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HomeMy WebLinkAbout1998-11-10; City Council; 14936; Poinsettia Gardens Affordable Apartment Projectm li J=- rO 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 0 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 6zhswJ 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. 2 AB# ) 4;936 Page 3 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) 3 1 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 /” 28 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 1 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 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. . . . 5 1 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 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 6 . ,- 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 7 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 . . L.. J --- - VINUOjllV3 ‘avesiu 311s 3m+wo=I~v~ VIll~SNlOd \ \ j ! I ! ! I I I I i I ! ! I ! I I I [ ! ! I i ! I I i I i i j i \\: i i y1 ; : ?J ; $, g VINkIOjIlV3 ‘OV9SlHV3 94 ” : I 3~1s 318vat104v VIll3SNlOd ” ‘- a< 0). 8, =. z . 2 t 3 5 x i2 m. IL.: $? sa l-8 .? 0 f t 5 5 B e+ mt LUF 53 ‘” R : -u r J 3;- : VlNtIOJllV’3 ‘CIVflSluV’3 - $f +;o ; 0 : 22% $ I 3~1s navatloddv VIll3SNlOd he - VlNHOdllV3 ‘aVESlHV3 I; 311s mavauo=Idv VIll3SNlOd 8” 4 AZ 2 22 I I.7, I r y y--q d-7-i --r=Y-- lziir=-ilil --I I I t II WI H w ad .$ 93 -.-. Ed 2; 1 JJ =, Lg! !ir -.-. =-I Wlu 3> % z m VINkAOJllV’3 ‘aV8SiMV3 - 311s 3iavatlodst VIll3SNlOd 1 1 1 .c-m 1 11 ; : I VlNtlOdllV3 ‘OVfISltlV3 - ; ” $ y-- I 3~1s navatlojdv : 25; $ VIll3SNlOd 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. 33 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. 35 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 38