DEPARTMENT OF

CITY PLANNING CITY OF LOS ANGELES

200 N. SPRING STREET, ROOM 525

LOS ANGELES, CA 90012-4801

CITY PLANNING COMMISSION

MABEL CHANG PRESIDENT

DAVID L. BURG VICE-PRESIDENT

JOY ATKINSON ERNESTO CARDENAS

SUSAN CLINE MARY GEORGE

MICHAEL MAHDESIAN BRADLEY MINDLIN THOMAS E. SCHIFF

GABRIELE WILLIAMS COMMISSION EXECUTIVE ASSISTANT

(213) 978-1300

August 25, 2005

Honorable Antonio Villaraigosa Mayor, City of Los Angeles 200 North Spring Street, Room 303 Los Angeles, CA 90012

Attention: June Lagmay

Honorable Members Los Angeles City Council Room 395, City Hall

CALIFORNIA

ANTONIO R. VILLARAIGOSA MAYOR

Dear Mayor Villaraigosa and Honorable Members:

MELLO-ROOS DISTRICT APPLICATION FOR MARLTON SQUARE

EXECUTIVE OFFICES

CON HOWE DIRECTOR

(213) 978·1271

GORDON B. HAMIL TON DEPUTY DIRECTOR

(213) 978-1272

ROBERT H. SUTTON DEPUTY DIRECTOR

(213) 978-1274

FAX: (213) 978-1275

INFORMATION (213) 978-1270

www.lacity.org/PLN

In accordance with Policies and Procedures for Mello-Roos and Special Assessment Districts as amended and approved by the City Council on November 1, 1994, the interdepartmental Mello­Roos Review Committee transmits for your consideration the Marlton Square Application for Mello-Roos Bond Financing. The City's Mello-Roos Policy establishes the procedures by which all Mello-Roos bond financing applications are reviewed by the City. These procedures are briefly summarized as follows:

1. The application is submitted to the Department of City Planning along with a filing fee.

2. The Infrastructure Subcommittee including the Director of Planning (Chair), the City Engineer and the General Manager of the Department of Transportation, reviews the application for compliance with planning, engineering and transportation approvals and confirms that the improvements to be funded with bond proceeds are consistent with City Mello-Roos program policies. The Finance Subcommittee including the City Administrative Officer (CAO), the City Attorney and the City Treasurer reviews the application and makes recommendations on the financial structure of the proposed

AN EQUAL EMPLOYMENT OPPORTUNITY- AFFIRMATIVE ACTION EMPLOYER OQ.

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Honorable Mayor and City Council August 25, 2005 Page2

project. The CAO oversees the establishment of the district and development of the financing.

3. The Review Committee, comprised of the Infrastructure Subcommittee and Finance Subcommittee, considers the public benefits offered by the applicant and makes a preliminary assessment of the project feasibility. The Review Committee's recommendations are transmitted to the Mayor and City Council.

4. The City Council may grant Provisional Approval and authorize staff to proceed with a more comprehensive project review. Provisional Approval is not the final authorization for funding.

City policy requires that proposed projects using Mello-Roos bond financing must provide "extraordinary public benefits" to justify use of the City's debt capacity. Public benefits are described as features that go beyond mitigating project impacts and provide benefit to the surrounding region or that contribute to the economic revitalization of designated city redevelopment areas.

MARLTON SQUARE PROJECT

Marlton Square, formerly known as Santa Barbara Plaza, is located within the Crenshaw Redevelopment Project Area and is bounded by Martin Luther King Jr. Boulevard, Santa Rosalia Drive, Marlton Avenue and Buckingham Road (see Exhibit A). It is a proposed mixed-use redevelopment project on approximately 22 acres that will consist of 180 units of rental housing for very low-income seniors, 140 units of ownership housing for moderate income home buyers, 150 market rate residential condominium units and between 110,000 to 120,000 square feet of retail services.

Early discussions with City staff began in late 2003 followed by a pre-application meeting held with the applicant and City staff at the Community Redevelopment Agency (CRA) offices on November 18, 2004, where the project was presented and feedback on the City's requirements was provided. The Mello-Roos application was received by the Planning Department on July 20, 2005 and a meeting of the Infrastructure Subcommittee was held on Wednesday, August 3, 2005 to evaluate the proposal according to the Mello-Roos policy requirements.

