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HomeMy WebLinkAbout1998-02-10; City Council; 14552; Rancho Carrillo Affordable Housing Agreement& OF CARLSBAD -AGENDA BILL II3 0 72 1 AB# /Y+c= ITITLE: I DEPT. HD. MTG. Y&/k/ DEPT. H/Red RANCH0 CARRILLO AFFORDABLE HOUSING C1TYATTY.W AGREEMENT CITY MGR- RECOMMENDED ACTION: Consider the policy issues as presented in Exhibit 3 and direct staff to return with documents approving the Affordable Housing Agreement for the Ranch0 Carrillo Master Plan consistent with the resolution of these issues. ITEM EXPLANATION: Staff has been working with the developer, Continental Homes, of the Ranch0 Carrillo Master Plan for the past several months to finalize an Affordable Housing Agreement which will allow the developer to final maps on properties within the Master Plan area. An Affordable Housing Agreement was drafted by the Affordable Housing Policy Staff Team, which consists of the Community Development Director, Housing and Redevelopment Director, Planning Director, Management Analyst - Housing, Administrative Services Director, Finance Director, Deputy City Attorney and Special Legal Counsel - Polly Marshall of Goldfarb and Lipman. The draft Agreement was forwarded to the Housing Commission for review during a special meeting held on January 14, 1998. The draft agreement prepared by this team was not acceptable to the developer. However, rather than continue to negotiate, the developer agreed to allow the agreement to be presented to the Housing Commission as recommended by the team. The developer then made a counter proposal to the Housing Commission at their meeting. The meeting was not called to discuss this new proposal but the Commission recommended that the City Council consider the revised affordable housing agreement proposed by the developer, which was supported by 6 of the 9 Housing Commissioners. Commissioners Wellman and Rose supported staffs recommendation, and Commissioner Walker was absent from the meeting. The agreement is being forwarded to the City Council at this time for approval. lnclusionarv Housing Reauirement The lnclusionary Housing Ordinance, Chapter 21.85 of the Carlsbad Municipal Code, states that 15% of the total number of housing units produced by a developer must be affordable to lower income households. Although there are some exceptions, this basically means that every residential development over seven units must produce new affordable housing concurrently with market rate housing. Continental Homes has an obligation to concurrently produce a total of 272 units of affordable housing under the assumption that the Ranch0 Carrillo Master Plan area will result in the production of a total of 1816 housing units. Developers must demonstrate compliance with the lnclusionary Housing Ordinance through the preparation and approval of an Affordable Housing Agreement. The approval and recordation of the agreement must take place prior to final map approval, or where a final map is not being processed, prior to the issuance of building permits. The agreement must be recorded as a deed restriction on those individual lots or units of property which are designated for the location of the affordable units. On January 14, 1998, the Affordable Housing Policy Team, as identified above, presented a draft affordable housing agreement to the Housing Commission that covers the first phase of affordable housing development only for the Ranch0 Carrillo Master Plan; this agreement related to 116 units of affordable housing. The first phase agreement, as presented, entitles Continental Homes to final maps on a total of 775 housing units, and to subsequently obtain building permits for a total of 659 market rate units and 116 affordable housing units. Based on existing policy, Staff has consistently t AB# @ila- Page 2 recommended the execution of affordable housing agreements only if a related site development plan is provided for the affordable housing units. Without the site development plan, the City is unable to identify the specific details required within the Affordable Housing Agreement. Also, the City has no guarantee that the additional units can be approved without the site planning. In the proposal submitted by the developer to the Housing Commission, the subject affordable housing agreement covers (and release) the entire Ranch0 Carrillo Master Plan. This means that Continental Homes would be allowed to final maps on all of the property within the Master Plan for all proposed housing units. The agreement makes general statements as to how the remaining affordable housing units would be provided and identifies the general locations of these units. However, at this time, no site development plans would be provided for the additional 102 units of multi-family housing or the second dwelling units. The developer has argued consistently that Continental should be entitled to final maps on all 1816 housing units as long as they acknowledge within the affordable housing agreement that the additional affordable units will be built and they identify the location. A copy of the correspondence presented by the developer to the Housing Commission on January 14, 1997 is attached as an exhibit to this report for Council review. AFFORDABLE HOUSING AGREEMENT EXECUTION The lnclusionary Housing Ordinance authorizes the Community Development Director to execute affordable housing agreements, with a positive recommendation from the Housing and Redevelopment Director and the Planning Director. Recently, staff also began presenting the agreements to the Housing Commission for review and a recommendation. In the past, the Community Development Director has executed only those agreements which set forth the basic requirements of the developer and are consistent with the lnclusionary Housing Ordinance. Due to the fact that the affordable housing agreement proposed by the Developer and recommended for approval by the Housing Commission for the Ranch0 Carrillo Master Plan represents a change in policy, staff does not feel it has the authority to execute the subject agreement without direction from the City Council. Therefore, action is required by the City Council in order to execute the subject agreement. Staffs issues and concerns related to execution of the subject agreement are outlined in the attached staff report to the City Manager. HOUSING COMMISSION RECOMMENDATION The Housing Commission took action on January 14” to approve a recommendation to the City Council which indicates that the developer’s proposal should be accepted by the City. This action was taken with a 6-2 vote with Commissioners Wellman and Rose opposed. Commissioner Walker was not present at the meeting. The Commission felt that as long as the developer identified the sites for the affordable housing and agreed to return for approval of the site development plans, the City should not be concerned with the developer’s ability to final maps with the recorded agreement. Staff is presenting the Housing Commission’s recommendation to the City Council for consideration and approval of the affordable housing agreement proposed by the developer for the Ranch0 Carrillo Master Plan. FISCAL IMPACT: There is no fiscal impact related to the policy direction or the execution of the subject agreement. The subject agreement sets forth the affordable housing requirements for the Ranch0 Carrillo Master Plan and states how the developer intends to meet the requirements. EXHIBITS: 1. Correspondence from Chris Chambers, Continental Homes, dated January 14, 1998. . h c AB# /KS* Page 3 2. Developer Proposed and Housing Commission Recommended Affordable Housing Agreement. 3. Staff Report to City Manager, dated January 22, 1998 regarding concerns related to the execution of the subject agreement. 4. Staff Report to Housing Commission, dated January 14, 1998. The reasons for the Community Development Director’s inability, or unwillingness, to execute the subject affordable housing agreement without further action by the Council, are as follows: 1. The developer’s proposed agreement represents a shift in policy. Typically, a Site Developmenf P/an for the affordable housing has been required from all developers and is processed together with the Agreement. In past cases, the site development plan represents the entire inclusionary housing obligation. Final Maps can then be recorded for all properties represented by the affordable housing agreement and related site development plan(s). 2. Staff does not believe that the agreement proposed by the developer conforms to the requirements set forth in the lnclusionary Housing Ordinance. Per the Ordinance (Chapter 21.85) the Affordable Housing.Agreement is to include 1) the number of inclusionary dwelling units proposed; 2) the unit size of the inclusionary units and the number of bedrooms per inclusionary dwelling unit; 3) the proposed location of the inclusionary units; 4) tenure of affordability for the inclusionary units; 5) schedule of production of the dwelling units; 6) incentives and/or financial assistance provided by the City; 7) where applicable, terms and conditions establishing rules and procedures for qualifying tenants, setting rental rates, filling vacancies, and operating/maintaining units; 8) where applicable, terms and conditions governing the initial sale of for-sale inclusionary units; and 9) standards modifications granted by the City. Site development plans typically provide for these required specifics. For Ranch0 Carrillo, a Site Development Plan was provided for the initial 116 units of affordable housing only. The Developer indicated that the Site Development Plans for the remaining units (156) would be provided at a later date. The Developer has indicated that the remaining obligation for affordable housing would be met with 102 additional multi-family housing units (within Village B) and with 54 second dwelling units (in several villages). However, no design has been presented as of this date for those remaining affordable housing units. Although the developer has indicated that the second dwelling units will be consistent with the City’s Second Dwelling Ordinance, staff has been provided with no specific details on the remaining affordable housing units to be produced by the developer. 