Council Communication

Review of Lithia Parking Lot Affordable Housing Proposals
Meeting Date:	August 3, 2005		Primary Staff Contact:	Brandon Goldman, 552-2076 goldmanb@ashland.or.us
Department:	Community Development		Secondary Staff Contact:	John McLaughlin, 552-2043 mac@ashland.or.us
Contributing Departments:	Legal		Estimated Time:	45 Min. + Continuation
Approval:	Gino Grimaldi

Statement: The City of Ashland issued a Request for Proposals on December 23, 2004 for the development of affordable housing upon the Lithia Way Parking lot, located between Pioneer Street and First Street, on the South side of Lithia Way. Four proposals were received in response to the RFP. Attached are the four proposals, the Staff evaluations of the proposals, and the minutes from the Housing Commission's deliberations. In evaluating the proposals the City Council is to determine whether the proposals received have merit, and if so make an award selection in favor of the proposal that best meets the objectives as outlined in the RFP.
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Background: On September 21, 2004, the City Council directed Staff to issue a Request for Proposals to develop affordable housing utilizing the airspace above the Lithia Way Parking Lot. This was intended to be a pilot project to demonstrate the viability of using airspace in this way. The Housing Commission reviewed each of the four proposals received at numerous regular meetings (March 30, April 27, May 25, and July18th, 2005) and at one special meeting held on April 13, 2005. During these meetings applicants presented the merits of their proposals and responded to clarification questions posed by the Housing Commission. The attached Housing Commission Memo dated 3-30-05 provides a staff assessment of the four proposals identifying each proposal's strengths and weaknesses. The Housing Commission Memo dated 5-25-05 attempts to address a number of questions raised by the Housing Commission relating to provisions in the RFP, housing unit size and costs, income ranges, parking, and mixed use development. Further this May 5th Memo provides staff's recommendations and options considered by the Housing Commission.
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Related City Policies: Adopted Council 2005-2007 Goals Identify at least 25 units of affordable housing; have online for construction in 2006 Comprehensive Plan The Housing Element of City's Comprehensive Plan encourages integration of commercial and residential uses where appropriate: "Mixed uses often create a more interesting and exciting urban environment and should be considered as a development option wherever they will not disrupt an existing residential area." (CH 6 goal 2a). The Transportation Element of the Comprehensive Plan states mixed-use development is encouraged especially when in easy walking distance of transit (pg. 11). Being located on an existing bus route, the Lithia Way lot is well suited to take advantage of existing transit. Further the Transportation Element cites that "mixing land uses, housing and jobs, reduces traffic by locating residences close to shopping, entertainment, and job centers." Site Design and Use Standards The Commercial development design standards aim to "… improve the projects appearance, enhance the City's streetscape, lessen the visual and climatic impact of parking areas…" (pg 17, Site Design and Use Standards). At a minimum any parking lot must be screened to reduce the adverse visual impact (11-C-2D2). Zoning Ordinance The purpose of the C-1 zones is "…to stabilize, improve, and protect the characteristics of those areas providing commercial commodities and services"(ALUO 19.32.010). Downtown Plan adopted in 1988 Will Dodge Way is identified as a Pedestrian area and the Plan urges the development of the area to enhance this potential: "Will Dodge Way, where more businesses front and where more land is available for development holds the greatest potential. The proposed development plan map shows the alley closed to traffic for the peak pedestrian times of the day, from 11:30am to 10:00pm. All new buildings and some of the existing merchandising can flourish. A central courtyard, about fifty feet square, draws pedestrians down the alley. Buildings at least two stories in height are required along Lithia Way in order to enclose the alley and give it an intimate atmosphere." (pg 37 Downtown Plan) Within the section on Housing in the Downtown Plan it is stated that "Housing should be introduced downtown on upper stories. Allowing it outright and removing off-street parking requirements encourages owners to rent to travelers and enhances the area's diversity. This will allow a flexible downtown housing pattern and encourages appropriate downtown multi-story developments" (pg. 44). Affordable Housing Action Plan The plan recommends the City target lands for the development of affordable housing including City owned Parking Lots: "Existing city-owned surface parking lots in or in close proximity to the downtown. These sites could be targeted for application of recently enacted vertical housing development tax exemptions. The new law provides a partial tax exemption for certified projects that include a ground floor or lower floors occupied by commercial uses and one or more upper floors of residential uses. The allowable exemption is for 20% of assessed value on land and improvements for each floor up to four floors of residential use with a maximum partial tax exemption of 80%. Other than these relatively small lots, the City does not own any parcels suitable for affordable housing development." (Strategy 3A, pg 15)
