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HomeMy WebLinkAbout2004-02-03; City Council; 17493; La Costa Fariway Condominiums Affordable CreditsP w a: e Q U 5 .. z 0 F 0 a J G z 3 0 0 TITLE: APPLICATION TO PURCHASE AFFORDABLE CREDITS IN THE VILLA LOMA HOUSING PROJECT FOR - 4B# 17,493 MTG. 2-3-04 THE LA COSTA FAIRWAY CONDOMINIUMS DEPT. HlRED - DEPT. HD. CITY MGR. RECOMMENDED ACTION: ADOPT Council Resolution No. 2004-037 APPROVING a request by SCI Enterprises, LLC, to purchase two (2) Affordable Housing Credits in the Villa Loma combined housing project in order to satisfy the affordable housing obligation of the La Costa Fairway Condominiums under the City’s lnclusionary Housing Ordinance. 1 ITEM EXPLANATION: The La Costa Fairway Condominiums project was approved by the Carlsbad Planning Commission on May 7, 2003, allowing for the subdivision of an approximately 1 .I 5 acre parcel of land located on the north side of La Costa Avenue and between El Camino Real and Viejo Castilla Way. The subdivision will result in 10 residential condominiums. The applicant is requesting to purchase two (2) affordable housing credits in the Villa Loma Project to satisfy the project’s inclusionary housing obligation. The City Council is the approval body for the purchase of affordable housing credits. The project is a small subdivision both in terms of the number of units (IO) and developable area (1.15 acres). The site is further constrained by a utility easement and sloping topography, which results in approximately 40% of the site remaining in open space. Due to the small size of the project, 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 rather than construct affordable units within their development (Exhibit 3). 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 (stam 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 $43,000 per unit. The purchase of 2 credits will result in a payment of $86,000 to the City’s Housing Trust Fund. EXHIBITS: 1. City Council Resolution No. 2004-037 2. Draft Affordable Housing Agreement 3. Developer’s request to purchase credits. 4. Site Map DEPARTMENT CONTACT: Craig Ruiz (760) 434-281 7, cruiz@ci.carlsbad.ca.us 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CITY COUNCIL RESOLUTION NO. 2004-037 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING A REQUEST BY SCI ENTERPRISES, LLC, TO PURCHASE TWO AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT IN ORDER TO SATISFY THE AFFORDABLE HOUSING OBLIGATION OF THE LA COSTA FAIRWAY CONDOMINIUMS PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING ORDINANCE. APPLICANT: LA COSTA FAIRWAY CONDOMINIUMS CASE NO: CT 02-27 WHEREAS, SCI Enterprises, LLC has received approval of Tentative Map CT 02-27 for the development of a ten (1 0) unit residential development; and WHEREAS, SCI Enterprises, LLC has requested approval from the City of Carlsbad City Council for the purchase of two affordable housing credits in the Villa Loma housing project to satisfy the inclusionary housing requirement of Tentative Map CT 02-27; and WHEREAS, the City Council did hold a public meeting to consider said request for the purchase of Affordable Housing Credits by SCI Enterprises, 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, the City Council finds that the off-site satisfaction of the inclusionary housing requirement is in the public interest. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 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 SCI Enterprises, LLC to purchase two affordable housing credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the La Costa Fairway Condominiums 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 2 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 3rd dayof February , 2004 by the following vote, to wit: AYES:council Members Lewis, Finnila, Kulchin, Hall and Packard NOES: None ABSENT: None ABSTAIN: None ATTEST: LORRAINE M. WObb-, City Clerk ’ ‘d (SEAL) CC Resolution No. 2004-037 Page 2 3 Recording Recluested by: City of Carlsbad When Recorded Mail to: City of Carlsbad City Clerk‘s Ofice 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 ,200-, by and between the CITY OF CARLSBAD, a municipal corporation (hereinafter referred to as the “City”), and SCI Enterprises, LLC, a California limited liability company (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 CT02-27 which provides conditional approval of the construction of ten (10) condominium units (“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 Developer’s affordable housing obligation (“Affordable Housing Obligation”), as such is defined under Chapter 21.85 of the Carlsbad Municipal Code. Planning Commission Resolution No. 5406 provides that the Affordable Housing Obligation of two (2) units will be satisfied by the purchase of affordable housing credits, as provided for in Chapter 21.85, Section 21.85.080. NOW, THEREFORE, incorporating the foregoing Recitals and in consideration of the mutual covenants contained herein, the parties agree as follows: 1. That the Recitals Are True And Correct. 