HomeMy WebLinkAbout2006-11-07; City Council; 18776; Annual Housing Production ReportCITY OF CARLSBAD - AGENDA BILL
AB# 18,776
MTG. 11/7/oe
DEPT. PLAN
ANNUAL HOUSING PRODUCTION REPORT
FISCAL YEAR 2006
DEPT. HEAD \M N
CITY ATTY. <^
CITY MGR. (^ —
RECOMMENDED ACTION:
That the City Council ADOPT Resolution No. 2006-312 AUTHORIZING the submittal of the
attached report to the State Office of Planning and Research and Department of Housing and
Community Development.
ITEM EXPLANATION:
Section 65400 of the Government Code requires that each jurisdiction "provide an annual report
to the Office of Planning and Research and the Department of Housing and Community
Development on the status and progress in meeting its share of regional housing needs." The
purpose of this requirement is to summarize each year's housing program accomplishments
and how those accomplishments contribute toward meeting the goals of the Housing Element.
Pending legislation is requiring a change in the reporting format in order to streamline the
process and highlight program schedules. Information will be reported on the calendar year
rather than the fiscal year. Reporting for 2006 will be required April 1st of next near, 2007.
FISCAL IMPACT:
None. This is an information report only.
ENVIRONMENTAL IMPACT:
This is an information item only that does not have the potential to physically impact the environment.
Therefore, it is not subject to the California Environmental Quality Act (CEQA) pursuant to Section 15378
of the CEQA Guidelines.
EXHIBITS:
1. City Council Resolution No. 2006-312
2. Memorandum to the City Manager from the Community Development Director dated October 12,
2006 with the subject: Annual Housing Production Report - Fiscal Year 2006.
FOR CITY CLERKS USE ONL Y.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
/
D
D
D
D
CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER - SEE MINUTES
D
D
D
D
DEPARTMENT CONTACT: Michele Masterson, (760) 602-4615, mmast@ci.carlsbad.ca.us
1 RESOLUTION NO. 2006-312
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
3 CARLSBAD, CALIFORNIA, ACCEPTING THE FY 2005-2006
ANNUAL HOUSING PRODUCTION REPORT
4
WHEREAS, the Housing Element of the General Plan requires that an annual
5
Housing Production Report be prepared and submitted to the local agency, the Governor's
6
Office of Planning and Research and the California Department of Housing and Community
7
Development; and
o
WHEREAS, the current report covers the period July 1, 2005 to June 30, 2006;
10 and
WHEREAS, Carlsbad continues to see significant results from its commitment to
12 the development of housing affordable to lower-income families; and
13 NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City
14 of Carlsbad, California, as follows:
15 1. That the above recitations are true and correct.
16 2. That the City Council of the City of Carlsbad accepts the report and directs the
Planning Director to submit the report to the Governor's Office of Planning and Research and
the state Department of Housing and Community Development.
18
19
20
21
22
23
24
25
26
27
28
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
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 7th day of November, 2006, by the following vote:
AYES: Council Members Lewis, Hall, Packard, Sigafoose
NOES: None
ABSENT: Council Member Kulchin
AHEWIS/Mayor&6/-&*
ATTEST:
LXAH
LORRAINE M. WOOD, City Cleft l ?J
(SEAL)
EXHIBIT 2
October 12,2006
TO: CITY MANAGER
VIA: COMMUNITY DEVELOPMENT ~v>
ASSISTANT PLANNING DIRECTOR
FROM: Management Analyst - Planning Dept.
ANNUAL HOUSING PRODUCTION REPORT - FISCAL YEAR 2006
This document constitutes the thirteenth annual report describing the City's progress in
producing housing. It describes our progress during the previous fiscal year (July 1,
2005 to June 30, 2006, FY 2006) in meeting, through the construction of new homes,
Carlsbad's estimated share of the region's forecasted growth for the four income groups
identified in state law.
Report Purpose - The Annual Housing Production Report is prepared pursuant to
California Government Code Section 65400 (b)(1) which in part requires an agency to
report annually to its legislative body on the progress in meeting its share of regional
housing needs.
Reporting Period - As required by State Law, the City has been processing an update
to the General Plan Housing Element. The report covers housing production and
affordability in FY 2006. Along with covering FY 2006, this report also discusses
production and affordability from 1999 through FY 2006.
Report Format - The City's production and progress during FY 2006 and the housing
cycle is reported with data contained in the following tables:
• Table 1 defines the four income groups.