3. Specific lots are not identified for the second dwelling units. Therefore, at a minimum, the City should require deed restrictions on all of the property within the Villages identified by the Developer to ensure that the property remains available for affordable housing purposes. 4. To ensure that all of Village B remains available for affordable housing, all of the property within Village B should be deed restricted for affordable housing purposes. 5. For all of the affordable housing to be provided, the agreement should at least include some minimum level specifics for unit size, number of bedrooms and timing of construction as related to the market rate units in order to meet the requirements of the lnclusionary Housing Ordinance. For example, the Council could require at a minimum that the additional 102 multi- family units provide for 1, 2 and 3 bedrooms, with at least 10 of the total number of units as 3 bedroom. In addition, the Council could require that each of the units be no smaller in size than those units approved for the first phase of affordable housing development. The timing of construction could also be similar to the first phase in terms of minimal acceptable levels. EXHIBIT 1 January 14, 1998 Kathleen Wellman Chairman of Housing Commission 1200 Carlsbad Village Drive Carlsbad, CA 92008- 1989 Continental Homes 12636 High Bluff Drive, Suite 300 San Diego, California 92130 (619) 793-2580 Fax (619) 793-2575 RE: Ranch0 Carrillo Dear Kathleen, We wish to thank the Housing Commission and staff for scheduling tonight’s hearing at the special request of Continental Homes and the Ranch0 Carrillo affordable housing project developers, Barone & Galasso and Housing Opportunities Inc. The City staff assigned to this project is to be commended for their diligent attempts to resolve the many outstanding issues we have discussed and to prepare the report and agreement necessary for tonight’s hearing. We had been negotiating, until very recently, a comprehensive Affordable Housing Agreement that addresses both phases of the affordable housing rental project, the second dwelling units, and the building permit thresholds for all of Ranch0 Carrillo. These thresholds are meant to ensure that affordable housing is provided concurrent with market rate units. We have asked (and been denied by staff) that the agreement reflect this comprehensive approach to affordable housing by including the points discussed below: 1. The Agreement Should Address the Entire Master Plan. Until recently, the draft agreement covered the entire master plan. Only the first threshold of market rate units could be built with the approved housing agreement before you tonight. In the previous draft, the second phase of market rate units could be built once a site development plan and financing plan were approved. At any time the thresholds could be increased to reflect actual construction of second dwelling units. Recent staff changes now require a new process for second dwelling units and for the second phase of the affordable housing project. This is not necessary since the location of fl affordable housing has been identified. The comprehensive nature of the previous draft was highly desirable in that it gave all parties a clear understanding of the goals that had to be achieved in order for the master plan to reach first phase buildout and second phase buildout. The comprehensive draft also made the process more efficient for the developer, staff, commissions and City Council in that it would require only one hearing on one affordable housing agreement (of course a phase two site development plan and finance plan would be processed separately). 2. .. Second Dwelling Construction. Until-recently, the draft agreement contained a provision that would allow for the threshold to be increased by 6 units for each second dwelling constructed. That has been eliminated. Clearly no second dwellings can be constructed without Housing Commission, Planning Commission and (presumably) City Council site plan approval. We think the reference to our ability to build up to 20% of the affordable units as second dwelling units is consistent with our negotiations, is Kathleen Wellman January 14, 1998 Page Two consistent with the City’s current policies and helps all to understand the eventual composition of Ranch0 Carrillo. Again, staff has eliminated any reference to second dwelling units from the draft you have before you tonight. Please note that 22 of the 54 second dwelling units are planned for the first phase of Ranch0 Carrillo. In fact the builders in the first phase have all accepted a requirement that they build second dwelling units. But we have no opportunity to build market rate units allowed by the second dwelling units already under development. 3. Market Rate Threshold. It is essential to the success of the affordable housing program as it relates to master plans to understand the difference between (i) number of affordable housing units which must be provided and (ii) the schedule for constructing affordable housing units. The agreement before you makes no distinction between these two concepts. The ordinance at 21.85.120(b) states “The required inclusionary units shall be constructed concurrent with market-rate units unless both the final decision-making authority of the city and developer agree within the affordable housing agreement to an alternative schedule for development.” The staff has taken the narrowest definition of “concurrent” and required that only 659 market rate units may be built before Phase 2 of the affordable housing project is started. In our discussions with staff we had originally requested that 1,040 and later 775 market rate units be permitted before the second phase is started. Understand that pulling a permit does not mean occupancy. There is a four to six month house construction period. Master planned communities are selling 450 - 500 homes a year. At 775 homes we would in effect be required to process and start construction of Phase 2 of the affordable housing agreement within a year and a half. It is premature to design and attempt to finance a project today that won’t even be needed for two years! As to the fear that NIMBYS may act to halt the construction of Phase 2 of the affordable housing project, all homeowners will be well advised of the housing project via disclosure notices in their sales contracts and by virtue of the ongoing construction of the first phase. Importantly, the 775 unit threshold also allows us to sell some residential parcels in phase two of the master plan to merchant builders who will be investing substantial amounts of money and time in processing their projects through the City. These builders will not proceed if they cannot have some assurance that once through the ardorus approval process they will not be able to obtain building permits. We understand the concept of strict concurrency as it relates to housing affordability production vis a vis market rate production; however, for practical reasons very much driven by real time lines, this goal is not achievable. By making the threshold more reasonable, the master plan can proceed consistent with a prudent business plan. The City’s goal of assuring that the affordable housing project is completed becomes most Kathleen Wellman January 14,1998 Page Three achievable as more and more money is spent on developing the community and its neighborhoods. 4. Final Map Threshold. The comprehensive nature of our proposed draft of the Affordable Housing Agreement would ensure that no moratorium on development would occur. It would allow Continental to process Final Maps and proceed with land development on all areas once the agreement is executed. We accept the fact that permits for the homes can not be issued unless and until our affordable housing project conditions are met. It gets back to the first point made in this letter. The goals of the affordable housing program in a master plan are best met by making a distinction between the number of units constructed and the schedule for constructing them. One comprehensive agreement is best for all parties. Tying the concurrency requirement to building permits and not to final maps is the most reasonable approach to provide affordable housing in a master plan. Conclusion. Attached to this letter are revisions to the agreement before you which incorporate the points raised by this letter. We ask that you approve the agreement with these revisions. If you do not feel it appropriate to revise staffs draft agreement, we ask that you approve the agreement before you and pass it on to Council with a recommendation that the Council incorporate the recommendations herein addressed. Very truly yours, Continental Homes Chris Chambers Division President cjc:nn cc: Marty Orenyak, Community Development Director Michael Holzmiller, Planning Director Deborah Fountain, Housing and Redevelopment Craig Ruiz, Housing and Redevelopment Jane Mobaldi, City Attorney’s Office Ron Ball, City Attorney Mike van Horn, Hecht, Solberg, Robinson & Goldberg 5 . MARKED TO SHOW CHAN”S FROM PREVIOUS DRAFT OF 01/06/9F- Deletions appear as struck-throw_ text surrounded by H. EXHIBIT Additions appear as double-underlined text. Redlining provided as convenience only with no warranty as to accuracy. 2 THE F&.& OF THIS REDUNEL~WUWT MA{ APPEAR SOMEWHAT DJFFERENT FRDM Tl& FCkMAi OF THE ACTWU REVISER DOCWlENT AND MAY APPEAR IN RACES TO iTOt+MlN FORMA’tTiNG ERFlORS~.