Speaker 1: District nine. I. Motion is carried.
Speaker 2: Thank you. With item 23, please.
Speaker 1: Report from Development Services Recommendation to adopt middle income housing program to include the policy components included here in citywide.
Speaker 2: All right. Thank you. I know there's a there's a staff report on.
Speaker 5: Yes. Mayor, vice mayor and members of the council. This is a pretty complex process. We would like to spend some time to go through what we've been working on to try to develop an additional tool for some middle income housing. We have, of course, the director of development services who can walk us through the policy and some of the implications and be able to answer questions. Oscar.
Speaker 2: Thank you, Mr. Modica. Please. Next slide. Thank you, Mayor. And members of the Vice Mayor. Members of the City Council. Moderate income households are those households that earn between 81 220% of the area median income. These households are looking for affordable housing as well as others, but earn too much to qualify for the standard subsidized lower income housing. City programs have focused on a variety of programs to assist very low and low households. Thus, we have not been able to meet the moderate income housing units required under the current housing element. And the next housing element will require over 40,000 moderate income units. In February of 2021. The City Council approved the participation in the case middle income housing program for the purchase of the Ocean Air Apartments for middle income housing on a pilot basis. At that time, the City Council also asked staff to conduct further research and return to council with a proposed Long Beach middle income housing program. This presentation summarizes staff's recommended policies, which was prepared with the assistance of HRA advisors who are here tonight to answer any questions and is attached to the council letter that you have in front of you. Next slide, please. I would like to provide a brief middle income program overview. There are three primary parties involved in these transactions, which include the JPA and the JPA Act as a sponsor as well as the owner of the project and is also the bond issuer. The city is considered the host and can request the sale of the property after 15 years. The developer is a project administrator that is responsible for putting together the deal. These projects are 100% financed by tax exempt bonds. Bond terms are typically 30 years. There are two types of bonds associated with these transactions. The first type is a series, a bond. These bonds are intended to acquire the property where applicable for new construction, for financial reserves and other cost. The series B bond is another type of bond and that that is provided solely to the project administrator as preferred equity. Next slide, please. The JPA or Joint Powers Authority or the owner has the ability to purchase, own and finance the project, including existing or existing housing or new construction projects. Some or all the units are typically restricted to moderate or middle income households. If the city approves the project, it will enter into a public benefit agreement with the JPA, and the JPA will have a property tax exemption during the term of the bonds.
Speaker 0: How?
Speaker 2: Household income restrictions terminate at the end of the bond term, and the city has a right to force the sale of the building after 15 years and realize any net proceeds from the sale after the debt is paid off. Next slide, please. This financial structure is relatively new in the long term data and its success is really not available. The financial structure does not rely on the excuse me, it does rely on economic growth to pay off the debt rather than more conventional financing structure. So what the city is attempting to do is to with with these programs.
Speaker 0: Is to reduce the risk.
Speaker 2: And provide real, meaningful middle income, affordable units. To accomplish this, the middle income program has been designed to ensure long term housing affordability, ensure adequate long term property maintenance, reduce the.
Speaker 0: Risk of.
Speaker 2: Foreclosure, recover the city's pro-rata share of the property tax revenue, provide oversight and accountability, and provide access for the processing of these requests. Next slide, please. This slide is intended to illustrate all the parties involved as currently structured with other deals. The interaction between the city or the host is with the owner. As you can see from the attached illustration, what these policies are intended to do is to provide more, like I said, more oversight and accountability, accountability to the other parties involved in this agreement. Next slide, please. So the program, again, as indicated in the report, the program that we are proposing is flexible and we've established a structure that can be tailored to a certain project's attributes. Therefore, we are asking the Council to approve the following policies. The first policy is a provision for a requirement of deeper affordability by requiring deed restricted moderate income units that will qualify for the Reno Regional Housing Needs Allocation Credit to maintain the city's housing element requirements. Also, the provisions are intended to rely on or to propose housing affordability that is based