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APPROVE AMENDMENTS TO REGULATORY AGREEMENTS FOR PRICE V. CITY OF STOCKTON
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RECOMMENDATION
It is recommended that the City Council adopt a resolution:
1. Approving amendments to the Regulatory Agreements for the Gleason Park Apartments, Marquis Place, Vintage Plaza, Wysteria, and Winslow Village housing projects; and
2. Authorizing the City Manager, or his designee, to execute all documents and take necessary and appropriate actions to carry out the purpose and intent of the resolution.
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Summary
As the result of a settlement agreement between the City of Stockton and the Price Judgment Creditors, the City agreed to amend the regulatory agreements for several affordable housing projects to provide additional clarification of the income limits of the tenants. The income restricted units were initially required as the result of the Price v. City of Stockton litigation (Price Case), which obligated the City to construct 340 housing units available for lower income households to replace units that were closed and/or demolished as a result of code enforcement and redevelopment activities in downtown Stockton. The required units have been constructed, but during the review of the regulatory agreements for all of the developments by the Price Judgement Creditors, it was found that the agreements for Gleason Park Apartments (Attachment A), Marquis Place (Attachment B), Vintage Plaza (Attachment C), and Wysteria (Attachment D), did not specify the income levels required by the Price Case judgement. The regulatory agreement for Winslow Village (Attachment E) included the correct income levels, but allowed the developer to increase the income level of the tenants, with City approval, if they were unable to obtain rent subsidies. Therefore, for the units in these complexes to be counted toward the City’s obligation, the regulatory agreements must be amended to delete the option clause in the Winslow Village agreement and to add the required income restrictions to the other documents.
DISCUSSION
Background
In 2001 and 2002, through code enforcement efforts, the City closed ten occupied residential buildings in downtown Stockton. Some of the buildings were later demolished as the result of activities undertaken by the Redevelopment Agency. These actions resulted in approximately 350 people being displaced.
In January 2002 several of the displaced residents sued the City and the Redevelopment Agency claiming that they had not fulfilled the requirements to provide full relocation benefits as required under state and federal law. The lawsuit, Price v. City of Stockton, further claimed that the City and Redevelopment Agency were required to replace any residential units taken off the market and ultimately demolished.
The lawsuit resulted in a judgement that required the City and Redevelopment Agency to establish a relocation fund, construct or substantially rehabilitate 340 replacement housing units, and provide a preference for certain eligible displaced persons in the replacement housing units. The 155 units in the Hotel Stockton counted towards the replacement requirement, leaving an additional 185 units that were required to be produced. Of the 185 units, 85 units were required to be affordable to persons whose income did not exceed 60 percent of the Area Median Income (AMI) and 100 units were required to be affordable to persons whose income did not exceed 30 percent of the AMI. The units were to be constructed by 2010 and were required to be affordable for at least 55 years.
By 2010, the City had made substantial progress in providing loans to developers to construct or rehabilitate the required affordable units, but had not fully met the goal of 185 units. All 85 of the units required to be affordable to 60 percent AMI households had been produced, but only 47 of the units affordable to the 30 percent AMI households were completed. Because all of the units had not been produced, the parties to the Price Case began meeting to discuss the alleged breach of the judgement, but before those negotiations were complete, the California Legislature dissolved redevelopment agencies. In February 2012 the assets, functions, and obligations of the former Redevelopment Agency, including the obligations of the Price Case, were transferred to the City in its capacity as Successor Agency to the former Redevelopment Agency. When the City filed for bankruptcy, even though the Successor Agency was not a party to the bankruptcy, the attorneys for the defendants in the Price Case, under the name Price Judgement Creditors, filed a claim against the City and participated in mediation sessions to resolve the outstanding issues.
Present Situation
The City has now completed more than the number of units required by the Price Case and they are occupied by households with the appropriate incomes. However, during the mediation sessions, the Price Judgment Creditors noted that even though several of the projects were completed and providing housing to the required number of 30 and 60 percent income households, due to the omission of the requirement to provide the specified number of 30% and 60% AMI units in the regulatory agreements, which are the documents which specify the rental terms and requirements, they would not count the units toward the City’s replacement obligations. Per the terms of the settlement agreement, in order for the units to count toward meeting the City’s obligations, the regulatory agreements must be amended.
The effected projects, the owners, and the number of units required by the Price Case are shown in the table below:
|
Project |
Owner |
Total Units in Project |
Required 30% AMI Units |
Required 60% AMI Units |
|
Winslow Village |
Service First of Northern California |
40 |
31 |
3 |
|
Marquis Place |
Visionary Home Builders |
21 |
2 |
10 |
|
Wysteria |
Visionary Home Builders |
65 |
7 |
52 |
|
Gleason Park Apartments |
Mercy Housing California |
93 |
11 |
0 |
|
Vintage Plaza |
Visionary Home Builders |
18 |
3 |
0 |
All of the above developments are currently providing the required 30% and 60% units under regulatory agreements with the California Low Income Housing Tax Credit Allocation Committee (CTAC), so the proposed revisions will not impact the projects, cause additional requirements, nor displace any current tenants.
In addition to adding the requirements for the 30% and 60% AMI units, the revisions to the regulatory agreements also include the addition of a clause stating that preference shall be given to any eligible households displaced by activity of the City or the Successor Agency.
FINANCIAL SUMMARY
There is no financial impact from the proposed amendments to the regulatory agreements. The amendments do not affect the loans that the City and/or Agency provided to these projects.
Attachment A - Gleason Amended Agreement
Attachment B - Marquis Amended Agreement
Attachment C - Vintage Amended Agreement
Attachment D - Wysteria Amended Agreement
Attachment E - Winslow Amended Agreement