HomeMy WebLinkAbout2012-08-21; City Council; 20976; Funding for Purchase 577 Laguna DriveCITY OF CARLSBAD - AGENDA BILL
AB# 20.976 AUTHORIZATION AND
APPROPRIATION OF FUNDING FOR
THE PURCHASE OF 577 LAGUNA
DRIVE
DEPT. DIRECTOR
MTG. 8/21/2012
AUTHORIZATION AND
APPROPRIATION OF FUNDING FOR
THE PURCHASE OF 577 LAGUNA
DRIVE
CITY ATTY.
DEPT. HNS
AUTHORIZATION AND
APPROPRIATION OF FUNDING FOR
THE PURCHASE OF 577 LAGUNA
DRIVE CITY MGR. 1 ,
RECOMMENDED ACTION:
Adopt City Council Resolution No. _
execute all documents associated
2012-190 authorizing
purchase of 577
the City Manager to
Laguna Drive, Cartsbad, with the
California for affordable housing, and appropriating $154,600 from the Housing Trust Fund
for the purchase of said property and payment of all acquisition related expenses.
ITEM EXPLANATION:
The Laguna Point condominium development was required to sell three units at an affordable
price to lower income persons to meet the City's Inclusionary Housing Ordinance. Ms.
Scheherezad Massoudi purchased a one-bedroom unit in the development in 2007 for
$123,500. She received a first mortgage loan from Bank of America for $122,500 for the
purchase.
An appraisal of the unit at that time estimated its market value to be $375,000. Ms. Massoudi
was required to enter into a loan agreement with the City in an amount of the difference
between the affordable price of $123,500 and the appraised value of $375,000, for a loan of
$251,500. The $251,500 included $70,000 in assistance that the City provided as a subsidy
to the developer. Payments on the City loans are deferred until the unit is sold at market rate
after 15 years or at the end of the 45 year term. Loan payments will be used to create new
affordable housing opportunities.
Ms. Massoudi was also required to enter into a Resale Restriction Agreement with the City in
order to purchase the unit to help ensure that it would remain as affordable housing for up to
45 years. The agreement gives the City the option to purchase the unit at an affordable price
if the owner needs to sell it. It also gives the City the option to purchase the unit at an
affordable price if the owner defaults on the agreement or defaults on their mortgage loan.
Ms. Massoudi was unable to continue making payments on her first mortgage loan after
losing her job in 2010. Bank of America filed a Notice of Default on July 14, 2010, and the
City filed a Notice of Default on the Resale Restriction Agreement on August 17, 2010. Bank
of America and City staff worked with Ms. Massoudi in an effort to cure the defaults. Ms.
Massoudi was unable to obtain a restructured loan agreement with Bank of America and
foreclosure activities were started again in October of 2011.
DEPARTMENT CONTACT: Frank Boensch 760-434-2818 frank.boensch@carlsbadca.qov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC •
DENIED CONTINUED TO DATE UNKNOWN •
WITHDRAWN • RETURNED TO STAFF •
AMENDED • COUNCIL RECEIVED THE •
REPORT/PRESENTATION
OTHER-SEE MINUTES •
Page 2
Ms. Massoudi decided to sell her home in an effort to avoid foreclosure and continued in her
attempt to restructure her loan with the bank. She was successful in postponing a trustee
sale of the unit numerous times. A trustee sale of the unit is currently scheduled for
September 21, 2012. City Council provided direction to staff in closed session to use the City
option to purchase the unit in hopes of avoiding a trustee sale and possible loss of the
affordable housing. Ms. Massoudi was notified in May that the City intended to utilize its
option to purchase her home and escrow was opened for the purchase in June.
RECOMMENDATION:
Although it will require an allocation of $154,600 to complete the purchase of 577 Laguna
Drive, the City will be able to recover a maximum of $147,849 when it is sold to another lower
income person. A number of persons have indicated an interest in purchasing the property.
However, Ms. Massoudi has been uncooperative in attempts to allow potential buyers into the
unit. Ms. Massoudi has also been uncooperative in executing documents needed in the
escrow process. Further direction may be needed from the City Council in a future closed
session to determine what legal alternatives might be taken to protect the affordability of the
unit if she continues to avoid completion of the purchase.
It is recommended that the City Council approve a resolution authorizing the City Manager to
execute documents associated with the purchase of 577 Laguna Drive, and appropriating
$154,600 from the Housing Trust Fund for the purchase of said property and payment of all
acquisition related expenses such as inspections, reports and escrow fees.
FISCAL IMPACT:
The City's Housing Trust Fund currently has an available cash balance of approximately
$16.8 million. The appropriation of $154,600 would be largely offset by selling the unit for
approximately $147,849.
ENVIRONMENTAL IMPACT:
Pursuant to Public Resources Code Section 21065, purchase of the unit does not constitute a
"project" within the meaning of CEQA in that it has no potential to cause either a direct
physical change in the environment, or a reasonably foreseeable indirect physical change in
the environment, and therefore does not require environmental review.
EXHIBITS:
1. Resolution No. 2012-190 authorizing the City Manager to execute all documents
associated with the purchase of 577 Laguna Drive, Carlsbad, California for affordable
housing, and appropriating $154,600 from the Housing Trust Fund for the purchase of said
property and payment of all acquisition related expenses.
1 RESOLUTION NO. 2012-190
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A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
3 CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE ALL
DOCUMENTS ASSOCIATED WITH THE PURCHASE OF 577 LAGUNA
DRIVE, CARLSBAD, CALIFORNIA FOR AFFORDABLE HOUSING, AND
APPROPRIATING FUNDS FOR THE PURCHASE OF SAID PROPERTY
AND PAYMENT OF ALL ACQUISITION RELATED EXPENSES.
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7 WHEREAS, the City has an interest in maintaining affordable housing; and
WHEREAS, the affordable housing located at 577 Laguna Drive is scheduled for
a trustee sale as a result of a default on a mortgage on the property; and
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WHEREAS, the affordability of the property may be lost if it is sold through the
10 trustee sale; and,
11 WHEREAS, the City has an option to purchase the property to help it ensure that
^2 the affordability is maintained; and,
WHEREAS, the City Council has taken all testimony into account.
14 NOW, THEREFORE BE IT HEREBY RESOLVED as follows:
15 1. That the above recitations are true and correct
16 2. That the City Council authorizes the City Manager to execute all documents
associated with the purchase of 577 Laguna Drive, Carlsbad, California from
17 Scheherezad Massoudi for affordable housing.
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That an appropriation of $154,600 from the City's Housing Trust Fund is
approved for purchase of said property and payment of all acquisition related
expenses.
That the City Council hereby makes the finding that acquisition of property at
577 Laguna Drive, Carlsbad, California is consistent with the General Plan of
the City of Carlsbad.
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1 PASSED AND ADOPTED at a special meeting of the City Council of the City of
2 Carlsbad on the 21stday of August 2012, by the following vote, to wit:
3 AYES: Council Members Hall, Kulchin, Balckburn, Douglas, Packard.
4 NOES: None.
5 ABSENT: None.
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10 ATTEST
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Vl. WOOD, Cifv Clerk