HomeMy WebLinkAbout1998-11-10; City Council; 14936; Poinsettia Gardens Affordable Apartment Projectm
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CITY OF CARLSBAD - AGt;;DA BILL++- p
AB# /h! ci3 6 TITLE: REQUEST FOR APPROVAL OF AN AFFORDABLE DEPT. HD
HOUSING AGREEMENT FOR THE CONSTRUCTION OF 92
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MTG. J/-/O 0 98 AFFORDABLE APARTMENT UNITS IN PLANNING AREA 5 TO c1l-y ATTY.
SATISFY THE INCLUSIONARY HOUSING REQUIREMENTS @T l
DEPT. H/RED FOR THE POINSETTIA PROPERTIES SPECIFIC PLAN
RECOMMENDED ACTION: SbP p-279
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That the City Council ADOPT Resolution No. 48 -37Y to APPROVE an Affordable Housing Agreement
for the construction of 92 Affordable Apartment Units in Planning Area 5 to satisfy the lnclusionary
Housing requirements for the Poinsettia Properties Specific Plan.
ITEM EXPLANATION:
On January 20, 1998, the City Council approved the Poinsettia Properties Specific Plan (SP210). The
Plan allows for the development of a total of 617 residential units and a commercial/retail development.
To satisfy the inclusionary housing requirement for the Master Plan, a 92 unit affordable apartment
project within Planning Area 5 is proposed. While second dwelling units may be developed within the
Master Plan, they will not be utilized for inclusionary housing purposes. Also, the commercial/retail area
in Planning Area 6 has the flexibility to include residential units. If Planning Area 6 is ultimately approved
as a mixed-use development, it will be subject to a separate Site Development Plan and Affordable
Housing Agreement.
Site Development Plan for Poinsettia Properties
It has been past policy that when an Affordable Housing Agreement is presented to the City Council for
approval, there is also a corresponding approved Site Development Plan (SDP), or a SDP which has
been recommended for approval . The SDP provides the details of the Affordable Housing Project as
related to unit floor plans, bedroom size, design, parking, etc. Planning staff has not yet completed its
processing of the subject SDP and, therefore, has not provided a formal recommendation to the Planning
Commission for approval. However, staff did not believe that any of the remaining issues will prevent the
developer from receiving a recommendation for approval for the proposed SDP. Therefore, in order to
allow the developer to proceed with obtaining their financing commitments for the project, staff agreed to
process the Affordable Housing Agreement for approval with the proposed SDP. The plan modifications
are nearly complete and staff anticipates that the project will be presented to the Planning Commission
for consideration by the end of January, 1999.
I Affordable Housing Agreement for Poinsettia Properties
The Affordable Housing Agreement, together with the SDP, includes specific information on how the
affordable housing is to be provided and the timing for its construction as related to market rate
development. The lnclusionary Housing Ordinance authorizes the Community Development Director to
execute affordable housing agreements. The Community Development Director, however, will not
execute agreements which represent a change in policy direction previously approved by the City
Council. Due to the fact that the proposed Agreement between the City and the developer of Poinsettia
Properties as recommended for approval by the Housing Commission represents a change in policy, the
Agreement is being forwarded to the City Council for consideration and final action.
AB# 14,936 r _
Page 2 I
The Affordable Housing Agreement drafted by staff, and recommended for approval by the Housing
Policy (Staff Team), included a phasing plan for construction of the affordable housing units which is
consistent with other agreements recently approved by the City Council, such as those for the Ranch0
Carrillo Master Plan and the Kelly Ranch project. The lnclusionary Housing Ordinance requires that
affordable housing units be constructed concurrent with the market rate development. In theory, this
means that for every 7 units of market rate development, the developer should produce 1 unit of
affordable housing. In more practical terms, staff has developed a policy position which has been
approved by the City Council which allows for a three phase approach to development of market rate
units as related to the start and finish of the affordable housing units. This means that building permits
for market rate units are based on the completion of certain actions related to construction of the
affordable housing units. The Developer disagrees with staff and believes that once the developer has
provided the land and any agreed upon cash contribution, and the construction financing is in place for
the affordable housing units, then all building permits should be released for the market rate units. Staffs
recommendation along with the Developer’s requested modifications are outlined in further detail below.
Except for the proposed phasing plan, the draft Affordable Housing Agreement as prepared by staff was
acceptable to the developer and the Housing Commission.
Phasing Plan for Affordable Housing Anreement
Under Staffs recommendation, building permits can be released for a total of 230 market rate units and
92 affordable units upon approval of the affordable housing agreement, approval of the SDP and
recordation of the Final Map. Once building permits have been issued and the foundations for 92
apartment units are complete, inspected and approved, another 149 building permits for market rate
units can be released. Finally, upon final Certificate of Occupancy on a total of 92 affordable units, the
remaining 146 building permits would be released for market rate housing within Poinsettia Properties. It
is staffs position that the “three phase” release of building permits provides adequate assurances that
the affordable housing project will be completed prior to construction of all of the market rate units. This
is the same type of construction phasing schedule that has been approved by the Council for Ranch0
Carrillo and Kelly Ranch. Exhibit 2 provides a summary of the phasing plan as proposed by staff.
Under the Developer’s proposed phasing plan, building permits can be released for a total of 230 market
rate units and 92 affordable units upon approval of the affordable housing agreement, approval of the
SDP and recordation of the final map. This is the same as staffs recommendation. Once ownership of
the property is transferred to Bridge Housing (affordable housing developer) or the City, the Developer
has provided their financial assistance ($900,000) to the project, and Bridge Housing has recorded a
construction loan for the affordable housing units, then all remaining market rate building permits would
be released by the City. Exhibit 3 provides a summary of the phasing plan as proposed by the
Developer. The Developer’s proposal is different from staffs recommendation in that it does not require
construction to begin on the affordable housing units before additional units are released for market rate
unit development. It also has no requirement to hold a portion of the building permits for market rate
development until the affordable housing units are complete. The Developer’s proposal could
theoretically result in the construction of all of the market rate units before construction begins or is
complete on the affordable housing units.
The modifications to the phasing plan have been requested because the developer believes that the staff
recommended phasing schedule may make the overall development of the Poinsettia Properties Specific
Plan Area difficult to finance and is unnecessarily restrictive. To date, the Ranch0 Carrillo and Kelly
Ranch developers have made no indications that they have had any difficulty in obtaining financing for
their projects as a result of the staff proposed phasing plan. Therefore, staff is unable to confirm that the
developer’s financing concern is valid. The other developers have agreed, however, that the staff
recommended phasing plans are unnecessarily restrictive.
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AB# ) 4;936
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Housing Commission Recommendation
On August 27, 1998, the Housing Commission reviewed the Affordable Housing Agreement
recommended by staff and considered the developer’s request for modifications to the proposed phasing
plan. The Commission took action on August 27’h to recommend approval of the Affordable Housing
Agreement with the phasing plan modifications requested by the Developer as outlined above. The
Commission took action to recommend approval of the Agreement with the understanding that the final
SDP would be returned to them at a later date for review.