~IS Is WE TO THE AUTOMATiC REDLINING tiOMPiJTER SOFTWARE AND ODES NOT AFFECT THE i&MAT OF THE REVISED DOCUMENT. I RECORDING REQUESTED BY City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk’s Office Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, California 92008 (ABOVE SPACE FOR RECORDER’S USE) AF’FORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY This AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY (“Agreement”), entered into this day of 1998, by and between the CITY OF CARLSBAD, a municipal corporation (“City”), and CONTINENTAL RANCH INC., a Delaware corporation (“Developer”), is made with reference to the following: A. Developer is the owner of certain real property in the City of Carlsbad, in the County of San Diego, California (“Subject Property”) described in “Attachment A,” which is attached hereto and incorporated herein by this reference. B. Developer wishes to construct m 1.816 residential units (“n Master Development”) on B the Subject Property. The City has approved the Ranch0 Carrillo Master Plan (“Master Plan”); Carlsbad Tract Map Numbers CT 93-01, CT 93-04, CT 93-07, CT 93- 08 and CT 95-06; Planned Unit Development Numbers PUD 93-06, PUD 93-07, PUD 95-04 AND PUD 95-05; and, Site Development PlanNumbers SDP 94-01, SDP 95-12 and SDP 95-13 for the fl Master Development-. The City issued these approvals subject to certain Conditions of Approval, including a condition requiring fifteen percent (15%) of the units in the Master Development to be affordable housing as required by the City’s Inclusionary Housing Ordinance, Carlsbad Municipal Code Chapter 21.85 (“CMC Chapter 21.85”). In that regard, this Agreement, as supplemented and amended from time to time, is intended to implement the . h requirements imposed by CMC Chapter 2 1.85 for these approvals and all future City approvals of tentative maps, planned development permits and site development plans pursuant to the Master Plan. C. Developer has indicated that it intends to meet its inclusionary housing requirement for fpka4e-+e4 the Master Development by constructing, or causing to be constructed, @-l-@ 218 units within Village B of the Master Plan, in two chases described below. and 54 secondarv dwelling units disnersed throughout the Master Develoument. D. Developer is required by the Conditions of Approval to enter into an Affordable Housing Agreement as required and with the content specified by CMC Chapter 21.85. This Agreement is an Affordable Housing Agreement pursuant to CMC Section I2 1.8S%X@$$# 2 1.85.020(21, and shall be signed prior to the approval of any Final Map for the Subject Property. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Incorporation of Recitals. The Recitals are hereby incorporated in this Agreement. 2. Satisfaction of Affordable Housing Obligation and Conditions of Aunroval. In order to satisfy the Conditions of Approval of CT 93-01, CT 93-04, CT 93-07, CT 93-08, CT 95-06 and future tentative maps approved by the City within the Master Plan, and the requirements of CMC Chapter 21.85, Developer shall cause a minimum @Gene& unless adiusted as provided in this Agreement. of two hundred #&eeh (11 ‘H seventv-two (272) units @G%xKK+ of the Master Development to be affordable to lower-income households (the “Affordable Units”), according to the schedule and terms contained herein. 3. Number and Tvue of Affordable I Jnits. Developer shall construct, or cause to be . . constructed, M on the Subiect Prouertv two hundred m (2 181 eighteen dwelling units (“Affordable Multifamily Units”) and a maximum of fiftv-four (54) secondarv dwelling units (“Affordable Second Dwelling: Units”). However. the narties recognize that construction of the Master Develonment will nrobablv result in the actual construction of less than the authorized 1.8 16 residential units. Accordinglv. the actual number of Affordable Units to be constructed Master Develonment is less than the authorized total of 1.8 16 market rate units and Affordable Units. The reduction. if anv. in the number of reauired Affordable Units. as a result of the develonment of the Master Develonment. will be made in Phase 2. as defined in Paraeranh 4 below. of the Affordable Multifamilv Units. 4. Te iGoverning Provision of the Affordable Multifamily Units shall be governed by the following terms: 4.1 Location of Multifamily Units. The m Affordable Multifamily Units shall 3 be constructed m in two chases in Village l/14/98 2 7 \ - . B of the Master Development. Phase 1 shall consist of one hundred sixteen (116) units. Phase 2 shall consist of one hundred two (102) units. However. prior to the anuroval of the site develonment plan for Phase 2. the uarties will review and agree on the total number of market rate units which will be built within the Master Develonment. If the total number of affordable units reauired bv CMC Chanter 21.85 is less than 272. then Developer shall only be reauired to build in Phase 2 the difference between 170 (the 116 Affordable Multifamilv Units provided in Phase 1 and the 54 Affordable Second Dwelling Units) and the new total Affordable Units reauirement based upon the reduction in the number of actual market rate units reasonablv anticinated to be constructed within the Master Develonment. 4.2 Size and Bedroom Count. The Phase 1 Affordable Multifamily Units shall include one, two and three bedroom units in the numbers and with the square footages indicated in “Attachment B” to this Agreement. 4.3 Affordabilitv Requirements. The Phase 1 Affordable Multifamily Units shall be restricted to occupancy by households with incomes, at the time of initial occupancy, that do not exceed 50%, 60%, or 80% of the median income for San Diego County, adjusted for actual household size. Twenty percent (20%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes, at the time of initial occupancy, that do not exceed 50% of the median income for San Diego County, adjusted for actual household size; forty percent (40%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes not exceeding 60% of the median income; and forty percent (40%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes not exceeding 80% of the median income. Monthly rents (including utility allowance as published by the United States Department of Housing and Urban Development) of the Affordable Multifamily Units shall not exceed l/l 2th of 30% of the designated percentage of median income for San Diego County, adjusted for assumed household size appropriate for the unit. Median income figures shall be those published annually by the United States Department of Housing and Urban Development. Assumed household size figures shall be provided to Developer by the City of Carlsbad Housing and Redevelopment Department. With respect to each Affordable Multifamily Unit, the affordability requirements of this Section 4.3 shall continue for fifty-five (55) years from the date of issuance of a Certificate of Occupancy by the City for such unit. The affordability requirements of this Section 4.3 shall be set forth in the Regulatory Agreement between the Developer or its successor and the City, provided for in Section 4.7.4 below, which shall supersede this Agreement with respect to the Phase 1 Affordable Multifamily Units upon recordation of the Regulatory Agreement. 4.4 Affordable Housing Developer. Developer has indicated it will contract with an affordable housing developer to develop and construct the Phase 1 portion of the Affordable Multifamily Units to be constructed in Village B. Developer shall obtain prior City approval of the developer and proposed development agreement for the units (“Affordable Housing Development Agreement”). The Affordable Housing Development Agreement shall describe with particularity the financial arrangements for the construction of the Affordable Multifamily Units, the restrictions applicable to the Affordable Multifamily Units and the record keeping obligations for the management of the units. 1 II 4198 3 8 4.5 Schedule for Develouing Affordable Multifamilv Units. Developer shall provide the Affordable Multifamily Units pursuant to the following schedule: 4.5.1 Prior to the approval of any Final Map for the Master Development, the following shall be in place: 4.5.1.1 This Agreement shall be duly signed and recorded against the m Subiect Proper&. 4.5.1.2 A Site Development Plan shall be approved for the Phase 1 Affordable Multifamily Units. City hereby agrees to priority process the Site Development Plan for the Phase 1 Affordable Multifamily Units. 4.5.2 Building permits shall not be issued for more than 225 of the market rate units m of the Master Development prior to the Phase 1 Affordable Multifamily Units in Village B being under construction. For purposes of this Agreement, “under construction” means approval and issuance of the building permits and completion of inspection(s) for the foundation(s) for the initial phase of the Phase 1 Affordable Multifamily Units. @hej These 225 building permits for - . market rate units r:,,1.. may be allocated among the villages @n+ha~+ of the Master Development in any combination as Developer determines in its sole discretion. 4.5.3 Building permits shall not be issued for more than 500 total of the market rate units m of the Master Development prior to completion of the construction of the Phase 1 Affordable Multifamily Units in Village B. After final inspection is complete by the Building Department and a final Certificate of Occupancy is issuedfjj for the Phase 1 Affordable Multifamily Units, building permits may be obtained for s an additional 275 market rate units @n+has+. This 775 building nermit threshold for market rate units of the Master Development shall be increased bv six (6) market rate units for each Affordable Second Dwellinp Unit constructed nrior to the date the number of market rate unit buv of 6 market rate units allocated to the stage in which the Affordable Second Dwelling TJnits are constructed. For examnle. if 10 Affordable Second DwellinP Units are constructed among the first 225 market rate units. the 225 market rate units shall be c 4.5.4 Prior to the issuance of more than 775 building nermits for market rate units of the Master Develooment. extent as this 775 building Den-nit threshold is adiusted nursuant to Subnaragranh 4.5.3 above. a Site Development Plan shall be annroved for the Phase 2 Affordable Multifamilv Units. ng 4.5.5 Buildi 1 II 4198 4 - rate units of the Master Develonment. as adiusted nursuant to Subnaragranh 4.5.3 above. nrior to the Phase 2 Affordable Multifamily Units in Village B being under construction. 