Based on its review, the Infrastructure Subcommittee finds that the proposed project meets the City's requirements for consistency with land use entitlement approvals and compatibility of infrastructure design with the City's standards. The Subcommittee also finds that this project meets the Mello-Roos policy requirements by providing extraordinary public benefit as outlined under, "Section II - Project Review Criteria For Mello-Roos and Assessment Financing: Low­Income Housing and Economic Development." The benefits provided through this project include affordable rental units to very low-income seniors, for sale units for moderate-income home buyers, creation of new jobs, redevelopment of an existing blighted commercial center that falls within a designated CRA redevelopment area and the increase of the local tax base.

Honorable Mayor and City Council August 25, 2005 Page 3

In addition, under the Mello-Roos policy requirements, a Phase I environmental audit of the property was conducted. Results of the Phase I environmental audit for this site identified PCE­impacted soils from current and former onsite dry cleaners, the likely presence of onsite soils impacted by fuel releases from a former gas station and current auto repair operations, the potential presence of asbestos-containing materials and lead-based paint, and the presence of peat underlying the site which could provide a potential source of methane and hydrogen sulfide gases (Attachment 14 of the application packet). The complete application is available for review in the Planning Department. According to the City Mello-Roos Financing Policy, the findings of the Phase I environmental audit requires that a Phase II environmental audit be conducted to further study the property and detail any necessary remediation action. (Section II -Project Review Criteria For Mello-Roos and Assessment Financing: Environmental Audit of the Policies and Procedures for Mello-Roos and Special Assessment Districts.)

Therefore, the Infrastructure Subcommittee recommends Provisional Approval of the application and forwarding of the application to the CAO for a more comprehensive project review, provided that the applicant record the final tract map, satisfying all tract conditions, and that the applicant conduct a Phase II Environmental Audit as required by the Mello-Roos policies.

To proceed with the comprehensive project review, the CAO will be selecting the necessary consultants to review, analyze and prepare the required legal and financial documents. All consultants that are needed for the formation of the Community Facilities District (CFD) and issuance of the bonds will be chosen through a competitive Request for Proposals (RFP) process or existing qualified lists previously approved by the Mayor and Council. All City and consultant costs associated with the project review, creation of the Mello-Roos District and development of the financing will be paid by the Developer. The Developer is required to make a deposit with the City that will be used to pay the consultant costs during district formation and issuance of the bonds. A Deposit and Reimbursement Agreement executed between the City and the Developer will provide for the creation of the fund that will contain the deposit from the Developer. Certain consultant costs are also recoverable through the proceeds of a bond issuance if, and when, bonds are issued.

RECOMMENDATIONS

That the City Council, subject to the approval of the Mayor:

1. Grant preliminary approval of the Mello-Roos District Marlton Square Application provided that:

a. Tentative Tract Map No. 53973 be recorded satisfying all tract conditions; b. Applicant conduct a Phase II Environmental Audit;

2. Authorize the City Administrative Officer and other members of the Interdepartmental Review Committee to proceed with a comprehensive review of and planning for the establishment of a Community Facilities District (CFD) and development of a Mello­Roos financing program for the Project; and

Honorable Mayor and City Council August 25, 2005 Page4

3. Authorize the City Administrative Officer to negotiate and execute a Deposit and Reimbursement Agreement between the City and Marlton Square Associates, LLC to pay for all costs associated with the establishment of a Mello-Roos District and financing program for Marlton Square.

FISCAL IMPACT STATEMENT

There is no fiscal impact to the City's General Fund as a result of these recommendations. All consultant costs are paid through developer fees.

FINDINGS

1. Project Description

Marlton Square is located in Council District Eight within the West Adams-Baldwin Hills -Leimert Park Community Plan area and is bounded by Martin Luther King Jr. Boulevard, Santa Rosalia Drive, Marlton Avenue and Buckingham Place. Marlton Square is a mixed-use project proposed to be developed on approximately 22 acres with residential and commercial uses. Major project features include:

a. 180 units of rental housing; b. 140 units of ownership housing; c. 150 market rate residential condominium units; and d. 110,000 to 120,000 square feet of retail services and public facilities.

All land use entitlements have been granted and are contained in Tentative Tract No. 53973 and Case No. ZA 2003-5251-ZAA-YV. The project is consistent with the General Plan Land Use designation and zoning and is in conformance with the City street standards. The West Adams­Baldwin Hills-Leimert Park Community Plan was recently amended through the Community Plan Update Program (CPU) and adopted by City Council on May 6, 1998. The plan designates the subject property for Regional Commercial land uses with the corresponding zone(s) of C2, C4, P and PB.

