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HomeMy WebLinkAbout1997-08-14; Housing Commission; Minutes4 Minutes of: HOUSING COMMISSION Time of Meeting: 6:OO P.M. Date of Meeting: Place of Meeting: AUGUST 14, 1997 CITY COUNCIL CHAMBERS CALL TO ORDER: Vice Chairperson Wellman called the Regular Meeting to order at 6:03 p.m. PLEDGE OF ALLEGIANCE: The pledge of allegiance was led by Commissioner Walker. ROLL CALL: Present: Vice Chairperson Wellman, Commissioners Calverley, Escobedo, Latas, Rose, Scarpelli, and Walker Absent: Chairperson Schlehuber and Commissioner Noble Staff Present: Debbie Fountain, Acting Housing and Redevelopment Director Craig Ruiz, Management Analyst APPROVAL OF MINUTES: ACTION: Motion by Commissioner Rose, and duly seconded, to approve the Minutes of the Regular Meeting of July 10, 1997, as submitted. Escobedo, Latas, Rose, Scarpelli, Walker, Wellman VOTE: 6-0- 1 AYES: NOES: None ABSTAIN: Calverley ACTION: Motion by Commissioner Scarpelli, and duly seconded, to approve the Minutes of the Special Meeting of July 10, 1997, as submitted. Escobedo, Latas, Rose, Scarpelli, Walker, Wellman VOTE: 6-0- 1 AYES: NOES: None ABSTAIN: Calverley COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA: There were no comments from the audience. NEW BUSINESS: 1. MAR VISTA AT LA COSTA - Application to purchase affordable housing credits in the Villa Loma housing project. Craig Ruiz reviewed the background of the request and stated that this Mar Vista project is different from the other Mar Vista project in the City (a 49-unit project near Poinsettia Park). The project being presented is a request to purchase excess affordable housing credits in the Villa Lorna Project. There are 16 1 credits remaining from Villa Lorna belonging to the City; and Mr. Ruiz explained that the Inclusionary requirement for these 17 single-family homes will result in 2.55 units. If this project is ultimately approved and the City Council approves the payment of the credits, $82,16 1 will go into the Housing Trust Fund. HOUSING COMMISSION MINUTES August 14, 1997 Page 2 Mr. Ruiz explained Council Policy 57 and its three criteria: (1) feasibility of the on-site proposal; (2) relative advantageddisadvantages of an off-site proposal; and (3) advancing the goals and strategies of the City’s Housing policies. Mr. Ruiz discussed the project in relation to each of these criteria pointing out the physical constraints of the site (a sloped area being 20 percent of the site resulting in a two-acre net buildable area for the 17 units) and said that the economics of building on-site would take a substantial outlay by the developer or City contribution. The Council Policy 57 Committee viewed these three criteria and unanimously recommended that the credit option be available for this development; therefore Staff is recommending the Housing Commission approve the purchase of the credits by making a recommendation to the City Council. Vice Chairperson Wellman asked if there were any questions of Mr. Ruiz. Commissioner Walker asked if Villa Loma is the only possible area where credits can be applied. Mr. Ruiz replied that today, yes; and possibly Laurel Tree in the future. Commissioner Walker asked if the $32,220 per unit cost was a developer cost or Villa Loma cost. Mr. Ruiz responded that this is a per unit cost to the City and that the City started out with a base year of $28,000 for each unit. He added that every year there is an accruing interest, and the credit is to recover the City’s actual investment plus interest over time. Commissioner Walker asked if it would cost the developer more to develop these 2.55 units on-site. Mr. Ruiz responded that the developer has not proposed an on-site option and said that most likely a 2.55 unit project would definitely cost more than $32,220 per unit. Mr. Ruiz added that the cost is based on the Villa Loma units to recover the City’s investment. Commissioner Calverley mentioned that of the 161 units available for purchase at Villa Loma, a large number are set aside in reserve just in case Laurel Tree doesn’t make it. Mr. Ruiz responded that technically there are 135 units being held for Laurel Tree; however, Laurel Tree is in escrow now and by the end of the month Staff expects those units to be released. Vice Chairperson Wellman opened the public testimony and issued the invitation to speak. Scott Redsun, President, Avalon Homes/TRC Development, 26440 La Alameda, Suite 370, Mission Viejo, CA, 92691, addressed the Commission and described the project as four individual lots at about .6 acres with 20 percent taken up by slope. The surrounding area is a mixture of three- to four-story condos, some high-density detached houses, some townhomes, some condos. Further down the street there are older, very large single-family homes. Mr. Redsun