2. THAT SATISFACTION OF DEVELOPER’S AFFORDABLE HOUSING REQUIREMENT WILL BE BY THE PURCHASE OF AFFORDABLE HOUSING CREDITS. June 11,2002 1 4 (a) Performance under this Agreement satisfies the Developer’s obligation for affordable housing under Chapter 21.85 of the Carlsbad Municipal Code as applied to the land covered by Carlsbad Tract No. CT 02-27 by reason of the approvals of the Tentative Map of CT 08-27, including Condition No. 14 listed in Planning Commission Resolution No. 5406, and any other applicable approval. (b) The Developer shall purchase two (2) Affordable Housing Credits for an amount established by resolution of the City Council and as required by Condition No 14 of Planning Commission Resolution No. 5406. The fee shall be paid prior to the Developer receiving any building permits 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. 14 of Planning Commission Resolution No. 5406. 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. CT 02-27. 4. HOLD HARMLESS Developer will indemnity and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as “Indemnitees”), and any of them, from and against all loss, all risk of loss and all damage (including attorneys’ fees and expenses) sustained or incurred because of or by reason of any and all claims, demands, suits, or actions, obtained, allegedly caused by, arising out of or pertaining in any manner to Developer’s actions or defaults pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto. 5. NOTICES All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested to the party to receive such notice at the address set forth below: TO THE CITY: City of Carlsbad Housing and Redevelopment Department Attn: Housing & Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, California 92008-2389 June 11,2002 2 TO THE DEVELOPER 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. 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. June 11,2002 3 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the day and year first above written. DEVELOPER CITY City of Carlsbad, a Municipal corporation By: By: By: Name Title Name Title ~ Sandra L. Holder Community Development Director If required by City, proper notarial acknowledgment f execution by Developer must be attached. If a Corporation, Agreement must be signed by one corporate officer fiom each of the following two groups. *Group A. Chairman, President, or Vice-president **Group B. Secretary, Assistant Secretary, CFO or Assistant Treasurer Otherwise, the corporation secretary under corporate seal empowering the officer(s) signing to bind the corporation. attach a resolution certified by the secretary or assistant APPROVED AS TO FORM: RONALD R. BALL, City Attorney By: Assistant City Attorney June 11,2002 4 ATTACHMENT A LEGAL DESCRIPTION OF SUBJECT PROPERTY LOTS 4 AND 5 OF LA COSTA GREENS, IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 6708, FILED IN THE OFFICE OF THE COUNTY RECORDER, SAN DIEGO COUNTY. June 11,2002 5 THE [I G HTFO OT PLAIN IN G GROUP April 4, 2003 Mr. Craig Ruiz Housing and Redevelopment Department 2965 Roosevelt Street, Ste. B Carlsbad, CA 92008 Re: La Costa Fairway Condominiums CP 02-12, CT 02-27 Dear Craig: On behalf of our client and the applicant of the above-referenced project, we are requesting consideration of the enclosed Inclusionary Housing Application which proposes to purchase two off-site affordable housing credits at the existing Villa Loma development to satisfy the inclusionary housing obligations. There are several reasons why the use of existing off-site units at Villa Loma is a more practical and desirable solution for fulfilling the requirement than constructing them on- site. Specifically, existing site conditions and design constraints limit the number of proposed units to ten and available floorplan options to two. A third design for only two units is financially difficult to accommodate in comparison to the off-site option. Furthermore, with the off-site option, the City will have another opportunity to recover more of its initial investment in the Villa Loma project. We appreciate you taking the time to review the enclosed revised worksheet and application. Should you have any questions or require additional information during the course of your review, please contact Ann Gunter or me at the number