HomeMy WebLinkAbout2000-08-01; City Council; 15854; Annual Housing Production Report FY 1998-19998 P k a
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CITY OF CARLSBAD - AGENDA BILL -
RECOMMENDED ACTION:
That the Council ACCEPT the staff report on housing production for the reporting period, July 1,
1998 to June 30,1999.
ITEM EXPLANATION:
Description: This Agenda Bill brings to the City Council staffs sixth annual report on the progress
the City is making in housing production. This report is an information item only and complies with
the state law requirement for an annual housing report to the Council. No action or environmental
review is required.
The report consists of a memorandum to the City Manager, attached as Exhibit 1. It is concerned
only with new housing construction over the last housing cycle, which began July 1991 and ended
June 30, 1999, and particularly during the last part of that cycle, fiscal year 1998 - 1999. Staff has
waited to present the report until Council could review it as a companion item to the General Plan
Housing Element update. The update of the Housing Element was approved by the City Council on
July 11, 2000.
The report provides:
l Statistical information for housing production overall by income group to which it is affordable, and in comparison with regional share needs. (The income groups established
by State Law are very-low, low, moderate and above-moderate or “other”.)
l A discussion of cumulative progress from the beginning through the end of the cycle. Data
are included for market-rate housing and the City’s inclusionary housing programs.
l Observations and conclusions about the housing production data.
This fall, staff will provide the next annual housing report to the Council for fiscal year 1999-2000,
Nhich marked the beginning of the current five-year housing cycle that will continue through June
30, 2004.
3epor-t Conclusions: In recent years the City has seen significant results from its commitment to the
development of affordable (low and very-low income) housing throughout Carlsbad. This City’s
commitment is evidenced in its policy framework, the allocation of its own resources, and its efforts
:o pursue creative partnerships with the private sector in all aspects of housing production. The
lumber of affordable housing units that have been constructed to date or are currently under
:onstruction also evidences this commitment. As of June 30, 1999, the City had successfully
‘acilitated the construction of 442 units of both rental and for-sale units with restricted rents and/or sales prices. This new construction includes the successful Villa Loma Apartment Project (344
Jnits), a portion of the Cherry Tree Walk Townhomes, and a number of second dwelling units. The *eport for program year 1999-2000 will reflect continued success with the completion of the Ranch0
Carrillo Family Apartments (116 units), the Cherry Tree Walk Townhomes, and five (5) Calavera
-lills single-family affordable homes. Subsequent annual reports will also reflect the completion of :he Laurel Tree Apartments (138 units) and the Poinsettia Station Apartments (92 units), all of which
are currently under construction.
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PAGE 2 OF AGENDA BILL NO.
The bullet points below summarize additional information from the report about affordable and
market-rate housing production within the City over the last year as well as the previous housing
cycle.
o In fiscal year 1998 - 1999, 1,396 new homes were built in Carlsbad, the most in over 10
years of development.
o Over the entire housing element cycle (beginning in 1991 and ending in June, 1999), 442
units of newly constructed housing were produced which are affordable to lower income
households.
o During the housing element cycle, 297 units of newly constructed housing were produced
which are affordable to moderate-income households.
* Demands for higher-end housing remains relatively strong. Therefore, Carlsbad’s private
sector continues to produce primarily up-scale housing.
l The median price of a detached home rose $52,240 (from $336,750 to $388,990) between
the fiscal years 1997-l 998 and 1998-l 999.
Due to a variety of factors (primarily financing and construction phasing) production of affordable
housing has not yet met the estimated needs for such housing set forth within the previous and the
recently updated Housing Element. Nevertheless, it is important to note that the City has made
considerable strides towards its efforts to create new affordable housing. The City’s continued
commitment to implementation of the lnclusionary Housing Ordinance, which was revised this past
year, will be critical to the continued success of the City in providing affordable housing throughout
the community. Also, City staff will be focusing on additional efforts to create new affordable housing
opportunities outside the requirements of the lnclusionary Housing Ordinance to meet the needs of the community.
At this time, staff is recommending that the City Council accept this housing report. The report will
be forwarded to the California Department of Housing and Community Development as an appendix
to the recently approved Housing Element.
FISCAL IMPACT:
None. This is an information report only.
EXHIBITS:
1. Memorandum from the Planning Department to the City Manager, dated December 22,
1999, with the subject: Annual Housing Production Report - FY 7998 - 7999.
