The City Commission is expected to approve a development agreement this week that provides more protections for the city than we have become accustomed to seeing in the city's land deals. In addition, Alan Fallik, the Interim City Attorney, has explained the terms of the agreement to the Commission in more detail than the city attorney has typically provided in the past. Thank you, Mr. Fallik.
The project is Tango Gardens. This development has been stalled for two years for lack of financial feasibility. The plan is to build 60 two-story owner-occupied townhouses, 31 of which are to be affordable to persons earning 80% of the median income. The remaining units are to be sold at market rates, but a deed restriction will prevent rentals. This is not a development for renters or investors, just home owners. The project is to be built in two phases, the first of which would create 10 affordable units and 10 market-rate ones.
These Tango Gardens townhouses are to be built on city-owned land on Adams Street near 24th Avenue. Unfortunately, the number of affordable units proposed is minuscule in relation to the need, and the agreement provides that these units will be affordable for only 15 years, after which they can be sold for whatever the market will bear.
Other than the 15-year limit on affordability, the chief concerns with the Tango proposal have been three. The first is the developer's lack of a track record. The development agreement seems to recognize this potential deficiency by requiring the developer to post a bond equal to the total estimated cost of the project before building permits can be issued. In addition, the agreement provides a specific timetable for starting and completing construction.
The second is feasibility. Last year, the developer sought, but did not receive, a State grant of $5 million to make the project financially feasible. So the numbers are tight and possibly not workable. The development agreement recognizes this concern and explicitly places the burden on the developer to come up with whatever revenue may be needed to carry out the project. The agreement also provides that developer inability to secure the requisite funds does not constitute an "unavoidable delay" that would excuse developer performance.
The third concern is the dual price structure of the townhomes. Will the prospective market-rate homeowner see a unit in this development as a good buy considering that half of the residents will be paying much less for their units. The development agreement seems to recognize this problem as well. It provides that the developer is not obligated to begin construction of either phase unless the developer successfully pre-sells at least nine of the market-rate townhomes first.
The City's Department of Housing and Community Development has been diligently determined to create affordable housing in Hollywood and for this it is to be commended. The Department has been working with Tango Gardens for two years now and this development agreement is the fruit of all that work.
Before this development agreement is executed, there is a nagging question that should be answered:
How long will the city go on working with Tango if, for example, the pre-sales stall; or if, for another, costs continue to escalate and the project continues to be financially infeasible?
The agreement gives the city rather wide latitude to extend time limits so long as (1) whatever is causing the delay can be corrected, and (2) the developer is diligently working to correct the problem.
But at some point, Tango must be built or the city must move to Plan B. Should an alternative be needed, what about a nonprofit developer like Habitat for Humanity, which not only has a substantial track record, but also the ability to raise funds through charitable contributions to help offset financial feasibility problems that affordable housing can present? Perhaps with such a developer, all the units could be sold at the same affordable price and kept affordable for the long term.