4.6 Comnliance Renort. Following completion of construction of j&ej each Phase #j & Affordable Multifamily Units, a Compliance Report meeting the requirements of CMC Section 2 1.85.180, verifying compliance of the completed Phase @j of Affordable Multifamily Units with the terms of this Agreement and certified as correct by a third-p&, shall be submitted annually to the Housing and Redevelopment Director. If similar reports on @hej each Phase w of Affordable Multifamily Units are required for regulatory compliance with otherfinancing pro&ams, those reports may be deemed satisfactory for the purpose of this section by the Housing and Redevelopment Director, with respect to @hej & Phase w of Affordable Multifamily Units - covered by such reports, provided that copies of those reports are provided on an annual basis to the Housing and Redevelopment Director with a third party certification addressed to the City. 4.7 City Annroval of Documents. The following documents, in form and substance acceptable to the City, shall be used in connection with the rental of jjthej each Phase fq of Affordable Multifamily Units. Such documents shall be prepared by the Developer or its successor and shall be submitted to the Housing and Redevelopment Director for review and approval no later than the commencement of construction of #e$ each Phase @j Lf Affordable Multifamily Units: 4.7.1 A marketing plan establishing the process for seeking, selecting and determining the eligibility of tenants of @hej & Phase w of Affordable Multifamily Units. 4.7.2 A form of Rental Agreement. 4.7.3 A property management plan. 4.7.4 A form of regulatory agreement between the Developer or its successor and the City (“Regulatory Agreement”). 5. Terms Regarding Provision of Affordable Second DwellinP Units. Provision of the Affordable Second Dwelling Units shall be governed bv the following terms: 5.1 Location of Units. The Affordable Second Dwelling Units shall be snecificallv identified and autxoved as hart of Villages G. H. J. K. M. 0. and R of the Master Plan as indicated in “Attachment C” to this Agreement. The lots identified as including an Affordable Second Dwelling Unit shall be reauired to have an anuroved Site Develoument Plan. unless otherwise annroved bv the Communitv Develonment Director. urior to construction on the lot. 5.2 Size and Bedroom Count. The Affordable Second Dwelling Units shall meet the reauirements of CMC Section 21.10.015 and Citv nolicies relating thereto on the date of this 1 II 4198 5 . . Agreement. as resuects use of a secondarv dwelling unit to fulfil1 affordable housing reouirements. 5.3 Affordabilitv of Second Dwelling Units. Affordable Second Dwelling Units shall be nrovided in accordance with the reauirements of CMC Section 21.10.015. Affordable Second Dwelling Units may be. but are not reauired to be. rented. If an Affordable Second Dwelling Unit is rented. the monthlv rent (including utility allowance) shall not exceed l/12th of 30% of 80% of median income in San Diego Countv. adiusted for assumed household size annronriate for the unit. as reauired oursuant to CMC Section 21.10.015(P). Median income figures shall be those published annuallv by the United States Department of Housing and Urban Develonment. Assumed household size figures shall be nrovided to Developer bv the Citv Denartment of Housing and Cornmunitv Develonment. The affordabilitv reauirements of this Section 5.3 shall continue for the useful life of the Affordable Second Dwelling Units. which is assumed to be not less than 30 vears from the date of comnletion of original construction. 5.4 Schedule of Develonment of Second Dwelling Units. The Affordable Second DwellinP Units shall be constructed in the normal course of develonment with the market rate single- familv units included within the Master Develonment. The Affordable Second Dwelling Units shall be develoned in Villages G. H. J. K. M. 0 and R. and shall be constructed according to Develouer’s schedule for constructing the market rate single-familv units: nrovided. however. the construction of the Affordable Second Dwelling Units shall be reasonablv nronortionate to the construction of the market rate single-familv units. 6. Release of Subiect Prouertv From Ameement. The covenants and conditions herein contained shall apply to and bind the heirs, executors, administrators, successors, transferees and assignees of all the parties having or acquiring any right, title or interest in or to any part of the Subject Property, and shall run with and burden the Subject Property until terminated in accordance with the provisions hereof. Prior to the issuance of building permits, Developer shall expressly make the conditions and covenants contained in this Agreement a part of any deed or other instrument conveying any interest in the Subject Property. Notwithstanding anything to the contrary set forth in this Agreement, individual purchasers of single-family units pursuant to an approved public report ,. in compliance with the California Subdivided Lands Act, and mortgage lenders holding deeds of trust on such individual units after sale to such purchasers, shall not be subject to the terms of this Agreement; and the terms of this Agreement shall be of no further force or effect with respect to such completed unit on the date of the recordation of a deed to the individual purchaser. Upon allocation by the Developer of the building permits for the first 225 market rate units among the villages in w the Master Development, in any combination as Developer determines in its sole discretion, then those 225 market rate units shall be released from the burdens of this Agreement. Upon allocation by the Developer of the building permits for the 226th through 500* market rate units among the villages in m the Master Development, in any combination as Developer determines in its sole discretion, and after the Phase 1 Affordable Multifamily Units in Village B are under construction, then the 226* through 500* market rate units shall be released from the burdens of this Agreement. After final inspection is complete, or a final Certificate of Occupancy is issued, for the Phase 1 Affordable Multifamily Units, then w an additional 275 market rate units in m the Master Development shall be released from the burdens of this Agreement. l/14/98 6 Annronriate adjustments shall be made in the number of market rate units released from the burdens of this Agreement consistent with the increases in building nermits uursuant to Subuaragrauh 4.5.3 above. Unon issuance of a building uermit or uermits for all of the Phase 2 Affordable Multifamily Units in Village B. then the remaining balance of the Subiect Prouertv. with the excention of the Affordable Second Dwelling Unit lots identified pursuant to DamTaDh 5.1 above, shall be released from the burdens of this Agreement. w z. Default. F ai 1 ure of Developer to cure any default in Developer’s obligations under the terms of this Agreement within ninety (90) days after the delivery of a notice of default from the City (or where the default is of a nature which cannot be cured within such ninety (90) day period, the failure of Developer to commence to cure such default within the ninety (90) day period or Developer’s failure to proceed diligently to complete the cure of such a default within a reasonable time period) will constitute a breach of this Agreement and the requirements of Carlsbad Municipal Code Chapter 21.85 and the City may exercise any and all remedies available to it with respect to Developer’s failure to satisfy the Conditions of Approval and Chapter 21.85 of the Carlsbad Municipal Code, including, but not limited to, the withholding of building permits for the market rate units within the Master Plan. fl8. A-- -. At its sole discretion, the City may designate, appoint or contract with any other public agency, for-profit or non-profit organisation to perform the City’s obligations under this Agreement. f8j 2. Hold Harm1 ess. Developer will indemnify and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as “Indemnitees”), and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to Developer’s actions or defaults pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them, with respect thereto. Mu. Insurance Requirements. Developer (or its successor or successors) shall obtain, at its (or their) expense, comprehensive general liability insurance for development of the w Affordable Multifamily Units naming Indemnitees as additional named insureds with aggregate limits of not less than Five Million Dollars ($5,000,000) for bodily injury, and death and property damage, including coverage for contract liability and products and completed operations purchased by Developer (or its successor or successors) from an insurance company duly licensed to engage in the business of issuing such insurance in the State, with a current Best’s Key Rating of not less than A-V, such insurance to be evidenced by an endorsement which so provides and delivered to the City Clerk prior to the issuance of any building permit for the w Affordable Multifamily units, fl-qlJ Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, Ill4198 7 . L4 to the party to receive such notice at the addresses set forth below: To the City of Carlsbad: CITY OF CARLSBAD Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, California 92008-2389 To the Developer: CONTINENTAL RANCH, INC. Attn: Dave Lother 12636 High Bluff Drive, Suite 300 San Diego, California 92130 Any party may change its address to which notices are to be sent by notifying the other party of the new address, in the manner set forth above. fW2. Integrated Agreement. This Agreement constitutes the entire agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. p+U. Duration of Agreement. This Agreement shall E---:-:- . c,ll^-...-.terminate and become null and void unon the earlier of: (a) the issuance of a building nerrnit for the last Affordable Unit to be constructed uursuant to this Agreement: or (b) the recordation of the Regulatorv Agreements described in Section 4.7.4 for all of the Affordable -Multifamilv Units: or (c) unon the granting of a written release bv the Communitv Develoument Director. Following termination of the Agreement. the reauirements of CMC Chanter 2 1.85 reparding annual comuliance renorts. as set forth in Section 4.6 of this Agreement. shall continue to aunlv. This Agreement. and anv DwamaDh, subnaragrauh or covenant contained herein mav be amended onlv unon the written consent of Developer and the Communitv Develonment Director. fW& Recordinp of Agreement. The parties hereto shall cause this Agreement to be recorded against the Subject Property in the Offkial Records of the County of San Diego. B-et& Severabilitv. In the event any limitation, condition, restriction, covenant or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full force and effect. 