Policv Resolution and Staff Recommendation
As a result of prior Council approval of the agreements with Ranch0 Carrillo and Kelly Ranch, an
important policy decision was made as to the need for restrictive phasing standards to ensure that
affordable housing was constructed along with, not behind, the market rate development. The Council
has indicated previously that the affordable housing needs to be complete before all of the market rate
units are built. The only method available for the City to control the construction of the market rate units
is to control the release of the related building permits. Therefore, staff developed the three phase
approach to release of building permits for market rate units. If the Agreement with Poinsettia Properties
is approved as requested by the Developer and recommended for approval by the Housing Commission,
it would be inconsistent with the previous policy decision and would most likely result in a need to re-
negotiate the agreements with the developers of Ranch0 Carrillo and Kelly Ranch.
The Housing Commission’s recommendation is presented for consideration by the City Council.
However, in light of the fact that approval of the Developer’s request and the Housing Commission’s
recommendation would be inconsistent with the phasing policy set forth by the City Council, staff is
recommending that the Affordable Housing Agreement for the Poinsettia Properties Specific Plan be
approved as originally recommended by staff (see Exhibit 6). No action is requested at this time on the
proposed SDP. The SDP will be presented at a later date for approval.
ENVIRONMENTAL REVIEW:
An Environmental Impact Report was approved by the City Council for the entire Master
20, 1998 (EIR 96-01). No further environmental review is required as part of the
Affordable Housing Agreement
FISCAL IMPACT:
Plan on January
approval of the
No fiscal impact is anticipated as a result of approval of the Affordable Housing Agreement.
EXHIBITS:
1. City Council Resolution No. 9 8 -3 7 4
2. Phasing Plan Summary Chart (Staff Recommended)
3. Phasing Plan Summary Chart (Developer & Housing Commission Recommended)
4. Housing Commission Staff Report dated, August 27, 1998
5. Excerpts of Housing Commission Minutes dated, August 27, 1998
6. Affordable Housing Agreement (Staff Recommended)
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CITY COUNCIL RESOLUTION NO. 98-374 /
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
CARLSBAD, CALIFORNIA, TO
AFFORDABLE HOUSING AGREEMENT FOR
CONSTRUCTION OF 92 AFFORDABLE
UNITS IN PLANNING AREA 5 TO S
INCLUSIONARY HOUSING REQUIREMENT
POINSETTIA PROPERTIES SPECIFIC PLAN
APPLICANT: HSL\BP\MAGELLAN, L.
WHEREAS, HSL/BP/Magellan, L.L.C, is the devel
Plan, and,
of the Poinsettia Properties Specific
WHEREAS, the developer is seeking appr to develop 617 residential units within the
WHEREAS, the de esidential units will require the development of 92
residential units affordable ouseholds as required by Carlsbad Municipal Code
Chapter 21.85 of the City ousing Ordinance; and
icipal Code Chapter 2 1.85 requires the developer of a residential
al of an Affordable Housing Agreement which details how the
onary Housing Ordinance shall be met; and
the developer is processing a Site Development Plan which proposes to
ent units affordable to lower income households as a means to satisfy their
WHEREAS, said City of Carlsbad Housing Commission did, on the 27th day of August, 1998,
meeting to consider approval of the Affordable Housing Agreement for the
Poinsettia Properties Specific Plan; and
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CC RESO. NO.
Page 2
WHEREAS, at said special pu
of all persons desiring to be heard, s
developer’s request and approved said
g all testimony, if any,
factors relating to the
WHEREAS, the City Council did hold a public meeti
approve the Affordable Housing Agreement; and
WHEREAS, at said public m
persons designing to be heard, said
request for financial assist
NOW, THEREF
Carlsbad, California, as fo
developer’s request to
stimony, if any, of all
the application and
ncil of the City of
1. The above recr tron are true and correct. %a. s/
units which will be rented at levels
The project, therefore, has the ability to
and priorities as expressed in the Housing
based on the information provided within the City Council and Housing
Staff Reports, the testimony presented during the public meeting of the
ity Council and Housing Commission and the Conditions of Approval contained
herein, the City Council hereby APPROVES the Affordable Housing Agreement as
recommended by staff to allow for the development of a 92 unit apartment project
within the Poinsettia Properties Specific Plan to satisfy the developer’s obligation
under the City’s Inclusionary Housing Ordinance.
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CC RESO. NO. /
PAGE 3 /
/j
5. That the City Council authorizes that the Community Develdment Director or the
City Manager to execute the Affordable Housing Agreement, substantially the form
presented to City Council and attached hereto, and approval by the
City Attorney.
PASSED, APPROVED, AND ADOPTED meeting of the City
Council of the City of Carlsbad, California, held on the - day of , 1998, by the
following vote, to wit:
i’ AYES: ; / : NOES:
ATTEST:
CLAUDE A. LEWIS, Mayor
Z, City Clerk
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. ,- EXHIBIT 2
POINSETTIA PROPEl? I rES -AFFORDABLE HOUSING AGKEEMENT
PHASING FOR CONSTRUCTION OF UNITS - STAFF RECOMMENDATION
Development Plan by City
Council & record Affordable
Housing Agreement, as
approved by City Council.
Final maps will allow for a
total of 617 units only.
Building Permits will be
used for development of
Planning Areas 5, 7 & 8. A
total of 322 building permits
could be issued at this point
and approved for 92 apartment
units.
units under construction
which represents 61% of
the total # of units w/in the
project. The market rate
units will be single family
must be issued for 92 rental
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POINSETTIA PROPER I IES -AFFORDABLE HOUSING AGt-tEEMENT EXHIBIT 3
PHASING FOR CONSTRUCTION OF UNITS - DEVELOPER PROPOSAL
Action Required/
Phasing
Receive Approval of a Site
Development Plan by City
Council & record Affordable
Housing Agreement, as
approved by City Council.
Transfer of property ownership
to Bridge Housing Corporation
or City of Carlsbad, payment of
$900,000 developer subsidy,
and recordation of construction
loan for affordable housing
oroiect.
Total
# of Building
Permits & Type
Released
230
market rate
building permits
and
92
affordable
building permits
All remaining
(295) market rate
building permits
617 units
% of Total
Permits for
Project
37%
15%
48%
Comments
Same as Staffs Proposal.
No requirement to have
affordable units under
construction or completed
before 2”d and final release
of building permits.
