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HomeMy WebLinkAbout1999-02-09; City Council; 15039; WESTERN PACIFIC HOUSING REQUEST TO PURCHASE AFFORDABLE HOUSING CREDITS - VILLA LOMAH l . A !2 z e. % r: . . g 2 g z s9n Q 0 CITY OF CARLSBAD - AGENDA BILL .& p),,f 4B# 151039 1’ TITLE: DEPT. HD. JITG. 2-7 -49 THE WESTERN PACIFIC HOUSING REQUEST TO PURCHASE AFFORDABLE HOUSING CREDITS CITYATTY. * L2L IEPT. H/RED CITY MGS? RECOMMENDED ACTION: C-T- 97-K ADOPT Resolution 9 9 - L13 as recommended by the Housing Commission, APPROVING a request by Western Pacific Housing to purchase 10.95 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Western Pacific Housing/LOHF project under the City’s lnclusionary Housing Ordinance. Proiect Description: The Western Pacific/LOHF Housing project is a 73 unit, single family development on approximately 37 acres located west of El Camino Real, at the future intersection of El Camino Real and Poinsettia Lane . The tentative map and site development plan for the project were recommended for approval by the Planning Commission on December 2, 1998. This project will subsequently be submitted to the City Council for final approval. Affordable Housing Reuuirement: The subject project, known as the LOHF project, has a requirement to provide 10.95 units of affordable housing to satisfy its inclusionary housing obligation. The applicant has two potential options to satisfy the obligation. First, the project could construct on-site affordable housing units. The development of on-site affordable units, however, is very difficult due to several factors. Due to the environmental constraints of the property and the creation of large slope areas necessary for the construction of Poinsettia Lane, the developable area of the site is limited. In addition, the small scale of the potential affordable housing project (IO-11 units) makes the development economically infeasible due to the significant financial subsidy which would be required for the project. Therefore, the applicant is severely limited in their ability to provide on-site affordable housing. The second option is to purchase 10.95 affordable housing credits form the Villa Loma Affordable Housing Project. This option requires approval by the City Council. Because of the physical and financial difficulties of developing an on-site affordable housing project, the applicant has elected to pursue the purchase of affordable housing credits. The City Council has adopted Policies 57 & 58 that govern the sale of affordable housing credits. The policies examine the feasibility of an on-site proposal, the advantages and disadvantages of an off-site proposal, and whether the off-site project advances the City’s housing goals and strategies. Housing Commission Recommendation: In reviewing the applicant’s request, the Housing Commission utilized the criteria contained in the above mentioned policies to make their recommendation. Due to the small size of the affordable requirement and the other noted constraints, the Housing Commission has recqmmended that the City Council approve the attached Affordable Housing Agreement which will allow the subject project to purchase 10.95 credits in the Villa Loma Affordable Housing Project. Copies of the Housing Commission staff report and related minutes, dated November 9, 1998, are attached for review by the City Council. - A Page 2 of Agenda Bill No. Is;0 37 FISCAL IMPACT The Affordable Housing Credit is currently $34,000 per unit. The purchase of 10.95 credits will result in a payment of $372,300 to the City’s Housing Trust Fund. EXHIBITS 1. City Council Resolution No. 4 9 - q 3 2. Affordable Housing Agreement 3. Staff Report to the Housing Commission dated, November 19, 1998 w/attachments 4. Excerpts of Housing Commission Minutes dated, November 19, 1998 3 I ! l( 11 1: 1: 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - RESOLUTION NO. 99-43 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A REQUEST BY WESTERN PACIFIC HOUSING TO PURCHASE 10.95 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT IN ORDER TO SATISFY THE AFFORDABLE HOUSING OBLIGATION OF THE WESTERN PACIFIC HOUSING PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING ORDINANCE. APPLICANT: WESTERN PACIFIC HOUSING . CASE NO: CT 97-15 WHEREAS, Western Pacific Housing has received a Planning Commission recommendation for approval of Tentative Map CT 97-15 for the development of a 73 unit residential development; WHEREAS, Western Pacific Housing has received a recommendation of approval fl-om the Housing Commission that the City Council approve the purchase of 10.95 affordable housing credits in the Villa Loma housing project to satisfy the inclusionary housing requirement of Tentative Map CT 97-15; WHEREAS, the City Council did hold a public meeting to consider said request for the purchase of Affordable Housing Credits by WESTERN PACIFIC HOUSING ; WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all persons desiring to be heard, said Council considered all factors relating to the application and request to purchase Affordable Housing Credits: NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. The project is consistent with the goals and objectives of the City of Carlsbad’s Housing Element, the Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. 