1114l98 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the day and year first above written. CITY: CITY OF CARLSBAD, a municipal corporation By: MARTIN ORENYAK Community Development Director Approved as to form: RONALD R. BALL, City Attorney DEVELOPER: CONTINENTAL RANCH, INC., a Delaware corporation Its: By: 1!14/98 9 - ATTACHMENT “A” (Subject Property) 10 I5 ATTACHMENT “B” @base 1 Size and Bedroom Count) Number of Number f o Sauare Footage Bedrooms Units l/14/98 11 1‘ I, ATTACHMENT C AFFORDABLE SECOND DWELLING UNITS Total Market Second Dwelling p:% Villa e nit G 39 4 H 72 7 K 92 9 M 67 7 02 55 5 R3 45 4 04 26 3 1114l98 12 - EXHIBIT 3 TO: CITY MANAGER FROM: P COMMUNITY DEVELOPMENT DIRECTOR RANCH0 CARRILLO AFFORDABLE HOUSING AGREEMENT January 22, 1998 The following report has been provided to outline the reasons/concerns staff has related to execution of the affordable housing agreement for the Ranch0 Carrillo Master Plan. The Community Development Director is authorized to execute affordable housing agreements. However, due to the fact that the agreement proposed by the developer, Continental Homes, and recommended for approval by the Housing Commission represents a change in policy, staff is not willing to execute the subject agreement without direction from the City Council. The reasons for the Community Development Director’s unwillingness to execute the subject affordable housing agreement without further action by the Council, are as follows: 1. The developer’s proposed agreement represents a shift in policy. Typically, a Site Development P/an for the affordable housing has been required from all developers and is processed together with the Agreement. In past cases, the site development plan represents the entire inclusionary housing obligation. Final Maps can then be recorded for all properties represented by the affordable housing agreement and related site development plan(s). 2. Staff does not believe that the agreement proposed by the developer conforms to the requirements set forth in the lnclusionary Housing Ordinance. Per the Ordinance (Chapter 21.85) the Affordable Housing Agreement is to include 1) the number of inclusionary dwelling units proposed; 2) the unit size of the inclusionary units and the number of bedrooms per inclusionary dwelling unit; 3) the proposed location of the inclusionary units; 4) tenure of affordability for the inclusionary units; 5) schedule of production of the dwelling units; 6) incentives and/or financial assistance provided by the City; 7) where applicable, terms and conditions establishing rules and procedures for qualifying tenants, setting rental rates, filling vacancies, and operating/maintaining units; 8) where applicable, terms and conditions governing the initial sale of for-sale inclusionary units; and 9) standards modifications granted by the City. Site development plans typically provide for these required specifics. For Ranch0 Carrillo, a Site Development Plan was provided for the initial 116 units of affordable housing only. The Developer indicated that the Site Development Plans for the remaining units (156) would be provided at a later date. The Developer has indicated that the remaining obligation for affordable housing would be met with 102 additional multi-family housing units (within Village B) and with 54 second dwelling units (in several villages). However, no design has been presented as of this date for those remaining affordable housing units. Although the developer has indicated that the second dwelling units will be consistent with the City’s Second Dwelling Ordinance, staff has been provided with no specific details on the remaining affordable housing units to be produced by the developer. 3. Specific lots are not identified for the second dwelling units. Therefore, at a minimum, the City should require deed restrictions on all of the property within the Villages identified by the Developer to ensure that the property remains available for affordable housing purposes. 4. To ensure that all of Village B remains available for affordable housing, all of the property within Village B should be deed restricted for affordable housing purposes. 5. For all of the affordable housing to be provided, the agreement should at least include some minimum level specifics for unit size, number of bedrooms and timing of construction as related 18 - - to the market rate units in order to meet the requirements of the lnclusionary Housing Ordinance. For example, the Council could require at a minimum that the additional 102 multi- family units provide for 1, 2 and 3 bedrooms, with at least 10 of the total number of units as 3 bedroom. In addition, the Council could require that each of the units be no smaller in size than those units approved for the first phase of affordable housing development. The timing of construction could also be similar to the first phase in terms of minimal acceptable levels. Staff believes that the agreement should have minimum levels included for number, size, bedrooms, and construction timing for the all of the affordable housing proposed for the Ranch0 Carrillo Master Plan. If the City Council decides to accept the Housing Commission’s recommendation for approval, staff requests that the Council instruct staff to add minimum levels of acceptable affordable housing within the agreement to ensure that any future developer of the affordable housing has acceptable guidelines for future development projects. MARTY ORENYAK - - EXHIBIT 4 The City of Carlsbad Housing &‘Redevelopment Department A REPORT TO THE HOUSING COMMISSION I I Item Na- 1 I Sta# Craig D. Ruin Adanqqemenf Analyst 1 DATE: JANUARY 14,199s SUBJECT: SDP 97-15 RANCH0 CARRILLO VILLAGE B PHASE I - REQUEST FOR RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL OF AN AFFORDABLE HOUSING AGREEMENT AND SITE DEVELOPMENT PLAN FOR THE CONSTRUCTION OF 116 AFFORDABLE APARTMENT UNITS IN VILLAGE B TO SATISFY THE INCLUSIONARY HOUSING REQUIREMENTS FOR PHASE ONE OF THE RANCH0 CARRILLO MASTER PLAN. I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 98001, recommending APPROVAL to the City Council of an Affordable Housing Agreement and Site Development Plan SDP 97- 15 for the construction of 116 affordable apartment units in order to satisfy the requirements of the Inclusionary Housing Ordinance in Village B of the first phase of development in the Ranch0 Carrillo Master Plan. II. PROJECT BACKGROUND The Ranch0 Carrillo Master Plan was approved by City Council on October 21, 1997. The purpose of the Master Plan is to provide for the orderly development of the Ranch0 Carrillo site, while preserving the environmental resources of the area. For planning purposes, the Ranch0 Carrillo Master Plan is divided into 19 villages. The Master Plan identified the allowable type and intensity of land uses in each village and provides general development and design standards, requirements, and the method by which the Ranch0 Carrillo Master Plan will be implemented. Pursuant to the City’s Inclusionary Housing Ordinance, 15% of the base dwelling units in the Master Plan must be provided for lower income households. The Affordable Housing Agreement for the Ranch0 Carrillo Master Plan establishes the phasing and development of the inclusionary housing for the Master Plan pursuant to Chapter 21.85 of the City of Carlsbad Zoning Ordinance, lnclusionary Housing. The subject site development plan (97-15) ensures consistency with the applicable affordable housing agreement and provides the inclusionary housing for the first phase of development of the entire Master Plan area. R:\Word\RNCHO CARRLLLO HCRPTOl/06/98 SDP 97-15 - RANCH0 CARRILLO VILLAGE B/PHASE I JANUARY 14,199s PAGE 2 III. The Ranch0 Carrillo Master Plan is estimated to include a total of 18 16 total housing units. Of these I8 16 units, a total of 272 units must be affordable to households at 80% of the San Diego County Median Income. This means that Continental Homes may eventually build a total of 1544 market rate and 272 affordable housing units. However, since the final number of housing units to be constructed remains only an estimate, Continental Homes has proposed to initially complete 116 affordable housing units within a multi-family housing project to be constructed in Village B. The proposed 116 affordable units in Village B will satisfy the inclusionary requirements for the first phase of the Master Plan. Additional affordable housing units may be constructed at a later date in the remainder of Village B, or elsewhere within the Ranch0 Carrillo Master Plan. The total number of affordable units to be constructed will be based on the total number of units ultimately approved for development in the Ranch0 Carrillo Master Plan. The construction of additional affordable units in Village B will require an amendment to SDP 97-15, or an additional site development plan will be required if another site is selected for the affordable housing. Approval of the 116 unit affordable housing rental project (SDP 97-15) will allow Continental Homes to construct a total of 775 housing units within the Ranch0 Carrillo Master Plan. Of these 775 units, 659 will be market rate units and 116 will be affordable to lower income households. The required timing for construction of the first phase (116 units) of affordable housing will be directly related to the total number of market rate units (659) to be constructed. The Phase I Affordable Housing Agreement with Continental Homes is attached for review by the Housing Commission. This agreement will be amended at a later date to include the approved Phase 2 affordable housing and to allow for a maximum of 1816 total housing units within the Master Plan, if this total number of units is ultimately approved for the area. Phase 2 of the affordable housing will most likely include 102 additional units of multi-family housing and 54 second dwelling units. Additional details on the remaining affordable housing will be provided at a future date. PROJECT DESCRIPTION A. Location Village B is located adjacent to Palomar Airport Road and the future Melrose Drive in the Ranch0 Carrillo Master Plan. The affordable units will be located on Lot 207 as shown on the proposed Tentative Map CT 97-02 (See attached Exhibit 4). B. Unit Mix The proposed 116 unit affordable apartment project consists of