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ITEM 19

City Council Memorandum Neighborhood Resources Memo No.

Date:

May 6, 2024

To:

Mayor and Council

Thru:

Joshua H. Wright, City Manager
Tadd Wille, Assistant City Manager
Leah Powell, Neighborhood Resources Director

From:

Amy Jacobson, Housing and Redevelopment Senior Manager

Subject:

Final Adoption of Ordinance No. 5092, approving a ground lease at 77 North McQueen Road with Villas on McQueen, LLC

Proposed Motion:

Move City Council adopt Ordinance No. 5092, approving a ground lease at 77 North McQueen Road with Villas on McQueen, LLC, and authorizing the Mayor to sign the lease and the City Manager to sign all related documents.

Background:

The Chandler Public Housing Authority, as part of its mission, provides safe, decent and sanitary affordable housing for low-income individuals and families within the community. The city has identified a need for additional affordable housing and has assembled land owned by the city for this purpose. The land will serve as a new site for 157 units of housing, including a mix of 1, 2, 3, 4 and 5 bedroom units, community space and park area. Villas on McQueen will have specific consideration for special populations such as seniors, persons with disabilities and veterans. The City of Chandler is seeking approval of a lease with Villas on McQueen, LLC. This lease is in alignment with the Landlord's (City of Chandler) goal of establishing and preserving public and affordable housing. Specifically, Resolution No. 5604 approved by the Chandler City Council on July 14, 2022 (the "Resolution") ,allows Landlord to take the necessary steps to enter into a U.S. Department of Housing and Urban Development ("HUD") Rental Assistance Demonstration program ("RAD Program") for property known as Villas on McQueen, located at 77 North McQueen Road in Chandler, Arizona. This lease is made in accordance with Resolution No. 5604.

Discussion:

The basic terms of the lease are:
• A 99-year lease of the land located at 77 North McQueen Road.
• Tenant shall have the right to construct a 157 unit apartment complex and related improvements (collectively, and together with such other improvements to the Land made from time to time by Tenant under this Lease, the "Improvements") on the Premises and to use the Premises and the Improvements as an affordable housing project in accordance with Applicable Laws, the terms of this Lease and the CC&Rs for the duration of the Term.
• The initial ground lease rate is $4,000.00 per year during the first year of the term, increasing at a rate of three percent per annum (3%).
• The lease defines the restrictions to affordable housing and may not be used for another purpose without written consent of the city.
• Families residing in Chandler Public Housing sites at 210 North McQueen and 73 South Hamilton will occupy 78 of these units
• There is a preference for seniors, veterans, and persons with disabilities.
• Construction of Villas on McQueen will be completed in 2026.
• Landlord and Tenant acknowledge and agree that Tenant shall pay for all costs of constructing the improvements. The agreement also includes updated contractual language regarding insurance, indemnification, environmental liability, property inspections and other business matters. On April 10, 2024, the city's Housing and Human Services Commission voted to recommend City Council approval of this lease. The Villas on McQueen project is anticipated to break ground in late spring 2024

This ordinance was introduced and tentatively adopted at the Regular City Council meeting on April 18, 2024.

Attachments

Ordinance No. 5092

Ground Lease