2. Extraordinary Public Benefits

The Marlton Square project lies within the Crenshaw Redevelopment Project area. It involves redevelopment of Santa Barbara Plaza, an obsolete and blighted commercial center for the last several decades. Other project features offered by the developer and that are not required as part of the entitlement actions include:

a. 180 Affordable Rental Units to very low-income seniors; b. 140 For Sale Units to moderate-income home buyers; c. Development of community center/public facilities and shopping opportunities; d. Creation of 413 new jobs to provide direct employment to residents of the area;

Honorable Mayor and City Council August 25, 2005 Page 5

e. Creation of270 full time equivalent construction jobs; f. Boost economic development of a blighted commercial center; and g. Increase of the local tax base.

In addition to the above project features, the Marlton Square project also complies with Section II - Extraordinary Public Benefit criteria of the City's Policies and Procedures for Mello-Roos and Special Assessment Districts, wherein it states, "Public infrastructure undertaken in .... areas targeted for economic development (such as enterprise zones or redevelopment project

) " areas .....

3. Property Owner/Developer Description

The Marlton Square Associates, LLC, located at 3055 Wilshire Boulevard, Los Angeles, CA 90010. The Chief Executive Officer is Christopher Hammond. Marlton Square Associates, LLC, is applying on behalf of four separate entities that will actually own the property, once fully acquired. The four ownership entities are Buckingham Place Senior Housing LP (for the senior housing portion), Santa Rosalia Homes LLC (for the single-family ownership housing), MLK LLC (for the condominiums) and LNR Marlton Square Associates LLC (for the retail). The development team consists of the firms Capital Vision Equities (master developer) and The Lee Group, Inc. (developer-partner of ownership housing). Capital Vision Equitities (CVE) is a full service real estate development and consulting group which specializes in the construction and rehabilitation of affordable housing and quality retail development in inner-city areas in California. CVE has participated as developer or consultant in the construction or rehabilitation of over 1,400 residential units and 285,000 square feet of retail centers. The Lee Group, Inc., has developed many successful projects in the L.A. area that include homes in Playa Vista, Woodland Hills, live/work artist lofts in Venice, live/work condominiums adjacent to the Staples Center and homes in Aliso Village in East Los Angeles. Lennar Partners, a subsidiary of LNR Property Corporation, is one of the nation's leading real estate investment, finance and management companies. LNR Property Corporation has been acquiring, developing and managing commercial real estate for over 30 years.

4. Provisional Approval

The Infrastructure Subcommittee has conducted a preliminary analysis of the application for funding and unanimously finds that the application is consistent with City policies. Accordingly, the Committee recommends that the Mayor and City Council authorize continuing with the development of a Community Facilities District (CFD) to allow for Mello-Roos financing of approved facilities.

Following Mayor and Council approval, City consultants will begin a detailed analysis of the developer's financial statements and the overall financing structure of the project to determine whether the project is financially viable at this time. A market absorption study will be conducted, followed by an independent appraisal of the project to confirm that the Mello-Roos Policies' 4:1 value-to-lien ratio requirement is met and to ensure that the assumptions relative to project development are reasonable. Planning, Transportation and Engineering staffwill conduct

Honorable Mayor and City Council August 25, 2005 Page 6

a more detailed review of the individual facilities to be funded with Mello-Roos proceeds to determine whether they are consistent with planning requirements and City policy. Finally, bond counsel will begin the process of drafting documents to provide for public hearings and elections to establish the CFD. The results of this more detailed analysis will be submitted to the Mayor and City Council for final project approval. Additionally, various other approvals directly related to the issuance of Mello-Roos bonds will be required, giving the Mayor and City Council several future opportunities to review the project and finally determine whether to proceed with the issuance ofMello-Roos bonds.

5. Financing Structure

To issue Mello-Roos bonds, it is necessary to establish a Community Facilities District (CFD) and institute a special tax on all properties located within the CFD. The tax would not be based on the value of the property, but would be based on some other measure, such as the square footage of improvements. The proceeds of the special tax would be used to support the issuance of bonds to fund the infrastructure improvements as described above. The bonds would be issued with a maturity of no longer than 30 years. As the project is developed, subdivided and sold, the new property owners would assume the obligation for the special tax payments until the bonds are paid.

