HomeMy WebLinkAbout2000-04-18; City Council; 15701; Affordable Housing Creditsts B E 4
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AB# 17 701 TITLE- APPLICATION TO PURCHASE AFFORDABLE .
MTG. 4-i 8-m HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT FOR THE HADLEY
DEPT. H/RED PROJECT
CITY OF CARLSBAD - AGENDA BILL
CITYMGR. %+
RECOMMENDED ACTION:
ADOPT Council Resolution No. 2000- 121 APPROVING a request by Spectrum Communities
LLC, to purchase 6.5 Affordable Housing Credits in the Villa Loma combined housing project in order to satisfy the affordable housing obligation of the Hadley project under the City’s lnclusionary Housing
Ordinance.
ITEM EXPLANATION:
The Hadley project is a 38 lot/37 unit single-family residential subdivision on a vacant parcel on the east side of Black Rail Road and south of the future Poinsettia Lane in Local Facilities Management Zone 20,
and within the Southwest Quadrant of the City. The tentative map and site development plan were approved by the City Council on August 17, 1999. The applicant is requesting to purchase affordable
housing credits in the Villa Loma Project to satisfy the project’s 6.5 unit inclusionary housing obligation. The City Council is the approval body for the purchase of affordable housing credits.
Per the City Council approval, the Hadley project has two potential options for satisfying the inclusionary
housing obligation. The project may construct on-site affordable units or purchase housing credits. The
project proposes 37 single family homes. In addition, 5.45 acres, or 37% of the site, will be in open space
to preserve constrained lands and sensitive habitats. Due to the relatively small size of the project and the open space requirements, it would be difficult to physically and financially integrate the required
affordable housing units within the market rate subdivision. Therefore, the developer has submitted a request to purchase housing credits from the City of Carlsbad.
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. In reviewing
the applicant’s request, the Affordable Housing Policy Team (staff) has utilized the criteria contained in the
noted policies and has made a recommendation to the City Council to approve the purchase of the
credits.
FISCAL IMPACT:
The Affordable Housing Credit is currently $36,000 per unit. The purchase of 6.5 credits will result in a
payment of $234,000 to the City’s Housing Trust Fund.
EXHIBITS:
1. City Council Resolution No. 2000-121 t
2. Applicants Request to Purchase Credits
3. Draft Affordable Housing Agreement 4. Villa Loma Affordable Housing Credit Balance
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RESOLUTIONNO. 2000-121
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, APPROVING A REQUEST BY
SPECTRUM COMMSJNI TIES LLC, TO PURCHASE 6.5
AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA
HOUSING PROJECT IN ORDER TO SATISFY THE
AFFORDABLE HOUSING OBLIGATION OF THE HADLEY
PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING
ORDINANCE.
APPLICANT: SPECTRUM COMMUNITIES LLC
CASE NO: CT 98-17
WHEREAS,. Spectrum Communities LLC has received approval of Tentative Map CT
98-l 7 for the development of a 38 lot/37 unit residential development; and
WHEREAS, Spectrum Communities LLC has requested approval from the City of
Carlsbad City Council for the purchase of 6.5 affordable housing credits in the Villa Loma
housing project to satisfjr the inclusionary housing requirement of Tentative Map CT98-17;
and
WHEREAS, the City Council did hold a public meeting to consider said request for the
purchase of Affordable Housing Credits by Spectrum Communities LLC ; and
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 Inclusionary Housing Ordinance, and the Carlsbad General
Plan.
3. Based upon the analysis contained within the City Council Staff Report dated April
18, 2000, the City Council finds that the off-site satisfaction of the inclusionary
housing requirement is in the public interest.
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4. That based on the information provided within the City Council Staff Report and
testimony presented during the public meeting of the City Council, the City Council
hereby APPROVES a request by Spectrum Communities LLC to purchase 6.5
affordable housing credits in the Villa Loma housing project in order to satisfy the
affordable housing obligation of the Hadley 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 as Exhibit 3 of the City Council Staff Report 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 18th day of April , 2000 by the following vote,
to wit:
AYES: Council Members Lewis, Hall, Pinnila, Nygaard and Kulchi
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
.m
M. WOOD, City Clerk
@EN
CC RESO # 2000-121
PAGE 2
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Spectrum Communities Exhibit *
April 15, 1999
Ms. Deborah K. Fountain
Housing and Redevelopment Director
City of Carlsbad
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Subject: Hadley Property - Request to Purchase Off-site Affordable Housing Credits
Dear Ms. Fountain:
This letter serves as a formal request by Spectrum Communities to purchase off-site
affordable housing credits in the existing Villa Loma development to satisfy the inclusionary
housing obligations of the Hadley Property subdivision (CT 98-17). 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.