listed below. Sincerely, Alexis Pagnotta v Associate Planner Enclosures cc: Ms. Barbara Kennedy, Planning Department 702 CIVIC CENTER DRIVE OCEANSIDL CR 92054 (760) 722.1929 FAX (760) 433-7511 L\CLIENTS\SCI\Lm\lnclHousingAppCoverLtr. wpd 9 OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET BACKGROUND 1. oWIIer/ADDliCant: SCI Enterprises, LLC 567 San Nicolas Drive, Ste 320 Newport Beach, CA 92660 Attn: Brett Shaves 949-644-8900 ADDlicant’s Rmresentative: The Lightfoot Planning Group 702 Civic Center Drive Oceanside, CA 92069 Attn: AM Gunter or Alexis Pagnotta 760-722- 1924 2. Off-site or Combined Project Name Inclusionary units are expected to be provided off-site at the Villa Loma Apartments. 3. DescriDtion of Proiect with Inclusionarv Housin~ Obligation The proposed La Costa FrUiway Condominiums project, CP 01-12 and CT 02-27, is comprised of ten townhorne units located off of La Costa Avenue within the southeast quadrant in the City of Carlsbad. It is sited on 1.15 acres and has a 15 % affordable housing obligation (rounded per Ordinance requirement to 2 units). 4. P~ODOS~~ On-site Project DescriDtion (if any) The La Costa Fairway Condominiums project does not currently propose to provide affordable housing units on-site. To create a basis for comparison for the purpose of this worksheet, the developer has evaluated changing one of the proposed 10 market rate units into two (approximately 1 ,OOO square foot) affordable for-sale units. This comparison assumes that the replacement of one larger unit with two smaller units is possible from a site design standpoint, but it should be noted that this would required detailed design studies. Based on the known design constraints on this property (discussed further below) such a reconfiguration would be challenging, at best. 5. Prowsed Off-site Proiect DescriDtion The Villa Loma project is a 344-unit apartment development in which all units are restricted and are affordable to households with incomes not exceeding 60% of the San Diego county Median. Villa Lorna was developed by La Terraza Associates, with Bridge Housing Corporation as the Managing General Partner. The community contains 1,2, 3 and 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 Lorna Apartment complex is a Combined Project according to the Inclusionary Housing Ordinance, and developers may participate in this as an “off-site” method of satisfying their affordable housing obligation. Participation in the Villa Loma Apartment Affordable Housing Credit program by the applicant would consist of the purchase of 2 credits under terms established by City Council Policies 57 and 58. 6. DescriDtion of On-site Proiect Constraints Feasibility of providing affordable housing units on-site at La Costa Fairway Condominiums is limited by existing conditions such as the area of the site, topography, and an existing sewer easement, and by design constraints including the site configuration, required access, parking, setbacks and open space. The area of these constraints encompasses approximately 50% of the project site, which limits the development potential of the property. It has been designed with 10 units. WORKSHEET 1. Feasibility of the On-Site Promsal 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? Providing on-site affordable units on this property is limited by the size of the project, both in terms of site area and number of units. The existing physical conditions of the property that constrain the development potential include sloping topography between the street and golf course, an existing sewer easement across the width of the site (3 %), and design constraints such as extra-deep setbacks required adjacent to La Costa Avenue (12 %). Given the site configuration, and topographic conditions, providing . the required access drive requires a substantial portion of the site to be used to achieve acceptable street grades and turn-around areas (16 %). The topographic constraints also strongly influence the design for the units, which are sited to follow the slope and step down the hill. However, when combined with parking, access and open space requirements to meet zoning standards, the buildable area of the site is limited to approximately 50%, and the total number of units is limited. This, coupled with the results of the required subsidy, make construction of affordable units on-site financially impractical. At this point in the design of La Costa Fairway Condominiums, construction of inclusionary units on-site would require much effort and additional cost toward the redesign of the project. To create a basis for comparison for the purpose of this application, the developer has projected the financial