The bonds would not be an obligation of the City in any way. The City merely covenants to foreclose on properties that are delinquent on their special tax payments and sell them at a tax sale. All bond offering documents will clearly state that the City will, in no way, assume the responsibility to make debt service payments should the developer or subsequent property owners default on their payments.

If you have any questions, please call Ralph Avila at (213) 978-1397 or Christina Toy Lee at (213) 978-1388.

Sincerely,

CON HOWE Director of Planning

i=t.:!-ILTON Deputy Director

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APPLICATION FOR CREATION

Of

A MELLO-ROOS SPECIAL ASSESSMENT DISTRICT

For the Proposed

MARLTON SQUARE PROJECT

Submitted by

Abbreviated Application

MARLTON SQUARE ASSOCIATES, LLC

To

THE CITY OF LOS ANGELES

MARCH, 2005

MARLTON SQUARE ASSOCIATES, LLC

March 4, 2005

Mr. Con Howe Planning Director City of Los Angeles

3055 Wilshire Boulevard Los Angeles, CA 90010

(213) 747-7437

200 N. Spring Street, Room 528 Los Angeles, CA 90012

Re: Application for Establishment of a Mello-Roos Community Facilities District - Marlton Square

Dear Mr. Howe:

Marlton Square Associates LLC is pleased to present this application for establishment of a Mello-Roos Community Facilities District for the Marlton Square mixed use redevelopment project recently approved by the City Council.

As you know, the project is a very large, regionally significant undertaking in the Crenshaw Redevelopment Project Area. The project will deliver 180 units of rental housing affordable to very low-income seniors, 140 units of ownership housing affordable to moderate income home buyers, 150 market rate residential condominium units, also affordable to moderate income buyers, and between 110,000 and 120,000 square feet of new retail services and significant additional public facilities, benefits and services to residents of south Los Angeles. The project is in an area severely hit by years of economic disinvestment, redlining and urban decay, and is designed to have a regional revitalization impact. The project will be the single largest investment in south Los Angeles since the 1992 Civil Disturbances and holds the potential to be the economic catalyst which will change the economic outlook for the entire troubled region.

The $4.9 million in net Mello-Roos bond proceeds being applied for is part of a $43.4 million City Council approved financing package for the overall $180+ million project. Privately raised debt and equity will finance the balance.

As explained to your staff in several meetings we have already held, Marlton Square Associates LLC is applying on behalf of four separate entities which will actually own the property, once fully acquired. These are Buckingham Place Senior Housing LP (for

the senior housing portion), Santa Rosalia Homes LLC (for the single family ownership housing), MLK LLC (for the condominiums) and LNR Marlton Square Associates LLC (for the retail). All four ownership entities have agreed to support establishment of the district.

We currently own the property which will underlie the senior project. Marlton Square Associates is in the process of acquiring the balance of the property from the remaining 32 other property owners. The District will actually be formed when the ownership has been consolidated in the four entities listed above.

While we are well aware that considerable work remains to be done before the District is actually formed, and bonds sold, as discussed in our meetings, we believe that the best course of action is to get our application on file and the approval process started. We are anxious to move this proposal forward to City Council as quickly as possible. Please keep us advised of its progress and of any additional information you may require.

Respectfully submitted,

APPENDIX I

CITY OF LOS ANGELES MELLO-ROOS AND ASSESSMENT FINANCING PROGRAM

APPLICATION FORM (Please submit 3 copies of this application and any attachments. Use separate sheets if necessary.)

APPLICATION INFORMATION

1. Application Information

Project: Previous name(s) under which project has been known or processed by the City:

Marlton Square (formerly known as santa Barbara Plaza)

Applicant: Marl ton Square Associates LLC Relationship to Property Owner: Master Developer selected by City Mailing Address: 3055 Wilshire Blvd

LOS Angeles, CA 90010 Contact: John Molloy Title: Project Manager Phone: (213) 747-7437 Fax: (213) 747-7437

Major Property Owner(s): See Cover Letter Mailing Address: 305 5 Wilshire Blvd

Los Angeles, CA 90010 Contact: John Molloy Title: Project Manager Phone: (213) 747-7437 Fax: (213) 747-7437

Developer: Applicant _Mailing Address: 30 55 Wi l shi re Blvd

Los Angeles, CA 90010 Con~ct: John Molloy Title: Project Manager Phone: (213) 747-7437 Fax: (213) 747-7437

Mello-Roos and Assessment Financing Program Application Form Page 2

DISTRICT INFORMATION

2. Financing Method: (Check all that apply)

Special Assessments

Mello-Roos Community Facilities Act X

Revenue Bonds

Other

Undecided

Explanation

3. District Boundaries. Define the boundaries of the proposed Assessment/Mello-Roos district. (See attached map)

Attachment #1

4. Public hnprovements Proposed. Describe the improvements to be financed through an Assessment/Mello-Roos district. Include a cost breakdown, construction timetable and the operating cost impact on the City.