EXHIBIT 1
December 22,1999
To: CITY MANAGER
From: Associate Planner
ANNUAL HOUSING PRODUCTION REPORT - FY 1998-1999
This document constitutes the sixth annual report describing the City’s progress in new
housing construction. It describes our progress both a) in terms of overall housing
production, and b) towards meeting regional share needs (housing affordable to the four
income groups identified in state law). Although the City has numerous housing programs -
involving housing preservation, acquisition, rental assistance, and others - this report is
concerned only with the construction of new homes, the bulk of which are produced by the
private sector.
Reporting periods This one-year reporting period is for fiscal year 19981999, which
marks the end of the eighth and last year of the current Housing Element cycle. By state
law, this cycle was originally supposed to have extended from July 1, 1991 to June 30,
1996, a period of five years, However, in 1994, 1995, and again in 1996, as part of the
annual budget reconciliation acts, the state legislature extended the housing cycle by an
additional year. Consequently, the original five-year housing cycle became an eight-year
cycle, running through June 30, 1999. The numerical objectives remain the same,
however. An updated housing element and new five-year performance objectives, subject
to state Housing and Community Development review, have been prepared for the current
housing cycle that began July 1,1999 and ends June 30,2004.
Report Format The City’s progress is presented through data contained in eight tables.
Table 1 defines the four income groups. Tables 2 - 4 set out the qualifying income levels
for the four income groups and the corresponding rents and sales prices during FY ‘98-‘99
at which housing was considered to be affordable. Table 5 provides the counts of new
housing units, by income group and type of housing stock, which completed construction
this last fiscal year. Table 6 shows changes in median prices over the last two years. Table
7 gives annual and total housing counts for the last seven years. Last, Table 8 compares
our cumulative progress to the original five-year housing objectives. General observations
and conclusions are provided at the end of this report.
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CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Housing Cycle Objectives You will recall that the determinations of housing need for
each jurisdiction in California are derived from the Regional Housing Needs Statements
prepared by the regional councils of government (COG) before the beginning of each
housing cycle. Based upon these assessments of need the local jurisdictions are charged to
adopt housing objectives in the housing elements of their general plans.
A regional assessment of need is an estimate of the total need for new housing construction
throughout the region due to growth which has been forecast to occur during the five-year
cycle. The over-all housing need is then broken out by four income groups: very low-,
low-, moderate-, and other (as defined by HUD). The regional needs are then allocated to
the local jurisdictions on a “regional share” basis, according to models and formulas
designed by the COG.
The regional share estimate of need prepared by SANDAG for Carlsbad for the current
housing cycle is shown in Table 1. It is based, in part, upon the growth which SANDAG
forecast for the City in its Series 7 Growth Forecasts from the late 1980s.
Table 1: Carlsbad’s Regional Share Needs
* Definitions are from HUD, via the California Department of
Housing and Community Development.
The combined very low- and low-income (“lower’‘-income) estimate of need was 2,509
units. This equated to 40% of the total need for housing.
Definitions of Income Classes Table 1 also shows that each of the four income groups is
defined with reference to a percentage of the local median household income. Because the
incomes in a region change over time, the dollar limits for the income groups are revised
annually by HUD. These limits are based on a four-person family and are adjusted for
family size. Large families may pay more; smaller families should pay less. Table 2 shows
the income limits for very low-, low-, moderate-, and “other” income groups for FY 1998 -
1999 for households consisting of 2,4, 6, 8, and 10 persons. For example, a household of
6 people earning more than $30,450 and up to $48,700 last year was considered to be low-
income. A family of 4 with an income of $52,500 in 1999 earned the local median
household income.
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CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Page 3
Prices of Affordable Housing Generally, the federal and state rule is that housing is
affordable to a given family if the family pays less than 30% of its monthly income for
housing expenses. A determination of whether a housing unit is affordable can be easily
made for assisted public rental housing and other pubEic housing programs because
documentation is maintained on both the individual household’s income and the actual cost
of the unit in question (typically a rental).