upon income state income requirements. Although this is a flexible term and we can use other affordability requirements like providing that there's greater affordability in the project field. Another provision or policy is to maintain the city or to recover the city's property tax losses via a host fee. And lastly, we have other public benefits, and this is intended to be a bit of a catch all, if you will, again, in order to be able to tailor a transaction to the attributes of the project. And some of the things that we could consider is if a project comes to the city that provides other revenues like sales tax. In the case where you have a mixed use project or the preservation of older properties, this will allow for older properties to continue with certain amount of improvements. Next slide, please. In order to implement these policies. The program includes bond underwriting standards. These include such things as a host fee, as indicated earlier, to recover the pro-rata share of the city's property tax revenue. It also requires things like a third party appraisal to review the administrator and the and the sponsor or the owner's cause for the acquisition and sale of the property. Again, we are recommending that rents be limited to 30% of household income consistent with current affordable housing standards and that net tenants get paid utility allowances as well as other things, including affordable restrictions, to include a minimum 55 year deed restriction on these units. Next slide, please. Additional underwriting standards include establishing reserve accounts with escalators to ensure proper property maintenance. Ensuring bond debt service ratios of 1.0 beginning on year one. Minimizing the interest only financing so that we can establish bond amortization at the end of the bond terms. The city's ability to review construction costs for new construction projects is also part of the provisions. Underwriting provisions in other provisions are included to reduce debt, maintain a healthy operating expenses and return on the investment. Next slide, please. The program also includes standards as well as oversight provisions for such transactions and annual fees for the oversight, such as allowing the city to review the closing cost of the bond transaction, allowing and providing an annual fee that would pay for the city's annual review of the project. Making sure that the asset there's at least three years worth of asset management reserves in the project. Provisions in the project deal and making certain that the series B bond not capitalized the interest. Next slide, please. Additional oversight provisions include the city's ability to review and approve any additional debt exceeding $15,000, as well as the ability to force the sale of the project after the 15 years of long term and the ability to approve or reject changes to the project team. The project team, including would include the JPA slash owner, the administrator and the property manager. Next slide, please. The policies also prescribe qualifications for the middle income team. We are setting certain provisions or standards, if you will, for the JPA. The administrator, the property manager, the property manager, excuse me. And also the provision to include an independent municipal advisor to participate in the transaction. Next slide, please. Tenant protection provisions are also included in the policies to prevent the displacement of existing tenants, while ensuring that the rapid replacement of two middle income households and adhering to the OECD's affirmative fair housing provisions, as well as honoring housing vouchers. Next slide, please. As envisioned, the program will require significant annual reporting, including a tenant satisfaction survey, household income and rent information. An assessment of the condition of the property in an annual financial report. These reports will be required in the Public Benefit Agreement and the city may request corrective actions based upon the report findings. Next slide, please. The program also provides an application and a review process with fees to support Stat's review, including the third party reviews. Thank you. Next slide, please. And I know there's a lot there's a lot here to unpack. But at this point, the city's recommending staff is recommending that the city council approve the middle income housing program, as indicated in the attachment to the council letter. That concludes my presentation.
Speaker 0: Staff, including.
Speaker 2: H.R. Nick, are consultant, is here to answer any questions that you may have at this time. Thank you. And I'll just add a comment and then we'll go to Councilwoman Sun Huff, whose maker is cued up to make a motion. But I do remember when staff said, Hey, let us have some time, go come up with a policy. Because, you know, the last project was a pilot. And since then, you know, we see that other states, other cities are adopting this. And I just want to thank the staff for taking the time to put a policy forward. So what we do is consistent, and I love the things that I heard. Tenant protections are within that. Some of the things that the city values are within that. So we're expanding middle income housing while preserving units as well. And I think that's having more tools in the tool belt is certainly important. So I want to go to Councilwoman and they are.
