Westminster Housing Authority
SUBJECT
Title
Rose Garden Apartments located at 8190 13th Street - Proposed Transfer of Fee Ownership, Affordability Preservation, and Property Rehabilitation.
End
From: Christine Cordon, Executive Director
Requested by: Administration
Prepared by: Michael Son, Housing Specialist
____________________________________________________________
RECOMMENDED ACTION
The Chair and Authority Board Members:
A. Adopt a Resolution entitled, “A RESOLUTION OF THE WESTMINSTER HOUSING AUTHORITY APPROVING A PURCHASE AND SALE AGREEMENT FOR THE PROPERTY LOCATED AT 8190 13th STREET AND APPROVING A REHABILITATION AND OPERATIONS AGREEMENT FOR THE ROSE GARDEN APARTMENTS AT 8190 13TH STREET, WESTMINSTER, CA”;
B. Approve a Purchase and Sale Agreement for the Property located at 8190 13th Street, Westminster, CA 92683;
C. Approve a Rehabilitation and Operations Agreement for the Rose Gardens Apartments at 8190 13th Street, Westminster, CA 92683;
D. Authorize the Executive Director and Housing Authority Legal Counsel to make non-substantive modifications to the Purchase and Sale Agreement and Rehabilitation and Operations Agreement as necessary; and
E. Authorize the Executive Director to execute all documents necessary to complete the transaction.
BACKGROUND
Rose Garden Apartments is a senior affordable housing development located at 8190 13th Street in Westminster, California. The project consists of 133 total units, including 132 affordable senior housing units and one manager's unit. The project is on land owned by the Westminster Housing Authority ("Housing Authority") and is operated pursuant to a Ground Lease originally executed in 1992 and amended in 2009.
The current operator and lessee, Elderly Development Westminster, L.P., has proposed transferring its leasehold interest to an ownership entity affiliated with Waterford Property Company and C&C Development. The proposed transaction considers a two-step ownership transfer. The Westminster Housing Authority would convey fee ownership of the land to Elderly Development Westminster, L.P. pursuant to the Purchase and Sale Agreement, included in the proposed resolution (Attachment 1). Following closing, Elderly Development Westminster, L.P. anticipates transferring ownership to a successor ownership entity, Waterford Property Company and C&C Development. Pursuant to the Rehabilitation and Operations Agreement, the successor ownership entity would assume the affordability, rehabilitation, compliance, and revenue participation obligations established as part of the transaction.
Existing Affordability Restrictions
Rose Gardens currently operates as senior housing and is subject to multiple affordability restrictions.
49 percent of the affordable units are subject to affordability restrictions through agreements with the Westminster Housing Authority that remain in effect through the term of the Ground Lease.
51 percent of the affordable units are subject to affordability restrictions imposed through a Tax Credit Allocation Committee (TCAC) Regulatory Agreement. These restrictions are scheduled to expire in December 2026.
Upon expiration of the TCAC restrictions, 51 percent of the affordable units may no longer be subject to the current affordability requirements.
Proposed Transaction
The proposed transaction would:
• Transfer fee ownership of the land;
• Provide a payment of $3,000,000 to the Housing Authority concurrent with closing;
• Provide approximately $6,000,000 in rehabilitation improvements;
• Record affordability restrictions in perpetuity through an affordability deed restriction;
• Restrict 49 percent of the affordable units to households earning no more than 60 percent of Area Median Income (AMI);
• Restrict 51 percent of the affordable units to households earning no more than 80 percent of AMI;
• Continue operation of the property as senior housing for residents age 60 and older; and
• Provide the Housing Authority with 5 percent of future net refinance proceeds and 5 percent of future net sales proceeds.
Preservation of Affordable Housing
The primary public benefit associated with the proposal is the preservation of long-term affordability at Rose Gardens Apartments.
The proposed transaction would preserve affordability restrictions currently affecting 51 percent of the affordable units that are scheduled to expire in December 2026. The proposal would establish affordability restrictions in perpetuity for all 132 affordable units through a recorded affordability deed restriction.
As proposed, Rose Gardens would continue to operate as senior housing for residents age 60 and older while providing affordable housing opportunities for lower-income households.
Property Rehabilitation
The rehabilitation of the property is estimated at approximately $6,000,000. The rehabilitation is intended to address deferred maintenance and modernize major building systems throughout the property.
The rehabilitation will focus on unit interiors and major building systems including boilers, elevators, exterior paint, wood framing, patios/decking, HVAC, etc.
Resident Relocation Plan
To facilitate rehabilitation activities, residents may be temporarily relocated while work is performed within their units.
Residents would be temporarily relocated for approximately three weeks depending on the scope of work being completed. A third-party relocation consultant would be retained to administer the relocation program.
Surplus Land Act Considerations
City staff consulted with Westminster Housing Authority legal counsel regarding the applicability of the California Surplus Land Act (Government Code Section 54220 et seq.) to the proposed transaction.
Legal counsel has advised that the Surplus Land Act does not apply because the transaction involves the preservation and transfer of an existing affordable housing development and does not contemplate new development of the property.
FISCAL IMPACT
If approved, the transaction would result in:
• $3,000,000 in upfront proceeds to the Westminster Housing Authority;
• 5 percent participation in future refinance proceeds;
• 5 percent participation in future sale proceeds;
• Approximately $6,000,000 in rehabilitation improvements to the property; and
• Long-term preservation of affordable housing.
LEGAL REVIEW
The City Attorney’s Office/Westminster Housing Authority’s Legal Counsel has reviewed as to form.
CONCLUSION
The proposed transaction presents an opportunity to preserve 132 affordable senior housing units, including 51 percent of the affordable units currently subject to TCAC affordability restrictions scheduled to expire in December 2026.
The proposal would establish affordability restrictions in perpetuity through a recorded affordability deed restriction, maintain the property's operation as senior housing, provide approximately $6,000,000 in rehabilitation and modernization improvements, and provide both immediate and long-term financial consideration to the Westminster Housing Authority.
The proposed transaction would be implemented through a Purchase and Sale Agreement and Rehabilitation and Operations Agreement with the current owner, Elderly Development Westminster, L.P. Upon acquisition of the property, the buyer ownership entity would assume the obligations of the Rehabilitation and Operations Agreement, thereby ensuring the continuation of affordability restrictions, rehabilitation obligations, future revenue participation, and Westminster Housing Authority monitoring and enforcement rights.
Approval of the proposed transaction would preserve long-term affordable senior housing while leveraging private investment to modernize the property and secure affordability protections beyond the expiration of the current TCAC restrictions in December 2026.
ATTACHMENTS
1. Proposed Resolution
REVIEWED BY
Erin Backs, Finance Director
City Attorney’s Office
Christine Cordon, Executive Director/City Manager