AgdaPkt 2000-05-22 - Laserfiche WebLink

Browse Search

LÞ l.-- \ REPORT To the Redevelopment Agency May 22,2000 Subject Franklin Street Project -- Second Amendment to the Disposition and Development Agreement (DDA) with Shea Homes Recommendation Staff recommends that the Board approve the amendment to the DDA schedule of performance, providing to November 20,2000 (180 days) to permit the parties to redesign the entire project and restructure the business proposal. Background Under the DDA as currently drafted, Shea was to have made their election to proceed and to fund the deal by May 17, 2000. However, in early May, the developer indicated that the deal no longer made economic sense for them and that without amendment, they would elect not to proceed. We knew in February that it was virtually certain that there was no way to include the Pacific Telephone building. Shea's original concept would have converted the section of the Pacific Bell property along EI Camino to housing. However, during the site analysis process we discovered that the costs to acquire and relocate the equipment and fiber optic lines running through this structure made it impossible to include. This change alone required the redesign of the overall Shea project. As we learned more about the project costs it became evident to Shea that this elimination alone would not be sufficient to make the project viable. Part of the problem is the sheer size and complexity of the assemblage. In the current economy there is no effective way to get control of the acquisition costs because of the extreme volatility in the market. The affordable housing requirement was another considerable cost. The Board indicated some willingness to be flexible on this issue, and staff has indicated to Shea that the Agency would be willing to move forward with the developer only being responsible for the 9% moderate-income units, eliminating the developer's obligation to provide the 6% very low-income units 1. The retail component may also be an area to re-examine. The Board's original Request for Proposals said the Agency would leave it up to the developer whether to include retail. In the end all the proposals the Agency received included retail, but generally because it 1 The Board will recall that the Redevelopment Agency has an obligation under state law to require that 9% of the units built within the Redevelopment Area over the life of the Agency must be affordable to households at or below 120% of median income; and a further 6% must be affordable to households at or below 50% of the median. Redwood City has always sought to impose this requirement on a project-by- project basis but is not legally required to do so. In terms of economic impacts, the 6% very low-income units are an enormous cost burden to a project. - -~ ~-~-"'..~--.--~'-'-~~'