stated that the project has tremendous constraints and TRC’s expertise is in high-density detached housing and in-fill sites. TRC has worked diligently with the City and with the City guidelines and code restraints to effectively utilize this site as efficiently as possible. The options for affordable housing are to sell the units under the guidelines, to create granny flats, or to put in a two-unit apartment complex. Addressing each of these issues, Mr. Redsun stated that land bases and land prices of today do not allow on a small site the ability to create off-site areas. The footprint of the homes are too small to create a separate unit above or a granny flat, and have to be created over a two-car garage. Mr. Redsun said they would have to build a one-unit granny flat with a single bedroom house, which is not a viable solution in today’s market. This is going to be moderately-priced housing with square footage ranging from 1,800 to 2,000 square feet. The City’s Planning Department will concur that the developer is “stretching the envelope” as much HOUSING COMMISSION MINUTES August 14, 1997 Page 3 as possible to provide moderately-priced housing, h4r. Redsun said. Given the constraints of the site, Mr. Redsun said TRC is here to ask for the credits, which is the best way to utilize the site and the policies of the City. Vice Chairperson Wellman asked if there were questions of Mr. Redsun. Commissioner Scarpelli asked if the four lots would be subdivided into 17 lots. Mr. Redsun responded that they are re-subdividing into 17 lots, in what is called a PUD with a homeowner’s association, and a small tot lot. Vice Chairperson Wellman asked if TRC is exercising a density bonus with the development of the lots. Mr. Redsun responded negatively. There being no other persons desiring to address the Commission on this topic, Vice Chairperson Wellman declared the public testimony closed and opened the item for discussion among the Commission members. Vice Chairperson Wellman and Commissioner Scarpelli commented that buying units in Villa Lorna is the best choice for this project--the developer meets their requirement for the mandate of the affordable housing, Villa Loma has been built, and the units are there and available to be used. Commissioner Escobedo asked for clarification of the fourth paragraph of the project DescriptiodExplanation, “Marvista will also include 4 additional homes which is being developed on a lot not contiguous to this project. They are separated by one lot ...” Vice Chairperson Wellman asked the applicant to respond. Mr. Redsun replied that there are actually six vacant lots in a row on Unicornio. One lot on the comer TRC is purchasing, which is being processed. Because it is not contiguous, it has to be processed under a minor subdivision, which is a separate application and a separate process. Because it is under seven units it automatically meets the requirement of paying its percentage of credit. It is included in this description, which was used for submitting the application for the tentative map. Even though they are not contiguous, they are separate applications from the tentative map standpoint and from a processing standpoint. There will be four units that will be part of the same association and be tied together; but from a technical processing standpoint, they are considered separate and distinct houses. Vice Chairperson Wellman asked if there is existing housing in between. Mr. Redsun responded that there is a vacant lot which he could not get the landowner to sell. Commissioner Escobedo asked about the credits. Mr. Ruiz responded that when a project has over seven units, it has to go through the process discussed previously-- either to provide or purchase excess credits. The other project, because it is a separate application and less than seven units, can pay a fee by right. The developer has two distinct projects going in two separate paths; even though it’s the same builder, same design, same general vicinity, they have two different criteria. One is looked at as 17 units, the other as less than seven. ACTION: Motion by Commissioner Walker, and duly seconded, to adopt Resolution No. 97-009, recommending that the City Council approve a request by TRC Development Corporation to -- HOUSING COMMISSION MINUTES August 14,1997 Page 4 purchase 2.55 affordable housing credits in the Villa Loma Housing Project in order to satisfy the affordable housing obligation of the Mar Vista at La Costa Project under the City’s Inclusionary Housing Ordinance. Calverley, Escobedo, Latas, Rose, Scarpelli, Walker, Wellman VOTE: 7-0-0 AYES: NOES: None ABSTAIN: None 2. OCEAN BLUFF - Application to purchase affordable housing credits in the Villa Loma housing project. Craig Ruiz reviewed the background of the request and stated that