HomeMy WebLinkAbout2003-08-12; City Council; 17282; Affordable Housing Project 2578 Roosevelt StreetAB# 17,282
MTG. 8-12-03
DEPT. HIRED
CITY COUNCIL -AGENDA BILL
TITLE: REALLOCATION OF COMMUNITY DEVELOPMENT
BLOCK GRANT HOUSING RESERVE FUNDS FOR THE
DEVELOPMENT OF AN AFFORDABLE HOUSING
PROJECT LOCATED AT 2578 ROOSEVELT STREET
CITYMGR
RECOMMENDED ACTION:
Hold a public hearing and ADOPT Council Resolution No. 2o03-219 APPROVING the
reallocation of $244,161 from the Community Development Block Grant Housing Reserve Fund to
pay pre-development costs related to the development of an affordable housing project at 2578
Roosevelt Street.
ITEM EXPLANATION:
BACKGROUND
On March 11, 2003, the Carlsbad Redevelopment Agency (Agency) purchased a vacant .58-acre
property located at 2578 Roosevelt Street. At the time of the acquisition, the site contained an
uninhabitable, boarded-up residence and large amounts of trash and debris. As a requirement of the
Agency's purchase, the previous property owner removed the structure and all of the material on-
site. Thus, the purchase of the subject property has enabled the Redevelopment Agency to meet a
primary redevelopment objective of eliminating blight.
The property was also acquired with the intention of developing a 10-12 unit affordable apartment
project on the site (subject to Housing and Redevelopment Commission approval). After acquiring
the property, the Redevelopment Agency issued a Request for Qualifications to firms with experience
developing affordable housing projects. Staff received three responses to the Request for
Qualifications. After conducting interviews with each of the responding firms, Wakeland Housing and
Development Corporation was found to be the most qualified to develop the project, and was
therefore selected. Wakeland is an experienced non-profit affordable housing developer in the San
Diego and Southern California region. Wakeland also has local development experience, having
developed the 28-unit Vista Las Flores affordable apartment complex in Carlsbad in 2001 (located
on the southeast corner of Aviara Parkway & Cobblestone Road).
The Carlsbad Redevelopment Agency's 2000-2004 Redevelopment Implementation Strategy
includes an affordable housing production plan that indicates the Redevelopment Agency intends to
assist in the production of 253 units of newly constructed affordable housing units. Development of
the subject project will assist the Agency in meeting a portion of the production goal. The subject
Strategy also requires that covenants be placed on the property to ensure the long-term maintenance
and affordability of the designated affordable housing units for a minimum of thirty (30) years.
However, to ensure the property remains affordable for the expected life of the project, and to be
consistent with other affordable housing projects developed in the City of Carlsbad, the Agency will require affordability requirements of fifty-five (55) years.
PROJECT DEVELOPMENT
In order to proceed with development of the affordable housing project on the noted Roosevelt Street
property, plans need to be prepared and various studies need to be completed. In conjunction with
the reallocation of CDBG funds, staff is proposing that the Housing and Redevelopment Commission
and the Developer (Wakeland Housing) enter into a pre-development loan in the amount of $200,000
in order to prepare the appropriate plans and determine the complete scope of the noted project, and then, if appropriate, process the project for entitlement purposes.
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PAGE 2 OF AGENDA BILL NO. 17,282
While the project is in the permit processing stage, staff and Wakeland will be negotiating an
agreement for the ultimate development of the property. The subsequent agreement will formalize
the roles and responsibilities of the Agency and Wakeland for the property development and
operation, establish the terms for the purchase or long-term lease of the property, and the terms of
the City’s construction loan to the project. The agreement will be returned to the Housing
Commission and Housing and Redevelopment Commission for their review at a later date.