· (See Attachment #2)

5. Extraordinary Public Benefit. Describe the extraordinary public benefit you will provide· as a condition of the City's burdening its debt capacity with the proposed .financing. Extraordinary public benefits include, without limitation: (I) regionaUmprovements which benefit a population beyond the immediate impact area of your project (e.g.,' libraries, fire stations, and freewcw m1-ramps); (ii) low and very low income housing; (iii) environmental benefits such as preservation of wetlands or the construction of storm water treatment facilities; and (iv) additional public improvements (e.g., improvements beyond those required by the City Planning Department or CRA as a condition of your project's approval). NOTE: You may list as extraordinary public benefits any environmental mitigation measures or other exactions to be provided pursuant to a development agreement you have negotiated with the City concerning this project. (See Attachment #3)

6. District Financing Plan. State the estimated dollar amount of the proposed Assessment/Mello-Roos bond(s} and your assumptions, including interest rates, maturity and capitalized interest, if applicable. As a . guideline, use a maximum 25 year maturity and a maximum one year of capitalized interest. Interest cost assumptions will be provided by the City based on the most recently available information on outstanding comparable Assessment/Mello-Roos transactions.

(See Attachment #4)

Mello-Roos and Assessment Financing Program Application Form Page 3

7. Other Public Infrastructure Needs. List all other required public infrastructure not financed with the requested Assessment/Mello­Roos district. Provide cost estimates and funding methods. None

8. Ta.Xes, As·s~ssment and Liens. List all existing and proposed taxes, assessments and liens on properties in the proposed district. Provide a recent preliminary title report and recent property tax bill. (See Attachment· #5)

9. Other Districts on the Property. : Have you, or anyone else, filed a petition with another public agency (e.g., school or water district) to form ·an Assessment/Mello-Roos disbict on the property? No

10. Other Property Owners. Identify other property owners who may be included in the proposed district but who were not indi~ted in #1, above, and attach a map identifying their properties. Please indicate their level of support for the proposed district See cover letter, there are no other owners.

11. Other Public Assistance. What other forms of public financial assistance (e.g., mortgage revenue bonds, block grants, Section, 8 funds, etc.} will you pursue for your project? (See Attachment #6)

12. Additional Information. Do you foresee any unusual requirements, problems or opportunities associated with establishing this district, or financing the improvements? No

PROJECT INFORMATION The City may designate a representative to receive and review confidential materials required below.

13. Project Description. Provide a map identifying your project. Attach a full description of the project, including number of units/acres by land use, development schedule and utility and transportation requirements. See Attached Map and Attachment #7

14. Civil Engineer. Provide name, address, contact, and phone number of- the project's civil engineer.

(See Attachment #8)

15. Market Absorption Study. Attach a copy of any market absorption study, already undertaken specifying date and contact person. An Absorption Study will be required for all projects to be secured by new development. A market absorption consultant will be selected by the City.

(See Attachment #9)

Mello-Roos and Assessment Financing Program Application Form Page 4

16. Appraisal(s). List the date and amount of most recent appraisals) and name of appraiser, if any. Attach a copy of the appraisals). The City will rely on an independent MAI appraiser, selected by the City to determ\n.e 9-ppraised value of the property for calculating the value-to-lien ratio.

·· · · (See Attachment #10)

17. City Planning Approvals. List status of planning approvals required for your project, including processing numbers, projected approval dates and any development agreements. (see Attachment # 11 )

18. Project Pro Formas. Provide project·_ pro: ·form as (a) .assuming conventional financing for the infrastructure improvements and (b) assuming tax-exempt public financing. (See Attachment # 1 2)

19. Project Guarantees. Identify proposed mechanism for guaranteeing special tax or assessment payments prior to positive project cash flow. None offered - We will operate on a reimbursement

basis.