this project went through the same process as the Mar Vista at La Costa project just presented. Mr. Ruiz described the project as 92 single-family homes on a 3 1-acre site. The homes will be on lots of between 7,500 and 13,000 square feet. The Inclusionary requirement on this project is 16.24 units, with a credit price of $32,220 per unit. If approved by the City Council, a payment of $523,252 will go into the City’s Housing Trust Fund. Mr. Ruiz stated that this project was originally before the Commission in February 1996. To satisfy the Inclusionary obligation, the applicant proposed the 92 single-family homes and a 16-unit apartment complex. At that time, there was a proforma analysis that was done that showed the cost to build the project, and there was no mention of how the project was going to be financed. When the project was approved by the City Council in April of 1996, they approved the Planning Commission’s condition that said the developer had the option of building the 16-unit apartment complex or purchasing housing credits in an approved Combined Project, if approved through the Combined Project Review process. The developer is now requesting to purchase credits in the Villa Loma project. Per the developer’s request, the proposed affordable housing project is not feasible and the developer would like to purchase credit as opposed to the previous approvals they have received to construct the 16 units on site. Mr. Ruiz explained that Council Policy 57, as discussed earlier, was also applied to this project. Mr. Ruiz stated that the small development of this 16-unit development makes it economically unfeasible due to the significant financial subsidy which would be required for the project of about $55,000 a unit. Mr. Ruiz added that the year-old proforma is still relatively accurate. In addition, small projects have more difficulty generating interest from funding sources. Mr. Ruiz explained the advantages and disadvantages of the off-site proposal as being similar to what was heard with the previous project. Vice Chairperson Wellman asked if there were any questions of Mr. Ruiz. Commissioner Calverley asked how the applicant had proven that it was not feasible to build. Mr. Ruiz responded that this information is based upon the proforma and an analysis. Staff believes that the purchase of credits is the best option for this project. Commissioner Scarpelli asked how the $500,000 in credits from this project would be applied. Ms. Fountain responded that there are several projects that have money committed to them, i.e., the Laurel Tree project, the Sambi project (a first-time homebuyer project). Any money coming in would be used on those existing projects; then hture projects would be looked at. Ms. Fountain added that there are quite a few projects on the horizon that will potentially ask for money; one being Poinsettia Properties, a 108-unit apartment project. HOUSING COMMISSION MINUTES August 14, 1997 Page 5 Ms. Fountain added that generally a $22,000 per unit subsidy is not the best “bang for the buck” for only 16 units. A 1 08-unit apartment or a 50-unit apartment project with $10,000 to $12,000 per unit in subsidy would be something Staff would be more comfortable recommending.. Vice Chairperson Wellman asked if Staff weighed the advantages of original proposal with the affordable on-site apartments, which goes toward the mixed use and not segregating lower income people to certain areas. Vice Chairperson Wellman asked if condo or homeownership is also not feasible on this 3 1-acre site. Mr. Ruiz responded that Staff looked at the proposal that the developer put forward, which is a 16-unit complex. Staff did not look at a for-sale project, because that was not what was presented to Staff. Staff did evaluate whether this was the best place to put this type of project. If the City Council wants to put in $22,000 per unit, maybe it would be feasible. The City put in $700,000 for 138 units at Villa Loma; putting in a half million dollars to get 16 units plays into the decision. Staff has to balance an Ordinance that may have been written at a time when they wanted to see one out of every seven units built, but then Staff has to balance that against the reality. Staff has been told that there is nobody out there looking to build or loan on a small project like this that doesn’t typically generate a lot of cash flow. This is a small project and it will be difficult to get financing and hard to get somebody to manage. It makes it difficult with an Ordinance with a certain ideal and a different reality. Vice Chairperson Wellman commented that with the competitiveness of tax credits, it seems even difficult for large units now, eg, Laurel Tree. She added that there is no guarantee that large units will get funding. Mr. Ruiz responded