Court Ruling Validates City of Cerritos/ABC Unified School District/Cuesta Villas Affordable Senior Housing Project
Updated April 23, 2010
Los Angeles County Superior Court released a ruling on December 4, 2008 that approves a project to construct an affordable senior housing project in the City of Cerritos, and denies all the stated challenges to the project. The ruling validates the ABC Unified School District, City of Cerritos, Cerritos Redevelopment Agency, and Cuesta Villas Housing Corporation’s “Affordable Housing, Financing, and Disposition and Development Agreement.”
Under the agreement, the District will lease surplus property located at 16700 Norwalk Boulevard, the current site of the District’s administrative offices, to the Cerritos Redevelopment Agency (Agency). The Agency will then assign its rights to the ground lease to Cuesta Villas, a private, non-profit corporation, which will then construct 247 apartments with 207 units for moderate-income senior households, 15 for low-income senior households and 25 for very low-income senior households. A new 13,000-square-foot senior center and a 4.04-acre park will also be part of the development. (If additional school facilities are needed in the future, the 4.04-acre park would be made available for the development of a new school.)
The Cerritos City Council/Redevelopment Agency purchased two properties located at 12880 Moore Street and 12881 166th Street in Cerritos to accommodate a kitchen/warehouse facility and administrative offices for the District. The current District office and kitchen/warehouse operations will be relocated to the purchased buildings. The District will have an option to purchase the buildings.
The Court’s ruling included the following:
- Denial of the assertion by the agreement’s challengers that the public agencies bear the burden of proof in the case, as the administrative record was equally available to both sides.
- A finding that the project is not required to be submitted to voters for approval and the project does not qualify as a “low rent housing project” under Article 34 of the California Constitution.
- The argument by the challengers that the project’s rent cap is a form of subsidy is “without any underpinnings.”
- A conclusion that the Financing Agreement does not place the City’s general fund monies at risk.
- A denial of the assertion by the Agreement’s challengers that Cuesta Villas is a “shell corporation” for the City and the Agency.
- A finding that elimination of blight is not a requirement for the use of low and moderate income housing funds for development of the project.
- A denial of the argument that use of low and moderate income housing funds for the project would be unlawful.
- A denial of the challenger’s assertion that the $46,000,000 construction loan from the Agency to Cuesta Villas is a gift of public funds. The court wrote: “Here the public purpose is clearly for the purpose of low and moderate income housing.”
- A conclusion that the argument of incompatibility of office “does not make sense.”
In addition to meeting the housing needs of the community, Cuesta Villas will fulfill State laws governing redevelopment agencies and local housing. The Cerritos Redevelopment Agency is required to spend 20 percent of its tax increment revenue on the development of housing for low- to moderate-income households. In addition, the State’s Regional Housing Needs Assessment requires the City to provide its “fair share” of regional housing, including housing affordable to very low-, low- and moderate-income households. Cerritos has met its required allocation of very-low income and low-income units for the planning period of 1998 – 2005, but needs additional very-low, low- and moderate-income units to fulfill its most recent allocation by 2014. If the City fails to comply with the Regional Housing Needs Assessment requirements, it could be subject to a suspension of its authority to issue building permits and approve entitlements.
The District would maintain ownership of the developed Norwalk Boulevard property under a ground lease and would receive over $3 million in ground rent annually. After the 55-year lease with the Cuesta Villas Housing Corporation, the property would be given back to the District with the related improvements.