Table 2: FY 98-99 Qualifying Limit On Annual Income
Rv Household Size
Income Group
to Which Units Persons Per Household
Are Afforrlshle
2 4 6 8 10
very low $21,000 $26,250 $30,450 $34,650 $38,850
low $33,600 $42,000 $48,700 $55,450 $62,150
moderate $50,400 $63,000 $73,100 $83,150 $93,250
A determination of whether market-rate housing is affordable according to the 30% rule,
on the other hand, presents some challenges. Builders of market-rate rental and for-sale
housing do not set prices based upon an individual buyer’s ability to pay. Rather, the
rents/prices are set to what the market will bear. Further, rents and prices do not generally
vary with the number of people in the household. For example, market rent for a two-
bedroom apartment will remain constant no matter if it is being rented to a l-, 2-, 3-, 4-, or
5-person household. So the challenge is how to determine to what income groun (as
opposed to an individual household) a given market-rate house is affordable, and to do so
based upon the number of bedrooms it has (as opposed to persons). A convention
developed in 1993 by member agencies of the San Diego Association of Governments is
to assume that there would be two persons per bedroom. Thus, a two-bedroom unit is
assumed to house four people.
To determine affordable @, the practice is to set rent thresholds for each income group,
using the 30% rule, with adjustments for the number of bedrooms. An additional
adjustment is also made for a utility allowance, as required by HUD. Table 3 shows the
resulting maximum market-rate rents for the four income groups for FY 1998 - 1999. For
example, a two-bedroom unit with a rent of up to $1,050 would be at the upper threshold of
affordability for a low-income household (i.e.: at 80% of county median income).
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CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
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Table 3: FY 98-99 Qualifying Rents, By Bedroom
. Number of bedrooms
Are Affordable
Source: Carlsbad Housing Authority, based upon 1998 HUD median income data,
effective l/27/99. A utility allowance is also a factor in the rents.
For-sale market-rate housing is even more complicated for purposes of determining
affordability. Neither state nor federal regulations provide a formula to determine
affordability. A multitude of factors are potentially involved. First, buyers don’t pay the
full price of a house in cash. Instead, they take out one of many types of mortgages,
subject to many variables (fixed or variable interest rate, down payment, pay-back period,
mortgage insurance, loan origination fees, etc.). In addition, other housing costs must be
factored in, including property taxes, insurance, utilities, and homeowners’ association
dues. All of these factors are recognized “housing costs” and indirectly affect how much a
family can pay each month under the 30%-of-income rule. Only the principal and down
payment, however, relate directly to the sales price of the house. All the others are related
to financing and operating a house.
Lacking guidance from state or federal law, SANDAG member agencies developed a
simple formula in 1993 for use in determining the affordability of market-rate for-sale
houses. The formula, provided below, follows a rule-of-thumb used by many mortgage
lending institutions. As with the rental formulas discussed earlier, it was subsequently
reviewed and accepted by the SANDAG Board and the California Department of Housing
and Community Development.
Affordable sales price = 3 .O X maximum-allowed-annual-income for each class,
adjusted for bedroom count.
Based upon this formula, Table 4 gives the qualifying purchase price for housing for the
four income groups for FY 1998 - 1999. To illustrate, a two-bedroom house costing less
than $78,750 would be potentially affordable to a very low-income family (at 50 percent of
median-income). This price is three times the upper limit for a very low-income family of
four, at $26,250 (from Table 2).
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HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Page 5
Table 4: FY 98-99 Qualifying Purchase Price, By Bedroom
( = 3X Annual Income*)
Income Group
to Which Units
Are Affordable
Number of Bedrooms
1 2 3 4 5
verv low $63,000 $78,750 $91,350 $103,950 $116,550
low $100,800 $126,OOO $146,100 $166,350 $186,450
moderate $151,200 $189,OOO $219,300 $249,450 $279,750
* 3X multiplier was developed by an ad hoc committee at SANDAG with subsequent approval by the
SANDAG Board in 1993. (There is no formula in state law.) The rule also assumes 2 persons per
bedroom to provide a correspondence back to HUDs affordability rules based upon a per household
(as opposed to bedrooms). In 199%1999,41,6-bedroom houses were built in Carlsbad. HUD tables do
not provide for 12 person households. Therefore, these homes were treated as if they were 5-bedroom
homes.