PRE-DEVELOPMENT LOAN FUNDING
To fund the recommended pre-development loan, staff is recommending that the City use the CDBG
funds which have been set-aside in the CDBG affordable Housing Reserve Fund. Currently, there is
$244,161 within this Reserve Fund that can be used for development of the subject property. CDBG
funding may be used for property acquisition and pre-development costs only. The funds cannot be
used for construction of the affordable housing units. Because the CDBG funds must be used in a
timely manner and the City Council has already indicated its intent to use the noted funds for the
purpose of developing affordable housing, staff is requesting that the City Council reallocate the
$244,161 from the CDBG Housing Reserve Fund to the specific project known at this time as the
Roosevelt Street Affordable Housing Project. Of the total $244,161, a total of $200,000 would be
used to fund the pre-development loan described within this report. The remaining funds will be
available for other pre-development costs if deemed appropriate at a later date. Any funds that are
not required for pre-development costs will remain within the project account and may be reallocated
at a later date. To allocate the noted CDBG funding to a specific housing project, the City Council
must take action following a public hearing.
INVESTMENT POLICY CONSISTENCY
Recently it was brought to staffs attention by the City Treasurer that the City’s Investment Policy
must be addressed with the approval of all loans provided by the City/Redevelopment Agency.
Currently, the City’s investment policy does not specifically address the investment requirements for
loans for affordable housing projects which are unique in nature since the goals and objectives of
affordable housing financial assistance recognize that the assistance is in actuality more in the
nature of a subsidy than an investment. The City Treasurer has indicated that he will be
recommending an amendment to the City’s Investment Policy that will exclude housing loans from
the general investment requirements for City/Agency loans. Therefore, pending that policy revision,
the attached City Council resolution includes a finding that the City’s standard investment
requirements are not applicable.
HOUSING COMMISSION RECOMMENDATION
At their meeting on July 23, 2003, the Housing Commission reviewed the reallocation of the CDBG
funds related to the subject affordable housing project. The Commission voted 4-0 (Ritchie absent) in
favor of the recommended action.
STAFF RECOMMENDATION
Staff recommends that the City Council adopt the attached resolution to authorize the reallocation of
the CDBG funds to the Roosevelt Street Affordable Housing project for pre-development costs.
Separate action will be required by the Housing and Redevelopment Commission to approve the pre-
development loan itself and the related loan documents.
ENVIRONMENTAL REVIEW:
The property was acquired for the purpose of construction of affordable housing. The project is
consistent with City’s General Plan and Zoning Ordinance. Further, the project is less than 2 acres in
PAGE 3 OF AGENDA BILL NO. 17r282
size, is adequately served by utilities, and has no value as wildlife habitat. Therefore, pursuant to
Section 15280 of the State CEQA Guidelines, the project is exempt from environmental review.
FISCAL IMPACT:
The pre-development funds will be utilized by the Developer to conduct all necessary planning,
engineering a nd a rchitectural studies, a nd p rocess the n ecessary p ermits to a llow for the project
development. The amount of the loan is to be $200,000. The CDBG Housing Reserve Fund has a
current balance of $244,161. Staff is requesting that the entire balance be reallocated for pre-
development activities for this project. The $44,161 difference between the loan amount and the
allocated CDBG amount would be reserved as a contingency fund for the pre-development portion of
the project. If some or all of the contingency funds are not used, the funds will be returned to the
Housing Reserve Fund to be used for an alternate project. At a later date, the Housing Commission
and Housing and Redevelopment Commission will review a request for financial assistance to
construct the subject affordable housing project.