8
. -EXHIBIT 4 Lp SQ
The City of’Carlsbad Housing & Redevelopment Department
AmF’ORT TO THE
HOUS1Ne C-tiMMXSSXON “9
Staff: Craig Rukz
;lp Mana@sament Analymt
Xtem No. 2
DATE: AUGUST 27,1998
SUBJECT: POINSETTIA PROPERTIES - REQUEST FOR RECOMMENDATION
OF APPROVAL TO THE CITY COUNCIL OF AN AFFORDABLE
HOUSING AGREEMENT AND SITE DEVELOPMENT PLAN FOR
THE CONSTRUCTION OF 92 AFFORDABLE APARTMENT UNITS
IN PLANNING AREA 5 TO SATISFY THE INCLUSIONARY
HOUSING REQUIREMENTS THE POINSETTIA PROPERTIES
SPECIFIC PLAN
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 98-012, recommending that the City
Council APPROVE an Affordable Housing Agreement and Site Development Plan for the
construction of 92 affordable apartment units in Planning Area 5 to satisfy the inclusionary
housing requirements for the Poinsettia Properties Specific Plan
II. PROTECT BACKGROUND
The purpose of the Poinsettia Properties Specific Plan is to guide the orderly development of
the property while preserving and enhancing the site’s unique amenities. For planning
purposes, the Poinsettia Properties Specific Plan is divided into 8 individual residential, non-
residential and open space areas (Planning Areas). The Specific Plan defines the allowable type
and intensity of land uses in each Planning Area and provides general development and design
standards, requirements, and the method by which the Poinsettia Properties Specific Plan will
be implemented
The Poinsettia Properties Specific Plan was previously reviewed by the Housing Commission
on October 21,1997. At that time, the Commission reviewed the affordable housing component
of the Plan, which included a total of 857 residential units. The proposal was to satisfy the
project’s inclusionary housing obligation by providing 152 affordable units in a combination of
second dwelling units, an apartment complex, and a potential mixed-use (1st floor commercial
and second floor residential) development.
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 2
On January 20, 1998, the City Council approved the Specific Plan to include a total of 669
residential units. With the reduction in total dwelling units, the affordable housing
requirement was reduced accordingly. The project now consists of a 92 unit affordable
apartment project within Planning Area 5 of the Specific Plan. Any second dwelling units
within the Project will not be utilized for inclusionary housing purposes. If the commercial
development in Pl anning Area 6 is constructed with residential units, 15% of those units will be
required to be affordable to low income households. Further, the mixed-use development will
be the subject of a separate Site Development Plan and Affordable Housing Agreement.
Pursuant to the City’s Inclusionary Housing Ordinance, 15% of the base dwelling units in the
Specific Plan must be provided for lower income households. The Affordable Housing
Agreement for the Poinsettia Properties Specific Plan establishes the phasing and development
of the inclusionary housing for the Specific Plan pursuant to Chapter 21.85 of the City of
Carlsbad Zoning Ordinance. The applicant is currently processing a site development plan (98-
09) for the development of a 92 unit affordable apartment project which will ensure the
development is consistent with the applicable affordable housing agreement.
III. PROTECT DESCRIPTION
A. Location
The Specific Plan is located generally on the easterly side of Avenida Encinas, north of
Poinsettia Lane and west of Carlsbad band west of Carlsbad Boulevard. The affordable
units will be located in the northeast corner of the Specific Plan (See Exhibit 3).
B. Unit Mix
The proposed 92 unit affordable apartment project consists of seven separate residential
structures. The proposed development includes 36 one bedroom (39%), 44 two
bedroom (48%) and 12 three bedroom units (13%).
C. Other Features and Amenities
Within each unit, hook-ups for a washer and dryer will be provided. Also, the project
will feature an approximately 2,500 square foot community building, community
laundry facilities; a “tot-lot” with playground equipment; a swimming pool; a private
pedestrian trail system and 267 parking spaces.
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 3
IV. DEVELOPMENT TEAM
-’
The Specific Developer for the Specific Plan has ztained Bridge Housing Corporation
(Bridge) to develop the affordable housing project. Bridge has developed and managed
numerous affordable housing projects throughout the United States. Bridge has
previous experience in the City of Carlsbad, having developed the highly successful 344
unit Villa Loma affordable apartment project. The Architect for the project is Brad
Burke of Studio E Architects. The architect has designed several award winning
projects throughout the State,
V. SITE
A. Site Control
The site is currently owned by the partnership which is developing the Poinsettia
Properties Specific Plan. The site will be contributed to the Bridge as part of the
financial contribution to the affordable project by the master developer.
B. Land Cost
The site is currently valued at approximately $2.9 million. The cost of the land will be
verified through an appraisal at a later date.
C. Site Characteristics
The entire Specific Plan area is currently vacant. Surrounding land uses include a
mobile home park to the south, a car dealership, office uses and motels to the west, the
Poinsettia Transit Station, a mobile home park and South Carlsbad State Beach to the
west, and vacant land to the north.
The proposed Specific plan is considered to be a transient orientated design. By this, it
is intended that all residents of the Specific Plan will be able to take advantage of the
close proximity to mass transit (bus and rail) and retail businesses, and automobile trips
will be reduced.
II
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 4
VI. A ABILITY
+ A. Rent and Income Levels
Bridge Housing Corporation has elected to restrict the rent levels to all 92 affordable
units to households with incomes not exceeding 60% of the area median (AMI). The
affordable project will be financed in part through the use of tax credit bond issuance.
The affordability requirements of the Tax Credit Allocation Committee (TCAC), which
regulates tax credit bonds, are more stringent than the City’s Inclusionary Housing
Ordinance. TCAC requires that 20% of the units be restricted to 50% of AMI, a 40% of
the units be restricted to at 60% of AMI, and the remaining units be restricted at 80% of
AMI. Therefore, the project will ultimately be much more affordable than either the
requirements of the City’s Inclusionary Housing Ordinance or TCAC.
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.
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 proposed project meets the priorities, goals and objectives of the City for affordable
housing.
VII. CONSTRUCTION PHASING
The attached Affordable Housing Agreement has been drafted such that once the developer
receives approval of the Affordable Housing Agreement and Site Development Plan the
developer will be allowed to proceed with construction of 230 market rate housing units. The
230 market rate units represent 44% of the total number of market rate units (525) permitted to
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 5
be constructed within the project as part of this agreement. This agreement does not
include the market rate or affordable housing units related to Planning AreG 6.
Therefore, the total number of housing units covered by the attached affordable housing
agreement is 617-525 market rate and 92 affordable.
After the 230th market rate 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 of the
foundations are complete for 92 apartment units. After construction begins on the
affordable housing units, builders will be permitted to obtain building permits for an
additional 149 market rate housing units before construction must be compIete on the
affordable housing project. The total number of building permits that may be issued
before construction must be complete on the affordable housing project is 379, which
represents 72% of the total number of market rate units permitted within the
development and covered by this agreement.
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 146
market rate units (28% of total market rate units).
The construction phasing noted above allows the developer 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 Affordable Housing Agreement is also consistent with the inclusionary
housing ordinance which requires concxrrenf construction of the affordable housing
units.
VIII. ENTITLEMENTS
The Specific Plan for the Poinsettia Properties development was approved by the City Council
on January 20,1998. Subsequent to the Council’s action, the project was approved, with minor
modifications by the California Coastal Commission. The minor modifications must be
approved by the Planning Commission and the City Council. The Planning Commission is
scheduled to hear the amendments at their September 19,1998 meeting. The Council will hear
the matter shortly thereafter. Future approval of the site development plan for this affordable
apartment project 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 (92 units) is attached for review
.
