HomeMy WebLinkAbout2008-01-22; City Council; 19291; Policy 73 City Option to Purchase Resale Housing,/3«Ji£/gy^O
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AB# 19,291
MTG. 01/22/08
DEPT. HSG/RDV
TY OF CARLSBAD - AGENDA 1
City Council Policy 73
City Option to Purchase Resale
Affordable Housing
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DEPT. HEADf &£} ^
CITY ATTY. x^-
CITYMGR. (u^
2008-015 APPROVING City Council Policy 73.
RECOMMENDED ACTION:
ADOPT Resolution No.
ITEM EXPLANATION:
The City's Inclusionary Housing Ordinance requires developers of residential projects with
more than six units to provide fifteen percent of the homes to lower income households at an
affordable price. Developers may satisfy the ordinance requirements by providing rental or
for sale (ownership) units. Some developers are able to use alternatives such as second
dwelling units or the purchase of affordable housing credits to meet the Inclusionary Housing
Ordinance requirements if approved by the City Council.
Under the initial requirements of the Inclusionary Housing Program, low income homebuyers
were required to execute a Resale Agreement that allowed them to sell their homes at market
rate to a non-low income homebuyer if they repaid the City outstanding loan amounts and
paid a share of the equity from the sale to the City. This initial policy resulted in the loss of
many of the for-sale affordable units in the City. Therefore, the policy was changed to require
the restricted unit to be sold to another low income household during the first 15 years of the
affordability term.
A new Resale Restriction Agreement and Option to Purchase (Agreement), which replaced
the Resale Agreement, was developed to implement that new policy. The Agreement also
now gives the City an option to purchase the unit at a low income restricted price in the event
the owner needs to sell the property at any time prior to the end of the term of the Agreement.
Agreements for affordable units in the Village Redevelopment Area, and units assisted with
Redevelopment Low/Mod Housing Set Aside Funds, have an affordability term of 45 years,
while all others have a term of 30 years.
If the homeowner needs to sell the home during the first 15 years of the Agreement, and the
City does not use its option to purchase the property, the owner must resell the unit to a lower
income household at an affordable price. After the initial fifteen years, the owner may sell the
unit at market value to a non-low income buyer if the City does not use its option to purchase.
When the unit is sold at market value, the seller must repay the City loans and share the
equity from the sale with the City. This revenue is deposited into the City's Housing Trust
Fund for future affordable housing purposes.
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER - SEE MINUTES
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The proposed City Council policy will grant authority to the City Manager, or designee, to
decline the option Jo purchase an affordable ownership unit during the first fifteen years of an
Agreement. Because the restricted unit must be sold to another low income homebuyer at a
restricted price during the first fifteen years of ownership, there is no benefit to the City to
exercise the option to purchase and there is no risk that the unit affordability will be lost to
market conditions.
If the City Manager, or designee, believes that it may be in the City's best interest to
purchase the property during the first fifteen years, the matter will be presented to the City
Council with a recommendation for consideration and action to accept or decline the
purchase option. After the initial fifteen years, all notices of a low income homebuyer's intent
to sell will be presented to the City Council for consideration and a decision as to whether or
not to accept or decline the purchase option. This policy shall apply to all units restricted in
order for a housing development to comply with the requirements of the City's Inclusionary
Housing Program.
FISCAL IMPACT:
Should City Council Policy #73 be implemented, staff does not anticipate any significant fiscal
impact.
EXHIBITS:
1. City Council Resolution No. 2008-015
2. Council Policy 73
DEPARTMENT CONTACT: Frank Boensch, (760) 434-2818, fboen@ci.carlsbad.ca.us
1 RESOLUTION NO. 2008-015
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, APPROVING CITY COUNCIL
3 POLICY NO. 73 REGARDING CITY OPTION TO
4 PURCHASE RESALE AFFORDABLE HOUSING.
5
WHEREAS, the City enters into a Resale Restriction Agreement and Option to
6
Purchase (Agreement) with buyers of affordable housing provided as a result of the
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City's Inclusionary Housing Ordinance; and8
WHEREAS, the Agreement provides the City with the option to purchase the
10 affordable housing in the event the homeowner desires to sell the unit; and
11 WHEREAS, the proposed policy will provide direction to staff regarding how to
12 respond to homeowners regarding the City's use of the option to purchase when a
13 homeowner needs to sell their home.