EXHIBITS:
1. City Council Resolution No. 2003-219 2. July 23, 2003 Housing Commission Staff Report (without attachments)
DEPARTMENT CONTACT: Craig Ruiz (760) 434-281 7, cruiz@ci.carlsbad.ca.us
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CITY COUNCIL RESOLUTION NO. 2003-219
THAT THE CITY COUNCIL APPROVE THE REALLOCATION OF
$244,161 FROM THE COMMUNITY DEVELOPMENT BLOCK GRANT
FOR THE DEVELOPMENT OF AN AFFORDABLE HOUSING
PROJECT AT 2578 ROOSEVELT STREET
HOUSING RESERVE FUND TO PAY PRE-DEVELOPMENT COSTS
WHEREAS, on March 11,2003, the Carlsbad Redevelopment Agency acquired property
located at 2578 Roosevelt Street for the purposes of developing an affordable housing project;
and
WHEREAS, after acquiring the subject property, the Redevelopment Agency issued a
Request for Qualifications for the purpose of selecting a non-profit affordable housing developer
to develop, own and operate an affordable housing development on the subject site; and
WHEREAS, the Redevelopment Agency received three responses to the Request for
Qualifications; and
WHEREAS, after reviewing the responses to the Request for Qualifications and
interviewing each the responding firms, Wakeland Housing and Development Corporation was
letermined to be the most qualified organization to develop the affordable housing project; and
WHEREAS, the Redevelopment Agency has approved a Pre-Development Loan
4greement with Wakeland Housing and Development Corporation to fund the pre-development
ictivities to allow the proposed project to receive necessary entitlement permits; and
WHEREAS, the Housing Commission did, on the 23rd day of July, 2003, hold a public
neeting to consider the reallocation of $244,161 from the Community Development Block Grant
jousing Reserve Fund to provide funding for the pre-development costs related to the
ievelopment of the subject affordable housing project at 2578 Roosevelt Street; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to
)e heard, said Commission considered all factors relating to the proposed Pre-Development Loan
igreement and recommended approval of the loan to the developer of the project; and
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2003-219 CC RESOLUTION NO. PAGE 2
WHEREAS, the City Council did, on the 12* day of August, 2003, hold a public hearing
to consider the reallocation of $244,161 from the Community Development Block Grant Housing
Reserve Fund to provide funding for the pre-development costs related to the development of the
subject affordable housing project at 2578 Roosevelt Street; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to
be heard, said Council considered all factors relating to the reallocation of the funding within the
Community Development Block Grant Housing Reserve Fund.
WHEREAS, the City Council finds that the he reallocation of $244,161 from the
Community Development Block Grant Housing Reserve Fund to the Roosevelt Street Affordable
Housing Project is consistent with the goals and objectives of the Housing Element of the City of
Carlsbad’s General Plan, Consolidated Plan, the Inclusionary Housing Ordinance, and the Village
Master Plan.
WHEREAS, the City Council finds that the reallocation of $244,161 from the
Community Development Block Grant Housing Reserve Fund will assist with the development of
approximately ten to twelve (10-12) affordable housing units which will be affordable to lower
income households. The project, therefore, has the ability to effectively serve the AgencyKity’s
housing needs and priorities as expressed in the Housing Element of the City of Carlsbad’s
General Plan, the Consolidated Plan and the Village Master Plan.
WHEREAS, the City Council finds that the Pre-Development Loan shall not be required
to meet the general investment requirements set forth within the City’s Investment Policy since
;he goals and objectives of affordable housing financial assistance recognize that the assistance is
.n actuality more in the nature of a subsidy than an investment. The subject housing loan shall be
:xcluded from the investment policies with this approval.
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NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
The above recitations are true and correct.
That based on the information provided within the City Council Staff Report and
testimony presented during the public meeting of the Housing Commission on July
23,2003, the City Council hereby ADOPTS Resolution No. 2003-219 ,
APPROVING the reallocation of $244,16 1 from the Community Development
Block Grant Housing Reserve Fund to pay pre-development costs for the
development of an affordable housing project at 2578 Roosevelt Street.
That the City Manager or his or her designee be authorized to execute all
documents related to the reallocation of $244,161 from the Community
Development Block Grant Housing Reserve Fund to the Roosevelt Street
Affordable Housing Project, subject to review and final approval by the City
Attorney.
That the use or expenditure of Community Development Block Grant funds in the
form of a subsidy or loan, including pre-development loans, to affordable housing
projects made pursuant to applicable state or federal law and approved by the City
Council are not considered investments of City funds subject to the control of the
City Council’s Investment Policy dated January 14,2003, and are excluded from
the definition of Pooled Investments subject to management and reporting by the
City Treasurer.