thirteen separate residential structures, a recreation building and accessory uses. The proposed development includes twelve 723 square foot one bedroom (IO%), forty eight 908 square foot two bedroom (4 1%) and fifty six 1,127 square foot three bedroom units (49%). R:\Word\RNCHO CARRlLLO HCRPT 01/06/98 SDP 97-15 - RANCH0 CARRILLO VILLAGE B/PHASE I JANUARY 14,1998 PACE 3 C. Other Features and Amenities The project will feature a 2,235 square foot recreation building, laundry facilities; a “tot- lot” with playground equipment; a swimming pool; a 286 square foot maintenance building; and 267 parking spaces. Iv. DEVELOPMENT TEAM The affordable housing developer is Carlsbad Family Housing Partnership. The Partnership consists of Barone Galasso and Associates, a for-profit affordable housing developer and Housing Opportunities Inc. (HOI), an non-profit affordable housing developer. The Partnership developed and operates a 60 unit affordable project in La Mesa which is similar in nature to the proposed project in terms of affordability financing sources. The developers have experience in developing and managing affordable projects throughout California. The Architect for the project is Rodriguez Design Associates. This architect has designed the Laurel Tree Affordable Apartment Project as well as numerous other affordable housing projects. The engineer for the project is Rick Engineering. v. SITE A. Site Control The site is currently owned by Continental Homes, the developer of the Ranch0 Carrillo Master Plan. The site will be contributed to the affordable housing developer as part of the financial contribution to the affordable project by the master developer. B. Land Cost The site is valued at approximately $3.123 million. The cost of the land will be verified through an appraisal at a later date. C. Site Characteristics Village B is located in the Ranch0 Carrillo Master Plan adjacent to Palomar Airport Road and the future Melrose Drive. Currently, the subject property and surrounding property are vacant, but have been graded. The property to the south will be developed with multifamily units, while the property to the east will be developed with duplex units. Palomar Airport Road will separate this site from future non-residential development to the north. The proposed inclusionary units will be within close proximity (approximately % mile) of an elementary school that will be constructed by the San Marcos School District in R:\Word\RNCHOCARRlLLO HCRI'T01/06/98 SDP 97-15 - RANCH0 CARRILLO VILLAGE B/PHASE I JANUARY 14,199s PAGE 4 Village S. The Carrillo Ranch Community Park is located just to the south of the school. Village B is also in close proximity of existing and future employment opportunities in the industrial corridor on the north side of Palomar Airport Road. In addition, residents of Village B will be able to utilize existing and future bus service on Palomar Airport Road and Melrose Drive. VI. AFFORDABILITY A. Rent and Income Levels The 116 affordable units in Village B will be restricted and affordable to households with incomes not exceeding 80% of the area median (AMI). The affordable housing developer, Carlsbad Family Housing Partnership, is seeking to finance the project in part through the use of tax credit bonds issued by the California Housing Finance Agency (CHFA). The affordability requirements of CHFA are more stringent than the City’s Inclusionary Housing Ordinance. CHFA will require that 20% of the units be restricted to 50% of AMI, 40% at 60% of AMI and 40% at 80% of AMI. Therefore, the project will ultimately be much more affordable than required by the City’s Inclusionary Housing Ordinance. B. Target Population The affordable units will be targeted to lower-income families. With a growing number of lower-income jobs in Carlsbad, there is a significant demand for affordable housing for families which will improve the jobs/housing balance. Approximately 56 (48%) of the 116 units will be three bedroom units to serve the needs of larger low income households. C. Terms of Affordability The Affordable Housing Agreement will be executed with the developer to ensure the affordability for the project’s useful life or 55 years, as required by the City’s Inclusionary Housing Ordinance. D. Housing Element/Consolidated Plan Consistency The proposed affordable housing supports several Housing Element Goals and Objectives, including Objective 3.5 (Lower Income New Construction), Objective 3.6 (Inclusionary Housing), Objective 3.2 (Larger Units) and Goal 4 (Jobs-Housing Balance). The City of Carlsbad’s Consolidated Plan identifies housing opportunities for large, lower-income renter families as a top ranking priority. The proposed project meets the priorities, goals and objectives of the City for affordable housing. R:\Word\RNCHOCARRILLO HCRl'T01/06/98 SDP 97-15 - RANCH0 CARRILLO VILLAGE B/PHASE I JANUARY 14,199s PAGE 5 VII. CONSTRUCTION PHASING Approval of the Phase 1 Affordable Housing Agreement will allow Continental Homes to final maps on villages within the Ranch0 Carrillo Master Plan which will allow for the construction of a total of 775 housing units. The subject agreement allows Continental Homes to build a maximum of 225 market rate units within the Ranch0 Carrillo Master Plan before construction of the Phase 1 affordable housing units must be initiated; this represents 34% of the total number of market rate units (659) permitted to be constructed with development of the 116 unit affordable housing project. After the 225’” building permit is approved, no additional building permits will be available for market rate housing until the affordable housing project is under construction. The term “under construction” for the purpose of the agreement means that the building permits have been approved and issued and the inspections for the foundation(s) are complete for 116 apartment units. After construction begins on the affordable housing units, builders will be permitted to obtain building permits for an additional 275 market rate housing units before construction must be complete on the affordable housing project. The total number of building permits that may be pulled before construction must be complete on the affordable housing project (116 units) is 500, which represents 76% of the total number of market rate units permitted within the Phase 1 development. After final inspection is complete, or final Certificate of Occupancy is issued, for the affordable housing units, building permits may be obtained for the remaining 159 market rate units. The construction phasing noted above allows Continental Homes to proceed with construction of a reasonable number of the market rate homes before construction must begin on the affordable housing units. Staff believes that the phasing plan set forth within the agreement is also consistent with the inclusionary housing ordinance which requires concurrent construction of the affordable housing units. VIII. ENTITLEMENTS The Master Plan for the Ranch0 Carrillo development, as amended, was approved by the City Council on October 21, 1997. The site development plan and related tentative map will require approval by both the Planning Commission and City Council at a future date. The site development plan, which includes elevations and floor plans, for the affordable housing project (I 16 units) is attached for review by the Housing Commission at this time. Staff is recommending approval of the site development plan. R:\Word\RNCHO CARRILLO HCRPT 01/06/98 23 l -. SDP97-IS-RANCHOCARRILLOVILLAGEB/PHASEI JANUARY 14,1998 PAGE6 VIII. ON-GOING REOUIREMENTS OF THE CITY While the City will monitor the development of the project and its on-going management, their will be a minimal long-term future role for the City. A Regulatory Agreement will be required regarding affordability requirements, but monitoring responsibilities are greatly reduced because of the stringent affordability requirements of the tax credit program that are overlaid on the project. m. SUMMARY AND RECOMMENDATIONS It is the role of the Housing Commission to make recommendations to the Planning Commission and City Council based on several considerations with respect to affordable housing projects. These are: l The proposal’s effectiveness in serving the City’s needs and priorities as expressed in the Housing Element of the General Plan and the HUD Consolidated Plan. l The proposal’s consistency with the City’s affordable housing policies and ordinances as expressed in the Housing Element, Inclusionary Housing Ordinance, Density Bonus Ordinance, etc. l The proposal’s development and operating feasibility, emphasizing the development team capacity, financing sources and the role of the City in providing financial assistance or incentives. As indicated above, the proposed affordable housing project will serve the needs and priorities set forth within the City’s Housing Element and Consolidated Plan. It is also consistent with the City’s Affordable Housing Policies and ordinances. Continental Homes has selected a development team which has experience in producing affordable housing and presented a project which can be financed through various financing sources. Consideration of financial assistance from the City for the subject affordable housing project will be given at a later date. Financial assistance is a separate issue which will be addressed at a future date with the affordable housing developer, Carlsbad Family Housing Partnership. Any conditions of financial assistance provided to the affordable housing developer will be set forth in a separate agreement. Staff is recommending approval of the proposed affordable housing project, as presented, to satisfy the inclusionary housing obligation of the Master Plan developer, Continental Homes. As required by the Inclusionary Housing Ordinance, Continental Homes and the City must enter into an Affordable Housing Agreement prior to recordation of a final map for development within the Ranch0 Carrillo Master Plan. As mentioned previously, the Affordable Housing Agreement presented for review and a R:\Word\RNCHO CARRILLO HCRPT 01/06/98 P SDP 97-15 - RANCH0 CARRILLO VILLAGE B/PHASE I JANUARY 14,1998 PAGE 7 recommendation of approval by the Housing Commission records specific requirements of the Inclusionary Ordinance, including