TITLE:
title
EXTENSION OF OPTION TO LEASE AGREEMENT TO CONSTRUCT AND OPERATE A 70-UNIT AFFORDABLE SENIOR AND SUPPORTIVE HOUSING PROJECT LOCATED AT THE CITY’S SENIOR CENTER, 695 WEST 19TH STREET
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DEPARTMENT: ECONOMIC AND DEVELOPMENT SERVICES DEPARTMENT/PLANNING DIVISION
PRESENTED BY: CECILIA GALLARDO-DALY, ASSISTANT CITY MANAGER
CONTACT INFORMATION: CARRIE TAI, ECONOMIC AND DEVELOPMENT SERVICES DIRECTOR
RECOMMENDATION:
recommendation
Staff recommends the City Council review and approve the proposed “Extension of Option to Lease Agreement” for an additional 60-day term that will expire on April 30, 2025 to finalize lease negotiations with appropriate affordable housing terms and complete assembling funding for the project.
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BACKGROUND:
The property is located within the 19 West Urban Plan. Existing development on the subject property includes the City of Costa Mesa Senior Center which was constructed in the 1990s (approved under Conditional Use Permit PA-90-60). The Senior Center is an approximate 20,000-square-foot, two-story building with a 145 space surface parking lot. The original vision and concept for the Senior Center several decades ago included a senior housing component with 46 units. However, at the time of development, the City Council decided to not proceed with the senior housing component.
The proposed development would include a new 70-unit senior residential building to be developed on a portion of the Senior Center’s existing surface parking lot. The project does not propose any changes to the existing Senior Center building.
On July 21, 2020, the City Council approved an Exclusive Negotiating Agreement (ENA) with Jamboree Housing Corporation (JHC) to study and determine the feasibility for the right to acquire a long-term leasehold for an affordable senior housing project to be developed on a portion of the City’s Senior Center parking lot. The original ENA expired in 2022. Staff continued to work diligently with JHC to submit for entitlements.
On February 20, 2024, the City Council reviewed a project screening for the proposed senior and supportive housing development, in accordance with the 19 West Urban Plan. The purpose of the screening review is to receive City Council comments on the merits and appropriateness of the proposed development before the applicant submits the formal planning application(s). The City Council indicated that they supported the project moving forward with a suggestion that JHC consider adding more residential units. The project application for 70 units has been submitted to and considered by the Planning Commission, which recommended approval to the City Council. Staff is working with Jamboree to complete the necessary documents to move the item forward to the City Council for consideration.
On July 16, 2024, the City Council approved an “Option to Lease Agreement” for a term that expired on October 31, 2024, with one 120-day extension. The purpose of the agreement was for Jamboree Housing to apply for Project Based Vouchers issued by the County of Orange for the affordable senior housing development. Jamboree Housing exercised their option to extend the agreement and the City authorized the extension to February 28, 2025.
As currently proposed, the JHC project includes a 41,592 square-foot, four-story building with a total of 70 residential units. The development focuses on providing affordable housing for seniors, offering primarily one-bedroom units and several two-bedroom units, including one unit designated for the site manager. The units, excluding the manager's unit, will be available to seniors with income levels ranging from 30% to 60% of the Area Median Income (AMI). Out of the 70 units, 34 are proposed as permanent supportive housing for seniors. Ground-level amenities facing 19th Street will include office spaces, a community room, media lounge, and a dog run, with podium parking located behind. Above the ground floor, the project proposes an outdoor courtyard, fitness center, laundry room, and library. The current site has 145 parking spaces available. However, due to the building's placement on a portion of the parking lot, the number of parking spaces will be reduced to 133.
ANALYSIS:
The proposed “Extension of Option to Lease Agreement” would allow Jamboree Housing additional time to complete a lease with appropriate affordable housing terms and complete assembling funding for the project. The Option to Lease is a mechanism to demonstrate site control for eligibility of affordable housing funding, until they receive approval from the City Council of a fully negotiated “Ground Lease”.
Jamboree Housing Corporation has obtained a variety of funding sources for the Project, but additional funding is necessary. In addition, City staff and Jamboree are working on finalizing a lease agreement and affordable housing agreement associated with the Project. The final lease and affordable housing agreement is subject to City Council approval and will be brought to Council concurrently with the final review of the project.
California Environmental Quality Act (CEQA)
The City Council review of the option to lease is exempt from environmental review under the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines Section 15061(b)(3) (General Rule), in that there is no possibility that the approval of the option to lease will have a significant impact on the environment. The Planning Commission has determined that the proposed project is exempt from environmental review under the California Environmental Quality Act.
ALTERNATIVES:
The City Council can approve the proposed extension of option to lease agreement, or not approve the agreement. If the extension is not approved, development of the project could be subject to significant delays in that funding would not be available at the time the project receives local approval.
FISCAL REVIEW:
There is no fiscal impact to the City associated with the proposed extension of the option to lease agreement.
LEGAL REVIEW:
The City Attorney’s Office has reviewed this report and extension of option to lease agreement and approves them as to form.
CITY COUNCIL GOALS AND PRIORITIES:
• Diversify, stabilize and increase housing to reflect community needs.
CONCLUSION:
Public funding is a critical component of the development of affordable and supportive housing. JHC has requested the approval of the extension of option to lease agreement to finalize project documentation with City staff which are necessary for City Council approval and to complete the assembly of funding for project development.