the neighborhood.

The Authority, the Developer and the City agree to implement community building measures as an integral part of the revitalization, including Section 3 and the Authority’s Affirmative Action requirements as provided in the Workforce MOU described below. The Developer, in partnership with the City and the Authority, agree to coordinate the implementation of a community services plan that is being developed with input from the Hunters View residents.

On February 1, 2010, MOH made a Finding of No Significant Impact, pursuant to the National Environmental Policy Act and in connection with the Authority’s request to HUD for the release of its funds for Phase 1. On March 15, 2010, HUD authorized the Release of Funds. The City Planning Commission certified a Final Environmental Impact Report pursuant to the California Environmental Quality Act on June 12, 2008.

July 8, 2010 Page Three

Budget Considerations The total estimated cost for Phase 1A is $72 million. The estimated contributions from city agencies are: $9.8 million (SFRA), $16.6 (MOH) and $8 million (Authority). The balance of the funding, approximately $37.7 million, is from California Department of Housing and Community Development, Affordable Housing Program, Tax Credit Equity and General Partner Equity. The Authority $8 million contribution is: $6 million ARRA, $1 million Replacement Housing Factor and $1 million Neighborhood Initiatives Grant. The Authority is also providing the land at fair market value under ground lease agreements for the affordable housing components and fee simple for new public roadways and the market rate housing component, net proceeds of which will subsidize construction of the replacement public housing. Base rent for the ground leases will be $1 per year with additional land payment payable out of surplus cash as described below.

Repayment of loans and ground leases from the Developer will be made from surplus cash flow based on the Authority, SFRA and MOH proportional share of contribution to the development.

Surplus cash flow during construction generated on the Phase 1 development site and subsequent phases prior to the completion of all phases of the development will be used to finance the construction of the replacement public housing until all phases are completed. Distributions to the agencies would be made after this time.

The Authority is requiring a Right of First Refusal and Purchase Option for the new affordable rental housing components to be exercised no later than at the end of the Tax Credit Compliance period in 15 years. The purchase amount will be consistent with IRS requirements of the greater of debt plus taxes or fair market value.

MBE/WBE and Resident Hiring An Interagency Memorandum of Understanding (MOU) between the San Francisco Housing Authority, the San Francisco Redevelopment Agency, the Mayor’s Office of Housing and the Department of Economic & Workforce Development is being finalized for the Hunters View Development project (see Attachment V). The MOU clarifies and defines the roles, responsibilities, goals and procedures for each of the City agencies as they relate to overseeing good faith efforts of the developer to achieve contracting and hiring goals for the Hunters View project, including Section 3 and the Authority’s Resolution No. 4967 resident hiring goals and Resolution No. 3639 MBE/WBE contracting goals.

Department’s Requested Action Staff recommends adoption of the Resolution.

Executive Director’s Recommendation I concur with the requested action.

RESOLUTION NO. ____________________ ADOPTED____________________________ RESOLUTION AUTHORIZING THE EXECUTIVE DIRECTOR TO EXCUTE A DISPOSITION

AND DEVELOPMENT AGREEMENT, GROUND LEASE AGREEMENT FOR PHASE 1A AND INTERIM GROUND LEASE AGREEMENT FOR PHASE 1B AND ANCILLARY DOCUMENTS WITH HUNTERS VIEW ASSOCIATES, L.P., A CALIFORNIA LIMITED PARTNERSHIP, FOR REVITALIZATION OF THE PHASE 1 AREA OF THE HUNTERS VIEW HOUSING DEVELOPMENT IN SUBSTANTIALLY THE FORM ON FILE WITH THE AUTHORITY WHEREAS, on August 11, 2005, the Authority Commission approved Resolution #5225 authorizing the Executive Director of the Authority to negotiate an Exclusive Negotiating Rights Agreement ("ENRA") with the Development Team of Ridgepoint Non-Profit Housing Corporation, the John Stewart Company, and Devine and Gong, Inc. (collectively, the "Initial Developer"), to determine the basis of the material terms and conditions of a Disposition and Development Agreement ("DDA") and Ground Lease ("Ground Lease" or “Ground Leases”) for the revitalization of the Hunters View public housing site; and WHEREAS, on November 10, 2005, the Authority Commission approved Resolution #5239 authorizing the Executive Director to execute an ENRA and enter into negotiations for a DDA and Ground Leases for the revitalization Hunters View public housing site with the Initial Developer and on February 15, 2006, the ENRA was executed by the Authority and the Initial Developer; and WHEREAS, the ENRA was amended several times in response to progress the parties made in negotiating the terms of a development agreement. In connection with the foregoing, the Authority approved the assignment of the ENRA from the Initial Developer to the Hunters View Associates, L.P. (the “Developer”), which consists of the John Stewart Company, Hunters Point Affordable Housing, Inc. and Devine and Gong, Inc. as its general partners, and agreed that the parties would continue negotiations for the a Master Development Agreement for the entire project site.

