HomeMy WebLinkAbout2007-03-13; City Council; 18929; Annual Housing Production ReportCITY OF CARLSBAD - AGENDA BILL
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AB# 18,929
MTG. 03-13-07
DEPT. PLN
ANNUAL HOUSING PRODUCTION REPORT
CALENDAR YEAR 2006 DEPT. HEAD W^
CITY ATTY. <&^
CITY MGRT^sT>^FN\
RECOMMENDED ACTION:
2007-054 . AUTHORIZING the submittal of the
and Research and Department of Housing and
That the City Council ADOPT Resolution No.
attached report to the State Office of Planning
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.
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.
2.
2007-054City Council Resolution No.
Memorandum to the City Manager from the Community Development Director datedFebruary
1 3, 2007 with the subject: Annual Housing Production Report -Calendar Year 2006.
DEPARTMENT CONTACT: Michele Masterson, (760) 602-4615, mmast@ci.carlsbad.ca.us
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
X
D
D
Dn
CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER - SEE MINUTES
D
D
D
D
.if)
1 RESOLUTION NO. 2007-054
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
3 CARLSBAD, CALIFORNIA, ACCEPTING THE CALENDAR YEAR
2006 ANNUAL HOUSING PRODUCTION REPORT
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WHEREAS, the Housing Element of the General Plan requires that an annual
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Housing Production Report be prepared and submitted to the local agency, the Governor's
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Office of Planning and Research and the California Department of Housing and Community
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Development; and8
WHEREAS, the current report covers the period January 1, 2006 through
1Q December 31, 2006; and
U 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
17 the state Department of Housing and Community Development.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 13th day of March, 2007, by the following vote:
AYES: Council Members Lewis, Kulchin, Hall, Packard
NOES: None
ABSENT: Council Member Sigafoose
, Mayor
ATTEST:
LORRAINE M. WOOD, CityJ
(SEAL)
'K,*>*
EXHIBIT 2
February 13, 2007
TO: CITY MANAGER
VIA: COMMUNITY DEVELOPMENT 7
ACTING PLANNING DIRECTOR
FROM: Management Analyst - Planning Dept.
ANNUAL HOUSING PRODUCTION REPORT - CALENDAR YEAR 2006
This document constitutes the annual report describing the City's progress in producing
housing. It describes our progress during the calendar year (January 1, 2006 to
December 31, 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 CY 2006.
Report Format - The City's production and progress during CY 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 (CY 2006).
• Table 5 provides the counts of new housing built, by income group and housing
type, in CY 2006.
• Table 6 highlights the low-income housing built in CY 2006.
• Tables 7 and 8 provide price information on the market rate homes built in CY
2006.
• Table 9 compares our progress so far to the current housing cycle objectives.
Regional Share Needs - The determination of housing need for Carlsbad and all other
jurisdictions in California is 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.
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page 2
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
50% or under
51 - 80 %
81 -120%
Over 120%
* Definitions are from HUD, via the California Department of
Housing and Community Development.
" AMI is the County Area Median Income. The 2006 San Diego
County Area Median Income for a family of four is $64,900.
1,770
1,417
1,436
1,591
6,214
The combined very low and low-income ("lower"-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
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.
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page 3
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 CY 2006, for example, to change
from one income group to another. Furthermore, the housing in the City built
specifically for low-income families in CY 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 CY 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: CY 2006 Qualifying Limits On Annual Income
By Household Size
Income Group Persons Per Household
2468
Very Low $27,600 $34,500 $40,000 $45,550
Low $44,150 $55,200 $64,050 $72,850
Moderate $62,300 $77,900 $90,350 $102,800
Other >$62,300 >$77,900 >$90,350 >$1 02,800
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).
10
$50,700
$81,100
$115,000
>$1 15,000
Prices of Affordable Housing - Generally, the federal and state rule is that housing is
affordable to a given family if the family pays no more than 30% of its monthly income
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page 4
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 CY 2006.
Table 3: CY 2006 Qualifying Rent and Utility Expenses
Income Group
Very Low
Low
Moderate
Other
By Number of Bedrooms
Number of bedrooms
1 2 3
$690 $863 $1,000
$1,104 $1,380 $1,601
$1,558 $1,948 $2,259
>$1,558 >$1,948 >$2,259
4
$1,139
$1,821
$2,570
>$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).
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
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
PageS
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: CY 2006 Qualifying Purchase Price
By Number of Bedrooms
Income Group 1
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, homes with more than 5-bedrooms are treated as if they were 5-bedroom homes.
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page6
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 CY 2006 - Table 5 and the information below
summarize and expand on housing completed in CY 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.
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page?
Table 5: Type and Affordability of Housing Units Constructed in CY 2006
Income Group
Very Low
Low
Moderate
Other
Unknown***
Market Rate
^ 5, =£ = -
0 0000
0 0000
0 0 0 104 0
754 0 111 0 0
6 0 8 10 0
Assisted
Apartment
0
29
0
0
0
BuiftUnitS 76° ° 119 114 0 29
Second
Dwelling Totals
Unit
0 0
12 41
0 104
0 865
0 24
12 1,034
*0ne 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.
Highlights on Carlsbad's newest lower-income housing.
Table 6 highlights Carlsbad's newest lower-income housing.
Table 6: Low -Income Housing Built in CY 2006
Project
The
Summit
Second
Dwelling
Units
Location
Marron Road
Throughout
Carlsbad
Number
of Units
29
12
Description
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.
If rented, second
dwelling units must be
affordable to low-income
persons.
City Assistance
None
None
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
PageS
Medians and Extremes - Table 7 compares the median price of for-sale, market rate
housing built in CY 2006. Table 8 provides high and low sales prices during CY 2006.
Table 7: Median Sales Prices
Calendar Year 2006 (Market Rate Units
Only)
Structure Type
Median Sales
Prices
CY 2006
Single-Family Detached $963,669
Condominium $416,000
All For-Sale Units $907,250
Table 8: Low and High Sales Prices
Calendar Year 2006 (Market Rate Units
Only)
Structure Type Sales Price
Low High
Single-Family
Detached
Condominium
$416,000 $2,550,000
$364,500 $1,050,000
8
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page 9
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: Cummulative Progress Toward Current Housing Cycle Objectives
By Income Group
Income Group
Very Low
Low
Moderate
Other
Unknown*
Totals
FY
2000
23
159
42
1,679
11
1,914
FY
2001
138
158
94
1,700
7
2,097
FY
2002
17
106
75
1,255
7
1,460
Housing Units Built
FY FY
2003 2004
0
69
0
654
2
725
0
50
53
480
8
591
FY
2005
114
347
197
1,013
35
1,706
CY
2006
0
41
104
865
24
1,034
Total
292
930
565
7,646
94
Housing Units Needed
Objective Percentage
of
Objective
Achieved
1,770
1,417
1,436
1,591
n.a.
9,527 6,214
16%
66%
39%
481%
n.a.
153.3%
'Neither sale price nor rent information were available for these units.
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.
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.
CALENDAR YEAR 2006 ANNUAL HOUSING PRODUCTION REPORT
February 13, 2007
Page 10
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
IS