3. Based upon the analysis contained within the City Council Staff Report and the Housing Commission Staff Report dated November 19, 1998, the City Council 3 1 2 3 4 5 6 7 8 9 I( 11 12 I? 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 - finds that the off-site satisfaction of the inclusionary housing requirement is in the public interest. 4. That based on the information provided within the City Council Staff Report, the Housing Commission Staff Report and testimony presented during the public meeting of the City Council, the City Council hereby APPROVES a request by Western Pacific Housing to purchase 10.95 affordable housing credits in the Villa Loma housing project in order to satis@ the affordable housing obligation of the Western Pacific Housing project under the City’s inclusionary housing ordinance. 5. That the City Council hereby authorizes the Community Development Director to execute the Affordable Housing Agreement in substantially the form presented to the City Council and to execute such other documents, or take other actions as may be necessary or appropriate to assist the developer in acquiring the Affordable Housing Credits. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 9th day of February , 1999 the following vote, to wit: AYES: Council Members Lewis, Hall, Finnila, Nygaard and Kulchin NOES: None ABSENT: None ABSTAIN: None ATTEST: &liLtL a4. !L&gzL ALETHA L. RAUTENKRANZ, City Clerk (SEAL) ZCRESO# 99-w PAGE2 bY 4 RECORDING REQUESTED BY: City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk’s Office Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, California 92008 (Space abovefor Recorder’s Use) AFFORDABLE HOUSING AGREEMENT THIS AFFORDABLE HOUSING AGREEMENT (“Agreement”) is entered into this 19th day of November, 1998, by and between the CITY OF CARLSBAD, a municipal corporation (hereinafter referred to as the “City”), and Western Pacific Housing for LAMCO Housing Inc., (hereinafter referred to as the “Developer”), is made with reference to the following: RECITALS A. Developer is the owner of certain real property in the City of Carlsbad, County of San Diego, State of California, described in “Attachment A”, which is attached hereto and incorporated herein by this reference, and which is the subject of a Tentative Map (CT 97-15) which provides conditional approval of the construction of 73 single family dwelling units (“Project”). B. ’ Condition No. of Planning Commission Resolution No. states that this Affordable Housing Agreement shall be entered into between the City and the Developer as a means of satisfying the Developers’ affordable housing obligation (“Affordable Housing Obligation”), as such is defined under Chapter 21.85 of the Carlsbad Municipal Code. Planning Commission Resolution No. provides that the Affordable Housing Obligation of ten and ninety-five one hundredths (10.95) units will be satisfied by applying the requirements set forth in this Agreement. NOW, THEREFORE, incorporating the foregoing Recitals and in consideration of the mutual covenants contained herein, the parties agree as follows: 1. THE RECITALS ARE TRUE AND CORRECT. 2. SATISFACTION OF AFFORDABLE HOUSING REOUIREMENTS THROUGH THE PAYMENT OF AFFORDABLE HOUSING CREDITS. (a) Performance under this Agreement satisfies the Developers’ obligation for affordable housing under Chapter 2 1.85 of the Carlsbad Municipal Code as applied to the land covered by Carlsbad Tract No. 97-15 by reason of the approvals of the Tentative Map of CT 97-15, including and any other applicable Condition No. listed in Planning Commission Resolution No. approval. 1 5 (b) The Developer shall pay for ten and ninety-five one hundredths (10.95) Affordable Housing Credits as established by the City and as required by Condition No. of Planning Commission Resolution No. . The fee shall be paid prior to the Developer receiving a building permit for the project. 3. REMEDIES Failure by the Developer to perform in accordance with this Agreement will constitute failure to satisfy the requirements of Chapter 2 1.85 of the Carlsbad Municipal Code and Condition No. of Planning Commission Resolution No. -. Such failure will allow the City to exercise any and all remedies available to it including but not limited to withholding the issuance of building permits for the lots shown on Carlsbad Tract No. 97- 15. 