The five-story building would contain 62 units of affordable housing at 327-335 S. Robertson Blvd. (rendering courtesy of West Hollywood Community Housing Corporation)

A proposed affordable senior housing development on South Robertson Boulevard moved another step forward on Sept. 1, when the Beverly Hills City Council unanimously approved an option agreement with the project’s developer.

The agreement gives Robertson Sunflower LLC, an entity controlled by West Hollywood Community Housing Corporation, an exclusive option to ground lease the city-owned property at 327-335 S. Robertson Blvd. while the developer works to secure financing and complete plans for the project.

The option runs through June 21, 2027, and requires WHCHC to pay the city $100. Before the developer can exercise it, WHCHC must demonstrate that it has adequate financing, secure insurance, enter into a guaranteed maximum-price construction contract, complete final plans and obtain necessary permits and entitlements.

If the project moves forward, WHCHC would pay the city at least $6.05 million to lease the property for a minimum of 55 years, with payments coming from revenue generated by the development.

WHCHC Director of Real Estate Development Anup Patel told the council that the development, which calls for approximately 62 affordable rental units for seniors and three levels of subterranean public parking, is projected to cost approximately $44 million.

The option agreement was needed for WHCHC to demonstrate control of the property as it applies for approximately $18 million in Low-Income Housing Tax Credits through the California Tax Credit Allocation Committee.

The project has already been awarded approximately $11.7 million from the Los Angeles County Affordable Housing Solutions Agency and an additional $878,000 through the Westside Cities Council of Governments, bringing its outside funding awards to approximately $12.6 million.

Patel said the tax credits would allow WHCHC to obtain construction financing through tax-exempt bonds. He said the project would receive approximately $11.5 million through the bonds, which would eventually convert into a permanent loan supported by rental income from the property.

Because rents at the affordable development will be subsidized, Patel said rental income cannot support a loan covering the project’s entire development cost, making the tax credits necessary to complete the financing package.

During the Sept. 1 meeting, Mayor Craig Corman questioned what would happen if WHCHC exercised the option but construction did not move forward.

“I wouldn’t want to see the property get tied up with an option and then sit dormant for whatever reason,” Corman said. “That’s not a risk we want to assume.”

Corman proposed adding a provision under which the option would lapse and the property would return to the city unencumbered if construction does not begin within three years of the option exercise date or if the project is not completed within six years.

Patel agreed.

“We don’t want it to sit dormant either. We want to build as soon as we can,” Patel said.

The council included Corman’s provision in its motion and unanimously approved the agreement.

Despite voting to advance the project, Corman reiterated concerns he has previously raised about developing affordable senior housing at the site.

“I have not been the biggest proponent of this project from the get-go. Now that we own the property at 401 S. Robertson, I think there are other options available,” Corman said. “However, I do think we should at least play this out, and we need to let the developer see if they can get the financing they need.”

The proposed development has drawn scrutiny from some residents over its size, design and impact on parking in the surrounding neighborhood. In May, the City Council agreed that if the housing development proceeds, it should include three levels of subterranean public parking.

The parking component is currently estimated to cost approximately $9.6 million and would be paid for by the city and/or its Parking Authority. Funding sources have not yet been identified.

Corman said the additional public parking is now “more important than ever.”

Councilwoman Rebecca Pynoos also emphasized the importance of underground parking and said she supported moving the project forward.

Councilwoman Sharona Nazarian added that residents will have additional opportunities to weigh in as the project moves through the development and entitlement process.

The Sept. 1 action does not constitute final approval of the development. The city and WHCHC must still negotiate a final ground lease, which will return to the City Council for consideration along with other related agreements.

WHCHC must also secure the financing necessary to build the project. If the developer cannot satisfy the conditions of the option agreement, the terms could be renegotiated and return to the council, or the project could ultimately not proceed.