The Housing Commission has reviewed a report 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.
15375 Barranca Parkway, Suite B-211, Irvine CA 92618 l Tel: (949) 753-8400 Fax: (949) 753-8401
SpectrumCommunities
In the case of the Hadley Property, 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 (5 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 that a staff Project Review Committee will evaluate this request 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,
Mr. David Salene
Spectrum Communities, LLC
Enclosure
cc: Mr. Jack Henthorn, Jack Henthorn & Associates
Mr. Craig Ruiz, Housing and Redevelopment Department
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15375 Barranca Parkway, Suite B-21 1, h-vine CA 92618 l Tel: (949) 753-8400 Fax: (949) 753-8401 5
HADLEY PROPERTY
OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT
ASSESSMENT WORKSHEET -- BACKGROUND
The following background information is provided to assist you in your assessment.
1. Owner/Applicant Information:
Owner: Applicant: Applicant’s Representative:
Paul & Peggy Hadley Family Spectrum Communities, LLC Jack Henthom & Associates
Trust, December 3, 1941 Attn: Mr. David Salene Attn: Mr. Jack Henthorn
Paul & Peggy Hadley, 15375 Barranca Parkway 5375 Avenida Encinas
Trustees Suite B-21 1 Suite D
Irvine, CA 92618 Carlsbad, CA 92008
949-753-8400 760-438-4090
2.
3.
4.
Off-site/Combined Project Name:
VILLA LOMA APARTMENTS
Description of Project with lnclusionary Housing Obligation:
The Hadley Property, CT 98-17, is a proposed 39-lot, 38-unit, single-family development located
on a 14.7-acre parcel with a 5.7 unit affordable housing obligation.
On-site Affordable Housing Description:
The Hadley Property Affordable Housing project would be a 5-unit multi-family, apartment project
occupying two lots with 1, 2 and 3-bedroom units. The units would be offered in a maximum rent
range that 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 $256,000 (assuming the
developer provides a fully constructed pad, 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 Dibgo 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, Ocean Bluff and Lohf projects.)
b
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 Hadley Property
tentative map would require the purchase of 5.7 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.
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HADLEY PROPERTY
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 over $6,700 per unit so that land value could
be contributed by the developer. This figure would rise to almost $11,500 per unit if the applicant were
required to build the units on site and close the post land development gap of over $256,000.
l Based on the estimated restricted rental prices of the affordable units the applicant will be facing an
average subsidy requirement of approximately $51,200 per unit, beyond land contributions. This would
result in each unit being subsidized with approximately $87,200.
b. Will an affordable housing product be difficult to integrate 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 $400,000 to $700,000.
l The integration of 5 affordable apartment units, sized at 725 to 1,100 sq. ft., into the single-family
subdivision with homes of 2,500 to 4,500 square feet on approximately 7,500 to 15,800 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 AdvantacreslDisadvantages of the Off-site Proposal.
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.
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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 advantages over the on-site alternative, such as proximity
to jobs, schools, transportation, services; less impact on other existing developments, etc.?
l The Villa Loma development is located within close vicinity of jobs (in the nearby business parks and
shopping centers), public transportation, schools, public library, shopping, 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 cauacitv 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 developer obligations 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 Housing 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 lnclusionary 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 applicant’s participation will
provide for additional resources that 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: ;
l 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 Hadley 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.
Exhibit 3
RECORDING REQUESTED BY:
City of Carlsbad
WHEN RECORDED MALL TO:
City of Carlsbad City Clerk’s Office
Attn: Citv Clerk
1200 Carlsbad Village Drive
Carlsbad, California 92008
(Space above for Recorder’s Use)
THIS AFFOlXtV@LE HOtMlW r “) ia enter&l @to this day
of ,200, by and between the CITY OF CZ$B.%SBAD, a municip-irl cerporation (hereinafter
referred to as the “City”), and Spectrum Commtities LLC (kef%inafter referred to as the
“Developer”), is r&&e with retice to the following:
A. Developer is the owner of certain real property in the City of a&bad, County of San
Diego, State of California, described in “Attachment A”, which is attached fiervsa~ an+$ incorporated
herein by this reference, and which is the subject of a Tentative Map (CT%-17), w&h provides
conditional approval of the construction of a 38 lot/37 unit single family dwelling f”f”rpiect”).