4. HOLD HARMLESS Developer will indemnity 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, obtained, allegedly caused by, arising out of or retaining in any manner to Developers’ actions or defaults pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto. Developer shall obtain, at its expense, comprehensive general liability insurance for development of the ($ l,OOO,OOO) purchased by the Developer from an insurance company duly licensed to engage in the business of issuing such insurance in the State of California, 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 Project. 5. 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 address set forth below: TO THE CITY: City of Carlsbad Housing and Redevelopment Department Attn: Housing & Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, California 92008-2389 TO THE DEVELOPER: Western Pacific Housing for LAMCO, Housing Inc. 2385 Camino Vida Roble, Suite 107 Carlsbad, California 92009 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. 2 6. ENTIRE 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. 7. DURATION OF AGREEMENT This Agreement shall terminate and become null and void upon the payment of the Affordable Housing Credits, or the repeal, termination, or modification of any applicable ordinance which act would render the Affordable Housing Obligation unnecessary or unenforceable. a. SUCCESSORS This Agreement shall benefit and bind the Developer and any successive owners of Affordable Housing Lots. 9. SEVERABIILITY In the event any provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining provisions 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 signed as of the day and year first above written. DEVELOPER Western Pacific Housing for LAMCO Housing, Inc. CITY . . City of Carlsbad, a municipal corporation By: (Name) By: MARTIN ORENYAK Community Development Director By: (Title) APPROVED AS TO FORM: RONALD R. BALL CITY ATTORNEY 7 ATTACHMENT A LEGAL DESCRIPTION OF SUBJECT PROPERTY PARCEL A: PARCEL 2 IN COUNTY OF SAN DIEGO, STATE OF CALIFORNIA AS SHOWN ON PARCEL MAP NO. 2244, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JANUARY 10, 1974. PARCEL B: THE SOUTH HALF OF THE NORTHWEST QUARTER OF THE NORTHWEST QUARTER OF SECTION 26, TOWNSHIP 12 SOUTH, RANGE 4 WEST, SAN BERNARDINO MERIDIAN, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF. -‘EXHIBIT 3 TheCiCyofCaslsbad HOUS~XX~ &RedeuelLopm~ntDepast~ent AREPORT TO THE HOUS1[NG COMMISSXON I St&i: Cral~ D. Rlliz Mmna,@?ment Analyti DATE: NOVEMBER 19,199s SUBJECT: CT 97-15 - WESTERN PACIFIC HOUSING FOR LAMCO HOUSING, INC. - APPLICATION TO PURCHASE 10.95 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 98-015, recommending that the City Council APPROVE a request by Western Pacific Housing, to purchase 10.95 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the LOHF project under the City’s Inclusionary Housing Ordinance. II. BACKGROUND Western Pacific Housing, is currently processing an application for tentative map (CT 97- 15) to develop 73 single family homes on approximately 36.7 acres. Due to the environmental and topographical constraints of the site, approximately 25% of the site will remain as open space. The project consists of home sites with a minimum parcel size of 10,000 square feet and includes the construction of the eastern portion of Poinsettia L.&e connecting to El Camino Real. The development of 73 homes will require the developer to provide 10.95 units of housing affordable to lower income households as required by the City’s Inclusionary Housing Ordinance. It is the applicant’s position that there are significant economic burdens on the site which would make it difficult to provide the affordable housing units on-site. Therefore, the applicant is requesting to purchase Affordable Housing Credits (“credits”) in the Villa Loma project in lieu of on-site construction. The City’s Inclusionary Housing Ordinance permits off-site satisfaction of an inclusionary requirement through participation in a Combined Inclusionary Housing Project (“Combined Project”) if the City Council determines that it is in the public interest. Purchase of credits in the Villa Loma project constitutes participation in a Combined Project. There are 137 credits currently available for purchase. 4 CT 97-15 - WESTERN PACIFIC HOUSING NOVEMBER 19,1998 PAGE 2 Policies Regarding Off-Site Proiects and Purchase of Affordable Housiw Credits The City Council has adopted two policies which address off-site or Combined Projects and the sale of Affordable Housing Credits. Council Policy 57 was developed to establish the criteria to be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. Council Policy 58 was established to determine the price of credits and the mechanism to satisfy a developers obligation under the City’s Inclusionary Housing Ordinance. III. DISCUSSION The Council Policies require staff to evaluate the request for off-site satisfaction of the inclusionary housing obligation and the purchase of credits based upon three primary criteria. The criteria includes: 1) feasibility of on-site proposal; 2) relative advantages/disadvantages of an off-site proposal; and 3) the advancement of housing goals and strategies. The