HOUSING AUTHORITY BOARD OF DIRECTORS

BACKGROUND Kottinger Place, located at 240 Kottinger Drive, includes 50 affordable senior homes developed in 1972 that are owned and operated as a HUD Public Housing property by the Housing Authority. The 50 existing units consist of 32 studio, 16 one-bedroom, and 2 two-bedroom units. The site also includes a small community room, laundry facilities, and open space for gardening and socializing. The existing homes are not accessible, making it difficult for residents to age-in-place, and due to demand, the studios often house couples, creating crowded living environments. The development is also experiencing increasing maintenance and repair needs. In 2004, the City Council formed the Kottinger Place Redevelopment Task Force (Task Force) to evaluate the condition of both Kottinger Place and the 40-unit Pleasanton Gardens development that is currently owned by Pleasanton Gardens Inc., a not-for- profit community based 501 (c) 3 with a board comprised of local residents. The outcome of the Task Forces's work was approval of the Kottinger Place and Pleasanton Gardens Predevelopment and Analysis Report (Predevelopment Report) that recommended construction of a new jointly owned development on both the Kottinger and Pleasanton Gardens sites with a 185-unit senior housing project. The predevelopment report was approved by the City Council and this led to approval of a number of documents including a Memorandum of Understanding with Pleasanton Gardens that sets forth the terms for transferring that site to the City, a PUD and General Plan Amendment for the new development, the above-referenced Disposition, Development and Loan Agreement with Mid Pen that memorializes its role as the project developer and eventual owner of site improvements, an appropriation of $10 million from the City's Lower Income Housing Fund to meet project development costs, and the selection of Kottinger Gardens as the name for the new development. DISCUSSION In order to move forward with the redevelopment of the Kottinger Place site, the Housing Authority needs to apply for HUD's approval to dispose of and demolish the existing site improvements. This is accomplished through the submittal of a Section 18 Application to HUD's Special Application's Center. If approved, HUD's Deed of Trust will be removed and terminated and the City would be authorized to move forward with the demolition of all Kottinger Place units. In addition to the approval to dispose of the existing site improvements, this approval also includes provisions for HUD to provide 50 rental subsidy vouchers to the Housing Authority of the County of Alameda that could be transferred to the City for the purpose of allowing rents at 50 of the new units to continue to be calculated the same way as they currently are at Kottinger Place, i.e., rents are calculated at 50% of a tenant's income. The remaining units at Kottinger Gardens will be affordable to seniors with incomes ranging from 30%-60% of the Area Median Income. Staff has been in contact with the Alameda County Housing Authority on the matter and anticipates more detailed discussions on the process for obtaining the vouchers for the new development. In order to be considered for demolition, the project must demonstrate that it has reached the end of its useful life and that it would be more cost-effective to build new units than to rehabilitate the existing ones. In order to prove this, as part of the technical assistance application, HUD reviewed a Physical Needs Assessment and a Page 2 of 4