• Tables 2 - 4 set out the qualifying income levels for the four income groups and
the corresponding rents and sales prices considered affordable to the income
groups during the reporting period (FY 2006).
• Table 5 provides the counts of new housing built, by income group and housing
type, in FY 2006.
• Table 6 highlights the low-income housing built in FY 2006.
• Tables 7 and 8 provide price information on the market rate homes built in FY
2006.
• Table 9 compares our progress so far to the current housing cycle objectives.
• Tables 10-12 focus on production and affordability overall during the current
housing cycle.
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Pape2
Regional Share Needs - The determination of housing need for Carlsbad and all other
jurisdictions in California derived from the Regional Housing Needs Statements
prepared by regional councils of government (COG) before the beginning of each
housing cycle. Based upon these assessments of need the local jurisdictions are
charged to adopt housing objectives in the housing elements of their general plans.
A regional assessment of need is an estimate of the total need for new housing
construction throughout the region due to growth forecasted to occur during the six-year
cycle. The overall housing need is then broken out by four income groups: very low,
low, moderate, and other (or above moderate or upper-income) - all as defined by the
federal Department of Housing and Urban Development, or HUD, and the state
Department of Housing and Community Development, or HCD. The regional needs are
then allocated to the local jurisdictions on a "regional share" basis, according to models
and formulas designed by the COG.
Table 1 shows the regional share estimate of need prepared for Carlsbad for the current
housing cycle. It is based, in part, upon the growth that the San Diego Association of
Governments (SANDAG), the region's COG, estimated for the City in its 2020 Regional
Growth Forecast. This forecast was prepared in 1998.
Table 1: Carlsbad's Regional Share Need Estimates
For Housing Cycle 1999-2006
Income Group Definition*
(%ofAMI**)
New Construction
Needs(in housing units)
Very Low
Low
Moderate
Other
Totals
80% or under
51 - 80 %
81 - 120%
Over 120%
1,770
1,417
1,436
1,591
6,214
* Definitions are from HUD, via the California Department of
Housing and Community Development
" AMI is the County Area Median Income. The 2006 San DiegoCounty Area Median Income for a family of four is $64,900.
The combined very low and low-income (1ower"-lncome) estimate of need is 3,187
units. This equals 51% of the total estimated need for the housing cycle.
Definition of Income Groups - Table 1 also defines each of the four income groups
with reference to a percentage of the county area median income (AMI). Defined as the
median income for a family of four in a specific geographic area, the AMI changes over
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12, 2006
Page 3
time and with location. HCD annually revises the AMI based on HUD data and cost of
living issues such as the relationship of housing prices to income. For 2006, HCD
established the AMI for San Diego County at $64,900.
Additionally, HCD modifies the area median income to reflect the differences in costs of
living throughout California, as the 2006 AMI information for different counties shows:
> San Diego:
> Orange:
> Shasta:
> Santa Clara:
$64,900
$78,300
$50,800
$105,500
Some regions of California, including San Diego County, have high housing costs
relative to incomes. In recognition of this factor, HCD adjusted the AMI and increased
the income limits in 2006 for the very low and low-income groups in these regions. This
potentially enables a larger group of people to qualify for housing assistance. However,
these adjustments did not have an effect on housing built in Carlsbad; they did not
cause the affordability of any housing produced in FY 2006, for example, to change
from one income group to another. Furthermore, the housing in the City built
specifically for low-income families in FY 2006 was already restricted to occupancy by
that income group.
The income maximums for each income group listed in Table 1 are adjusted for family
size so that larger households have higher income limits. Table 2 shows the FY 2006
income limits for very low, low, moderate, and other income groups for 2,4,6,8, and 10
person households. The income limits in Table 2 correspond to the standard
percentages stated in Table 1, but they also reflect the adjustments discussed in the
prior paragraph that are necessary to recognize our region's high housing costs relative
to incomes.
Table 2: FY 2006 Qualifying Limits On Annual Income
By Household Size
Income Group Persons Per Household
4 6 10
Very Low
Low
Moderate
Other
$27,600 $34,500 $40,000 $45,550 $50,700
$44,150 $55,200 $64,050 $72,850 $81,100
$62,300 $77,900 $90,350 $102,800 $115,000
>$62,300 >$77,900 >$90,350 >$1 02,800 >$1 15,000
Source: "2006 Income Limits," state Department of Housing and Community
Development, April 6, 2006; and Carlsbad Housing Authority table on "Lower and
Moderate Income Rental Rate Calculations" (based on HUD income data effective
March 8, 2006).
i
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Page 4
Prices of Affordable Housing - Generally, the federal and state rule is that housing
affordable to a given family if the family pays 30% of its monthly income for housing
expenses that include the rent or mortgage payment, property taxes, insurance, utilities,
and the like. A determination of whether a housing unit is affordable can be easily
made for assisted public rental housing and other public housing programs because
documentation is maintained on both the individual household's income and the actual
cost of the unit in question (typically rental).