Speaker 3: Thank you, Vice Mayor. For that. And thank you very much, staff, for that presentation. Thank you. As you know, I'm the housing advocate and I truly believe that when we say housing for all that it really means housing for all. We need to ensure that we focus on increasing and retaining local employment opportunities in our city and for our residents. And as we continue to work on breaking the generational poverty cycle, that we also plan to expand and build in opportunities for middle income housing. Even so, this program is designed to ensure long term housing affordability and maintenance is still a main focus of our city. And this is an area in which our partners that point have been very supportive of. I've as I've mentioned before, I'm a huge supporter of our students and our local university. That provide outstanding educational force in our city. Which is why I'm very excited for the partnership between Health, State University, Long Beach faculty and staff for this middle income housing prepackaged in Taiwan. Spin off. Oh, sorry. Sorry about that. That's okay. For the middle income housing proposal that has been introduced recently. And I want to make sure that this item supports the this project. Given the opportunity I'm sorry, given the complexity. I'd like to take the opportunity to raise a couple. A couple of things. And first, I want to say thank you to staff for all the the work that they have put into this, because they really deep dove deep into this issue. And they've really done a lot of work on this around it. And so I really want to say and I also want to thank all those who who have reached out to my office and in support of this and all the letters that I have that I have received. So I'm very thankful for that. I would also like to ask staff to come back within 45 to 60 days with an amended set of criteria that distinguishes between grownup construction and acquisition of existing buildings already under the modern income housing program. And in that regard, I'd like to make the following three recommendations for this item. First. I'd like to. I'd like us to adopt. I'd like us to adopt the general goals for the middle income housing program set forth by the staff report. Second, I'd like for us to direct city staff to work with Walter for California State University, Long Beach and CSC Aid to move forward with the faculty staff housing proposed that submitted by Waterford in September 2021 and to return to City Council within 60 days for final approval. If if the proposal meets the three primary goals set forward in tonight's staff report, aim make the city whole from any projected property tax law to achieve the city's affordability goal and see demonstrate that the property has adequate financial reserves and maintenance is required. So. I'd like to recommend that. Direct and direct staff consultant. Eight are and eight to work with the larger development community to refine the most specific of criteria set forward in the h r. In a report attached to the staff memorandum for future projects to be considered under the Middle Income Program. Thank you.
Speaker 2: All right. Thank you. I see a motion. I'm going to ask that before your next person. Do you are you clear on what that motion was? I know there was a pretty large, pretty long expanse of motion. Could you just speak to that? Yes, Councilmember. I think we're we're clear. We've got 45 to 60 days to come back to take the goals that we provided in the staff letter. And at the same time, consult with.
Speaker 0: Our.
Speaker 2: Waterford and CDR to make certain that we become whole as far as our loss in the property tax revenues and other provisions, and more importantly, to separate between the new construction projects versus existing transfer of existing projects. So I believe I've captured that and we can certainly do that, come back and at the same time and negotiate with Waterford on their proposed deal. And what we would bring back to you is policies that either align that hopefully will align with the Waterford project. And so we'll provide that analysis to you in 40 to 60, 45 to 60 days.
Speaker 3: Thank you.
Speaker 2: Okay. We're going to. Okay, we'll keep we'll keep going. Councilman Austin. I think a council member of the day has put it very, very bluntly and clearly. I mean, obviously, there is a huge need in our city to build housing, affordable housing, workforce housing. I think this policy advances that and gives us puts it in a good position to continue to do this, particularly in our downtown area. And I think it's a great place to continue and come back with specific projects in mind. So I support the motion to. Right next, we have Councilman Price. Ask me real quick, Justice. Can council members further clarify our interaction with H.R.? And I just want to make sure I understand that correctly. I didn't even understand the question correctly. Oscar. Who are you? Do you have a question for the magazine? Yes, the maker of the motion council member. My apologies. If you could just restate the and our ability to work with a consultant as part of your motion.
Speaker 3: Yes. I would like them to work with the water it. Well, with with obviously with staffers, with water, Ford and CSR and all the parties involved so that we can move this project forward.
Speaker 2: And I just want to be clear, Mr. Worsley. What we're talking about is a policy, not a specific project. So the motion here is saying create a separate sort of come back in 45 days with additional research, work with partners, additional research and recommendations around, you know, existing structures that are going to opt into the program. But it seems like new construction and all those things, those goals are fine. Let's keep keep here from our colleagues. But I think we should be clear. We're not talking about a specific project today. We're talking about the policy in front of us. I want to be clear on that. Councilman Price.
Speaker 3: Thank you, Mr. Vice Mayor. I support the motion wholeheartedly, and I'm super excited to support a project that includes a partnership.
Speaker 0: With State Long Beach Beach.
Speaker 2: Great. Thank you. Come on, Alan.
Speaker 0: Yes. Thank you, Councilwoman de Haas. I agree with everything and I'm really interested in middle income housing. And I know that these middle income housing programs are new and untested and untested. But I think what we have here is a robust a robust and flexible program. So I will be supporting this item today and I look forward to future discussions on this topic.
Speaker 2: Great. I don't see any other council comment. We're going to go to public comment now. Any public comment on the site?
Speaker 4: Yes, we have three public comment. Sharon, your time begins now.