Page 3 of 4 of Resolution No. 2003-219
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PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
the City of Carlsbad, California, held on the 12'h day of August, 2003, by the following vote, to
wit:
AYES: Council Members Lewis, Finnila, Kulchin
NOES: Council Members Hall, Packard
ABSENT: None
ABSTAIN: None
4TTEST:
LORRAINE M. W~D, city clerk'
:SEAL)
X Resolution No. 2003-219
'age 4
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EXHIBIT 2
I The City of Carlsbad Houshgg& RedeueIopment Depazdxnent
AREPORT TO THE
HOUSXNG- COIb!KMXBSXON I
DATE: . JULY23,2003
SUBJECT: ROOSEVELT STREET AFFORDABLE HOUSING PROJECT
RECOMMENDATION OF APPROVAL TO THE HOUSING AND
DEVELOPMENT LOAN TO WAKELAND HOUSING AND DEVELOPMENT
AGREEMENT AND RELATED DOCUMENTS, AND THAT $244,161 FROM
THE COMMUNITY DEVELOPMENT BLOCK GRANT HOUSING RESERVE
THE DEVELOPMENT OF AN AFFORDABLE HOUSING PROJECT AT 2578
ROOSEVELT STREET
REDEVELOPMENT COMMISSION TO PROVIDE A $200,000 PRE-
CORPORATION, APPROVAL OF THE PRE-DEVELOPMENT LOAN
FUND BE REALLOCATED TO PAY PRE-DEVELOPMENT COSTS FOR
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 2003-003 recommending APPROVAL
to the Housing iind Redevelopment Commission to provide a $200,000 pre-development loan to
Wakeland Housing and Development Corporation, approval of the Pre-Development Loan
Agreement and related documents, and that $244,16 1 from the Community Development Block
Grant Housing Reserve Fund be reallocated to pay pre-development costs related to the
development of an affordable housing project at 2578 Roosevelt Street.
11. PROJECT DESCRIPTION
On March 11,2003, the Carlsbad Redevelopment Agency (Agency) purchased a vacant .58-acre
property located at 2578 Roosevelt Street. The property was acquired for the purpose of
developing affordable housing. The Agency anticipates that a 10-12 unit apartment project can be
built on the site (subject to City CounciVHousing and Redevelopment Commission approval). It
is the Agency’s intention to work with a non-profit housing developer to construct, ownand
operate the development.
The property is located in Land Use District 8 of the Carlsbad Village Redevelopment Area. In
the Redevelopment Area, the Carlsbad Village Redevelopment Master Plan and Design Manual
(Master Plan) is the land use and design regulatory document. Under the Master Plan
regulations, multi- family housing is a permitted land use. Further, the General Plan and Master
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2578 ROOSEVELT STREET
JULY 23,2003
PAGE 2
Plan allow for a maximum density of 19 dwelling units per acre. The surrounding land uses
include a 3-story office building to the north, single-family residences to the east, multi-family
apartments to the south, and an office and trailer park to the west. The property is within close
proximity of many of the service facilities, retail locations, mass transit and other amenities
offered within the Redevelopment Area.
At the time the Redevelopment Agency initiated the acquisition, the site contained an
uninhabitable, boarded-up residence. In addition, the site contained large amounts of trash and
debris. As a requirement of the Agency’s purchase, the previous property owner removed the
structure and all of the material stored on-site. In addition to providing affordable housing, the
purchase and development of the subject property will assist the Redevelopment Agency to meet
the primary redevelopment objective of eliminating blight.
The Carlsbad Redevelopment Agency’s 2000-2004 Redevelopment Implementation Strategy
includes an affordable housing production plan that indicates the Redevelopment Agency intends
to assist in the production of 253 units of newly constructed affordable housing units.
Acquisition of the subject property will assist the Agency in meeting a portion of the production
goal. The subject Strategy also requires that covenants be placed on the property to ensure the
long-term maintenance and affordability of the designated affordable housing units for a
minimum of thirty ( 30) y ears. F or the u ltimate d evelopment o f t he p roperty, the Agency will
require long-term affordability requirements for a minimum of fifty-five (55) years.