Determining Affordability Based on the above information, two variables must be
known about a housing unit to determine its affordability: a) the sales price or rent, and b)
the number of bedrooms. Staff must collect this information for each individual housing
unit. For housing created under one of the City’s housing assistance programs this is
relatively easy, as we get the data via the program. However, for new market-rate rentals
and for-sale homes, staff must obtain the sales price or rent information directly from the
builders. Staff performs this task once a quarter via a voluntary survey of all newly
constructed units. Most builders are cooperative and provide the information we need. A
few are not. When the builder is unwilling to provide the information we need, staff
attempts to estimate the price by visiting sales offices, estimating “camp” prices from
similar units, or using similar approaches. Some large, custom homes are owner-built and
do not have sales prices. We ask the owner for lot prices and construction costs. Some
provide this information. Others do not. As a last resort, we refer to the County Assessors
records for transfer prices and assessed valuations. There is often a delay of up to several
months between when a house sells and when the Assessor’s records are updated. (Hence,
this report usually trails the end of the reporting period by a number of months.)
Housing Affordability and Activity in FY 1998-1999 During the reporting period
(7/98 - 6/99) builders completed construction on and the City “finaled” 1,396 new homes
in Carlsbad, 359 more units than the last fiscal year. All of these were produced by the
private sector, and 18 units were completed with city financial assistance. Nearly 80
percent, or 1,112 homes, were single-family detached homes. Table 5 provides a break-out
by type of unit and affordability group.
CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Page 6-
Table 5: Affordability of Newly-Constructed Housing
Reporting Period: 7/l/98 - 6/30/99
. Tvpe of Q&
Income Group S F Second
To Which Units ’ * S.F. Condo Rental For Sale Rental Dwelling Totals
are Affordable Detached Attached APT APT Unit*
*All but two of the second dwelling units were produced to meet inclusionary housing obligations for private, tract
developers. When and if these units are rented, they are required by ordinance to be affordable to “low” income households
(rents no higher than 30% of 80% of adjusted San Diego county median income).
**Because the required information was not available for 8 homes, it was not possible to determine accurately to what
income group the units were affordable. These homes include custom-built and tract residences for which the owners or
developers did not supply cost information or had not yet sold. There is a great probability that most of these units should
be placed in the “other” category.
As can be seen from Table 5, 61 units affordable to low-income families were built. These
included 18 for-sale units in Cherry Tree Walk, a new paired-home community. When
completed, this 42-unit development will fulfil1 the inclusionary housing needs of the
Sambi Seaside Estates Development near the current north end of Aviara Parkway. To be
affordable to purchase by low-income households, units require developer and city
subsidies of 30 to 40 percent of the sales price. By June 30, 1999, two Cherry Tree Walk
homes had already been purchased and occupied.
The additional low-income housing built consisted of 43 second dwelling units, each
integrated into a larger main house and, except for two second dwelling units built by
individuals, produced by developers to comply with a project’s inclusionary housing
requirements. Under current Inclusionary Housing Ordinance policy, renting of second
dwelling units is not required, and they are considered affordable because they are small
and meet an affordable housing need for elderly parents, domestic help, college students,
etc. If rented, however, rates for second dwelling units must be affordable to lower-income
households.
There were 56 market-rate units built affordable to moderate-income families, the third
most produced during this housing cycle. Most were built throughout the south half of the
city. Eighteen of the 56 homes constructed were priced under $220,000; two were priced
below $200,000. Unfortunately, most of the four and five-bedroom homes considered
affordable to moderate-income households were priced well over $200,000. Note from
CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Page 7
Table 4 that a five-bedroom home is technically affordable to a moderate-income family at
a price of up to $279,750. In Carlsbad not many five-bedroom homes will actually house
the ten people assumed by the bedroom conversion formula. This points out a weakness in
the methodology and undoubtedly leads to overstating the amount of new housing which is
“truly” affordable to moderate-income families.
The balance of the new housing last year - 1,271 units - was affordable to the “other”
(upper-income) category, the likely buyers of which are households earning more than
$63,000, or 120% of the area median. This represents nearly all (91%) the new housing
produced.
No sales price or cost information was available for eight units produced during the last
reporting period. Accordingly, they are classified as “unknown” and cannot be placed in
any income category. The unknown units are a mix of custom homes and tract housing and
are assumed largely to be affordable to the “other” category - for a potential total of 1,279
upper-income units.
Table 6 shows that the median price for new, single-family, detached homes not including
second dwelling units was $388,990, up $52,240 (15.5%) from 1997 - 1998. The median
price for the 162 condominiums was $254,990, up $26,900 (11.8%) from the previous
year.