A determination of whether market rate housing is affordable according to the 30% rule,
on the other hand, presents some challenges. Builders of market rate rental and for-
sale housing do not set prices based upon an individual buyer's ability to pay. Rather,
the rents/prices are set to that the market will bear. Further, rents and prices do not
generally vary with the number of people in the household. For example, a market rent
for a two-bedroom apartment will remain constant no matter if it is being rented to a 1-,
2-, 3-, 4, or 5-person household. So the challenge is how to determine to what income
group (as opposed to an individual household) a given market rate house is affordable,
and to do so based upon the number of bedrooms it has (as opposed to persons). A
convention developed in 1993 by member agencies of the San Diego Association of
Governments assumes two persons per bedroom. Thus a two-bedroom unit is
assumed to house four people.
To determine affordable housing expenses for rentals, the practice is to set thresholds
for each income group, using the 30% rule, with adjustments for the number of
bedrooms. An additional adjustment is also made for utility allowance, as required by
HUD. Table 3 provides the resulting maximum market rate rental expenses (which
include rent and a $32-$63 utility allowance that increases with household size) for the
very low, low, and moderated-income groups for FY 2006.
Table 3: FY 2006 Qualifying Rent and Utility Expenses
By Number of Bedrooms
Income Group Number of bedrooms
1 2 3
Very Low
Low
Moderate
Other
$1,000 $1,139
$1,104 $1,380 $1,601 $1,821
$1,558 $1,948 $2,259 $2,570
>$1,558 >$1,948 >$2,259 >$2,570
Source: "2006 Income Limits," state Department of Housing and
Community Development, April 6, 2006; and Carlsbad Housing
Authority table on 'Lower and Moderate Income Rental Rate
Calculations" (based on HUD income data effective March 8, 2006).
7
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12, 2006
PageS
For-sale market rate housing is even more complicated for purposes of determining
affordability. Neither state nor federal regulations provide a formula to determine
affordability. A multitude of factors are potentially involved. First, buyers do not pay the
full price of a house in cash. Instead, they take out many types of mortgages, subject to
many variables (fixed or variable interest rate, down payment, pay-back period,
mortgage insurance, loan origination fees, etc.). In addition, other housing costs must
be factored in, including property taxes, insurance, utilities, and homeowners'
association dues. All of these factors are recognized "housing costs" and indirectly
affect how much a family can pay each month under the 30%-of-income rule. Only the
principal and down payment, however, relate directly to the sales prices of the house.
All the others are related to financing and operating a home.
Lacking guidance from state or federal law, SANDAG member agencies developed a
simple formula in 1993 for use in determining the affordability of market rate for-sale
houses. The formula, provided below, follows a rule-of-thumb used by many mortgage-
lending institutions. As with the rental formulas discussed earlier, it was subsequently
reviewed and accepted by the SANDAG Board and the California Department of
Housing and Community Development.
Affordable sales price = 3.0 x maximum-allowed-annual income for each class, adjusted
for bedroom count.
Based on this formula Table 4 gives the qualifying purchase price for housing for the
different income groups. The table illustrates that a three-bedroom house costing no
more than $271,050 would be the maximum affordable to a moderate-income family.
Table 4: FY 2006 Qualifying Purchase Price
By Number of Bedrooms
Income Group Number of Bedrooms
2 3
Very Low
Low
Moderate
Other
$82,800 $103,500 $120,000 $136,650 $152,100
$132,450 $165,600 $192,150 $218,550 $243,300
$186,900 $233,700 $271,050 $308,400 $345,000
>$186,900 >$233,700 >$271,050 >$308,400 >$345,000
* 3X multiplier was developed by an ad hoc committee at SANDAG with subsequent approval by the
SANDAG Board in 1993. (There is no formula in state law.) The rule also assumes 2 persons per
bedroom to provide a correspondence back to HUD affordability rules based upon persons per
household (as opposed to bedrooms). Since HUD tables do not provide for 12 or more person
households hnrrms with mnre than 5-hertrnnms are treated as if thev were fi-herirnnm hnmes
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Page 6
Determining Affordability - Based on the above information, two variables must be
known about a housing unit to determine its affordability: a) the sales price or rent, and
b) the number of bedrooms. Staff must collect this information for each individual
housing unit. For housing created under one of the City's housing assistance programs
this is relatively easy, as we get the data via the program.