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Council Options: The Council can consider the following options when reviewing the four proposals for selection of an affordable housing project to be developed on the Lithia Way parking lot: The Council can consider the following options when reviewing the four proposals for selection of an affordable housing project to be developed on the Lithia Way parking lot: 1) Select one of the four proposals as submitted. Pros: Selected applicant can go forward with funding applications and development of the site. Provides 9-10 units toward meeting the Council Goal of developing at least 25 units of affordable housing, with construction to begin in 2006. Cons: (see "Pros" under Items 2, 3 and 4, as selection of a proposal would eliminate those potentials) 2) Select one the four proposals with specific clarifications pertaining to preferred alternatives as outlined in the offerors submitted proposal. Pros: City can provide more specificity (limitations) on the selected applicant. The applicant can go forward with greater limitations on the scope of development and proceed with funding applications and development of the site. Provides 9-10 units toward meeting the Council Goal of developing at least 25 units of affordable housing, with construction to begin in 2006. Cons: (see "Pros" under Items 3 and 4, as selection of a proposal would eliminate those potentials) 3) Reject all four proposals making the determination that doing such is in the best interest of the City. Pros: City can re-evaluate the future use of the property, determine the best use of the property, and incorporate considerations developed through the upcoming downtown visioning process. Cons: (see "Pros" under Items 1 and 2, as selection of this alternative would eliminate those potentials) 4) Direct Staff to develop a new RFP in collaboration with the Housing Commission for re-issuance. Pros: Re-issuance of the RFP would allow the City to request a more specific project, being explicit in terms of what is requested to include: commercial / no commercial; unit size limits (minimum or maximum; income range targets; consideration of non-profit partnership in evaluation criteria; parking location recommendations; commercial contribution to housing costs; reversion to City of Ashland; Period of affordability. This would also allow the City to negotiate with respondents should such be noted in the RFP. Cons: Respondents to a new RFP would be unable to respond to the State Consolidated Funding Cycle's fall round in February, thereby postponing funding applications until August 06'. A selected project could not begin construction until 2007. 5) A combination of #3 and #4 above, following the completion of the Downtown Plan. Pros: Provides an opportunity to prepare a new RFP for development of the property that is more explicit, as noted under the 'Pros' for alternative 4, and reflects the results of the Downtown Plan. Cons (see "Pros" under Items 1 and 2, as selection of this alternative would eliminate those potentials) Significant discussion by the Housing Commission has involved the proposed commercial components offered in two of the four proposals. Concern has been raised whether the RFP was explicit enough to allow the acceptance of proposals that contained a commercial component. Additionally members of the Housing Commission have expressed an interest in ensuring that any commercial component demonstrates a clear benefit for the affordable housing project. It is staffs belief that the original RFP was designed to be flexible in a purposeful attempt to encourage creative proposals. The RFP allows for this flexibility explicitly by stating that variations from the primary aim of the RFP will be accepted and considered. The City is soliciting proposals with the purpose of creating and managing affordable housing. The City is seeking proposals that would develop and manage affordable housing with provisions for the City to regain ownership at the conclusion of the proposed period of affordability. The City Council has further identified that proposals should aim to provide rental housing units for a minimum 40-year period, to households earning at or below 80% or less of the area median income. The City Council has expressed that proposals that do not meet these specific requirements will still be accepted and considered [emphasis added]. The RFP encourages applicants to review the Downtown Design Standards and provide a development plan that is responsive surrounding neighborhood: Proposals should emphasize economic feasibility, affordability, livability, good design, sensitivity to adjacent residential uses, responsiveness to Ashland's Downtown Design Standards and to the historic districts that surround the subject properties. One of the respondents to the RFP has contented that the City can not accept commercial uses as part of the development proposals, as it was his interpretation that the RFP's silence on commercial development meant that such would not be considered by the City. The City Legal Department has reviewed the RFP and determined that the City can entertain commercial development in addition to the development of affordable housing. Specifically the RFP as issued states: "In cases of doubt or differences of opinion concerning the interpretation of this RFP, the city reserves the exclusive right to determine the intent, purpose and meaning of any provision in this RFP". Therefore the City Council can determine the intent of the RFP and this is not changed by any wording contained in any of the proposals received. State law gives the City Council (contracting agency) broad discretion to reject all or parts of proposals provided the City can state a "reason" that supports that such a decision is in the best interest of the City (ORS 279B.100) . To decide to re-issue the RFP is either a determination that none of the original respondents proposals have merit, or that there are concerns as to the capacity of the offerors to actually complete and manage the development, or lastly, that the city was in error in issuing the RFP in the first place.