Table 6: Comparisons of Median Prices
FY ‘98 - ‘99 vs FY ‘97 - ‘98
Cumulative Progress Table 7 shows our progress last year added to what we have done
in the previous seven years. Unfortunately, during the first two years of the Housing
Element cycle (7/91 to 6/93) two factors combined to preclude determining the
affordability of units built during these years: a) the City did not have a process in place to
collect the price information necessary to determine the affordability of units, and b)
affordability formulas for market-rate housing were not defined until late 1993 (see earlier
discussion). Our total during these two years was 678 units, all of which were constructed
by the private sector. Based upon historical trends, it is likely that most, if not all, of these
units were affordable only to “other” income classes. Using this assumption, over the
eight-year period, from fiscal years 1991 - 92 to 1998 - 99, we built 247 units affordable to
very low-income families (of which 244 were associated with the Villa Loma Apartments
project), 195 units affordable to low-income families (including 100 associated with Villa
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CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
Page 8-
Loma), 297 units affordable to moderate-income families, and 3,580 units affordable to
“other” income families. Altogether, we built 5,013 new dwelling units.
Table 7: Newly Constructed Units - Annual Progress
By Income Class
Income
Group To
Which Units
Are
Verv Low
Low
Moderate
Other
Unknown*
Totals 1,396 i 1.037 1 651 1 822 I 295 I 134 I 678
Totals
247
195
297
3.580
694
5.013
Two other important observations from Table 7 can be made. The combined figures for
housing affordable to very low- and low-income families (“lower-income”) add up to
nearly nine percent of the total 5,013 new homes produced. Housing affordable to
moderate-income families constitutes six percent of the new housing. All the rest are
upper-income housing (assuming the “unknown” units are also “other” housing).
Table 8 below compares our progress during the eight years of the Housing Element cycle
with the original regional share needs figures (from Table 1). Our over-all construction
met 80 percent of the projected over-all housing need during the eight-year period. We
achieved 17.5 percent of the need for very low-income and for low-income families, 22.5
percent of the need for moderate-income families, and 146 percent of the need for “other”
income groups (174 percent, if the “unknown” units are included).
CITY MANAGER
HOUSING AFFORDABILITY REPORT PY 1998 - 1999
Page 9-
Table 8: Progress Vs Regional Share Objectives
Housing Cycle 7/91 to (299
Income Group Objective*
To Which Progress (Housing Percentage
Units Are (d.u.s) Need During Achieved to
Affordable ‘91-‘96 Date
Cvcle)
Very Low 247 1,443 17.1%
Low 195
Moderate 297
Other 3,580
unknown 694
Annual Totals 5,013
1,066 18.3%
1,317 22.6%
2,447 146.3%
n.a. n.a.
6,273 79.9%
Other +
Unknown 4,274 2,447 174.7%
* “Objective” is from Regional Housing Needs Statement, prepared by SANDAG, July 1990
Observations and Conclusions
1. Last year’s overall production Last year’s overall housing production rate continues
the rebound begun during the 1994 - 1995 reporting period, with 1,396 new homes
completing construction. This is the most produced in one year since the mid-1980s
and over 350 more units than fiscal year 1997-98. All of these homes were produced by
the private sector. The City is providing funds to assist low-income families in the
purchase of 18 units completed last year.
2. Eight-year overall production While Carlsbad’s overall production of housing during
the eight-year period (5,013 units) was 80% of the original regional share estimate of
need for Jive years (6,273 units), the lesser rate of production was due primarily to the
general economic downturn that occurred during the first three years of the cycle.
During this down period, growth throughout the state was flat, even negative in some
areas. Therefore, it is likely that the actual needs for housing (statewide and locally)
was significantly less than SANDAG’s original estimates of need. Carlsbad’s
production mirrors that of other jurisdictions throughout the state. Our production in
the last three years has rebounded strongly from the recession.
3. Last year’s lower-income housing production Sixty-one units were produced.
Eighteen of the units, all in Cherry Tree Walk, have been or will be sold at prices
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CITY MANAGER
HOUSING AFFORDABILITY REPORT FY 1998 - 1999
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affordable to low-income families. The remaining 43 units produced are second
dwelling units. If rented, their rates must be affordable to low-income persons.