following is a summary of staffs analysis of the criteria for the project. Feasibility of On-site ProDosal . The small scale of the developable area, the physical constraints caused by the large slope areas necessary for the construction of Poinsettia Lane and the on-site environmentally sensitive areas limit the ability to produce on site affordable units due to restrictions on project yield. Also, the small scale of the affordable housing project makes the development economically unfeasible due to the significant financial subsidy which would be required for the project. Further, the small scale of the affordable housing project makes it unlikely that the project will generate interest from available funding sources. Relative Advantaves/Disadvantages of an Off-site Prouosal . The participation in the off-site project will allow the City to recover the costs associated with the development of excess affordable housing units. . The Villa Loma project has locational advantages over the on-site project in terms of direct access to jobs, public transportation, schools, parks as well as other amenities and services due to the being located directly on a major thoroughfare. This project’s connection to El Camino Real will not occur until approximately 60% of the project is built. CT 97-15 - WESTERN PACIFIC HOUSING NOVEMBER 19,199s PAGE 3 Advancing Housiw Goals and Stratepies . The recovery of the City’s investment in the Villa Loma Project will provide for additional financial resources which are needed to further affordable housing development in the community. IV. RECOMMENDATION Based upon the analysis of the above criteria, the Affordable Housing Policy (staff) Team believes that adequate justification has been provided by the Developer to make the finding that the off-site satisfaction of the inclusionary housing requirement is in the public interest. Therefore, the staff team is recommending that the request to purchase credits be recommended for approval by the Housing Commission. V. EXHIBITS 1. Housing Commission Resolution No. 98-015 2. Applicant Request to Purchase Credits 3. Draft Affordable Housing Agreement - Western. Pacific Housing IAN DIIOO DlVlllON October 15, 1998 Ms. Deborah K. Fountain Housing and Redevelopment Director City of Carlsbad 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Subject: Lohf Property - Request to Purchase Off-site Affordable Housing Credits Dear Ms. Fountain: * This letter serves as a formal request by Western Pacific Housing to purchase off-site affordable housing credits in the existing Villa Loma development to satisfy the inclusionary housing obligations of the Lohf Property subdivision (CT 97-15). This request is in compliance with actions previously taken by the City Council: The City’s lnclusionary Housing Ordinance (CMC Chapter 21.85) establishes certain requirements under which residential developers must provide housing that is affordable to lower-income households as a condition of project approval and permit issuance. The ordinance provides that “circumstances may arise in which the public interest would be served by allowing some or all of the inclusionary units associated with one project site to be produced at an alternative site or sites.” The two inclusionary housing options that are available to a developer are that the developer shall either 1) enter into an agreement with the City to purchase affordable credits from Villa Loma; or 2) participate in an off-site combined inclusionary project within the southwest quadrant and as appropriate, in accordance with the requirements set forth in Chapter 21.85 of the Carlsbad Municipal Code and City Council Policies 57 and 58 dated September 12, 1985. A report has been reviewed by the Housing Commission that projected the inclusionary housing requirements of undeveloped property within the Southwest Quadrant of the City. The report examined whether projected development of the Quadrant could result in a demand for off-site credits exceeding the number of available credits in the Villa Loma project. The analysis showed that there are sufficient excess units (credits) to satisfy the potential demand of the Quadrant. I 2385 Camino Vida Roble, Suite 107,Carlsbad. C a 1 *mia I’f 92009 760.929.1600 Fax 760.929.1601 A In the case of the Lohf project, there are particular circumstances that warrant the provision of the inclusionary units off-site in combination with the existing Villa Loma Apartment project, pursuant to Council Policy 57 criteria. Significant feasibility issues affect the development of this project on-site. Contribution to the existing off-site project versus providing a small (IO unit) low-income apartment complex on-site will result in increased public benefit by returning funding currently tied up in the Villa Loma project, for use in other affordable housing activities. We understand this request will be evaluated by a staff Project Review Committee to determine