WHEREAS, on July 23, 2009, the Authority Commission approved Resolution #5435 authorizing the Executive Director to execute with the Developer: (1) the Master Development Agreement (MDA), that contemplates the development of the site in multiple phases, each to be governed by the MDA and a DDA and/or Ground Lease as applicable, and (2) Predevelopment and Construction Loan Agreement Developer to provide a loan in the amount of $8,319,692, in connection with certain predevelopment and construction activities of Phase I of the Development, in the form on file with the Authority (the “Loan Agreement”); and WHEREAS, the Developer desires to develop a development on the site (which includes a parcel owned by the Redevelopment Agency of the City and County of San Francisco (the "Agency") that will also be conveyed to the Authority, and thereafter conveyed to the Developer): that will consists of (i) the demolition of the existing 267 public housing apartment units on the Authority property; and (ii) (a) the new construction of 267 replacement public housing units and 202 mixed income housing units, (b) off street parking, new roadways, and sidewalks, (c) the construction of up to 6,500 square feet of neighborhood servicing retail space, and (d) the

construction of up to 8,500 square feet of childcare space, community parks, and landscaping to be developed on the property; and WHEREAS, the Development is expected to be financed with funds from several sources, including but not limited to the City and County of San Francisco HOPE SF Program, tax increment funds from the Agency, state and federal low income housing tax credits, tax exempt bonds, the State of California under its Multifamily Housing Program, and the Authority from funds it has been allocated from the United States Department of Housing and Urban Development ("HUD") under the American Recovery and Reinvestment Act of 2009, the Neighborhood Initiative Grant and Replacement Housing Factors Funds; and WHEREAS, the Authority desires to enter into a Disposition and Development Agreement for Phase 1A and Phase 1B for start of construction of Phase 1 of the Hunters View Housing Development, consistent with the terms of the MDA in the form on file with the Authority; and WHEREAS, Phase 1A consists of construction of approximately 107 multi-family housing units, including 80 replacement public housing, open space and park areas and a portion of street and infrastructure improvements; and Phase 1 B, as currently contemplated; consists of development and construction of approximately 112 housing units which may include affordable and for-sale housing and a portion of street and infrastructure improvements; and WHEREAS, the Authority further desires to enter into Ground Lease Agreements for the lease of the Phase 1A development site for the Phase 1A development as described above and the interim lease for the Phase 1B development sites primarily to evidence site control and to commence the construction of certain site and grading improvements (the “Interim Phase 1B Ground Lease�; and WHEREAS, it is contemplated that the Phase 1A Ground Lease Agreement will be changed to provide for one Ground Lease Agreement exclusively for the affordable housing on a portion of the Phase 1A development site and separate Ground Lease Agreements for portions of the Phase 1A development site in connection with the open space improvements and private street improvements; both of which shall be consistent with the provisions of Phase 1A Ground Lease Agreement; and WHEREAS, upon execution of the Phase 1A and Phase 1B Disposition and Development Agreement, the Phase 1A Ground Lease and the Interim Phase 1B Ground Lease, the Authority shall begin to negotiate the terms and conditions of additional agreements and documents with respect to the project, including, but not limited to: a new HUD declaration of trust, a regulatory and operating agreement, loan agreements, option agreements, an amendment to the Annual Contributions Contract, a management plan and numerous documents related to the proposed syndication of low-income housing tax credits; and WHEREAS, the Master Development Agreement, Loan Agreement, the DDA, the Ground Lease Agreements and any other documents related to the Development, shall be subject to any required HUD approvals.

NOW, THEREFORE, BE IT RESOLVED BY THE COMMISSION OF THE HOUSING AUTHORITY OF THE CITY AND COUNTY OF SAN FRANCISCO THAT: 1. The Commission finds the above recitals true and accurate.

2. The Commission authorizes the Executive Director to execute a Disposition and Development Agreement, Ground Lease Agreement For Phase 1A and Interim Ground Lease Agreement for Phase 1B and ancillary documents, in substantially the form on file with the Authority, with Hunters View Associates, L.P. a California Limited Partnership for revitalization of the Phase 1 area of the Hunters View Housing Development.

3. The Commission authorizes the Executive Director to change the Ground Lease Agreement

for Phase 1A to provide for two separate Ground Leases for the Phase 1A development site, one will be to lease a portion of the site for the affordable housing units, and the second for the private open space area and private street improvements; such leases shall be substantially consistent with the Phase 1A Ground Lease but shall be limited to the particular uses described above.

4. The Executive Director is hereby authorized to negotiate the terms of additional agreements and documents with respect to the Development.

5. This Resolution shall take effect immediately.

APPROVED AS TO FORM AND LEGALITY:

REVIEWED BY:

_________________________________ Tim Larsen, Acting General Counsel

Henry A. Alvarez III, Executive Director

Date:_____________________________

Date:

ATTACHMENT I

The Revitalization of Hunters View SFHA Commission Update July 8, 2010

ATTACHMENT II

Disposition and Development Agreement for the Hunters View Housing Development

ATTACHMENT III

Ground Lease Agreement (Phase 1A – Hunters View Project)

ATTACHMENT IV

Interim Ground Lease Agreement (Phase 1B – Hunters View Project)

ATTACHMENT V

Interagency Memorandum of Understanding Contract/Workforce Compliance and Workforce Development & Training

SFRA062410