04-0011R

RESOLUTION AUTHORIZING DEVELOPMENT AGREEMENT WITH C.C. SAN MARCO, L.L.C. FOR THE DEVELOPMENT OF A LOW INCOME RESIDENTIAL PROJECT IN THE CENTRAL HILLSIDE NEIGHBORHOOD WITH ACCOMMODATIONS FOR VICTIMS OF CHRONIC ALCOHOLISM.

BY COUNCILOR JOHNSON:

RESOLVED, that the proper city officers are hereby authorized to enter into a development agreement with CC San Marco L.L.C., substantially in the form of that on file in the office of the city clerk as Public Document No. __________, for the acquisition of the San Marco site as described therein, the demolition of structures thereon and the development of a residential project containing 40 units of SRO housing available to persons of low income and an additional 25 such units to be made available to chronic alcoholics, especially those whose alcoholism has resulted in chronic homelessness.


STATEMENT OF PURPOSE: The purpose of this resolution is to authorize a development agreement between the city of Duluth and CC San Marco L.L.C., a subsidiary of Center City Housing, Inc., for the development of 65 unit low income residential project on the site of the present San Marco hotel and surrounding buildings, generally located on the southeast corner of Third Avenue West and Third Street. Of these 65 units, not less than 25 would be reserved for chronic alcoholics whose disease has lead to behavioral problems which, in turn, has led to such persons being homeless.

Under the terms of the agreement, the city, with some assistance from DEDA as per Resolution No. 04-0005, will acquire the property in question from its present owners; it is anticipated that the use of eminent domain will be necessary to acquire the property, which process has previously been approved by the council. After acquisition is completed, the city will assist in funding demolition of the existing structures.

In addition, the city will commit to allocate up to $2.3 million in low income housing tax credits to the project, if necessary, to secure private development funds for the project. These tax credits were originally assumed to be necessary to fund the project but recently the MHFA has indicated that it might be willing to fund this portion of the project through the use of its state bond proceeds which would make the tax credits available for other projects.

In either case, the developer would be required to construct and operate a 65 unit SRO housing development on the site for the term of the agreement which is 20 years. Forty of these units would be made available to low income persons as standard SRO housing units, but the remaining 25 would be made available to persons suffering from chronic alcoholism, especially to those whose alcoholism had proven to be intractable to treatment and whose conduct had resulted in their being determined ineligible for other, more conventional SRO housing developments.