HomeMy WebLinkAbout2020-08-25; City Council; ; Acquisition of 2649 Hancock Circle, an Affordable Housing Resale Unit, and Expenditure of Community Development Block Grant Funds in the Amount of up to $250,000. Meeting Date: August 25, 2020
To: Mayor and City Council
From: Scott Chadwick, City Manager
Staff Contact: David de Cordova, Housing Services Manager
david.decordova@carlsbadca.gov, 760-434-2935
Subject: Acquisition of 2649 Hancock Circle, an Affordable Housing Resale Unit,
and Expenditure of Community Development Block Grant Funds in the
Amount of up to $250,000.
Recommended Action
Adopt a resolution authorizing the city manager to execute all required documents to complete
the acquisition of 2649 Hancock Circle. and the deputy city manager, administrative services, to
appropriate $250,000 from the Community Development Block Grant Funds Special Revenue
Fund to purchase this affordable housing unit.
Executive Summary
The City of Carlsbad has received notice that an affordable housing unit in the 100-unit
Mulberry condominium project in Bressi Ranch, is available for the city to purchase to provide
affordable housing in the City of Carlsbad as part of its inclusionary housing efforts.
Staff is recommending the city purchase the home using $250,000 of the $269,794 of
community development block grant funding approved by the City Council in June 2020 for the
purchase of such housing.
The City of Carlsbad Municipal Code does not provide authority to the city manager to proceed
with such an acquisition of property, or accept the grant deed for transfer of property
ownership, without the prior approval by the City Council. Approving this resolution would
allow the city to complete the acquisition process for this affordable housing property. The city
will own the property at the end of this transaction, with the intent to resell it to an eligible
lower-income buyer.
Discussion
Program Overview
The city adopted an inclusionary housing ordinance in 1993 that requires all residential
developments greater than six units to restrict 15% of the total number of homes in a project as
affordable to low-income households. Residential developers have the option to produce rental
or ownership properties to satisfy the inclusionary requirements. Various conditions are
imposed on the inclusionary units to ensure that they remain affordable to low-income
households, including a provision giving the city the first option to buy the home at a price
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restricted to the maximum of the low-income category in the county’s median income at the
time the city received notice the property was for sale.
The City Council approved the fiscal year 2020-2021 Community Development Block Grant
Program Annual Action Plan on June 16, 2020. This plan allocated $269,794 in block grant
funding to allow the city to exercise its option to buy additional affordable housing resale
properties at a restricted price and authorized the use of block grant funds to buy these resale
units as they became available. Under this Community Development Block Grant Program
Annual Action Plan approval, city staff is authorized to respond to applicable property owners
with the city’s intent to exercise its option to purchase affordable, restricted price homes as
they become available for resale and to use the block grant funds to purchase the units.
Approving this resolution would allow the city to buy an affordable home and then resell it to
an eligible lower-income buyer. As the owner, the city could place additional restrictions on the
property and could resell it at a lower price to create more affordable housing opportunities.
The property and the purchase
To fulfill its inclusionary housing obligation in 2005, the Bressi Ranch developer built the
Mulberry complex of 100 affordable condominiums and sold the units to low-income
homebuyers (Exhibit 2). The condominium at 2649 Hancock Circle is one of those affordable
units, and would be the city’s seventh purchase in this neighborhood.
As a condition of the City of Carlsbad’s inclusionary housing program, owners of restricted
affordable homes are required to notify the city when they intend to sell their properties and
allow the city the option to purchase them at restricted prices. On May 28, 2020, the owner of
the affordable housing unit gave the city such a notification, and the city subsequently notified
the owner of its intent to exercise its option to purchase the property at a restricted price
calculated to be $236,844. The city and owner then entered into a purchase agreement, and
escrow has been opened with the intent of completing the property acquisition by Sept. 1,
2020, but no later than Sept. 22, 2020.
Staff is recommending that the City Council authorize the city manager to execute all required
documents to complete the purchase of the subject property, which includes acceptance of the
grant deed, and to expend up to $250,000 in Community Development Block Grant funds to
cover the purchase price and all related escrow and other processing fees necessary to
complete the acquisition. If the City Council approves this purchase, this would become the
eighth affordable housing resale unit the city has acquired.
Fiscal Analysis
The homeowner purchased the home at Mulberry in 2005 at the restricted, subsidized price of
$162,000. The restricted price for the city to buy the affordable residential property from the
homeowner at 2649 Hancock Circle is based on the change in area median income levels during
the seller’s period of ownership. Over the past 15 years, area median income increased by
46.2%, resulting in a restricted purchase price of $236,844. Staff anticipates that there will be
additional acquisition costs including escrow fees.