20. Environmentallmpacts. Please attach copies of completed EIR(S) or indicate status. What efforts are planned to mitigate traffic congestion or other impacts, and will such efforts be financed by Assessment'Mello-Roos financing? Please also include copies of any soils or hazardous material surveys prepared in connection with such EIR(s). (see Attachment #13)

21. Environmental Audit. Please attach a Phase I environmental audit for the subject real property or properties (prepared by a reputable environmental consulting firm). (See Attachment #14)

APPLICANT EXPERIENCE/REFERENCES The City may designate :a representative to receive and review .confidential materials required below. - ...

22. Financial Statements and References. (a) List up to three banking references, one of which should be the current project lender. Include name, address, contact person and phone number. (See Attachment #15)

(b) Provide recent financial statements of developer (or other relevant entity), or provide other information demonstrating past financial performance. (see Attachment #1 5)

23. Prior Development Experience. List previous experience on similar developments and any other development ventures in California. Include location, project mix, size (number of units/square footage), year built and role of your development f1ITI1. Also provide the name of a city official that you worked with on the project. (See Attachment #1 6)

Mello-Roos and Assessment Financing Program Application Form Page 5

24. Prior Assessment/Mello-Roos Experience.· , List all Assessment/Mello-Roos financings in which you have participated. The Lee Group, a member of the.Home Ownership LLC, participated in the Playa Vista Project. Has an application for such financing on this property been previously denied, or have you ever been party.to an abandoned, defaulted or court challenged_ ;\ssessment/Mello-Roos district? If so, please explain. No

25. Application Fee. Please include a non-refundabl~. $5,CX)() initial application deposit, payable to ·the City of Los Angeles. A Depositand.ReimbursementAgreement between the applicant and the City, will be required priorto:the City beginning. its comprehensive project review. ·

Submitted by: Firm: Marl ton Square Associates, LLC Name: John Molloy Title: Date: Signature:

Received by: · ... - · 1,. -~~ J ~ ,..4.

CityOfficial: . Me~~ 'ef«nV/V>V/ T1tle: -~ !- .2Z Date: M~~tJ5 Signature: ~ (f/.j-iL.. Project Number Assigned:

Distributed to:

.~4.

Attachment 1 District Boundaries

The district will encompass all properties bordered by Marlton Luther King Jr. Blvd., on the north; Buckingham Place, on the west; Santa Rosalia Drive on the south; and, Marlton A venue, on the east.

See attached map.

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Attachment 2

Public Improvements Proposed

As described more fully in the 'Extraordinary Public Benefits' section below, the Marlton Square project is itself a regionally significant urban redevelopment undertaking which fully meets the criteria of being an 'Extraordinary Public Benefit' as detailed in the City's Policies and Procedures for Mello-Roos Districts. The project is the most significant redevelopment undertaking ever to be promulgated in South Los Angeles, before or since the 1992 Civil Disturbances, and has become designated by the Mayor's office as the City's highest priority economic development objective. The City Council has already approved a $43+ million assistance package for this project which includes the proceeds from the proposed Mello-Roos bond.

The crux of the argument regarding why this project should be considered in its entirety as a project of 'Extraordinary Public Benefit" is detailed in the following excerpt from Page 15 of the City's own guidelines for what constitutes such a project:

Low-Income Housing and Economic Development

Public infrastructure undertaken in connection with low and very-low income multi­family rental housing and low and medium income first time owner occupied housing (as defined by Federal law) as well as areas targeted for economic development (such as enterprise zones or redevelopment project areas), including infrastructure with only local benefit such as local streets, could be deemed to be of "Extraordinary Public Benefit". Public financing could be considered if it furthers the policy goals of such programs.

There is no project in Los Angeles that we know of which more strongly and directly meets the exact specifications laid out in the City's Mello-Roos guidelines. The project will provide 180 units of rental housing directly affordable to very low income households, 140 units of single family detached and 150 condominium units of for-sale housing directly targeted to medium income, primarily first-time homebuyers, and is in both the City's adopted Crenshaw Redevelopment Project Area and the Mid-Alameda Enterprise Zone. The economic benefits of the project has been fully laid out in both of the City" successful Economic Development Initiative, and Brownfield Economic Development Initiative applications for this project which have been sent to, and approved by, the federal government. The project will revitalize and renew one of the most difficult to develop and economically distressed areas of the region.

Because the project itself overwhelmingly meets the criteria of 'Extraordinary Public Benefit' we have included all of the public improvements necessary to implement the project as eligible for Mello-Roos financing, just as indicated in the City's guidelines, above.

Improvements to be Financed

See attached table.

