On May 10, 2016, the Housing Authority and Garden Grove City Council approved a Disposition and Development Agreement (“DDA”) with Lab Holdings LLC. (“Developer”), for the sale and development of 12 single family properties, the lease of two unimproved City properties, and the sublease of three unimproved Housing Authority properties in the Garden Grove Civic Center area for the Cottage Industries Project (“Project”). Pursuant to the DDA, the Buyer is afforded a due diligence period to review a preliminary title report reflecting the condition of title to the subject properties. The Buyer has informed staff of a disapproved exception identified in the title report.

The disapproved exception pertains to Regulatory Agreement and Affordable Housing Agreement (collectively “Agreements”) for the benefit of the former Redevelopment Agency that require that the subject properties be used only for affordable housing purposes. The properties were initially acquired by the former Redevelopment Agency, which has now been dissolved.  When the properties transferred to the Housing Authority as housing successor to the former Redevelopment Agency, the interests merged and are no longer required.  Furthermore, the Housing Authority, in approving the transfer of the properties in connection with the Project, determined that the properties are not suitable for an affordable housing project and that their disposition will be more beneficial by raising funds to be deposited in the Low-Moderate Housing Fund and made available to assist low-moderate income housing projects able to assist multiple families. 

There is no financial impact to the Housing Authority or the City.

It is recommended that the Housing Authority:

• Approve the Termination of Regulatory Agreement and Affordable Housing Agreement; and
  
  
• Authorize the Director to execute the Termination of Regulatory Agreement and Affordable Housing Agreement on behalf of the Housing Authority.

By:  Carlos Marquez, Senior Real Property Agent