14 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
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1. That the above recitations are true and correct.
17
2. That City Council Policy No. 73 is adopted as shown on Exhibit "2" to this
19 resolution.
20 3. That the City Clerk is hereby authorized to provide a copy of Policy No. 73
21 to all city departments and to those interested persons who have
22 previously requested a copy.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 22nd day of January, 2008, by the following vote to wit:
AYES: Council Members Lewis, Kulchin, Hall, Packard and Nygaard.
NOES: None.
ABSENT: None.
/[SEALfJ
M. WOOD, City
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Exhibit 2
Subject: CITY OPTION TO PURCHASE RESALE AFFORDABLE HOUSING
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
DATED: January 15, 2008
Policy No.
Date of Issue:
Effective Date
Cancellation Date
Supersedes No.
Page 1 of 2
73
January 22, 2008
January 22, 2008
Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads,
Employee Bulletin Boards, Press, File
PURPOSE:
To provide guidelines to City employees as to when the City's option to purchase a restricted
affordable housing ownership unit may be accepted or declined by the City Manager, or designee,
and/or the City Council. This policy will allow the City Manager, or designee, to decline the City's
Option, and to make recommendations to the City Council on when it would be appropriate to
exercise the City's option to purchase an affordable housing ownership unit.
BACKGROUND:
The City's Inclusionary Housing Ordinance requires developers of residential projects with more than
six units to provide fifteen percent of the homes to lower income households at an affordable price.
Developers may satisfy the ordinance requirements by providing rental or for sale (ownership) units.
Some developers are able to use alternatives such as second dwelling units or the purchase of
affordable housing credits to meet the Inclusionary Housing Ordinance requirements if approved by
the City Council.
Under the initial requirements of the Inclusionary Housing Program, low income homebuyers were
required to execute Resale Agreements that allowed them to sell their homes at market rate to a non-
low income homebuyer if they repaid the City outstanding loan amounts and paid a share of the
equity from the sale, to the City. This initial policy did result in the loss of many of the for-sale
affordable units in the City. Therefore, the policy was changed to require the restricted unit to be sold
to another low income household during the first 15 years of a 30 year affordability term.
A new Resale Restriction Agreement and Option to Purchase (Agreement), which gives the City an
option to purchase the unit at a low income restricted price in the event the owner needs to sell the
property prior to the end of the term of the Agreement, replaced the initial Resale Agreement.
Agreements for affordable units in the Village Redevelopment Area, and units assisted with
Redevelopment Low/Mod Housing Set Aside Funds, have an affordability term of 45 years while all
others have a term of 30 years.
Subject: CITY OPTION TO PURCHASE RESALE AFFORDABLE HOUSING
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
DATED: January 15, 2008
Policy No.
Date of Issue:
Effective Date
Cancellation Date
Supersedes No.
Page 2 of 2
73
January 22, 2008
January 22, 2008
Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads,
Employee Bulletin Boards, Press, File
During the first fifteen years of the Agreement, if the City does not use its option to purchase the
property at a low income restricted price, the owner must resell the unit to a lower income household
at an affordable price. After the initial fifteen years, the owner may sell the unit at market value to a
non-low income buyer if the City does not use its option to purchase. When the unit is sold at market
value, the seller must repay the City loans and share the equity from the sale with the City. This
revenue is deposited into the City's Housing Trust Fund for future affordable housing purposes.
POLICY:
Through this policy, the City Council grants authority to the City Manager, or designee, to decline the
option to purchase an affordable ownership unit at a restricted low income price during the first fifteen
years of a Resale Restriction Agreement and Option to Purchase. Because the restricted unit must be
sold to another low income homebuyer at a restricted price during the first fifteen years of ownership,
there is no benefit to the City to exercise the option to purchase and there is no risk that the unit
affordability will be lost to market conditions. If the City Manager, or designee, believes that it may be
in the City's best interest to purchase the. property during the first fifteen years, the matter will be
presented to the City Council with a recommendation for consideration and action to accept/decline
the purchase option. After the initial fifteen years, all notices of a low income homebuyer's intent to
sell will be presented to the City Council for consideration and a decision as to whether or not to
accept/decline the purchase option.
This policy shall apply to all units restricted under a Resale Restriction Agreement and Option to
Purchase in order for a housing development to comply with the requirements of the City's
Inclusionary Housing Program.
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