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 6
by the Housing Commission at this time. S recommending that the Housing Commission
recommend approval of the Site,Development Plan to the City Council.
IX. ON-GOING REQUIREMENTS 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.
X. 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 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. The developer
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 is a separate issue which will be
addressed at a future date with the affordable housing developer, Bridge Housing
Corporation . Any conditions of financial assistance provided to the affordable housing
developer will be set forth in a separate agreement.
POINSETTIA PROPERTIES
AUGUST 27,1998
PAGE 7
Staff is recommending approval of the proposed affordable housing project, as
presented, to satisfy the inclusionary housing obligation of the Specific Plan developer,
HSL/ BP/ Magellan, LLC. As required by the Inclusionary Housing Ordinance, the
developer and the City must enter into an Affordable Housing Agreement prior to
recordation of a final map for development within the Poinsettia Properties Specific lan.
As mentioned previously, the Affordable Housing Agreement presented for review and
a 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 Poinsettia Properties affordable housing project and the
related affordable housing agreement, in substantially the form presented at this time,.
XI. EXHIBITS
1. Housing Commission Resolution No. 98-012
2. Draft Affordable Housing Agreement
3. Vicinity Map/Planning Area Map
4. Reduced Plan Exhibits
5. Full-Size Plan Exhibits
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HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 2
EXHIBIT 5
nits were being purchased.
Commissioner Scarpelli d, that the Housing Commission
nding that the City Council APPROVE a request
sing Credits in the Villa Loma apartment
2. SDP 98-09 POINSETTIA PROPERTIES - REQUEST FOR RECOMMENDATION OF APPROVAL OF AN
AFFORDABLE HOUSING AGREEMENT AND SITE DEVELOPMENT PLAN FOR CONSTRUCTION
OF 92 AFFORDABLE APARTMENT UNITS TO SATISFY THE INCLUSIONARY HOUSING
REQUIREMENT.
Debbie Fountain reviewed the background of the request and stated that the Housing Commission reviewed the specific
plan for the Poinsettia Properties project in October 1997. At that time, the original plan included 1,009 units, including
152 affordable units., In January 1998, the plan went to the City Council and was approved with a requirement to reduce
the total number of units, which the applicant has done. Approximately 823 units total were approved with 123 of those
units being affordable.
Ms. Fountain explained that the request is for a total of 617 units with an affordable housing requirement of 92 units.
The 92 units are proposed in an apartment project within Planning Area 5, which is at Avenida Encinas (see Exhibit 3).
Ms. Fountain stated the apartment project will consist of seven separate residential structures with 36 one-bedroom, 44
two-bedroom, and 12 three-bedroom units. Amenities include washer and dryer hook-ups in each unit; a 2,500 sq. ft.
community building; tot lot with playground equipment; swimming pool; private pedestrian trail system; and 192
parking spaces, which meets the standards required for the project. All units are proposed to be affordable to households
at 60% of area median income. This is more affordable than required by the Inclusionary Housing Ordinance, which
requires them to be affordable at 80% of area median income, she said.
This project is going to be owned and operated by Bridge Housing Corporation, and will be financed through a private
bond (Bank of America) and tax credits, she said.
Ms. Fountain explained that the major issue of the Affordable Housing Agreement is the construction phasing. This is
the only issue where the Staff recommendation and the developer recommendation are different. She said that once the
developer receives approval of the Affordable Housing Agreement and Site Development Plan, they will be allowed to
proceed with 230 building permits for the market rate units. After construction begins on the affordable housing units,
builders will be allowed to obtain an additional 149 building permits released for the market rate units. After final
inspection or Certificate of Occupancy is issued for the affordable project, the remaining 146 permits will be released
for the market rate units.
Staff believes that the phasing plan set forth within the Affordable Housing Agreement is also consistent with the
Inclusionary Housing Ordinance which ;equires concurrent construction of the affordable housing units.
23
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 3
Ms. Fountain explained that the worst situation would be that for each six market rate units, the developer has to build
one apartment unit, which is not realistic in terms of building an entire apartment project. Staff has tried to come up with
another phasing plan that allows the developer to get a certain number of market rate units before they have to start the
affordable, get the affordable going, then another set of building permits would be released. Once the affordable is
complete, they would receive their final release.
Ms. Fountain addressed the developer’s proposal, stating that at approval of the Affordable Housing Agreement and the
Site Development Plan, 230 building permits would be released for market rate units, which is the same as Staffs
recommendation. The difference is that once they transfer the affordable housing site to the City or Bridge (proposed
affordable housing developer), they pay $900,000 in a subsidy and Bridge Housing records a construction loan for the
affordable project; then all of the remaining building permits would be released for the market rate units up to 525 units.
Ms. Fountain stated that there are a few.changes that need to be made to the language in the Agreement. A copy of the
revised Agreement was submitted as Exhibit 2.
Ms. Fountain said that the number 669 needs to be changed to 617 in Paragraph B on the first page of the Agreement.
Paragraph C states 52 market rate apartments and then 9 affordable, but Staff would like to just include the total number
in Planning Area 6. The reason for calling it out separately, is that it has already been decided that it would come under
a separate agreement that the developer would negotiate later when they were ready to move forward, and the proposal
is that they would have commercial below and residential above.
There is a sentence to be added at the end which will state: “In addition, the developer shall be required to process an
amendment to this Agreement to increase the total number of housing units which can receive final map approval up to
the maximum approved by the City Council of 823 units for the Poinsettia Properties Specific Plan.” The reason for this
is to recognize that they do have an approval for a larger number of units on the site, and if they want to get to that
number they will have to come back and amend the Agreement.
On page 2, there is another sentence that has been added, stating that if for some reason it is determined at a later date
that this project actually provides surplus units, then those could be used to meet an obligation like Planning Area 6.
In Condition 1 on page 2, where it talks about satisfaction of affordable housing obligations, Staff has added some
language that states what these affordable housing units are being used to satisfy, which is the obligation for Poinsettia
Properties. The Agreement is clear as to what Staff is talking about in terms of 525 market rate units and 92 affordable.
These changes are basically clarification statements, Ms. Fountain said.
Staff added clarifying statements as to how these apply in terms of final maps, and basically leaving it up to the
developer’s discretion to determine which planning areas are going to move forward first with building permits. This is
just general language restating what the numbers are, she said.
Chairperson Wellman opened the item for discussion among the Commission members.
Commissioner Scarpelli addressed Staff regarding their recommendation vs. developer’s recommendation to verify the
designated area being Area 5 for all of the affordable units.
Ms. Fountain stated that the developers might potentially have some affordable units in Planning Area 6 as well.
Commissioner Scarpelli asked if 92 is the total number of affordable required.
Ms. Fountain stated it would not be the total number if they did 823 units, where they would actually need 123
affordable units. With this agreement, Staff is allowing them to do a maximum of 6 17 units, which would meet the
requirement and they would develop all the units in Planning Area 5.