On the other hand, for new market rate rentals and for-sale homes, staff must obtain the
sales price or rent information directly from the builders. Staff performs this task once a
month via a voluntary survey of all newly constructed units. Most builders are
cooperative and provide the information we need. A few are not. If the builder is not
responsive, staff attempts additional contacts by mail and phone. If necessary, we also
research Building Department records and County Assessor's data, the latter on the
Internet, for any missing information on bedroom counts and sales prices.
Due to the research and delays involved in documenting prices and rents and
assembling data, this report trails the end of the reporting period by a few months. For
this reporting period, staff obtained with the monthly survey and additional research
sales prices and rents for all but a few homes.
Housing Activity and Affordability in FY 2006 - Table 5 and the information below
summarize and expand on housing completed in FY 2006. Definitions of terms used in
the table and the remainder of the report are as follows:
Market Rate Units - Units that received no financial assistance from the City
and have no affordability restrictions.
Assisted Units - Units that received financial assistance from the City and/or
other subsidy sources and have affordability restrictions.
Single-family detached - A single home on a single lot, detached from any other
unit, except for an attached second dwelling unit.
Condominium - A detached or attached home on commonly owned property.
Apartment - A unit that can only be rented and not owned.
Duplex- Two units on a single lot. Units cannot be individually sold.
Second Dwelling Unit - A completely independent dwelling unit on the same lot
as a primary residence. A second dwelling unit may be attached to or detached
from the primary residence.
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Paae7
Table 5: Type and Affordablltty of Housing Units Constructed In FY 2006
Income Group
Very Low
Low
Moderate
Other
Unknown***
Total Units BuW
Market Rate
S£ paS 255; Sf Du"-Detached* Attached minium ment
0 0000
0 0 78 0 0
0 0 0 19 0
1,195 0 150 3 0
6 0 18 2 0
Assisted
Apartment
2
29
0
0
0
1,201 0 246 24 0 31
Second
Dwelling Totals
Unit
0 2
9 116
0 19
0 1,348
0 26
9 1,511
* One single family detached home was built with a second dwelling unit This second dwelling unit is counted in the
second dwelling unit category.
***The 'unknown* income group counts units for which sales prices could not be obtained.
Comments on Housing Production in FY2006
> Developers built 1,511 new homes in Carlsbad, compared to 1,706 units built in
FY 2005 and 591 units built in FY 2004. The decrease in production is attributed
to the buildout of several master planned/large developments (e.g., Villages of La
Costa, Calavera Hills, Bressi Ranch, and Thompson/Tabata).
Highlights on Carlsbad's newest lower-income housing.
Table 6 highlights Carlsbad's newest lower-income housing.
Tabto 6: Low -income Housing Built In FY 2008
Protect
Mulberry
The Summit
Traditions
Second Dwelling
Units
Location
Bressi Ranch
Matron Road
El Camirto Real
& Cassia Way
Throughout
Carlsbad
Number
of Units
78
29
2
9
Description
Town Homes
Apartments
Apartments
Small, independent living
units located on property with
a larger primary residence.
Occupancy
Restrictions
Households earning
up to 80% of the Area
Median Income.
Households earning
up to 80% of the Area
Median Income.
Households earning
up to 80% of the Area
Median Income.
If rented, second
dwelling units must be
affordable to low-
income persons.
City Assistance
Yes-
Homebuyer
Assistance
None
None
None
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12, 2006
Page 8
Medians and Extremes - Table 7 compares the median price of for-sale, market rate
housing built in FY 2005 and FY 2006. Table 8 provides high and low sales prices
during FY 2006.