Staff is requesting that the City Council approve the expenditure of CDBG funds in the amount
of up to $250,000 to cover all acquisition costs for the subject property. As a condition of the
Aug. 25, 2020 Item #4 Page 2 of 9
city’s option to purchase, a 6% transaction fee, amounting to $14,211, is to be paid to the City
of Carlsbad at the close of escrow because the city is acting as the real estate agent for this
sales transaction. Funds paid at the close of escrow will be returned to the CDBG acquisition
activity fund. There is $269,794 available for the property acquisition and there will be $19,794
remaining in the activity fund after the purchase of the property. The remaining funds can be
used for future purchases with available undesignated funds that are accumulated through
program income, activities that have been completed under budget or cancelled activities. The
undesignated CDBG program balance is currently $337,215, so there will be approximately
$357,000 available for additional property purchases.
Next Steps
With the City Council’s approval, all acquisition documents will be executed by the city
manager, and the city will complete the purchase of the home and subsequently record the
grant deed to transfer ownership of the home to the City of Carlsbad no later than Sept. 22,
2020, and as early as Sept. 1, 2020. The home will then be resold to a lower-income household
at a later date. City staff will be returning to the City Council in the third quarter of 2020 for
approval of the program details for the resale of the eight affordable housing resale units the
city has purchased.
Environmental Evaluation (CEQA)
This action does not constitute a “project” within the meaning of California Environmental
Quality Act under Public Resources Code section 21065 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.
Public Notification
Public notice of this item was posted in accordance with the Ralph M. Brown Act and it was
available for public viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1. City Council resolution
2. Location map
Aug. 25, 2020 Item #4 Page 3 of 9
RESOLUTION NO. 2020-177
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE DEPUTY CITY MANAGER, ADMINISTRATIVE
SERVICES TO APPROPRIATE $250,000 FROM THE COMMUNITY
DEVELOPMENT BLOCK GRANT SPECIAL REVENUE FUND AND AUTHORIZING
THE CITY MANAGER TO EXECUTE ALL REQUIRED DOCUMENTS TO
COMPLETE THE ACQUISITION OF 2649 HANCOCK CIRCLE, CARLSBAD,
CALIFORNIA, AN AFFORDABLE HOUSING RESALE UNIT, EXPENDING
COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS IN THE AMOUNT OF UP
TO $250,000.
WHEREAS, the property owner of 2649 Hancock Circle provided notice to the city on May 28,
2020, indicating the owner's intent to sell or transfer ownership of the restricted affordable housing
unit at the noted location; and
WHEREAS, the city responded to the property owner of the restricted affordable housing unit
on June 24, 2020, indicating its intent to exercise its option to purchase the property at 2649 Hancock
Circle; and
WHEREAS, on June 16, 2020, the City Council approved the fiscal year 2020-2021 Community
Development Block Grant (CDBG) Program Annual Action Plan allocating $269,794 in CDBG funding to
allow the city to exercise its option to purchase additional affordable housing resales at a restricted
price and authorize the use of CDBG funds to purchase these resale units; and
WHEREAS, the purchase approval by the City Council allows for the city to recapture an
affordable home and extend its affordability for an indefinite period of time, if so desired, and to resell
it to an eligible buyer at a lower price, if necessary, to implement the city's affordable housing goals
and policies.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That the Deputy City Manager, Administrative Services is authorized to appropriate
$250,000 from the CDBG Special Revenue Fund for the property purchase at 2649
Hancock.
Aug. 25, 2020 Item #4 Page 4 of 9
3. That the City Council of the City of Carlsbad, California has determined that it desires to
exercise its option to purchase an affordable housing resale unit located at 2649
Hancock Circle, Carlsbad, California, and hereby authorizes the city manager to execute
all required documents, including the Acceptance of the Grant Deed (Attachment A), for
the purchase of said property, and to expend CDBG funds up to $250,000 to cover the
purchase price and all related escrow and other processing fees to complete the
acquisition.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 25th day of August, 2020, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Schumacher.
NAYS: None.
ABSENT: None.
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MATT HALL, Mayor
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BARBARA ENGLESON, tity Clerk
(SEAL)
Aug. 25, 2020 Item #4 Page 5 of 9
Attachment A
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CERTIFICATE OF ACCEPTANCE
(Pursuant to Government Code 27281)
This is to certify that the interest in real property conveyed by the Grant Deed from ROSALINDA
CHANDARLIS, AN UNMARRIED WOMAN, to the City of Carlsbad, a municipal corporation
(the “City”), is hereby accepted on August 26, 2020, by the undersigned officer or agent on behalf
of the City pursuant to authority conferred by City Council Resolution No. 2020-_____ adopted
on August 25, 2020, and the City Council consents to the recordation of said document in the
Office of the Recorder of San Diego County, State of California.
CITY OF CARLSBAD, a municipal corporation
By: ____________________________________
Name: Geoff Patnoe______________________
Its: Assistant City Manager_______________
Aug. 25, 2020 Item #4 Page 8 of 9
Street Map Plus Report
For Property Located At
2649 HANCOCK CIR, CARLSBAD, CA 92009-3052
EXHIBIT 2
Aug. 25, 2020 Item #4 Page 9 of 9