Construction Timetable

The improvements specified will be built by the developer as the project is implemented over the next two years and be reimbursed from Mello-Roos Bond Proceeds as completed.

Operating Costs

The City costs of operation of the sewer, water and street lighting charges are fully covered by user fees. The only other City operating costs we know of would be the normal costs of street maintenance and monitoring the traffic signals.

Mello Roos Eligible Improvements

i Improvement To Be Financed , Cost Cost Basis

I

Improvements to MLK, Jr. Blvd.: Break in Median Strip/Turn Lane Construction $ 20,000 Per Crain & Associates New Traffic Signal $ 150,000 Per Crain & Associates

Street Lighting $ 30,000 Remove/replace or add 20@ $1,500 ea. Street Lighting (wiring-electric) $ -Sidewalks around entire project. $ 335,300 47,900 SF @ $7.00/SF New Driveways & Curb Cuts $ 18,165 1730SF (4 driveways) $10.50/SF estimate Curb & Gutter $ 119,750 4790 LF@ $25/LF estimate DWP Power Pole Removal? $ 17,155 DWP Poles to be removed ($3431 ea.)

Street Trees $ 35,200 32 trees@ $1,100 ea. Per H&F Landscape Irrigation $ -Marlton Avenue Demolition/Reconstruction $ 609,120 67.680 SF @ $9/SF

Bus Stops $ 30,000 2 Pad Installations @ $15K per pad Per Crain & Associates

Sewer Line $ 27,720 1 ,260 LF @ $22/LF Per H&F Sewer Easement $ 1,215,648 25,200 SF @ $48.24/SF Per H&F

CRA Public Art Program: Retail Project $ 231,687 Total Project Development Costs less

Land Acq., Land Remediation, Off-Sites & Arts Development Fee: CVE 9/19/03 Pro Forma

Single Family Project 1 $ 286,748 Total Project Development Costs less Land Acq.: Lee 4/1/02 Pro Forma

Public Facilities Fees: Multi-Family School/Park Fees $ 360,000 Per MF Pro Forma Single Family School Fees $ 768,600 140 Homes@ 1500 SF@ $3.66/SF (at present level) Condominium School Fees $ 603,900 150 Homes·@ 1100 SF @ $3.66/SF (at present level)

Single Family Development-Park Fees $ 538,860 140 Homes@ $3849/Home (at present level) Condominium Development-Park Fees $ 577,350 150 Condos @ $3849/Home (at present level) Retail Development-School Fees $ 46,200 CVE Pro Forma 9/9/03

Addit. Project Street Landscaping/Beautification $ 300,000 28 palms @ $6k ea. Plus addl. Street furniture

Total ;$ 6,321,403

Required Total $ 4,900,000

Attachment 3 Extraordinary Public Benefit

As briefly alluded to in the response to Section 4 (Attachment 2), Public Improvements Proposed, of this application, the Marlton Square project directly comports with the City's Mello-Roos Policies and Procedures Manual definition of a project which, in its totality, delivers 'Extraordinary Public Benefit' for the City of Los Angeles.

The project is in both the City's adopted Crenshaw Redevelopment Project Area and the adopted Mid-Alameda Enterprise Zone. It provides very low-income rental housing (180 units), homeownership opportunities (290 units) and economic development opportunities via construction and permanent jobs in an area of the City which has long been targeted for economic development. The attached excerpt from the City's recently approved application for a Brownsfield Economic Development Grant for the project, made to and approved by the U.S. Department of Housing and Urban Development, highlights both the economic benefits of the project, as well as the serious problems it addresses.

Beyond the pure technical description, problems addressed, number of units and number of jobs involved, and other specific elements of the project, however, the reviewer of this application should be aware that this project is the most significant economic development undertaking ever proposed in a region of the City which has long been the scene of urban deterioration, blight and economic disinvestment on a massive scale.

The project has the potential to revive an area of South Los Angeles heavily impacted by the 1992 Civil Disturbances and desperately in need of both physical revitalization and economic stimulus. The existing center, which is to be tom down, is a serious and significant blighting influence on the entire region.

The Community Redevelopment Agency and the City Council have already approved an overall $43+ million financial assistance package for the project, of which this Mello­Roos proposal was an approved part. The Mayor's Office has established this project as its highest economic development priority.

Based on the above, it is our strong contention that all of the public improvements which further the development of this project are eligible to be included as Mello-Roos eligible costs.