compliance with the criteria defined in Policies 57 and 58. It is also understood that staff will then take the Committee’s recommendation to the Housing Commission and City Council. Please call if you need additional information or if we may be of any other assistance. Sincerely, Enclosure cc: Mr. Jack Henthorn, Jack Henthorn & Associates Mr. Craig Ruiz, Housing and Redevelopment Department 2 2385 Camino Vida Roble, Suite 107,Carlsbad, California 92009 760.929.1600 Fax 760.92911601 13 LOHF PROPERTY OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET -- BACKGROUND The following background information is provided to assist you in your assessment. I. Owner/Applicant Information: Owner/Applicant: Western Pacific Housing Attn: Mr. Scot Sandstrom 2385 Camino Vida Roble Suite 107 Carlsbad, CA 92009 760-929-l 600 Applicant’s Representative: Jack Henthorn & Associates Attn: Mr. Jack Henthorn 5375 Avenida Encinas Suite D Carlsbad, CA 92008 760-438-4090 2. Off-site/Combined Project Name: VILLA LOMA APARTMENTS . 3. Description of Project with lnclusionaty Housing Obligation: Lohf Property, CT 97-15, is a proposed 76-lot, 73-unit, single family development located on a 36.7-acre parcel with a 10.95-unit affordable housing obligation. 4. On-site Affordable Housing Description: The Lohf Property Affordable Housing project would be a lo-unit multi-family, apartment project occupying three lots with units ranging from 1 to 3 bedrooms. The units would be offered in a maximum rent range which is affordable to households earning incomes of 80% of the Area Median Income. To achieve financial feasibility, the project would require a net subsidy of $352,971 (even assuming a fully constructed pad is provided by the developer and unit revenues are based on a 95% occupancy rate factor). 5. Proposed Off-site Project Description: The Villa Loma project is a 344-unit apartment development in which all units are restricted and affordable to households with incomes not exceeding 60% of the San Diego County Median. Villa Loma was developed by La Terraza Associates, with Bridge Housing Corporation as the Managing General Partner. The complex contains 1, 2, 3 & 4 bedroom units. Villa Loma was financed with assistance from the City of Carlsbad and the Carlsbad Redevelopment Agency. The assistance was structured in such a way as to create affordable units which would be marketed exclusively by the City to “other developers” in order to satisfy an affordable housing obligation. The Villa Loma Apartment complex is a Combined Project according to the lnclusionary Housing Ordinance, and developers may participate in this as an “off-site” method of satisfying their affordable housing obligation. (This is also an approved site for the Greystone Cove and Ocean Bluff projects.) 3 2385 Camino Vida Roble, Suite 107,Carlsbad, California 92009 760.929.1600 Fax 760.929.1601 Participation in Villa Loma Apartments by the applicant would be in the form of a purchase of Affordable Housing Credits (Credits) under terms established by City Council Policies Numbered 57 and 58. If the applicant is afforded the opportunity to purchase Credits, the Lohf Property tentative map would require the purchase of 10.95 Credits to satisfy its inclusionary housing requirement. 6. Description of On-site Project Constraints: Specific constraints exist which would affect. an on-site affordable project’s feasibility. These include the uneconomical small scale of the affordable project and a significant product type difference between the affordable rental units and the proposed single-family market units that will be developed onsite. 4 2385 Camino Vida Roble, Suite 107,Carlsbad, California 92009 760.929.1600 Fax 760.929.1601 15 LOHF PROJECT OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET --WORKSHEET 1. Feasibilitv of the On-site Proposal a. Are there significant feasibilitv issues due to factors such as project size, site constraints, amount and availability of required subsidy, and competition from multiple projects that make an on-site option impractical? l The on-site affordable project is not of sufficient size to be a viable apartment project. Given the small size of the project and its restricted rental structure, on site management and maintenance will be difficult. l The small scale of the affordable housing project also makes it unlikely that the project will generate interest from funding sources. l The market units in this project would be required to absorb $4,100 per unit so that land value could be contributed by the developer. This figure would rise to over $8,900 per unit if the applicant is required to build the units on site and close the post land development gap of close to $353,000. . Based on the estimated restricted rental prices of the affordable units the applicant will be facing an average subsidy requirement of approximately $35,300 per unit, beyond land contributions. This would result in each unit being subsidized