+
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 4
Commissioner Latas asked for an explanation of the statement “the income shall not exceed l/12 of 30% of 80%” which
appears on page 2 of the Agreement, Paragraph 3.3 Affordabilitv Reuuirements.
Ms. Fountain stated that from the gross household income, the monthly expenses should not exceed 30% of 80%. The
1112 is the annual gross household income, divided by 12, which is the 30% of the monthly income that is considered
affordable.
Commissioner Latas asked Bobbi Nunn the percentage of a median income for a Section 8 family of two.
Ms. Nunn stated they are under 50% of the median income to initially get on the program.
Commissioner Calverley referred to the 30% of the 80% and stated that she finds it too stringent and feels it should be
raised, because the normal person would not qualify under these conditions.
Commissioner Scarpelli stated that in the underwriting it would be 33% of lOO%, which would only include principal,
interest, taxes, and insurance. He asked for clarification on the 30%, making sure the qualification was for the housing
expense, not the total expense.
Ms. Fountain explained for a rental it would include rent payment and utilities. If it were a for-sale product, it would
include a homeowner association fee, interest, and payment (total housing expense). Ms. Fountain stated that the 30% is
State-regulated.
Commissioner Calverley asked if there was any way to give some leeway.
Ms. Fountain stated that it would be a legal issue that could be processed for the Commission if so desired by the
Commission.
Lydia Tan, Bridge Housing, San Francisco, explained that the rent the landlord can charge cannot exceed 30% of 80%
of median income. This allows a resident to have a set low rental payment so they have enough money to spend on other
things. As a matter of policy, Bridge allows residents to pay up to 35% of their income to live in the property, even
though the rent is set up at 30%; therefore, they are able to reach lower income levels with this policy.
Commissioner Scarpelli expressed his concern that there is a limit to how much one can earn to qualify for affordable
housing, and asked about Bridge’s formula.
Ms. Tan replied that their formula is 80% of median income. The maximum income and maximum rent are the two
things to look at, she said. The Agreement states that maximum income is 80% of median income, and the maximum
rent the landlord can charge is based on 30% of 80% of median income.
Ms. Fountain said for a one-bedroom unit, based on a two-person household, the maximum annual income would be
$32,500. The maximum monthly income would be $2,708. The maximum rent that could be charged based on that 30%
figure would be $8 13. An utility allowance is also taken out, so the actual rent would be set at $797, and be capped at
$797. There may be someone who may have to pay 35% of their income for rent, but they are helped because there is a
cap on what the total rent is and what the 35% of income would get them in terms of the unit.
Commissioner Wellman asked what their target is.
Ms. Fountain replied that their target is 60%.
T-5
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 5
Commissioner Wellman asked about the breakdown of one, two, and three bedroom units; where these units are being
plugged in; and if existing needs are being met, or if there a surplus in any of those categories.
Ms. Fountain showed a chart exhibiting the City’s needs. She said that 51-80% is considered low income; therefore, the
60% falls into the low-income category, making it more affordable than what the Inclusionary Housing Ordinance
requires.
Commissioner Latas asked why the Agreement states l/12 of 30% of 80% rather than 60% of median income.
Ms. Fountain explained that Staff usually puts the actual requirement into the Affordable Housing Agreement, which the
Inclusionary Housing Ordinance says is 80%. Usually if Staff puts financial assistance into a project, then they get
specific on what affordability levels they are expecting for that assistance. Basically, the policy has been that unless you
are going below 80%, they are not going to provide financial assistance or recommend assistance, so the developer
would have to go lower. Staff would put in the Financial Assistance Agreement that they are going lower. This leaves
them some flexibility. At a later date, if for some reason this project does not work out, this basically outlines what the
requirement is, but they could come in at a later date with a regulatory agreement that would pin that down to the 60%.
Commissioner Scarpelli asked if this would allow assistance to Section 8 recipients.
Ms. Nunn explained it would provide more units within Carlsbad that would meet the program requirements on the rent
structure for Section 8.
Ms. Fountain stated that it makes more units available that could participate in the program. There are still a limited
number of certificates and vouchers, but this makes more units available in Carlsbad. With a project that is proposing to
have 100% of the units at 60%, it definitely helps provide additional units, she said.
Commissioner Scarpelli asked if the developer has offered the 60% to assist the City in providing more Section 8
availability.
Ms. Fountain commented that they did not come to this 60% to help the Section 8 specifically, but it definitely provides
a need.
Chairperson Wellman invited the applicant to speak.
Doug Avis, BenchMark Pacific, 5055 Avenida Encinas, Suite 210, Carlsbad, CA 92008, addressed the Commission and
described the nature of the Poinsettia Properties project. The project will create some affordable housing opportunities,
both market and subsidized. The product has three product types that are being developed ranging from 1,150 to 2,500
sq. ft., and the goal is to stay down into the $200,000 area. It is really a beach cottage community and the nature of the
architecture of the affordable housing project blends in with that. The principal building is the two-story building. The
idea of the project is to get garages off the street, with buildings on the outside and parking on the inside, and front doors
and porches on the street.
Mr. Avis explained that they have put together a team which includes Bridge Housing, starting four to five years ago,
having worked consistently with Bridge all along. Eventually the property and development will be handed over to
Bridge, including ownership of the land at the point that it is fully approved and fully financed. The affordable project
needs to be ahead of the market project because it has to be proven that it is indeed an affordable housing project to get
the market rate units released.
Mr. Avis pointed out that there has been a desire in the past to separate the affordable housing, either off-site, in another
part of the community, or in another corner of the project. The developer has purposely tried not to do that by making
the affordable project part of the complete project. This is important, according to Mr. Avis, because the transit station,
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 6
which is just a short walk away, will target people who can work in Old Town, Sorrento Valley, and local golf
manufacturers, giving them an opportunity to have a viable life without owning an automobile. One can walk a block to
the beach from this site or to the Ralph’s shopping center. One can get on the train and virtually get anywhere in
southern California very easily, he added. All of this leads to the opportunity of incorporating the affordable within the
project, as opposed to sticking it somewhere else and hiding it.
Mr. Avis described the two issues they have with the Agreement. The first being a minor issue, is that the developers
would like the Housing Commission to give consideration to the idea that if the developer ends up with excess units, that
those excess affordable units be allowed to mitigate Planning Area 6.
Mr. Avis said that the second issue relates to the releases. He explained that he worked with the Laurel Tree project
when they were managing the project for the Kaiser project. He explained how the process developed and stated that as
the tax credit requirements changed and the 9% credits got much tougher, it took about a year for that project to get
going. Mr. Avis stated that this projectis a 4% tax credit and not a 9% tax credit. He said the developer is “being held
hostage” under Staffs recommendation of waiting until the units have the Certificate of Occupancy because the
developers will have to go to their lenders to borrow money for curbs, gutters, streets, etc. The lender would then need
to know if the developer is in control of those things, and their response would be that they have no control over them.