4. Eight-year lower-income production The estimated need for lower-income housing for
the original five-year cycle was 2,509 units (or 40% of total need). The City’s
production of new lower-income units over eight years has been 442 units (or about
8.8 percent) of over-all production. Due to the complexities of producing housing
affordable to lower-income households, the City realized a fairly slow start in
construction of low-income housing during the noted reporting period. However,
during this period, numerous agreements were negotiated and several projects began
construction; this will soon increase the supply of affordable housing in Carlsbad as the
following list shows.
l Ranch0 Carrillo - Nearing completion is a 116-unit affordable apartment
project at the southeast corner of Palomar Airport Road and Melrose Drive. In
November 1999, sixteen of these units were rented to very low- and low-
income families. By February 2000, the rest of the apartments should be
completed and occupied.
l Laurel Tree - Near Palomar Airport Road and Aviara Parkway (extended), this
project consists of 138 very low- and low-income units. Project completion is
expected by next summer.
l Poinsettia Station - Grading began this fall on 92 lower-income apartments by
the Poinsettia Transit Station.
l Calmera HiEZs - Construction has began on five homes that will be affordable
to low-income households.
l Cherry Tree WaZk - The remaining 24 of the 42 homes in this low-income,
ownership development were completed in the first half of the current fiscal
year.
These five projects, all built to comply with the requirements of the Inclusionary
Housing Ordinance, will add 375 lower-income units in the City of Carlsbad by the end
of 2000, including many in this current fiscal year. Additionally, City financial
assistance has enabled each of these projects to be affordable to lower-income buyers.
5. Moderate-income housing production During the eight-year period 297 units (6% of
total production) have been produced which are affordable to moderate-income
families. The original regional share estimate of need indicated that 1,3 17 moderate-
income units were needed (or 21% of total need). When the City considered including
a moderate-income requirement as part of its inclusionary housing ordinances, the
requirement was set aside when the private sector assured the City that it would
produce moderate-income housing without inclusionary requirements. Based upon this
assurance, the City made a conscious decision to focus its own resources and efforts on
lower-income housing during the five-year period. The industry’s production figures
do not stand up well to its earlier assurances. In addition, as is pointed out in the main
body of this report, at least some of the units produced in this category may not be truly
affordable to moderate-income families: five-bedroom homes, selling at nearly
CITY MANAGER
HOUSING APPORDABILJTY REPORT PY 1998 - 1999
Page 11
$280,000, are technically affordable to the upper end of moderate-income families only
if they house 10 or more people. This type of production may not be meeting
Carlsbad’s real moderate-income needs. On the other hand, 90% (267 of 297) of the
market-rate moderate-income units produced since July 1991 were completed in just
the past three fiscal years. Perhaps economic and market trends will lend themselves to
producing more of the right kind of moderate-income affordable housing in future
years.
6. “Other’‘-income housing production The market-rate median prices of both single
family homes and condominiums produced in Carlsbad last year ($388,990 and
$254,990, respectively) are affordable primarily only to “other” income classes.
Clearly, Car&bad’s private sector continues to produce primarily up-scale housing. A
number of factors contribute to this trend: demand for higher-end housing remains
relatively strong; tax incentives for producing more affordable housing are few;
litigation against builders of multi-family housing projects continues to act as a
disincentive; and despite lower interest rates in recent years, per-square-foot production
costs remain high, so that profit margins on more affordable housing are low.
In conclusion, the City has seen significant results from its commitment to the development
of housing affordable to lower-income families. This commitment is evidenced in its
policy framework, the allocation of its own resources, and its efforts to pursue creative
partnerships with the private sector in all aspects of housing production. This commitment
is evidenced by the number of affordable housing units that has been produced or is
currently under construction. While the City has made positive strides in producing
affordable housing, the need for housing affordable to very low-, low-, and moderate-
income families continues to exceed the community’s collective ability to produce it. At
the same time, total production of new homes affordable to higher-income groups last year
hit the highest level in many years, as the current swing of the economic cycle provided the
conditions necessary for both production and purchases of new housing.
The fact that the market continues to strongly support the development of housing
primarily affordable to upper-income households is a key reason as to why the City must
continue its commitment to fully implement the Inclusionary Housing Ordinance. Over the
next few years, the City will experience a significant increase in the number of housing
units affordable to lower-income households which can be directly linked to the
requirements set forth in the Inclusionary Housing Ordinance. Although progress has been
slow to date on actual construction of more affordable housing units, the policy framework
has been established and many projects are in the development stages. As a result, the City
will realizes greater success under the next Housing Element cycle in the construction of
affordable housing units, especially for lower-income households.
SCOTT DONNELL SD/
/3