with approximately $65,300. b. Will an affordable housing product be difficult to intearate into the proposed market development because of significant price and product type disparity? l Price disparities will be substantial between the low-income rental apartment units restricted at $695 $1,062 rent and the approved higher-end single-family detached homes which have an estimated base price range of $350,000 to $395,000. l The integration of 10 affordable apartment units, sized at 725 to 1,100 sq. ft., into the single-family subdivision with homes of 2,800 to 3,300 square feet on 7,500 to 37,500 sq. ft. lots will result in major product type disparity on-site. The surrounding area will also be built-out with low density, single- family detached products consistent with the existing RLM land use designation and market demand. The on-site project would, therefore, also result in substantial product disparity with the surrounding region. c. Does the on-site development entity have the capacitv to deliver the proposed affordable housing on-site? l The applicant is not experienced in the development of affordable housing. l Affordable housing developers have advised the applicant that it is unlikely that this size of project will generate interest from funding sources. 2. Relative AdvantaaeslDisadvantaaes of the Off-site ProDosal, a. Does the off-site option offer greater feasibilitv and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance? l Villa Loma is built and has proven its feasibility; no additional assistance is required. l The applicant’s participation in Villa Loma would permit the intended recovery of City investment provided to the project through utilizing “excess units”. These funds could then be used to provide additional affordable housing. Conversely, the developer’s on-site project would create the demand for additional new subsidy. 5 2385 Camino Vida Roble, Suite 107,Carlsbad, California 92009 760.929.1600 Fax 760.929.1601 l The small size of the on-site project could result in additional future subsidy requests related to operating costs. b. Does the off-site proposal have location advantaaes over the on-site alternative, such as proximity to jobs, schools, transportation, services; less impact on other existing developments, etc.? . The Villa Loma development is located within close vicinity of jobs (in the nearby business parks and shopping centers), public transportation, schools, parks, as well as, other amenities and services due to being located along the major thoroughfare, El Camino Real. l Villa Loma is a self-contained affordable development in an area designated for higher density residential development such as condominiums and townhomes. l The on-site proposal could be a source of land use conflicts that typically occur when higher density development is permitted adjacent to larger lot single family development. c. Does the off-site option offer a development entity with the cabacitv to deliver the proposed project? l The Villa Loma project is an existing project, developed and managed by a highly experienced and specialized affordable housing developer. d. Does the off-site option satisfy multiple develooer obliiations that would be difficult to satisfy with multiple projects? l Villa Loma project was originally established as a Combined Project, specifically to address this purpose. l The proposed on-site project would be one of several projects in the southwest quadrant competing for scarce financial assistance. Villa Loma has already been financed and built and thus, would not be competing for subsidy financing. 3. Advancing Housina Goals and Strategy a. Does the off-site proposal advance and/or support City housing goals and policies expressed in the Housing Element, CHAS and lnclusionaty Housing Ordinance? General Plan Housing Element and CHAS Goals: l Villa Loma Apartment affordable project is targeted to the highest priority need identified, larger rental units for low income households. l The recovery of the City’s investment in the Villa Loma Project through the applicants participation will provide for additional resources which are needed to further affordable housing development. l Villa Loma provides a large quantity and diversity of affordable housing stock with its 344 units, including a generous supply of different size units to meet various housing needs of the community. lnclusionary Housing Ordinance Policies: . Consistent with the City and public interests to use existing “excess” affordable units before supporting additional new construction. l In conjunction with the combined Villa Loma project, the Lohf property will provide for 15% of the total units for affordable (lower income) residential units. The project also complies with the lnclusionary requirements as contained in the General Plan Housing Element. Growth Management Zone, Ord. No. NS-257 Guidelines: l Villa Loma is coordinated with surrounding properties by providing direct access to a major Circulation Element Roadway, El Camino Real, as well as circulation and pedestrian access to public facilities. 