He said that if they cannot get all their units out, they may not get the first one out. What that means is that the project
may not start until they get through the Certificates of Occupancy. In fact, the opportunity to be able to release the land
and come up with a million dollars may not happen, he said. This causes a logjam of progress.
Mr. Avis asked the Commission to give consideration to releasing the 230 units at the time that the Agreement is signed
and the Site Development Plan is approved by the City Council. Once they stick the deed to the property with their
check for the subsidy of the project, the balance of the units then would be released.
The other point is the release of the first 230 units. For a couple of business reasons, they had originally planned those
to be in area B and C, which is Planning Areas 7 and 8, rather than being at the developer’s discretion. The properties
have since been sold to Shea and Magellan. This was how it was originally, and they are asking it go back to that again.
Chairperson Wellman opened the item for discussion among the Commission members.
Mr. Avis added that he believes the numbers are wrong on the handout Ms. Fountain gave him, explaining that he took
the total number of units and multiplied it by 15% and he came up with 82 units. He believes the 230 is actually 232 in
the original schedule.
Ms. Fountain explained that she used the number 617, and 15% of that is 92. What is important to Staff is how many
are being released at any given time, so the percentages are the key points, and if that works out to different numbers,
then those numbers can be adjusted.
Mr. Avis commented that if the City wanted to, they could escrow the deed and escrow the money as well.
Chairperson Wellman stated there is a requirement for concurrent building of the affordable project and asked when the
affordable project would be built.
Mr. Avis explained that the definition of concurrent could be a lot of things. And it has already been determined that
concurrent was sticking the money and the deed in.
Mr. Avis said that Bridge is going to start with the affordable. They are going to give Bridge the deed and $1 million
which is the subsidy, and then Bridge owns the property. Construction should start in April or May. The conditions of
the project and the Site Development Plan allow the affordable housing project to be built on its own. It does not have
to be tied to the other drainage facilities in all of Avenida Encinas. The reason for that is that they want it to be ahead of
2-l
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 7
the balance of the project. He feels they have met their commitment to that project by putting the land and the money
into the deal.
John Gamlin, Vice President of Planning Development, Magellan Corporation, owner of Parcel B, stated that they were
the owner until about one week ago. They sold that property to Shea, and Paul Barns is present from Shea. Mr. Gamlin
wanted to echo his agreement with Mr. Avis’ requests relative to the release of Parcels B and C.
Commissioner Scarpelli stated that this disagreement appears to be the actual building of the affordable housing and it
appears from what he just heard that it is really going to be whether or not they get the 4% tax credits in November or
January. It would appear that the City’s problem is whether the tax credits will be available and whether construction
can start as immediately as possible.
Ms. Tan responded that nothing is guaranteed; but given the Laurel Tree experience, they have designed a financing plan
that does not rely on 9% tax credits. What they are actually doing is going in November for an allocation of bond
authority. Once you have an allocation of bond authority, you automatically qualify for 4% tax credits, she said. Multi-
family housing is the number one priority for allocating bond authority in the state, she said. The first round of bond
authority for 1999 applications is due in November and is scheduled to be allocated in January. Once that happens, they
will process an application for tax credits, which is automatic; and they will be issuing bonds in April, which means they
will need to start construction right away.
Commissioner Scarpelli asked if the 60% of median consideration was made to help assure getting the bond authority.
Ms. Tan stated that it would help; however, there is no point system in allocating bonds. There is stated in the allocation
plan a preference and priority for affordability. Bond authority for multi-family housing can be given to market-rate
projects, down to affordable projects in terms of affordability. Having 100% affordable and 60% median income will
help, she said.
Commissioner Scarpelli asked if they will accomplish bond authority issuance in January.
Ms. Tan replied that she feels good about it, and that the office of State Treasury is up for election in November. The
existing Treasurer is running for Senate; therefore, there will be a new State Treasurer. The State Treasurer oversees
both the bond allocation and the tax credit allocation process, she said. The new State Treasurer may want to take a
look at the process for allocating bond authority. There is intense pressure to make sure the bond authority allocation
process is a regular process and it usually happens every quarter.
Chairperson Wellman asked if there is a lottery combined with that, like there is with a tax credit.
Lydia Tan responded that it is first-come, first-served.
Chairperson Wellman opened discussion among the Commissioners.
Commissioner Noble explained how a Master Plan works.
Chairperson Wellman asked Staff to explain the phasing issue.
Ms. Fountain explained that Staffs logic behind the phasing is trying to control when the affordable housing comes on
line. The problem it causes, is that if the developer has any restrictions on how their building permits can be released,
they may have a problem with the whole project in terms of how they put in improvements, etc. What they are trying to
do, she said, is figure out how many units they can get released to them so they can at least get started on their project to
build some market rate units so there is some money to do the rest of their project, recover their costs for improvement,
or whatever it might be.
t
HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 8
Ms. Fountain explained that Staff has played with the numbers a lot to try to figure out what is appropriate, and this is
similar to what they have done on other projects, such as with Ranch0 Carrillo and Kelly Ranch. The percentages may
be played around with a little, but what Staff tried to do is get whole planning areas or villages that could be released at
one time. Staff changed that structure a little to give the developer more flexibility, but they prefer to have it pinned
down that Planning Areas 7 and 8 are going to go forward with these first set of permits. The developer has already
identified for the Commission that their first set of building permits are going to go to those planning areas. Staffs
concern is that if all the building permits are released for the market rate units, the affordable units may be the last
component to get built; and the concern is then with all these market-rate houses in the area there may be opposition to
the affordable project. What Staff was trying to do is make it more concurrent so that some of the market rate can get
built, then some of the affordable, then the rest of the market rate. Both Mr. Avis and Staff hope that the affordable
units will be built at the beginning of this project.
Ms. Fountain added that Staff is trying to get some concurrency in there so it all moves along together. If the affordable
housing project gets built first, then they will get all of the other units released rather quickly. If there is any hold up in
the financing, that could hold up their building permits, and that is where the real concern is. She added that if the
Commission desires to recommend something different to the City Council, that recommendation would be taken
forward.
Commissioner Latas asked if the Planning Commission has the same kind of ability to govern how the permits are
pulled.
Ms. Fountain responded that the Affordable Housing Agreement goes directly from the Housing Commission to the City
Council; however, the Site Development Plan does go to the Planning Commission.
Commissioner Scarpelli asked if Staff is not quite as confident as the developer that they will achieve the 4% tax credits.
He said that he certainly could empathize with the developer’s point of view in that it is very difficult to get the
financing under the conditions or restrictions that Staff is recommending. As a Commissioner, he cannot see why the
City cannot let them go ahead and be able to move forward on the project if Staff believes that they will get the tax
credits.
Ms. Fountain explained that there are no guarantees of what will happen, but is confident that they will get the credits, so
she does not see much of a concern on the release of the permits. Staffs recommendation gives the City some leverage
to make sure that all of the market rate units do not get built before the affordable housing.