unit type, affordability levels and construction timing. In summary, staff is recommending that the Housing Commission approve a recommendation to the Planning Commission and City Council to approve the subject site development plan for the Phase 1 Ranch0 Carrillo Affordable Housing Project and the related affordable housing agreement, in substantially the form presented at this time. XII. EXHIBITS 1. Housing Commission Resolution No. 98-00 1 2. Draft Affordable Housing Agreement 3. Reduced Plan Exhibits HC RESOLUTIONNO.98-001 1 I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 h HOUSING COMMISSION RESOLUTION NO. 98-001 THAT THE HOUSING COMMISSION RECOMMEND TO THE CITY COUNCIL APPROVAL OF AN AFFORDABLE HOUSING AGREEMENT AND SITE DEVELOPMENT PLAN SDP 97-15 FOR THE CONSTRUCTION OF ONE, TWO AND THREE BEDROOM AFFORDABLE APARTMENT UNITS FOR A TOTAL OF 116 AFFORDABLE UNITS IN ORDER TO SATISFY THE REQUIREMENTS OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE DEVELOPMENT OF 116 AFFORDABLE UNITS IN VILLAGE B OF THE RANCH0 CARRILLO MASTER PLAN. APPLICANT: CARRILLO FAMILY HOUSING CASE NO.: SDP 97-15 WHEREAS, the developer of the Ranch0 Carrillo Master Plan has proposed to construct 116 apartment units affordable to lower income households as a means to satisfy a portion of their affordable housing obligation as permitted by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance; and WHEREAS, the developer’s proposal to construct said units has been submitted to the City of Carlsbad’s Housing Commission for review and consideration; and WHEREAS, said Housing Commission did, on the 14th day of January, 1998, hold a ublic meeting to consider said proposal to construct 116 affordable housing apartment units; lb nd WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all persons desiring to be heard, said Commission considered all factors relating to the proposal to construct said affordable housing units, NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 1 4 3 4 5 6 7 a 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 ‘. 28 2. 3. 4. 5. londitions: The project is consistent with the goals and objectives of the City of Carlsbad’s Housing Element and Comprehensive Housing Affordability Strategy, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. The project will provide a total of 116, one, two and three bedroom affordable apartment units. The project, therefore, has the ability to effectively serve the City’s housing needs and priorities as expressed in the Housing Element and the Consolidated Plan. That based on the information provided within the Housing Commission Staff Report and testimony presented during the public meeting of the Housing Commission on January 14, 1998, the Housing Commission ADOPTED Resolution No. 98-00 1, recommending APPROVAL to the City Council of 116 affordable apartment units in Village B of the Ranch0 Carrillo Master Plan in order to satisfy the requirements of the Inclusionary Housing Ordinance. That the Housing Commission recommends that the City Manager or his designee be authorized to execute the Affordable Housing Agreement in substantially the form presented in Exhibit 2 of the Housing Commission Staff Report, subject to review and approval by the City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recommendation of approval is granted for Site Development Plan 97-15, incorporated by reference and on file in the Housing and Redevelopment Department. Development shall occur substantially as shown unless otherwise noted in the conditions of project approval by the City Council. The affordable housing units shall be deed restricted for “the useful life of the project” which is a minimum of 55 years. HC RESOLUTlONNO.98-001 II . 1 - i 2 3 4 5 3. Upon final approval of said affordable housing project and prior to final map approval, the applicant shall execute the Affordable Housing Agreement with the City of Carlsbad in substantially the form presented to the Housing Commission in the staff report dated January 14, 1998. The agreement is binding to all future owners and successors in interest. The Affordable Housing Agreement shall include all terms and conditions of said project approval required to comply with the City’s Inclusionary Housing Ordinance. 6 II PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 ommission of the City of Carlsbad, California, held on the 14th of January, 1998, by the Illowing vote, to wit: AYES: NOES: ABSENT: ABSTAIN: KATHLEEN WELLMAN, CHAIRF’ERSON CARLSBAD HOUSING COMMISSION lEBORAH K. FOUNTAIN .cting Housing and Redevelopment Director 24 25 26 27 28 HC RESOLUTION RECOEUXNG REQUESTED BY City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk’s Office Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, California 92008 (ABOVE SPACE FOR R&CORDER’S USE) AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY This AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY (“Agreement”), entered into this day of 1998, by and between the CITY OF CARLSBAD, a municipal corporation (“City”), and CONTIkENTAL RANCH INC., a Delaware corporation (“Developer”), is made with reference to the following: A. Developer is the owner of certain real property in the City of Carlsbad, in the County of San Diego, California ((‘Subject Property”) described in “Attachment A,” which is attached hereto and incorporated herein by this reference. B. Developer wishes to construct 775 residential units (“Phase 1 of the Master Development”) on a portion of the Subject Property. The City has approved the Ranch0 Carrillo Master Plan (“Master Plan”); Carlsbad Tract Map Numbers CT 93-01, CT 93-04, CT 93-07, CT 93-08 and CT 95-06; Planned Unit Development Numbers PUD 93-06, PUD 93-07, PUD 95-04 AND PUD 95-05; and, Site Development Plan Numbers SDP 94-01, SDP 95-12 and SDP 95-13 for the “Master Development” of the Subject Property. The City issued these approvals subject to certain Conditions of Approval, including a condition requiring fifteen percent (15%) of the units in the Master Development to be affordable housing as required by the City’s Inclusionary Housing Ordinance, Carlsbad Municipal Code Chapter 21.85 (“CMC Chapter 21.85”). In that regard, this Agreement, as supplemented and amended from time to time, is intended to implement the requirements imposed by CMC Chapter 21.85 for these approvals and all future City approvals of tentative maps, planned development permits and site development plans pursuant to the Master Plan. C. Developer has indicated that it intends to meet its inclusionary housing requirement for Phase 1 of the Master Development by constructing, or causing to be constructed, 116 units within Village B of the Master Plan, 01/06/98 D. Developer is required by the Conditions of Approval to enter into an Affordable Housing Agreement as required and with the content specified by CMC Chapter 21.85. This Agreement is an Affordable Housing Agreement pursuant to CMC Section 2 1.85.020(b)(5), and shall be signed prior to the approval of any Final Map for the Subject Property. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Incornoration of Recitals. The Recitals are hereby incorporated in this Agreement. 2. Satisfaction of Affordable Housing Obligation and Conditions of Approval. In order to satis@ the Conditions of Approval of CT 93-01, CT 93-04, CT 93-07, CT 93-08, CT 95- 06 and future tentative maps approved by the City within the Master Plan, and the requirements of CMC Chapter 2 1.85, Developer shall cause a minimum of one hundred sixteen (116) units of Phase 1 of the Master Development to be affordable to lower-income households (the “Affordable Units”), according to the schedule and terms contained herein, 3. Number and Tvpe of Affordable Units. Developer shall construct, or cause to be constructed, one hundred sixteen (116) multifamily dwelling units (“Affordable Multifamily Units”). 4. Terms Governing Provision of Affordable Multifamily Units. Provision of the Affordable Multifamily Units shall be governed by the following terms: 4.1 Location of Multifamily Units. The Phase 1 Affordable Multifamily Units shall consist of one hundred sixteen (116) units to be constructed within Village B of the Master Development. 4.2 Size and Bedroom Count. The Phase 1 Affordable Multifamily Units shall include one, two and three bedroom units in the numbers and with the square footages indicated in “Attachment B” to this Agreement. 4.3 Affordabilitv Requirements. The Phase 1 Affordable Multifamily Units shall be restricted to occupancy by households with incomes, at the time of initial occupancy, that do not exceed 50%, 60%, or 80% of the median income for San Diego County, adjusted for actual household size. Twenty percent (20%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes, at the time of initial occupancy, that do not exceed 50% of the median income for San Diego County, adjusted for actual household size; forty percent (40%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes not exceeding 60% of the median income; and forty percent (40%) of the Phase 1 Affordable Multifamily Units shall be affordable to households with incomes not exceeding 80% of the median income. Monthly rents (including utility allowance as published by the United States Department of Housing and Urban Development) of the Affordable Multifamily Units shall not exceed 1/121h of 30%. of the designated percentage of median income for San Diego 01/06/9a 2 County, adjusted for assumed household size appropriate for the unit. Median income figures shall be those published annually by the United States Department of Housing and Urban Development. Assumed household size figures shall be provided to Developer by the City of Carlsbad Housing and Redevelopment Department. With respect to each Affordable Multifamily Unit, the affordability requirements of this Section 4.3 shall continue for fifty-five (55) years from the date of issuance of a Certificate of Occupancy by the City for such unit. The affordability requirements of this Section 4.3 shall be set forth in the Regulatory Agreement between the Developer or its successor and the City, provided for in Section 4.7.4 below, which shall supersede this Agreement with respect to the Phase I Affordable Multifamily Units upon recordation of the Regulatory Agreement. 