consequence of converting one of La Cosra Fairway Condoems Page 2 April 4.2003 the proposed 10 market rate units into two (approximately 1 ,000 square foot) affordable for-sale units. The results are as follows: Projected Costs Per Unit (Type A) Land Basis $100,000 Construction Hard Cost $200,000 Site Development Costs $20,000 (Grading, Utilities, etc.) Fees (Development and Building) $61 ,000 soft costs $28,000 (Consultants, Bank Financing, etc.) Total Cost $409,000 1 Market Rate Unit Projected Sales Revenue $425,0OO-$450,~ Required Subsidy per Affordable Unit n/a 1 Affordable Unit $90,000 (assumes 11 total units) $120,000 $18,000 $5 1 ,000 $28,000 $307,000 $127 ,OOO $180,000 The total estimated subsidy necessary to construct the two required affordable units on site is $360,000. In addition, this comparison does not take into account the loss in revenue from the elimination of one market rate unit from the total project mix, nor redesign costs. The extremely small scale of a 2-unit on-site affordable housing option makes it unlikely that such a project would generate interest from funding sources. The off-site option already exists and the effectiveness of buying inclusionary housing credits is proven by prior examples. . b. Will an affordable housing product be difficult to integrate into the proposed market development because of significant price and product type disparity? If it was determined that affordable units could be constructed on-site, there would be noticeable cost and revenue disparities between the market rate and affordable units, especially given the few number of units proposed at the La Costa Fairway Condominium Project. The developer would need to seek financial subsidies and assistance with marketing for affordable units. La Costa Fairway Condominiums Page 3 Apri4.ZW3 c. Does the on-site development entity have the capacity to deliver the proposed affordable housing on-site? The applicant is not experienced in the development or marketing of affordable housing. Based on site constraints and the project size, the proposed La Costa Fairway Condominium Project was designed to provide only two unit types and two building types, allowing for cost savings in the development due to economies of scale. The inclusion of affordable units on site would require a redesign for a third unit type. Given the small project size, the cost of redesign for only two units is not financially practical. 2. Relative AdvantaPes/Disadvantantages of the Off-site Pro~osal a. Does the off-site option offer greater feasibility and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance? Villa Loma is already constructed, and has proven its feasibility. No additional public assistance would be necessary. The off-site option will allow the City to recover its investment by utilizing excess units still available at Villa Loma. These funds can then be used to provide additional affordable housing. The on-site alternative would require additional new subsidy.. 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? The off-site location has an advantage because it is close to jobs in the nearby business parks and shopping centers), schools, a public library, and public transportation service is provided immediately adjacent to Villa Loma on El Camino Real. There is no public transportation on La Costa Avenue. c. Does the off-site option (Villa Loma) offer a development entity with the capacity to deliver the proposed project? Yes, Villa Loma is already constructed, with experienced management for this affordable housing. La Costa Fairway Condominiums Page 4 Aprii 4,2003 !3 d. Does the off-site option satisfy multiple developer obligations that would be difficult to satisfy with multiple projects? The Villa Loma project was designed as a Combined Project which satisfies multiple developer obligations. Villa Loma has already been financed and built and would therefore not be competing for new subsidy financing. Villa Loma provides a range of small to large unit sizes throughout the project which would be difficult to replicate within multiple, smaller projects. a. Does the off-site proposal advance andor support city housing goals and policies expressed in the Housing Element, CHAS and Inclusionary Housing Ordinance? The off-site Villa Loma Project already exists and was designed and approved to support City housing goals and policies. Participation by La Costa Fairway Condominiums in this off-site project would further support the intent of the combined project by providing the City an opportunity to recover more of its original investment. La Costa Fairway Condoduns Page 5 April 4,2M3 Exhibit 4 La Costa Fairways Vicinity Map