HomeMy WebLinkAbout2004-02-03; City Council; 17493; La Costa Fariway Condominiums Affordable CreditsP w
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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
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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.
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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
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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.
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4. That based on the information provided within the City Council Staff Report and
testimony presented during the public meeting of the City Council, the City Council hereby
APPROVES a request by 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
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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
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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