B. C&p&r 21.85 of the Carl&ad Municipal Code requires that th& Af%r&ble Housing
Agreement shall be entered into between the City and the Developer as a mew of satisfying the Developers’ afford&Me huusing obligation (“Affordable Housing Obligation”), as such is defined under
Chapter 21.85 of the C&bad Municipal Code. The Affordable Hou&rg Obtigation for this project is determined to be six and five tenths (6.5) units and will be satisfied by applying the requirements set
forth in this Agreement.
NOW, THEREFORE, incorporating the foregoing Recit& md in consideration of the mutual
covenants contained herein, the parties agree as @lows:
1.
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 21.85 of the Carlsbad Municipal Code as applied to the land covered by Carlsbad Tract No. 98-17 by reason of the approvals of the Tentative Map of CT98-17, and any other applicable
approval.
(b) The Developer shall pay for six and five tenths (6.5) Affordable Housing Credits as
established by the City and as required by Condition No. 19 of Planning Commission Resolution No.
4576. The fee shall be paid prior to the Developer receiving a building permit for the project.
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3. REMEDIES
Failure by the Developer to perform in accordance with this Agreement will constitute failure to satisfy the requirements of Chapter 21.85 of the Carlsbad Municipal Code and Condition No. 19 of
Planning Commission Resolution No. 4576. 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.98-17.
4. 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 ag&st all I*, alf r&k of loss and all damage (including
expense) sustained or incurred because of it by reason of oont$ tsll claims, demands suits, actions, obtained, allegedly caused by, arising out of or retaking L ruly md~lrjr ti Developers’ actions or
defaults pursuant to this Agmement, and shall protect and defend I&em&&es, and any of them with
respect thereto.
5.
All noti@ ~~~ pw&ant to this Agreement &all be in writing @%l may I% .&V&I by personal
delivery or by r#&ered DT certified mail, return receipt requested to the pm to mu&v& mch notice at
the address set f&%h Wow:
TO THE CITY:
City ofCa&&ad
Housiq oand Re&&opment Department
Attn: I&t&&g & &deveI~~t Director
2965 R~@v& !!&w&, Suite B
Carlsbad, C&b&a %@08-2389
TO THE DEVEL
Spectrum Conununiti@s LL4Z
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.
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.
04/04/00
8. SUCCESSORS
This Agreement shall benefit and bind the Developer and any successive owners of Affordable
Housing Lots.
9. SEVERABILITY
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 her&o hwe cawed this Agreement to be signed as of the
day and year first above written.
DEVELOPER CITY
Spectrum Cormnt.mities LLC City of G&bad, a munioipal corporation
By: By:
MARTIN oI4mwm
Community IXwel63pmen~ Director
By:
(Title)
APPROVED AS TO FORM:
RONALD R. BALL
CITY ATTORNEY
04/04/00
ATTACHMENT A
LEGAL DESCRIPTION OF SUBJECT PROPERTY
04/04/00
From: Debra Doerfler
To: Craig Ruiz
Date: 6/20/01 9:06AM
Subject: Spectrum Comminities Affordable Housing Agreements
Craig, On April 18, 2000 Council approved resolutions 2000-I 20, 2000-l 21, 200-l 22 which authorized the
execution of 3 affordable housing agreements. It has now been over a year since Council action on these
items took place.
Our office requires the original finalized agreements with the legal description of the subject properties;
these documents need to be properly executed by the contractor and forwarded to our offices.
Please advise the current status of these 3 items. Thanks!
Debra
cc: Debbie Fountain; Lorraine Wood
WRITE IT - DON’T
To File
SAY IT!
Date June 30 I& 2000
0 Reply Wanted
From Debra q No Reply Necessary
6/30/00 Called Craig Ruiz in Hsg & Redev - 2817 & left a message on his voice
mail requesting an update as to the status of the AFFORDABLE HOUSING AGREEMENTS
w/ LEGAL DESCRIPTION OF SUBJECT PROPERTY.
These 3 items (!), Ij 1 1 1'1 from the 4/18/00 Council meeting have not yet resolved.
Debra /a
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