(1)AR 102108 Rancho Mediterrania street vacation

Browse Search

ITEM #1 CITY OF COLTON For the City Council and Redevelopment Agency Board Meeting October 21, 2008 TO: Honorable Mayor and Councilmembers Honorable Chairperson and Boardmembers FROM: Candace E. Cassel, Economic Development Direct r SUBJECT: Public Hearing to Vacate any Interests the City May Have in the Streets within the Rancho Mediterrania Mobile Home Estates and Authorization for the City Manager to Execute Necessary Documents to Ultimately Transfer Ownership of the Streets to the Individual Lot Owners. DATE: September 10, 2008 BACKGROUND In 1993, the Redevelopment Agency acquired the Rancho Mediterrania Manufactured Home Estates (the "Park") as a negotiated settlement of a dispute with the former owners regarding application of the City's mobilehome rent control ordinance. The Agency subsequently converted the Park to condominium lots and sold the lots to the residents for the purposes of providing the residents homeownership opportunities, an opportunity to control their total housing costs, and to aid the Agency in maintaining and preserving affordable housing. When a property is transferred from the Agency to the homeowner, their underlying space and 1/259th of the interest in the common area is also transferred to them, which includes the streets. In 1994, the City of Colton issued assessment district 1913 bonds and refinanced them in 2000 (collectively "RAD 00-01 "). The revenue stream to pay the debt service on the bonds is generated by a lien on each of the lots. That obligation is then transferred to the new lot owner upon their acquisition of the property and is due and payable with their property tax payments. In 1999, the Agency Board reaffirmed its decision to continue with the condominium conversion project, providing affordable housing options to the residents within the park. Thus, the Agency continued to sell the lots with a 1/259th undivided interest in the common areas as defined in the condominium map that was recorded in 1994. As part of this reaffirmation, the Agency Board also agreed to reduce the burden on lot owners by paying off the balance of the assessment district costs upon the transfer of the property to the new buyers and to those original lot purchasers who still occupied the property in 1999. In exchange for paying off the balance of the assessment district costs, each buyer/current owner was required to record an affordability covenant. The affordability covenants restrict the resale of the property to low and moderate income housing residents and assists the Agency in satisfying its low to moderate income housing obligations to produce affordable housing. This is a requirement of California Redevelopment Law. When the City issued the assessment district bonds, ownership of the streets became unclear because the City never formally accepted them as public streets. Nevertheless, the Agency continued to sell its interests (if any) in the streets to the lot owners with each lot sale. Hence,