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HomeMy WebLinkAbout2000-11-21; City Council; 15963; Affordable Housing Credits For Villa Loma. 5 CITY OF CARLSBAD - AGENDA BILL AB# 15, %‘3 TITLE: APPLICATION TO PURCHASE AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA MTG. ]\ l d\ -00 HOUSING PROJECT DEPT. H/RED I c-r 4a-Pj CITY MGR. w RECOMMENDED ACTION: ADOPT Resolution a000 -34 3 APPROVING a request by Standard Pacific Homes to purchase 3.7 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Roesch project under the City’s lnclusionary Housing Ordinance. I ITEM EXPLANATION: The Roesch project is a 21 unit single-family development on a 27 acre site. The Planning Commission approved the tentative map and related applications on October 6,1999. The applicant is requesting to purchase affordable housing credits in the Villa Loma Project to satisfy the project’s 3.7 unit inclusionary housing obligation. The City Council is the approval body for the purchase of affordable housing credits. The Roesch project has two potential options in satisfying its’ inclusionary housing obligation. The project could potentially construct on-site affordable units or purchase credits. The project is a small subdivision both in terms of the number of units (21) and net developable area (six acres). The site has physical constraints caused by the large slope areas and the environmental habitat areas that effectively preclude all types of on-site affordable housing- Because of the constraints of the project site, 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. In reviewing the applicant’s request, the Affordable Housing Policy Team (staff) has utilized the criteria contained in the policies in making their recommendation to approve the purchase of the credits. . I FISCAL IMPACT: The Affordable Housing Credit is currently $37,400 per unit. The purchase of 3.7 credits will result in a wo payment of $138,380 to the City’s Housing Trust Fund. 6 EXHIBITS: E % 1. City Council Resolution No. -0 l 3*3 2. Applicant’s Request to Purchase Credits 3. Draft Affordable Housing Agreement . . p Y 6 f 0 0 I 4 5 6 7 6 9 10 11 12 13 14 15 16 17 16 19 20 21 22 23 24 25 26 27 28 - RESOLUTION NO. 2000-343 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A REQUEST BY STANDARD PACIFIC HOMES TO PURCHASE 3.7 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT IN ORDER TO SATISFY THE AFFORDABLE HOUSING OBLIGATION OF THE ROESCH PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING ORDINANCE. APPLICANT: STANDARD PACIFIC HOMES CASE NO: CT 98-19 WHEREAS, Standard Pacific Homes has received approval of Tentative Map CT 98-19 for the development of a 21 unit residential development; and WHEREAS, Standard Pacific Homes has requested approval from the City of Carlsbad City Council for the purchase of 3.7 affordable housing credits in the Villa Loma housing project to satisfy the inclusionary housing requirement of Tentative Map 98-19; and WHEREAS, the City Council did hold a public meeting to consider said request for the purchase of Affordable Housing Credits by Standard Pacific Homes, Inc.; 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 November 14, 2000, the City Council finds that the off-site satisfaction of the inclusionary housing requirement is in the public interest. 2 4 5 6 7 8 9 10 11 12 13 14 15 16 18 23 24 25 26 27 28 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 Standard Pacific Homes to purchase 3.7 affordable housing credits in the Villa Loma ousing project in order to satisfy the affordable housing obligation of the Roesch project under the city’s inclusionary housing ordinance. 5. That the City Council authorizes the Community Development Director or his or her designee to execute the Affordable Housing Agreement in substantially the form presented to the City Council and subject to review and approval by the City Attorney. PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of the City of Carlsbad, California, held on the 21st day of November, 2000, by the following vote, to wit: AYES: c ouncil Members Lewis, Hall, Finnila, Nygaard and Kulchin. NOES: None ABSENT: None /I ATTEST: cc RESO # 2000-343 PAGE2 - giH1~/?- 2. 