AgdaPkt 2010-09-13 - Laserfiche WebLink

Browse Search

6.3A Page 1 REPORT To the Honorable Mayor and City Council From the Ci Mana er September 13, 2010 SUBJECT Proposed sale of 3272 Rolison Road ("Property") RECOMMENDATION Approve, by Resolution, Proposed Process for Sale of 3272 Rolison Road. BACKGROUND Priorto 1995, the City used grant funds to make a rehabilitation loan for a low-income multifamily complex at 3272 Rolison Road (the "Property"). The City acquired the Property, which contains seven units, when the property owners defaulted on their loans, in order to protect the City's security interest in the Property. The lender in first position had placed the Property in receivership through the San Mateo County Superior Court; the Court appointed Allen & Associates Property Management Company as the property manager. Because the City did not have the ability to manage the Property, it retained Allen & Associates Property Management Company as the property manager. The City's total cost to acquire the Property was $54,741.46, which was paid from Community Development Block Grant (CDBG) funds. This included (i) the principal balance and accrued interest on the City's rehabilitation loan to the borrower, (ii) the amount required to reinstate the first and second mortgages, and (Iii) payment of delinquent property taxes on the Property. However, no City general funds nor CDBG funding have been used to support the Property. The operating expenses and building improvements have been supported exclusively by rents -received from the tenants. The Property is currently occupied by seven low income households paying rents totaling approximately $70,000 annually. The Property has a first mortgage of approximately $165,000; operating expenses, including mortgage payments, averages around $45,000 annually, for a net income of approximately $25,000. The City has not offered this Property for sale previously because of the unfavorable and fluctuating neighborhood environment and economic climate. In 1994, the City and Redevelopment Agency collectively acquired some 70 units of housing near the Property, on Rolison Road, for the purpose of revitalizing the neighborhood. As part of its revitalization plan, the City developed and implemented the Friendly Acres Neighborhood Plan ("Plan") to reduce and prevent crime. Over the next three years, the City took numerous steps to implement the Plan, including the installation of many infrastructure improvements such as resurfacing the alley, lighting, flood prevention mechanisms, and fencing, and increasing police patrols to combat gang and drug violence. Despite these concerted efforts, the neighborhood remained severely depressed for some time. The Police Department reported constant home burglaries, dumping in the alley, drug sales and other illegal activity, including prostitution, as well as other violent crimes, leaving the neighborhood generally feeling unsafe. At that time, the City decided not to offer the Property for sale because the neighborhood was continuing to decline, and because of the number of absentee landlords who failed to maintain their properties. The City did not want the Property to 82483.00000\4749656.1