6 2385 Camino Vida Roble, Suite 107,Carlsbad, California 92009 760.929.1600 Fax 760.929.1601 LOHF COMPARATIVE PRO FORMA REVENUE ANALYSIS RENT UNITS REVENUE 1 BEDROOM $695 3 $2,085 2 BEDROOM $888 6 $5,328 3 BEDROOM $1,062 1 $1,062 10 $8,475 95% OCCUPANCY $8,051 OPERATING COSTS @ 30% ($2,415) NET OPERATING INCOME $5,636 DEBT SERVICE INCOME (1.2) $4,697 * Note: The remainder unit obligation of .95 will be met by purchase of offsite credits in the Villa Loma project. INCOME SUPPORTED DEBT $534,916 LAND DEVELOPMENT COSTS LAND (3 lots) ON SITE IMPS (3 lots) PUBLIC FEES (IO du’s) DESIGN/CONSULTANTS IMPROVED SITE COST (subtotal) LAND CARRY 18MO LAND DEVELOPMENT COST UNIT CONSTRUCTION COSTS . $300,000 $150,000 $195,000 $50,000 $695,000 $45,000 $740,000 UNIT SIZE 1 BR 2BR 3BR SQUARE FEET (project) 2175 5100 1100 STRUCTURE COST $45.00 $97,875 $229,500 $49,500 ON SITE INDIRECTS 10% STRUCT. OVERHEAD .04 MARKETING .02 CONSTRUCTION COSTS LOAN FEES .02 CONST FINANCING SUBTOTAL FINANCING PROJECT COST GAP Developer land contribution NET GAP $447,888 $10,698 $22,394 $33,093 !§1,187,888 $652,971 $300,000 $352,971 Revised 10/15/98 8375 $376,875 $29,313 $27,800 $13,900 $447,888 $33,093 $1,187,888 $652,971 Page 1 PER UNIT NET GAP PER UNIT GROSS SUBSIDY - COMPARATIVE PRO FORMA LOHF Page 2 Revised 10/15/98 $35,297 $65,297 TENTATIVE TRACT MAP LOHF,PROPERTY City Of Carlsbad, Cdlifornia , ----- . ----- -- t- . --- EXHIBIT 4 Minutes of: Time of Meeting: Date of Meeting: Place of Meeting: HOUSING COMMISSION 6:00 P.M. NOVEMBER 19,1998 CITY COUNCIL CHAMBERS CALL TO ORDER: Chairperson Wellman called the Special Meeting to order at 6:07 p.m. PLEDGE OF ALLEGIANCE: Commissioner Walker led the pledge of allegiance. ROLL CALL: Present: Chairperson Wellman, Commissioners Calverley, Escobedo, Noble, Rose, and Walker Absent: Commissioners Latas and Scarpelli Staff Present: Debbie Fountain, Housing and Redevelopment Director Craig Ruiz, Management Analyst APPROVAL OF MINUTES: ACTION: Motion by Commissioner Rose, and duly seconded, to approve the Minutes of the Regular Meeting of September 28, 1998, as submitted. VOTE: 5-o-1 AYES: Escobedo, Noble, Rose, Walker, Wellman NOES: None ABSTAIN: Calverley COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA: There were no comments from the audience. NEW BUSINESS: 1. CT 97-l 5 - WESTERN PACIFIC HOUSING FOR LAMCO HOUSING, INC. -APPLICATION TO PURCHASE 10.95 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT FOR THE LOHF PROPERTY. Craig Ruiz reviewed the background of the request and stated that the applicant, Western Pacific Housing, is currently processing a tentative map that will allow for the development of 73 single family homes on approximately 36.5 acres, known as the LOHF project. The development is going to be a typical single-family home with 10,000 square feet parcels, located at the intersection of the future extension of Poinsettia Lane and El Camino Real. The development of 73 homes will require the developer to approve 10.95 units of affordable housing, affordable to lower income households as required by the City’s Inclusionary Housing Ordinance. Mr. Ruiz explained that due to the environmental constraints of the site, approximately 25% of the site would remain as open space. Mr. Ruiz stated that it is the applicant’s position that there are significant economic burdens on the site that would make it difficult to provide the affordable housing units on-site. The developer is therefore requesting to satisfy their inclusionary housing obligation by purchasing credits in the Villa Loma project. Mr. Ruiz explained the feasibility of an on-site proposal; the advantages and disadvantages of an off-site proposal; and the advancement of housing goals and strategies as stated in Staffs report. Mr. Ruiz said that this small project, with its environmental and topography constraints, would require a large amount of subsidy. m-- -- HOUSING COMMISSION MINUTES November 19, 1998 Page 2 Mr. Ruiz mentioned the developer’s proforma, which was included in Staffs report. The subsidy amount that would be required, according to the proforma, for this project works out to roughly $65,000 per unit, with land kicked in by the developer valued at $300,000, reducing the net subsidy down to approximately $35,000 per unit. Mr. Ruiz stated that the selling of credits allows the City to recoup its investment in Villa Loma. The purpose of providing the extra units was to recoup the City’s costs from the projects that were not able to develop on-site, and then use that money to provide other housing opportunities in the City, which would further advance the City’s Housing Goals and Strategies. Based on the analysis of the criteria provided by the applicant, Staff has reviewed the request and feels that the findings have been made satisfactorily to allow the