Title
Introduction of Ordinance Approving a Lease and Authorizing the City Manager or Designee to Execute Documents Necessary to Implement the Terms of a One-Year Lease With Four One-Year Extension Options, Each Subject to Reasonable Discretionary Approval of the City Manager, with Shelter In Peace, Inc., a California Non-Profit Corporation, for 2815 San Diego Road Located at Alameda Point to Operate Transitional Housing for Refugees; and
Recommendation to Approve the Finding that the Short-Term Lease Transaction with Shelter in Peace, Inc. is Exempt from the Surplus Lands Act, as Amended. (Community Development 236)
Body
To: Honorable Mayor and Members of the City Council
EXECUTIVE SUMMARY
On March 3, 2019, the City Council approved the use of Community Development Block Grant (CDBG) Substantial Rehabilitation funds to replace the cracked foundation at 2815 San Diego Road at Alameda Point, so the home could be leased by Shelter in Peace, Inc., a nonprofit corporation (tenant), providing transitional housing and other services to refugee households being resettled in the City of Alameda (City). The home’s foundation is currently being repaired with occupancy anticipated in summer 2020.
This action introduces an ordinance authorizing a lease with tenant for a term of one year, with four one-year extension options, each subject to reasonable discretionary approval of the City Manager, at an annual rent of $1.00, for the premises at 2815 San Diego Road at Alameda Point. The lease limits the use of the premise to transitional housing for refugees and families immigrating to the United States, requires the tenant to maintain certain insurance coverages and an appliance warranty, and holds the tenant responsible for routine maintenance and repairs.
The short-term nature of the lease is not a property disposition, therefore the Surplus Lands Act does not apply to this transaction.
BACKGROUND
The City owns a single-family, four-bedroom home located at 2815 San Diego Road at Alameda Point. The home, last occupied in June 2016, was deemed uninhabitable due to a cracked foundation. In November 2017, the City Council approved $125,000 in CDBG funding to repair the foundation and make the home available for occupancy by refugee families resettling in the Bay Area.
The Housing Authority, on behalf of the City, worked with a structural engineer to develop the project scope, prepare a construction budget, obtain permits and prepare the Invitation for Bid (IFB) to repair the foundation. The project scope was to elevate the home, remove the existing foundation, pour a mat slab foundation and lower the home and reconnect it to the new foundation, including reconnecting to existing utilities.
The Housing Authority put the project out to bid in August 2018, but received only one response, which was for more than $400,000. Receiving a single bid was fairly commonplace in 2017 and 2018, due to significant construction cost increases. At the direction of the Community Development Director, the Housing Authority rejected the sole bid and in October 2018, published a second request for bids. Four responses were received, the lowest of which was $400,000.
When the project was initially proposed, the City Council approved the foundation replacement project with an estimated budget of $125,000. However, based on engineering reports and actual bids received, the total rehabilitation budget for the project was estimated to be approximately $500,000; $400,000 for construction costs and the balance for engineering, reports and permit fees. As a result, on March 3, 2019, the City Council approved the modified project, including its modified budget, and the provision of transitional housing for refugees pursuant to a lease with tenant.
Replacing the foundation at 2815 San Diego Road to provide transitional housing and support services to refugee households resettling in Alameda meets the objectives of the City Council’s February 7, 2017 referral to provide support services to immigrant and refugee families.
DISCUSSION
Shelter in Peace, Inc. will work with Bay Area refugee resettlement organizations for referrals of families to be placed in the home. Refugee families will live in the house, receiving transitional services and support from their referring agency, for 6-12 months until they are resettled, at which time a new refugee family will be placed in the home. The tenant, Shelter in Peace, Inc., is responsible for the obligations under the lease, not the individual families living in the house or the resettlement organizations.
The home located at 2815 San Diego Road is a single-family, four-bedroom residence at Alameda Point. The home’s foundation work is currently underway and the first family is expected to occupy the space in summer 2020. The lease effective date will be at the conclusion of the foundation work in spring 2020.
Key terms of the lease with Shelter In Peace, Inc. include:
• One-year term beginning in 2020, with four one-year extension options, each subject to reasonable discretionary approval of the City Manager.
• $1.00 annual rent.
• Security deposit of $1,000.
• Use limited to transitional housing for refugees and families immigrating to the United States.
• Tenant shall maintain insurance coverages and an appliance warranty.
• Tenant handles routine maintenance repair and replacement of elements of the home, which includes work that costs $1,000 or less. Work costing more than $1,000 will be submitted for payment to the following in the order listed: (i) tenant’s appliance warranty, (ii) tenant’s insurance, and (iii) the City’s insurance. Tenant may terminate the lease if costs in excess of $1,000 remain to be paid for a repair after submission to all such sources of funds. Tenant is also responsible for all repairs caused by tenant or its occupants, guests or invitees.
ALTERNATIVES
• Approve the lease with Shelter In Peace, Inc.
• Direct staff to renegotiate lease terms. Under this alternative, staff would continue to negotiate lease terms with Shelter In Peace, Inc. based on City Council direction.
• Direct staff to seek other prospective tenants. If Shelter in Peace, Inc. is not the preferred tenant, staff would market the property to other prospective tenants who provide housing to very low- and low-income households, but not specifically serving refugee or immigrant families. The use of CDBG Substantial Rehabilitation funds to repair the residential unit’s cracked foundation restricts this property only for occupancy for low- to moderate-income households for a specified period.
FINANCIAL IMPACT
The monies from this lease will be deposited into the Base Reuse Fund (Fund 858) Lease Revenue account and are limited to uses permitted under the Economic Development Conveyance Memorandum of Agreement with the United States Navy.
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
This project implements the February 7, 2017 City Council-approved referral regarding provision of immigrant and refugee support services.
SURPLUS LAND ACT
Given the short term nature of the lease, this proposed transaction would not constitute a disposition under the Surplus Land Act and is thus exempt from the requirements of the Act.
ENVIRONMENTAL REVIEW
This action is exempt from the California Environmental Quality Act (CEQA) pursuant to CEQA Guideline section 15301 (Existing Facilities).
CLIMATE IMPACTS
This action has no anticipated climate impacts.
RECOMMENDATION
Introduce Ordinance approving a lease and authorizing the City Manager or Designee to execute documents necessary to implement the terms of a one-year lease with four one-year extension options, each subject to reasonable discretionary approval of the City Manager, with Shelter In Peace, Inc., a California Corporation, for 2815 San Diego Road located at Alameda Point to operate transitional housing for refugees, and approve the finding that this short-term lease transaction with Shelter in Peace, Inc. is exempt from the Surplus Lands Act, as amended. (Housing 236)
CITY MANAGER RECOMMENDATION
The City Manager recommends introduction of an ordinance to execute a Lease with four one-year extension options, each subject to reasonable discretionary approval of the City Manager, with Shelter in Peace, Inc.
Respectfully submitted,
Debbie Potter, Community Development Director
By,
Lorie Curtis, Real Estate Technician
Financial Impact section reviewed,
Elena Adair, Finance Director
Exhibit:
1. Lease
cc: Eric Levitt, City Manager