3 T- m STANDARD. PACIFIC HOMES April 16, 1999 Ms. Deborah K. Fountain Housing and Redevelopment Director City of Carlsbad 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Subject: Roesch Property - Request to Purchase Off-site Affordable Housing Credits Dear Ms. Fountain: This letter serves as a formal request by Standard Pacific Homes to purchase off-site . affordable housing credits in the existing Villa Loma development to satisfy the inclusionary housing obligations of the Roesch Property subdivision (CT 98-19). 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. ‘,.,i, ,.,.;, l i,! .. 9335 Chesapeake Dr., +I D&o, CA 92 f23- IO IO TEL (619) 292-2200 FAX (619) 292-2260 f/ - Ms. Deborah K. Fountain April 16, 1999 Page two In the case of the Roesch 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 (3 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, Standard Pacific’Homes Vice President, Project Development Enclosure cc: Mr. Jack Henthorn, Jack Henthorn & Associates Mr. Craig Ruiz, Housing and Redevelopment Department 2 ROESCH 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: Ronald R. Roesch Standard Pacific Homes 2800 Nielson Way, #708 Attn: Mr. Gregg Linhoff Santa Monica, CA 90405 9335 Chesapeake Drive 31 o-392-2374 San Diego, CA 92123-I 010 61 g-292-2200 Applicant’s Representative: Jack Henthorn & Associates Attn: Mr. Jack Henthorn 5375 Avenida Encinas, Ste. D Carlsbad, CA 92008 760-438-4090 2. Off-site/Combined Project Name: VILLA LOMA APARTMENTS 3. Description of Project with lnclusionary Housing Obligation: The Roesch Property, CT 98-19, is a proposed 22-lot, 21-unit, single family development located on a 27.7-acre parcel with a 3.15unit affordable housing obligation.. 4. On-site Affordable Housing Description: The Roesch Property Affordable Housing project would be a 3-unit multi-family, apartment project occupying one lot 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 almost $155,000 (assuming the developer provides a fully constructed pad and that unit revenues are based on a 95% 2 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, Ocean Bluff and Lohf projects.) 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 3 c 57 and 58. If the applicant is afforded the opportunity to purchase Credits, the Roesch Property tentative map would require the purchase of 3.15 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 7 - ROESCH PROJECT OFF-SITE AND COMBINED INCLUSIONARY HOUSlhJG PROJECT ASSESSMENT WORKSHEET --WORKSHEET 1. Feasibilitv of the On-site Proposal a. Are there significant feasibility 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 small scale of the developable area onsite, as much of the site has steep slopes and environmentally sensitive habitat constraints, limits the ability to produce onsite affordable units due to restrictions on project yield. 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 almost $7,400 per unit so that land value could be contributed by the developer. This figure would rise to almost $11,700 per unit if the applicant were required to build the units on site and close the post land development gap of almost $155,000. . Based on the estimated restricted rental prices of the affordable units the applicant will be facing an average subsidy requirement of approximately $51,700 per unit, beyond land contributions. This would result in each unit being subsidized with approximately $81,700. b. Will an affordable housing product be difficult to inteqrate into the proposed market development because of significant price and product type disparity? . 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 will have an estimated base price range of $350,000 to $500,000. l The integration of 3 affordable apartment units, sized at 725 to .I,100 sq. ft., into the single-family subdivision with anticipated homes of approximately 2,700 to 4,000 square feet on a range of 7,500 to 16,300 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 AdvantaoeslDisadvantaqes 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 locaj public assistance? l Villa Loma is built and has proven its feasibility; no additional assistance is required. 5 - 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. 