Commissioner Scarpelli stated that it seems to him that they are looking at two pretty hard positions: Staffs
recommendation and the developer’s They are all assuming that the tax credits will be forthcoming, if not in January,
then some time between January and the end of the second quarter of 1999. Commissioner Scarpelli suggested they
come to some middle ground which would indicate, with the approval of the developer, if the tax credits are not
achieved, then they go into a particular formulation,
Commissioner Noble agreed with Commissioner Scarpelli, and referred to the Master Plan Aviara, where a lot of
market-rate homes were built before the first affordable homes. Then the developer got permission to build Villa Loma
off-site. Commissioner Noble pointed out that here is someone who is building 230 homes on-site, and if the bottom fell
out and there was no more money available, no more homes would be built until somebody comes forward and puts in
the number of homes. It may fall on the other developers, but still 15% of all those houses will be built as affordable
units.
There was discussion regarding a consideration to amend Staffs proposal.
c HOUSING COMMISSION MINUTES
AUGUST 27,1998
PAGE 9
Mr, Avis stated that with this condition, they would have difficulty financing their project. The only solution to meet this
condition is to tell Bridge that this is not going to be a tax credit deal, put up $4 million of their own money in land and
dollars, and build the project with a $4 million subsidy at 80% median income and own it as an asset. So the
affordability of the project is lost by stopping the project from the beginning in the financing of it, he said.
Commissioner Scarpelli stated that the project being offered at 60% of median income is extremely important because it
would help the Section 8 housing problem. If the developer moves forward, they might end up with 80% housing.
Commissioner Scarpelli stated he would like to encourage Staff not to approve this resolution as it stands right now.
Commissioner Noble stated that he agreed with Commissioner Scarpelli
ACTION:
VOTE:
AYES:
NOES:
ABSTAIN:
Motion by Commissioner Latas, and duly seconded, that the Housing Commission ADOPT
Resolution No. 98-012, recommending that the City Council APPROVE an Affordable
Housing Agreement and Site Development Plan for the construction of 92 affordable
apartment units in Planning Area 5 to satisfy the Inclusionary Housing requirements for the
Poinsettia Properties Specific Plan.
1-6-O
Wellman
Calverley, Escobedo, Latas, Noble, Scarpelli, Walker
None
There was discussion about requiring Section 8 housing with this project.
ACTION:
VOTE:
AYES:
I
NOES:
ABSTAIN:
Motion by Commissioner Noble, and duly seconded, that the Housing Commission ADOPT
Resolution No. 98-O 12, recommending that the City Council APPROVE an Affordable
Housing Agreement and Site Development Plan for the construction of 92 affordable
apartment units in Planning Area 5 to satisfy the Inclusionary Housing requirements for the
Poinsettia Properties Specific Plan with the developer’s recommendations as described bv
Ms. Fountain during Staffs presentation.
5-2-O
Calverley, Escobedo, Noble, Scarpelli, Walker
Latas, Wellman
None
OF 50 SECOND DWELLING UNITS TO SATISFY THE INC
Debbie Fountain review
with the Continental Ho
not final maps for more t
Development Plans for the rest of their
final maps on 775 units, and a phasing
second dwelling units to satisfy their
March 3, 1998. They have bee ard with financing for that project.
an Agreement developed
City Council that they could
provided additional Site
16 apartment units, with
75 number by adding 50
that original Agreement on
RECORDING REQUESTED BY: EXHIBIT 6
City of Carlsbad
WHEN RECORDED MAIL TO:
City of Carlsbad
City Clerk’s Office
Attn.: City Clerk
1200 Carlsbad Village Drive
Carlsbad, California 92008
(Space above for Recorder’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 (hereinafter referred to as the “City”), and
HSL/BPMagellan, L.L.C. (hereinafter referred to as the “Developer”), is made with reference to
the following:
A. The Developer is the owner of certain real property in the City of
Carlsbad, in the County of San Diego, California (hereinafter referred to as the “Subject
Property”) described in “Attachment A”, which is attached hereto and incorporated herein by this
reference.
B. The Developer wishes to construct a total of 6 17 residential units
(hereinafter referred to as the “Master Development”) on the Subject Property. The City has
approved the Poinsettia Properties Specific Plan (the “Specific Plan”) for the Master
Development. The City issued the approval subject to certain Conditions of Approval, including
a condition requiring at least fifteen percent (15%) of the units in the Master Development to be
affordable housing as required by the City’s Inclusionary Housing Ordinance (CMC Chapter
21.85).
C. The Master Development will consist of 8 individual Planning Areas.
Planning Area six will contain up to 61 apartment (or live/work) units. The inclusionary housing
obligation for Planning Area 6 will be provided entirely within Planning Area 6. The developer
of Planning Area 6 will be required to enter into a separate Affordable Housing Agreement prior
to the issuance of a building permit. In addition, the developer shall be required to process an
amendment to this Agreement to increase the total number of housing units which can receive
final map approval up to the maximum approved by the City Council of 823 units for the
Poinsettia Properties Specific Plan.
D. The Developer has indicated that it intends to meet its inclusionary
housing requirement for Planning Areas 1,2,3,4,5,7 and 8 by constructing, or causing to be
constructed, a minimum of 92 apartment units in Planning Area 5 of the Specific Plan and as
further described in “Attachment C.” If it is determined at a later date that a surplus of units are
provided within the subject affordable housing project within Planning Area 5, the surplus units
may be used at a later date to satisfy the affordable housing obligation for Planning Area 6 or
other Planning Areas within the Poinsettiia Properties Specific Plan Area, subject to approval by
the City of Carlsbad.
E. The Developer is required by the Conditions of Approval to enter into an
Affordable Housing Agreement as required and with the content specified by the City’s
Inclusionary Housing Ordinance, Carlsbad Municipal Code (“CMC”) Chapter 2 1.85). This
Agreement is an Affordable Housing Agreement pursuant to Section 21.85.020(b)(5) of CMC
Chapter 21.85, and shall be executed and recorded 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. Satisfaction of Affordable Housing Obligation and Conditions of ADproval. In
order to satisfy the Conditions of Approval of (SP, CT, etc.), and the requirements of the City’s
Inclusionary Housing Ordinance (CMC Chapter 2 1.85), Developer shall cause a minimum of
ninety-two (92) units of the Master Development to be affordable to lower-income households
(the “Affordable Units”), according to the schedule and terms contained herein. These units shall
satisfl the obligation for a portion of the Poinsettia Properties Specific Plan Area. A total of 525
market rate units and 92 affordable units may be constructed with approval of this agreement. An
amendment to this agreement will be required to receive final map approval for additional
housing units within the Specific Plan Area, above the subject 6 17 total housing units.
2. Number and Type of Affordable Units. Developer shall construct, or cause
to be constructed, on the Subject Property at least ninety-two (92) apartment units (hereinafter
referred to as the “Affordable Multifamily Units”).
3. Terms Governing; Provision of Affordable Multifamily Units
3.1 Location of Multifamily Units. A minimum of ninety-two (92) of the
Affordable Multifamily Units shall be constructed in Planning Area 5 of the Specific Plan.