As stated above, the proposed action before the Housing Commission is to approve the Pre-
Development Loan Agreement and related documents. Wakeland will utilize the pre-
development funds to conduct all necessary planning, engineering and architectural studies, and
process the necessary permits to allow for the project development. At a later date, the Housing
Commission will review a request for financial assistance to construct the subject affordable
housing project.
111. DEVELOPMENT TEAM
After acquiring the property in March, 2003, the Redevelopment Agency issued a Request for
Proposals to firms with experience developing affordable housing projects. After reviewing the
three responses and conducting interviews, Wakeland Housing and Development Corporation
was selected to develop the site. Wakeland is an experienced non-profit affordable housing
developer in the San Diego and Southern California region. In 2001 Wakeland developed the 28-
unit Vista Las Flores affordable apartment complex in Carlsbad (southeast comer of Aviara
Parkway & Cobblestone Road).
IV. FINANCIAL ASSISTANCE
In acquiring the property, the Agency utilized funding from the. Redevelopment Low and
Moderate Income Housing Fund (LowMod), the Federal Community Development Block Grant
2578 ROOSEVELT STREET
JULY 23,2003
PAGE 3
(CDBG) Program, and the Federal Home Investment Partnership Program Fund (HOME)
Program. CDBG regulations state that such funds may only be used for land acquisition and pre-
development activities, but not on actual construction activities. Therefore, the Pre-Development
Loan will utilize CDBG funds exclusively.
As stated in the attached Pre-Development Loan Agreement, the amount of the loan is to be
$200,000. The CDBG Housing Reserve Fund has a current balance of $244,161. Staff is
requesting that the entire balance be reallocated for pre-development activities for this project.
The $44,161 difference between the loan amount and the allocated CDBG amount would be
reserved as a contingency fund for the pre-development portion of the project. If some or all of
the contingency hnds were not used, it would be returned to the Housing Reserve Fund to be use
for a future project.
While the project is in the p emit processing stage, s taff and W akeland will b e negotiating a
development agreement. The agreement will formalize the roles and responsibilities of the
Agency and Wakeland for the property development and operation, establish the terms for the
purchase or long-term lease of the property, and the terms of the City's construction loan to the
project. The agreement will be returned to the Housing Commission for its review at a later date.
V. LOAN DOCUMENTS
As part of this transaction, the Agency and the developer will be entering into three agreements.
The first agreement is the Pre-Development Loan Agreement that details the requirements to
repay the loan. The
Assignment Agreement states that in the event of a default, all plans, studies, drawings and
entitlements become the property of the Agency. If necessary, the Agency could then use these
documents to complete the construction of the project.
The Promissory Note is the developer's pledge to repay the loan.
VI. SUMMARY AND STAFF RECOMMENDATION
It is the role of the Housing Commission to make financial assistance recommendations to the
City Council and Housing and Redevelopment Commission based on several considerations with
respect to affordable housing projects. These are:
0 The proposal's effectiveness in serving the AgencyKity's needs and priorities as
expressed in the Housing Element of the General Plan and the Consolidated Plan.
0 The proposal's consistency with the AgencyKity's affordable housing policies and
ordinances as expressed in the Housing Element and Inclusionary Housing Ordinance.
2578 ROOSEVELT STREET
JULY 23,2003
PAGE 4
The proposal's development and operating feasibility, emphasizing the development team
capacity, financing sources and the role of the AgencyKity in providing financial
assistance or incentives.
The subject affordable apartment project will be developed by a capable non-profit developer
that is committed to affordable housing. The financing structure, which will utilize a variety of
federal, City and private funding sources, is sound. The proposed City assistance meets the
City's underwriting goals of a strong borrower and reasonable project costs. The project location
is close to numerous service facilities, retail locations, mass transit and other amenities offered
within the Redevelopment Area. Finally, the project, through the removal of a previously non-
habitable structure and removal of trash and debris, will accomplish several redevelopment
revitalization goals along with the provision of affordable housing.
It is staffs recommendation that the Housing Commission approve the resolution of support
recommending conditional approval of the proposed City financial assistance for pre-
development associated with the subject affordable housing project to be located at 2578
Roosevelt Street.