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 advantaqes 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, library, shopping, 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 capacity 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 Housinq 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 lnclusionaiji 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. . In conjunction with the combined Villa Loma project, the Roesch 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 3 ROESCH PROPERTY 4119199 AFFORDABLE HOUSING COMPARATIVE PRO FORMA REVENUE ANALYSIS RENT UNITS REVENUE 1 BEDROOM $695 1 $695 2 BEDROOM $888 1 $888 3 BEDROOM $1,062 1 $1,062 3 $2,645 95% OCCUPANCY $2,513 OPERATING COSTS @ 30% ($754) NET OPERATlNG INCOME $1,759 DEBT SERVICE INCOME (1.2) $1,466 * Note: The remainder unit obligation of 15 will be met by purchase of offsite credits in the Villa Loma project. INCOME SUPPORTED DEBT $166,944 LAND DEVELOPMENT COSTS LAND ON SITE IMPS PUBLIC FEES DESIGN/CONSULTANTS IMPROVED SITE COST LAND CARRY 18MO LAND DEVELOPMENT COST #Lots 1 $90,000 $60,000 $58,500 $35,000 $243,500 $13,500 $257,000 UNIT CONSTRUCTION COSTS UNIT SIZE 1 BR 2 BR 3BR SQUARE FEET (project) 725 850 1100 2,675 STRUCTURE COST $45.00 $32,625 $38,250 $49,500 $120,375 ON SITE INDIRECTS 10% STRUCT. $9,363 OVERHEAD .04 $9,740 MARKETING .02 $4,870 CONSTRUCTION COSTS $144,348 $144,348 LOAN FEES .02 $3,339 CONST FINANCING $7,217 SUBTOTAL FINANCING $10,556 PROJECT COST $411,904 GAP $244,959 Developer land contribution $90,000 NET GAP $154,959 PER UNIT NET GAP $51,653 PER UNIT GROSS SUBSIDY $81,653 Page 1 JACK HENTHORN ASSOCIATES MKAlAff Hsg Proforma 2x1s I I I I . . - - ‘-1 I.“’ *’ b cf* I.IL .-- i ; _’ ; : ;&¶.I. I I )A _’ tin- r ..v > , 1 1 /I I 0 !u g i9 ; d I: <” 18 I , , I , , , I I t ! fi I I , , , I i 4 4 I 4 t 1 i . RECORDING REQUESTED BY: City of Carlsbad WHEN RECORDED MALL TO: City of Carlsbad City Clerk’s Office Attn: City Clerk 1200 Carlsbad Village Drive Carlsbad, California 92008 (Space above for Recorder’s Use) AFFORDABLE HOUSING AGREEMENT THIS AFFORDABLE HOUSING AGREEMENT (“Agreement”) is entered into this day of 3 2000, by and between the CITY OF CARLSBAD, a municipal corporation (hereinafter referred to as the “City”), and Standard Pacific Homes (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 9%14), which provides conditional approval of the construction of 21 single family dwellings (“Project”). B. Chapter 21.85 of the Carlsbad Municipal Code requires 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. The Affordable Housing Obligation for this project is determined to be three and seven tenths (3.7) units and 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 REQUIREMENTS 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. 98-14 by reason of the approvals of the Tentative Map of CT 98-14, and any other applicable approval. (b) The Developer shall pay for three and seven tenths (3.7) Affordable Housing Credits as established by the City and as required by Condition No. 12 of Planning Commission Resolution No. 4629. 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 21.85 of the Carlsbad Municipal Code and Condition No. 12 of Planning Commission Resolution No. 4629. 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. 98-14. 4. 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: Standard Pacific Homes 9335 Chesapeake Drive San Diego, CA 92123-2260 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. 5. 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. 6. 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. 7. SUCCESSORS This Agreement shall benefit and bind the Developer and any successive owners of Affordable Housing Lots. 6. 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 hereto have caused this Agreement to be signed as of the day and year first above written. DEVELOPER CITY Standard Pacific Homes City of Carlsbad, a municipal corporation By: PJaW By: MARTIN ORENYAK Community Development Director By: (Title) APPROVED AS TO FORM: RONALD R. BALL CITY ATTORNEY /6 . V-IITE IT - DON’T SAY I-*! Date 2/7/2001 To File; Craiq Ruiz - Hsq/Redev From Debra Doerfler - Office of the City Clerk As instructed by the City Clerk this item is being filed "as is". As of this date a fully executed AFFORDABLE HOUSING AGREEMENT has not been received from Housing & Redevelopment. On Dec. 29, 2000 I placed an inquiry with AR initiator, Craig Ruiz, as to the status of this agreement and was told it was not yet ready. On Feb. 7 ,200l I placed another inquiry with same and was told that the agreement was "probably 2-3 months away from completion." A conformed copy of the A% & resolution have been forwarded to Hsg/Redev Attn: Craig Ruiz. No other action can take place until the executed agreement is received in the City Clerk's Office. m Debra Doerfler 2/8/2001