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Staff Recommendation: Housing Commission Recommendation: The Housing Commissioners collectively utilized the numeric ranking criteria in the RFP and the aggregate ranking placed the Housing Authority's proposal as being most responsive to the RFP and as such the preferred alternative. The Housing Authority proposal's larger unit sizes were viewed by some Commissioners as being more livable and better suited to the intended beneficiaries. Although most Commission members expressed support of commercial use on the site in addition to housing, there was limited information to quantify how such a commercial component contributed to the housing affordability. In a 5-1 vote the Housing Commission recommended the selection of the Housing Authority proposal under the stipulation that 12 public parking spaces be provided within the subsurface parking area. Staff Recommendation: Prior to Housing Commission deliberations, staff identified the Kendrick Enterprise LLC proposal as the highest ranking in our independent evaluation of the proposals. Specifically staff ranked Kendrick Enterprise highest in their Understanding of the Project approach and Vision, in large part due to the proposals consistency with the context of the commercial downtown. Staff believes the Kendrick Enterprise mixed use concept has merit in providing both housing and jobs on a small site, while increasing the amount of available public parking within a subsurface lot. Staff also ranked Kendrick highest in response to the scoring of the Firms Capacity and Resources. Staff also believes the proposed reversion of assets, including both the residential and commercial development, to the City after 40 years provides a significant public benefit in the long term. However, Staff concurs with the Housing Commission's determination that the Housing Authority's proposal would be successful in providing needed workforce housing within the downtown core if ultimately selected by the City Council. Staff's numeric scoring ranked the Housing Authority second over all, and highest under identification of Project Funding Sources due to their ability to leverage state and federal funding in addition to Section 8 vouchers for low-income residents. Should the use of public property to allow commercial activity as part of a public/private partnership be considered inappropriate by the Council, staff believes the Housing Authority's proposal is a viable alternative meeting the intended parameters of the RFP. Although the Housing Authority does not provide a reversion of the development to the City, the Housing Authority would provide a minimum period of affordability of 50 years with the desire to operate the housing as affordable in perpetuity. Should the Council determine the mixed use concept is preferable, and the public/private partnership proposed by Kendrick Enterprise is appropriate, Staff recommends selection of their proposal with the stipulation that the rents are adjusted to be consistent with the HOME program, and that the subsurface parking scenario presented in the application be a condition of selection. If the Council has concerns about current policies relating to issues such as parking and housing in the downtown area, it would be appropriate to reject all four proposals and develop a new RFP that reflects the results of the Downtown Plan.
Attachments: Click on the PDF file link below to view the following attachments: Housing Commission Memo: dated 3-30-05 Memo - Legal Department: dated 4-13-05 Housing Commission Memo: dated 5-25-05 Evaluation Matrix (table comparing proposals) Housing Commission Minutes:    3-30-05    4-13-05    4-27-05    5-25-05    7-19-05 Detailed history of RFP development, issuance and evaluation Letters and Email Correspondence    Kendrick Enterprise    Allan Sandler    Diana Shavey    Brandon Goldman    Colin Swales Lithia Parking Lot Development Proposals    Housing Authority of Jackson County    Sandler Films    Kendrick Enterprise    LDC Design Group

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