VII. ATTACHMENTS
1. Housing Commission Resolution No. 2003-003
2. Draft Pre-development Loan Agreement, Promissory Note and Assignment Agreement
3. Vicinity Map
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HOUSING COMMISSION RESOLUTION NO. 2003-003
THAT THE HOUSING COMMISSION RECOMMEND APPROVAL TO THE
DEVELOPMENT LOAN TO WAKELAND HOUSING AND DEVELOPMENT
AGREEMENT AND RELATED DOCUMENTS, AND THAT $244,161 FROM
THE COMMUNITY DEVELOPMENT BLOCK GRANT HOUSING
COSTS FOR THE DEVELOPMENT OF AN AFFORDABLE HOUSING
PROJECT AT 2578 ROOSEVELT STREET
HOUSING AND REDEVELOPMENT COMMISSION OF A $200,000 PRE-
CORPORATION, APPROVAL OF THE PRE-DEVELOPMENT LOAN
RESERVE FUND BE REALLOCATED TO PAY PRE-DEVELOPMENT
WHEREAS, on March 1 1,2003, the Carlsbad Redevelopment Agency acquired property
located at 2578 Roosevelt Street for the purposes of developing an affordable housing project;
and
WHEREAS, after acquiring the subject property, the Redevelopment Agency issued a
Request for Qualifications for the purpose of selecting a non-profit affordable housing developer
to develop, own and operate an affordable housing development on the subject site; and
WHEREAS, the Redevelopment Agency seeks to enter into a Pre-Development Loan
Agreement with Wakeland Housing and Development Corporation to fund the pre-development
activities to allow the project to receive necessary entitlement permits; and
WHEREAS, the Housing Commission did, on the 23'd day of July, 2003, hold a public
meeting to consider the Redevelopment Agency Pre-Development Loan Agreement to provide
funding for the pre-development costs related to the development of an affordable housing
project at 2578 Roosevelt Street; and
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HC RESOLUTION NO. 2003-003
PAGE 2
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring
to be heard, said Commission considered all factors relating to the proposed Pre-Development
Loan Agreement.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of
the City of Carlsbad, California, as follows:
1. The above recitations are true and correct.
2. The Pre-Development Loan Agreement is consistent with the goals and objectives
of the City of Carlsbad’s Housing Element, Consolidated Plan, the Inclusionary
Housing Ordinance, the Carlsbad General Plan and the Village Master Plan.
3. The Pre-Development Loan Agreement will assist the development of
approximately ten to twelve (10-12) affordable housing units which will be
affordable to lower income households. The project, therefore, has the ability to
effectively serve the AgencyKity’s housing needs and priorities as expressed in
the Housing Element, the Consolidated Plan and the Village Master Plan.
4. That based on the information provided within the Housing Commission Staff
Report and testimony presented during the public meeting of the Housing
Commission on July 23, 2003, the Housing Commission hereby ADOPTS
Resolution No. 2003-003, recommending APPROVAL to the Housing and
Redevelopment Commission to provide a $200,000 pre-development loan to
Wakeland Housing and Development Corporation, approval of the Pre-
Development Loan Agreement and related documents and that $244,161 from the
Community Development Block Grant Housing Reserve Fund be reallocated to
pay pre-development costs for the development of an affordable housing
development at 2578 Roosevelt Street
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5. That the Housing Commission recommends that the Redevelopment Agency
Executive Director or his or her designee be authorized by the Housing and
Redevelopment Commission to execute all documents related to provision of the
Agency assistance, including but not limited to a Pre-Development Loan
Agreement, Promissory Note and Assignment Agreement, in substantially the
form presented to the Housing Commission on July 23, 2003, and subject to
review and final approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing
Commission of the City of Carlsbad, California, held on the 23'd day of July, 2003, by the
following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
EDWARD SCARPELLI, CHAIRPERSON
CARLSBAD HOUSING COMMISSION
DEBORAH K. FOUNTAIN .
HOUSING AND REDEVELOPMENT DIRECTOR
HC RESOLUTION NO. 2003-003
PAGE 3
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