AGENDA ITEM EXECUTIVE SUMMARY
ITEM TITLE*
title
Authorization to Execute a Ground Lease with CASA for the Supportive Housing Building in the Homestead Gardens Affordable Housing Development
presenter
RESPONSIBLE STAFF, TITLE, DEPARTMENT*
Alicia Arnold, Director, Housing and Community Development Department (HCD)
Emily Holt, Affordable Housing Assistant Director, HCD
Maggie Simon, Affordable Housing Development Coordinator, HCD
STAFF RECOMMENDATION*
Staff recommend that the Council authorize the Town Manager to execute a 99-year ground lease with CASA for the Supportive Housing building in the Homestead Gardens Affordable Housing Development.
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ACTION/DECISION POINTS*
Council must approve or reject the authorization to execute the ground lease with CASA for the Supportive Housing building in the Homestead Gardens Affordable Housing Development.
LEGISLATIVE CONTEXT*
In June 2023, Council authorized the Town Manager to execute option to ground lease agreements with CASA for their portions of the Town-owned 2200 Homestead Road site. Staff now need Council authorization to execute a ground lease with CASA.
BACKGROUND AND CONTEXT*
Background
The Town and its outside legal counsel at Ellinger & Carr have worked with CASA to draft a ground lease that establishes the major terms and conditions related to the lease of Town land for the development and management of the Supportive Housing building as part of the Homestead Gardens Affordable Housing Development.
The Town Council has consistently reviewed and authorized elements of the project leading to consideration of this agreement.
• In September 2017, Council designated 2200 Homestead Road as a mixed-income affordable housing site and authorized the Town Manager to continue to pursue development there.
• In June 2018, Council gave feedback on a Concept Plan for the development of 2200 Homestead Road.
• In November 2018, Council authorized the Town Manager to issue a Request for Qualifications to identify potential development partners for 2200 Homestead Road and to begin negotiations with potential developers.
• In June 2020, Council approved $3.3M in Affordable Housing Bond funding for the 2200 Homestead Road project.
• In November 2020, Council approved $173,395 in Affordable Housing Development Reserve funding for the 2200 Homestead Road project.
• In May 2021, Council approved the Conditional Zoning of the 2200 Homestead Road project.
• In October 2021, Council authorized the Town Manager to execute a site development agreement with Self-Help Ventures Fund for the 2200 Homestead Road site.
• In November 2022, Council approved $3,028,839 in affordable housing funding for the 2200 Homestead Road project.
• In June 2023, Council authorized the Town Manager to execute option to ground lease agreements with CASA, Habitat for Humanity of Orange County, and Community Home Trust for the Town-owned 2200 Homestead Road site.
• In November 2023, Council approved a Modification to the Conditional Zoning of the 2200 Homestead Road project.
Key components of the ground lease agreement:
• The 99-year ground lease is subject to customary rights of termination upon occurrence of certain events of default. The conveyance of the ground lease is “as is” and “where is” subject to very few exceptions on condition.
• The Tenant is charged with constructing and maintaining the improvements on the property, and upon termination or completion of the ground lease, those improvements will become assets of the Town.
• The Tenant has rights to obtain additional funding related to the project using the improvements and its leasehold interest as security for the loan, which is commonplace in this type of financing structure.
• The Tenant will provide all insurance on the property and improvements, and Tenant will have certain rights of restoration in the instance of damage or destruction.
• The ground lease will restrict use of the land to only include plans and improvements allowed by the Conditional Zoning Permit that was approved by Council in May 2021 and modified in November 2023.
TRADEOFFS, ALTERNATIVES, IMPACTS
If Council does not authorize execution of the ground lease, CASA will not be able to proceed with building, owning, and managing 22 affordable rental units in the Supportive Housing building.
If Council authorizes execution, CASA will proceed with securing the permits and financing needed to begin construction of the Supportive Housing building.
FINANCIAL IMPACT
The ground lease determines that CASA will pay $10 per year in rent to the Town for the 99-year term of the lease (payable in one lump sum at the time of the Ground Lease execution).
COMPLETE COMMUNITY CONNECTION
The Homestead Gardens project is consistent with the Complete Community framework, by adding affordable housing, with a mix of housing types and for a mix of income levels, that is transit accessible and expands the Town’s greenway system.
ATTACHMENTS
Resolution
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