3.2 Size and Bedroom Count. The Affordable Multifamily Units shall include
one, two, and three bedroom units in the numbers and with the square footage indicated in
“Attachment B” to this Agreement.
3.3 Affordabilitv Reauirements. The Affordable Units shall be available to
households with incomes not exceeding 80% of the median income for San Diego County,
adjusted for actual household size. Monthly Rents of the Affordable Units shall not exceed
142th of 30% of 80% of median income for San Diego County, adjusted for assumed household
size appropriate for the unit. For purposes of this Agreement, “Rent” shall include a utility
allowance as established and adopted by the City of Carlsbad Housing Authority, as well as all
monthly payments made by the tenant to the lessor in connection with use and occupancy of a
32
housing unit and land and facilities associated therewith, including and separately charged fees,
utility charges, or service charges assessed by the lessor and payable by the tenant. 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 upon
request to the City of Carlsbad Housing and Redevelopment Department. With respect to each
Affordable Unit, the affordability requirements of this Section 3.3 shall continue for fifty-five
(55) years from the date of issuance of a Certificate of Occupancy by the City for such unit or
another comparable unit based upon substitution provisions pursuant to the Regulatory
Agreement. The affordability requirements of this Section 3.3 shall be set forth in the
Regulatory Agreement between the Developer or its successor and the City, provided for below,
which shall supersede this Agreement upon recordation of the Regulatory Agreement.
3.4 Affordable Housing Developer. Developer has indicated it will contract
with an affordable housing developer to develop and construct the portion of the Affordable
Multifamily Units to be constructed in Planning Area 5. Developer shall obtain prior City
approval of the affordable housing developer and proposed development agreement for these
units (the “Affordable Housing Development Agreement”) prior to execution.
3.5 Schedule for Developing Affordable Multifamily Units. Developer shall
provide the Affordable Multifamily Units pursuant to the following schedule and as described in
Attachment C:
3.5.1 Prior to the approval of any Final Map for the Master
Development, this Agreement shall be duly executed, and recorded immediately thereafter.
3.5.2 Prior to the issuance of any building permit within the Master
Development, the Developer shall receive approval of a Site Development Plan for all of the
Affordable Multifamily Units included in Planning Area 5.
3.5.3 Prior to the issuance of any building permit within the Master
Development, the Developer shall record an executed Affordable Housing Agreement for the
Affordable Multifamily Units in Planning Area 5, in a form approved by the City.
3.5.4 Developer has indicated it will contract with an affordable housing
developer to develop the Affordable Multifamily Units to be constructed in Planning Area 5.
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.
3.5.5 Upon satisfying the conditions stated in Sections 3.5.1 through
Section 3.5.4, building permits can be released for a total for 230 market rate units and for the 92
unit affordable project.
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3.5.6 Once building permits have been issued and the foundations for the
92 affordable apartment units are complete, inspected and approved, 149 additional building
permits may be released.
3.5.7 Upon final Certificate of Occupancy for a total of 92 affordable
apartment units, the remaining 146 building permits may be released.
4. City Approval of Documents The following documents, to be approved in writing
by the City, shall be used in connection with the rental of Affordable Units.
4.1 A marketing plan consistent with the terms of this Agreement, establishing
the process for seeking selecting and determining the eligibility of tenants of the Affordable
Units.
4.2 Form of Rental Agreement.
4.3 A Property Management Plan.
4.4 A Form of Regulatory Agreement between the Developer of the affordable
project and City (the “Regulatory Agreement”), following the format designated by City.
5. Compliance Reports. Following completion of construction of any of the
Affordable Multifamily Units, a Compliance Report meeting the requirements of Section
21.85.170 of the Inclusionary Ordinance, verifying compliance of all completed 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 some or
all of the 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 portion of the Affordable
Multifamily Units covered by such reports, provided that copies are provided on an annual basis
to the Housing and Redevelopment Director with a third party certification addressed to the City.
6. Release of Subiect Proper@ 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 Subject Property and shall run with and burden the Subject Property until terminated
in accordance with Section 13 hereof. Until portions of the Subject Property are released from
the burdens of this Agreement pursuant to this Section 6, the 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 issuance of certificates of occupancy for all of the Affordable
Multifamily Units, the entire Subject Property, with the exception of Planning Area 5, shall be
released from the burdens of this Agreement. The burdens of this agreement shall remain in full
force and effect and recorded against Planning Area 5or the 55 year duration of this agreement.
7. Default. Failure of the Developer to cure any default in the 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 the nature which cannot be cured
within such ninety (90) day period, the failure of the Developer to commence to cure such default
within the ninety (90) day period or the Developer’s failure to proceed diligently to complete the
cure of such a default within a reasonable time period. but in no event not greater than 180 days,
will constitute a failure to satisfy the Conditions of Approval with respect to the Subject Property
and the requirements of Chapter 2 1.85 of the CMC and the City may exercise any and all
remedies available to it with respect to the Developer’s failure to satisfy the Conditions of
Approval and Chapter 2 1.85 of the CMC, including but not limited to, the withholding of
building permits for the market rate units within the Master Development.
8. 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.
9. 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. The provisions of
this section shall survive any release or termination of this Agreement.
10. Insurance Requirements. Developer shall obtain, at its expense, comprehensive
general liability insurance for development of the Subject Property 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 coverages for
contractual liability and products and completed operations, purchased by Developer 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 Subject Property.
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11. 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 addressed 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:
HSL/BPMagellan, L.L.C.
Attn: Doug Avis
5055 Avenida Encinas, Suite 2 10
Carlsbad, California 92008
Any party may change the address to which notices are to be sent by
notifying the other parties of the new address, in the manner set forth above.
12. 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.
13. Duration of AFrreement. This Agreement shall remain in effect for 55 years
following the date certificates of occupancy have been issued for all Affordable Units. This
Agreement, and any section, subsection, or covenant contained herein, may be amended only
upon the written consent of Developer and the Community Development Director.
14. 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.
.- h
15. Severability. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first above written.
DEVELOPER
HSL/BP/MAGELLAN, L.L.C.
By:
DOUGLAS M. AVIS
Name:
Title:
CITY
CITY OF CARLSBAD
A Municipal Corporation
By:
MARTIN ORENYAK
Community Development
Director
APPROVED AS TO FORM:
RONALD R. BALL
City Attorney
POINSETTIA PROPEFr.ES -AFFORDABLE HOUSING Ac:iEMENT
PHASING FOR CONSTRUCTION OF UNITS - STAFF RECOMMENDATION
Council & record Affordable
Housing Agreement, as
approved by City Council.
Final maps will allow for a
total of 617 units only.
Building Permits will be
used for development of
Planning Areas 5, 7 & 8. A
total of 322 building permits
could be issued at this point
in time; 52% of total
and approved for 92 apartment
units.
units under construction
which represents 61% of
the total # of units w/in the
project. The market rate
units will be single family
complete prior to the
release of additional
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