Speaker 2: We thank you, Vice Mayor and members of the city council, Alex Charron, speaking tonight on behalf of Waterford development. Very much appreciate the opportunity to speak in support of the policy. We also appreciate the efforts from city staff on Monica, Oscar Forsey, Linda Tatum and their team. It's a very complex issue as identified by the maker of the Motion and Waterford as the sponsor and participant in the city's only pilot project in the modern income housing in Oceania supports the policy and the continuing discussion. Appreciate the opportunity over the next 45 days or so to engage further with staff on how better to refine and clarify some of the policies outlined in city staff. The Cal State Long Beach proposal was submitted last year, and so our concern when we saw this item was obviously reconciling a project that was already in the pipeline with the city's need and understandably so for a larger policy that would cover it in any future projects. We are simply asking and support any decision in movement that would further clarify the distinction of this policy between ground up construction and acquisition type construction. We also have put together a number of data points on the Ocean Air Project, which I think would be very informative and appreciate Linda Tatum in her team coming out at the end of last year to tour the facility. I think by any metrics, the program has met or exceeded its affordability goals. I would just remind staff that Waterford is in full support of a policy that requires the city to be made whole. We've made that change, obviously, since the Ocean Air Project. So any project proposal moving forward should not leave the city in the hole from a tax revenue loss stand basis. And again, appreciate very much your support for this policy, and we look forward to working with you collaboratively. Thank you very much.
Speaker 4: Aren't going to be very visible.
Speaker 2: Public comment.
Speaker 4: Yes. Our next speakers and control. Time begins now.
Speaker 0: Good evening. I don't pretend to understand how this works. I can only go by what I have read in the L.A. Times that, yes, I assume there are some cities that are going with this plan, but there are also cities who have rejected it, such as San Jose. I am very much for low cost housing help. But I do not understand helping. Middle income. Unless I can get some help. I'm not with Social Security. I'm. I don't even. I couldn't even qualify for middle income, but. What worries me is that. We are giving these. Units. Pass on paying property tax. But as I understand it, then there will be a host fee. So I do not understand. I'd like to know the difference between what a person would pay and property tax and what they have to play with the host with fee if it really is advantageous for them. And according to the L.A. Times article, the units at Ocean Air, the one bedroom units, were $600 more than units in surrounding one bedroom facilities. So it doesn't seem like. People that are. Taking advantage of this are really getting much of a deal. I think that. The Council needs to really. Have an independent. Advisor on this as to whether this is really going to help with middle income housing and with the ocean there. It's not expanding housing because they're using housing that's already there. Thank you.
Speaker 4: That concludes all speakers for public comment on this item.
Speaker 2: All right. Thank you. All right. So we've heard from the council staff one more time. Um, staff. Do you have any final comments before you go to them?
Speaker 5: Yes. Vice Mayor. Thank you. So just to sum up what I think we heard, I think I heard support in general for the policy and from taking the next step and move it forward. I think we heard support for construction that if we're doing new construction, that in general those are supportive, but that we have some additional work to do on the acquisition projects, which is the ones that Waterford are proposing. And we will certainly engage with Waterford to get some specific comments now that a policy is out in the public. We would welcome any suggestions on specific language, on things that need to be modified, things that would help projects actually get approved. And then we would also engage with them to understand concerns and negotiate some additional language, if there are any, that can meet both both parties. The proposal that was mentioned back in September that currently has a lot of good things doesn't match up completely with what we presented tonight. So there would be some additional work we'd need to do on the policy before we're able to just move that one forward. And then we would return to council within about 60 days to let you know where we are, what we have agreement on, and what some of the areas would be that council could then consider if you were ready to adopt it or if you needed to make more tweaks. And with that, I think we're ready to move forward.
Speaker 2: And thank you. So it is great that we did the pilot, we did a study, we got the study back. We have a new tool now, which is good, and it's going to make the city whole address the concerns that was raised last time. So that's why it was also a roll call vote.
Speaker 1: District one, district two. I district three.
Speaker 3: I.
Speaker 1: District for.
Speaker 2: All right.
Speaker 1: District five.
Speaker 0: I.
Speaker 1: District six.
Speaker 3: I.
Speaker 1: District seven.
Speaker 2: I.
Speaker 1: District eight.
Speaker 2: Hi.
Speaker 1: District nine.
Speaker 2: Hi.
Speaker 1: Motion is carried.
Speaker 2: Fantastic. Thank you. Next I have item 20. But what's the next time on the list that might might be out of order? What do you have?
Speaker 1: Item 24.
Recommendation to adopt a Middle-Income Housing Program to include the policy components included herein.  (Citywide)