off-site alternative to the inclusionary housing requirement. Chairperson Wellman opened the item for discussion among the Commission members. There was no discussion. Chairperson Wellman invited the applicant to speak. Jack Henthom, Jack Henthom & Associates, 5375 Avenida Encinas, Suite D, Carlsbad, CA 92008, representing Western Pacific Housing, developer of the LOHF property, addressed the Commission. He explained that the developer has to deal with significant environmental issues and a large portion of this site has been set aside as open space. They have also been required to undertake a significant off-site burden relating to Poinsettia Lane and connecting that to El Camino Real to the east, he said. Mr. Henthom stated that when they began to evaluate the affordable housing, they looked at on-site options with a 1 O-unit project; however, the feasibility criteria did not make any sense. They talked with some nonprofits to see if they could interest them in the project, but they could not; therefore, the developer is requesting to purchase credits in Villa Loma. There was discussion about Poinsettia Lane and Aviara Parkway. Mr. Henthom explained that the City is trying to get the environmental agencies to allow them to begin construction with City funding to connect Palomar Airport Road down to Poinsettia. All of the plans are ready to go, but it is hung up with federal and state wildlife agencies. Poinsettia is currently under construction from where it ends presently to Black Rail Road. The piece in the middle could be as far off as 18 months to 3 years because it crosses a creek, he said. Commissioner Rose asked if Mr. Henthom believes that Aviara Parkway may start in the next 3 months. Mr. Henthorn stated yes and added that the City wants to see the road built. The City and developer, whom Mr. Henthom also represents, are now negotiating with the wildlife agencies to try to get approval to get started. If the City, Western Pacific, and the wildlife agencies could come to an agreement tomorrow, they would be moving dirt very quickly, he said. Commissioner Escobedo asked Mr. Henthom why the nonprofits were not interested in helping. Mr. Henthom stated that the principal reason is that the economics are not there. On a lo- unit project in this type of location, unless they have other things going on in the area, it does not make sense from a management standpoint for them to do a small deal. Mr. Henthom mentioned the Mariano project, stating that 25 units seems to be the breaking point. Chairperson Wellman asked if they had contacted Bridge Development and MAAC. Mr. Henthom stated that they had talked with Bridge in regard to this project, as well as the Mariano project, and they are not interested. He said that the MAAC peopie have their hands full and that they also contacted North County Housing. 23 HOUSING COMMISSION MINUTES November 19, 1998 Page 3 Chairperson Wellman stated that in the past the City has contributed approximately $10,000 per unit, and asked ifthis was the figure they were giving to the nonprofits. Mr. Henthom stated no that the nonprofits looked at the “package they had on the table.” Mr. Henthom mentioned the quadrant analysis that was completed a few months back and presented to the Commission. The analysis included this project as one to buy into Villa Loma. The conclusion in that survey was that if the project was fewer than 25 units, there were sufficient units in Villa Loma to purchase credits. Mr. Henthom added that most for-profit developers do not feel confident dealing with the affordable housing site production. Most of them do not manage apartments, and they specifically do not manage affordable housing projects. Scot Sandstrom, Director, Western Pacific Housing, 2385 Camino Vida Roble, Suite 107, Carlsbad, CA 92008, stated that he is present to support Mr. Henthom and his presentation. He thanked the Commission for their time and Staff for their hard work. There being no other persons desiring to address the Commission on this topic, Chairperson Wellman declared the public testimony closed and opened the item for discussion among the Commission members. ACTION: VOTE: AYES: NOES: ABSTAIN: Motion by Commissioner Noble, and duly seconded, to ADOPT Resolution No. 98-O 15, recommending that the City Council APPROVE a request by Western Pacific Housing, to purchase 10.95 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the LOHF project under the City’s Inclusionary Housing Ordinance. 6-O-O Calverley, Escobedo, Noble, Rose, Walker, Wellman None None ANNOUNCEMENTS: Ms. Fountain stated there would be a Thursday, December 10, 1998 meeting. There was discussion regarding the possibility of a special meeting December 17. ADJOURNMENT: By proper motion, the Special meeting of November 19, 1998, was adjourned at 6:34 p.m. ectfully submitted, DEBBIE FOUNTAIN Housing and Redevelopment Director KATHY VAN PELT Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.