Table 7: Comparison* of Median Sales PrlcM
FY 2005 vs. FY 2006 (Market Rate Units Only)
Median Sales Prices . _, ._,
Structure Type *T™™
FY2005 FY2008 Change
Single-Family Detached $859,992 $907.680 $47,688
Condominium $619,900 $595,000 -24,900
All For-Sate Units $897,621 $901,000 $3,379
Percent
Change
5.5%
-4.0%
0.4%
Table 8: Low and High Sales Prices
FY 2006 (Market Rate Units Only)
Structure Type
Sales Price
Low High
Single-Family Detached $501,000 $8,200,000
Condominium $409,000 $1,300,000
Progress Toward Housing Cycle Objectives - Table 9 below provides the number of
dwellings completed during the first seven years of the current housing cycle. The table
also shows the cumulative progress achieved during those years toward meeting the
new housing needs (from Table 1) estimated for the housing cycle over its original six-
year term (1999-2006).
Table 9: Cumulative Progress Toward Current Housing Cycle Objectives
By Income Group
Income Group
Very Low
Low
Moderate
Other
Unknown*
Totals
FY FY FY
2000 2001 2002
23 138 17
159 158 106
42 94 75
1,679 1,700 1,255
11 7 7
1,914 2,097 1,460
Housing Units Bum
FY FY
2003 2004
0
69
0
6S4
2
725
0
50
53
480
8
591
FY
2005
114
347
197
1,013
35
1,706
FY
2006
2
116
19
1,348
26
1,511
Total
294
1,005
480
8,129
96
10,004
Housing Units Needed
Percentage
Objective of Objective
Achieved
1,770
1,417
1,436
1,591
n.a.
6,214
17%
71%
33%
511%
n.a.
161.0%
* Neither sale price nor rent information were available for these units.
8
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Page 9
Affordability of Housing Produced from 1999-2006 - Table 10 shows the affordability of
housing produced in the first seven years of the current housing cycle.
Table 10: Affordabiilty of Housing Built
July 1, 1999 to June 30, 2006
Income Group
Very Low
Low
Moderate
Other
Total*
* 26 "unknown"
table.
Vary Low
3% L"*
W /10*
Units Buitt* ^r4 ....
294 A:l^n 5%
1.005 L ,,*T <)
480 V ' ', ;J
8,129 nth^-^
9,908 St
units, lor which prices could not to determined, am not reflected in this
Type of Housing Produced from 1999-2006 - Based on the type of housing built, the
nearly 10,000 units constructed over the past seven years break down as follows:
Table 11: Type of Housing Built
July 1, 1999 to June 30, 2006
Type
Single-Family Detached
Single-Family Attached
Condominium
Apartment
Duplex
Second dwelling Unit
Totals
Corwto
17%
Units Built SFA
6.288 2,y£
161 j^L
1,708 •
1,681 V
18 SFD167 Rp*
10,004
Apt
L 17%
7SVJ Duplex
J \^ o%
^•\SDUJj^ 2%
FISCAL YEAR 2005 - 2006 ANNUAL HOUSING PRODUCTION REPORT
October 12,2006
Page 10
Type of Lower-Income Housing Produced from 1999-2006 - Developers have built
nearly 1,300 homes for lower-income households in Carlsbad, most resulting from
Inclusionary Housing Ordinance requirements and requiring city financial assistance.
Table 12 breaks down the type and number of lower-income housing built during the
current Housing cycle.
Table 12: Type of Lower-Income Housing Built
July 1, 1999 to June 30, 2006
Type
Apartment
Condominium
Single-family Attached
Second Dwelling Unit
Totals
Units Built ^, ™
877 K"^^.
24 "* l^l^B
167 ^^fr™
1299
Conclusions
As this report demonstrates, Carlsbad has seen significant results from this commitment
to the development of housing affordable to lower-income families. This commitment is
evidenced in its policy framework, the allocation of its own resources, and its efforts to
pursue creative partnerships with the private sector in all aspects of housing production.
While the City has made positive strides in producing lower-income housing, the need
for housing affordable to very low, low, and moderate-income families continues to
exceed the community's collective ability to produce it. At the same time, total
production of new homes affordable to upper-income groups remains dominant.
Clearly, Carlsbad's private sector continues to produce primarily up-scale housing. A
number of factors contribute to the trend: Demand for higher-end housing remains
strong; tax incentives for producing more affordable housing are few, land costs are
high; and, despite lower, relatively stable or declining interest rates in recent years, per-
square-foot production costs remain substantial, so that profit margins on more
affordable housing are low.
Additionally, when the City considered including a moderate-income requirement as part
of its inclusionary housing ordinances in the early 1990s, the requirement was set aside
when the private sector assured the City that it would produce moderate-income
housing without inclusionary requirements. Based upon this assurance, the City made
a conscious decision to focus its own resources and efforts on lower-income housing.
Michele Masterson
10 13