4.4 Affordable Housing Developer. Developer has indicated it will contract with an affordable housing developer to develop and construct the Phase 1 portion of the Affordable Multifamily Units to be constructed in Village B. Developer shall obtain prior City approval of the developer and proposed development agreement for the units (“Affordable Housing Development Agreement”). The Affordable Housing Development Agreement shall describe with particularity the financial arrangements for the construction of the Affordable Multifamily Units, the restrictions applicable to the Affordable Multifamily Units and the record keeping obligations for the management of the units. 4.5 Schedule for Developing Affordable Multifamilv Units. Developer shall provide the Affordable Multifamily Units pursuant to the following schedule: 4.5.1 Prior to the approval of any Final Map for the Master Development, the following shall be in place: 4.5.1.1 This Agreement shall be duly signed and recorded against the subject property. 4.5.1.2 A Site Development Plan shall be approved for the Phase 1 Affordable Multifamily Units. City hereby agrees to priority process the Site Development Plan for the Phase 1 Affordable Multifamily Units. 4.5.2 Building permits shall not be issued for more than 225 of the market rate units included in Phase 1 of the Master Development prior to the Phase 1 Affordable Multifamily Units in Village B being under construction. For purposes of this Agreement, “under construction” means approval and issuance of the building permits and completion of inspection(s) for the foundation(s) for the initial phase of the Phase 1 Affordable Multifamily Units. The 225 building permits for market rate units included in Phase 1 of the Master Development may be allocated among the villages in Phase 1 of the Master Development in any combination as Developer determines in its sole discretion. 4.5.3 Building permits shall not be issued for more than 500 total of the market rate units included in Phase 1 of the Master Development prior to 01 IO6198 3 32 completion of the construction of the Phase 1 Affordable Multifamily Units in Village B. After final inspection is complete by the Building Department and a final Certificate of Occupancy is issued, for the Phase 1 Affordable Multifamily Units, building permits may be obtained for the remaining 159 market rate units in Phase 1 of the Master Development. 4.6 Compliance Report. Following completion of construction of the Phase I Affordable Multifamily Units, a Compliance Report meeting the requirements of CMC Section 2 1.85.1 SO, verifying compliance of the completed Phase 1 Affordable Multifamily Units with the terms of this Agreement and certified as correct by a third-party, shall be submitted annually to the Housing and Redevelopment Director. If similar reports on the Phase 1 Affordable Multifamily Units are required for regulatory compliance with other financing programs, those reports may be deemed satisfactory for the purpose of this section by the Housing and Redevelopment Director, with respect to the Phase 1 Affordable Multifamily Units covered by such reports, provided that copies of those reports are provided on an annual basis to the Housing and Redevelopment Director with a third party certification addressed to the City. 4.7 Citv Approval of Documents. The following documents, in form and substance acceptable to the City, shall be used in connection with the rental of the Phase 1 Affordable Multifamily Units. Such documents shall be prepared by the Developer or its successor and shall be submitted to the Housing and Redevelopment Director for review and approval no later than the commencement of construction of the Phase 1 Affordable Multifamily Units: 4.7.1 A marketing plan establishing the process for seeking, selecting and determining the eligibility of tenants of the Phase 1 Affordable Multifamily Units, 4.7.2 A form of Rental Agreement. 4.7.3 A property management plan. 4.7.4 A form of regulatory agreement between the Developer or its successor and the City (“Regulatory Agreement”). 5. Release of Subject Prouertv From Agreement. The covenants and conditions herein contained shall apply to and bind the heirs, executors, administrators, successors, transferees and assignees of all the parties having or acquiring any right, title or interest in or to any part of the Subject Property, and shall run with and burden the Subject Property until terminated in accordance with the provisions hereof. Prior to the issuance of building permits, Developer shall expressly make the conditions and covenants contained in this Agreement a part of any deed or other instrument conveying any interest in the Subject Property. Notwithstanding anything to the contrary set forth in this Agreement, individual purchasers of single-family units pursuant to an approved public report in compliance with the California Subdivided Lands Act, and mortgage lenders holding deeds of trust on such individual units after sale to such 01/06/98 4 33 purchasers, shall not be subject to the terms of this Agreement; and the terms of this Agreement shall be of no further force or effect with respect to such completed unit on the date of the recordation of a deed to the individual purchaser. Upon allocation by the Developer of the building permits for the first 225 market rate units among the villages in Phase 1 of the Master Development, in any combination as Developer determines in its sole discretion, then those 225 market rate units shall be released from the burdens of this Agreement. Upon allocation by the Developer of the building permits for the 2261h through 500”’ market rate units among the villages in Phase 1 of the Master Development, in any combination as Developer determines in its sole discretion, and after the Phase 1 Affordable Multifamily Units in Village B are under construction, then the 226’h through 500”’ market rate units shall be released from the burdens of this Agreement. After final inspection is complete, or a final Certificate of Occupancy is issued, for the Phase 1 Affordable Multifamily Units, then the remaining 159 market rate units in Phase 1 of the Master Development shall be released from the burdens of this Agreement. 6. Default. Failure of Developer to cure any default in Developer’s obligations under the terms of this Agreement within ninety (90) days after the delivery of a notice of default from the City (or where the default is of a nature which cannot be cured within such ninety (90) day period, the failure of Developer to commence to cure such default within the ninety (90) day period or Developer’s failure to proceed diligently to complete the cure of such a default within a reasonable time period) will constitute a breach of this Agreement and the requirements of Carlsbad Municipal Code Chapter 21 .S5 and the City may exercise any and all remedies available to it with respect to Developer’s failure to satisfy the Conditions of Approval and Chapter 2 1.85 of the Carlsbad Municipal Code, including, but not limited to, the withholding of building permits for the market rate units within the Master Plan. 7. Appointment of Other Agencies. At its sole discretion, the City may designate, appoint or contract with any other public agency, for-profit or non-profit organization to perform the City’s obligations under this Agreement. 8. Hold Harmless. Developer will indemnify and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as “Indemnitees”), and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to Developer’s actions or defaults pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them, with respect thereto. 9. Insurance Requirements. Developer (or its successor or successors) shall obtain, at its (or their) expense, comprehensive general liability insurance for development of the Phase 1 Affordable Multifamily Units naming Indemnitees as additional named insureds with aggregate limits of not less than Five Million Dollars ($5,000,000) for bodily injury, and death and property damage, including coverage for contract liability and products and completed operations purchased by Developer (or its successor or successors) from an insurance company duly licensed to engage in the business of issuing such insurance in the State, with a current Best’s 01/06/98 5 Key Rating of not less than A-V, such insurance to be evidenced by an endorsement which so provides and delivered to the City Clerk prior to the issuance of any building permit for the Phase 1 Affordable Multifamily Units 10. Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addresses set forth below: To the City of Carlsbad: To the Developer: CITY OF CARLSBAD Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, California 92008-2389 CONTINENTAL RANCH, INC. Attn: Dave Lother 12636 High Bluff Drive, Suite 300 San Diego, California 92130 Any party may change its address to which notices are to be sent by notifying the other party of the new address, in the manner set forth above. 11. Integrated Agreement. This Agreement constitutes the entire agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. 12. Duration of Agreement. This Agreement shall remain in effect for 55 years following the date certificates of occupancy have been issued for all Affordable Units. 13. Recording of Agreement. The parties hereto shall cause this Agreement to be recorded against the Subject Property in the Official Records of the County of San Diego. 14. Severabilitv. In the event any limitation, condition, restriction, covenant or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full force and effect. 01106/98 6 35 . L IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the day and year first above written. CITY: CITY OF CARLSBAD, a municipal corporation By: MARTIN ORENYAK Community Development Director Approved as to form: RONALD R. BALL, City Attorney DEVELOPER: Delaware corporation CONTINENTAL RANCH, INC., a By: Its: By: Its: 01/06/98 7 36 ATTACHMENT “A” (Subject Property) H:\...\ContHomes\AanchoCanillo\Pha~l AHA.vOl 12131/97 37 ATTACHMENT “B” (Schedule and Sizes of Affordable Multifamily Units) H:\...\ContHomes\RanchoCarrillo\Phasel AHA.vOl 12131197 3% , r . C.M I. IY - .._, ” , EXHIBIT . / Oceanside Carl&ad / l!Jsmavion Mapqo L t I I : i ! 1 , # 1 I 1; 1 : a’ i, x. 11 ; . 7’ i I% I 1’ . i 1 :;q ii il EXHlBll