affirmatively. Commissioner Calverley questioned the $22,000 in subsidy that was taken from the proforma the Commission saw in February. Commissioner Calverley said that since February 1996 the revenues have changed as far as rents and does not believe that $22,000 is anywhere near accurate as far as what the subsidy would be on these units. Mr. Ruiz responded that the proforma has not been updated. Staff looked at the proforma as a year old; and said that the numbers will change some but not significantly. Commissioner Calverley stated that she believes the proforma was not accurate to begin with. Vice Chairperson Wellman asked how much money is in the Housing Trust Fund that is not being loaned out to other developments. Mr. Ruiz responded that it is at about $1,700,00 right now. Vice Chairperson Wellman commented that there are monies available in City funds to put into this project on-site. Vice Chairperson Wellman invited the applicant to speak. Mr. Jack Henthorn, Jack Henthorn & Associates, 543 1 Avenida Encinas, Suite 543 1, Carlsbad, CA 92008, addressed the Commission and stated that the project was approved by City Council in April 1996 with positive recommendations from both the Housing and Planning Commissions. Mr. Henthorn stated that at that time the project’s conditions of approval included language that specifically acknowledged that an alternative method to the on-site provision of housing for this specific project was available in the form of the Policy 57/58 mechanism. Mr. Henthorn said that this project was pretty marginal back then in that the 16-unit apartment project was not being well-received by the developers who historically do them. There was some question as to whether or not the tax credit program at that point in time was going to change. Mr. Henthorn stated that he remembers addressing the Commission in February 1996 and stating that one of the assumptions the applicant was making when presenting the project was that the tax credit ’ HOUSING COMMISSION MINUTES August 14, 1997 Page 6 program was going to move to be more favorable toward smaller projects. There was a concern on the Villa Loma project or the Villas at El Camino Real that that project might have to be funded over two tax credit years because it was too large at that time. Unfortunately what happened was the tax credit program went through a series of evolutions to where today there is no real priority for anything-it’s a lottery-driven program. As far as small projects go, once you get through that initial lottery phase, and getting into some of the more discretionary things that go on with that program, smaller projects are basically getting funded where they are either in-fill projects or they are truly rural farm- type projects where there are other criteria to evaluate them. Basically the assumptions being made back then were that if the tax credit program took certain evolutionary directions, this project could possibly work. That’s why at that point, the applicant specifically said they were not asking for funding. The applicant did a proforma based on the information provided by the development community and their own sources, which also happens to be the group that’s doing the Laurel Tree project. Mr. Henthorn expressed his confidence in the proforma. Mr. Henthorn said that the cost of getting funding for the 9 percent tax credit program that was being utilized then was relatively low. So when you looked at small projects, spreading the cost, obtaining that funding wasn’t as critical as it is in today’s environment where you’re dealing with a 4 percent bond issuance program. The cost of issuing bonds to cover a deal like this on a 4 percent credit program are significant. Regarding the proforma, Mr. Henthorn added that for everything that possibly went up in revenue, there has been an increase on the cost side. Henthorn therefore doubts that there have been any changes that are significant to the proforma. Mr. Henthorn said that the developer both alone and in concert with the Staff of the Housing and Redevelopment Department went out and tried to attract developers to this project when it became apparent to the applicant that this project was not feasible. The applicant spoke with Bridge, Katellas, and Silverwood Developments. These developers said that a 16-unit project did not justify participation. The interest in the project was that there were no economies of scale, and it was not something they were interested in doing (as recent as three months ago). Mr. Henthorn added that the minimum size project that seems to be feasible anymore is about 50 units; 50 to 100 units seems to be where the breakpoint is roughly. As a result, the developer then came to the City and sought to have the alternative provided for in its original project’s conditions of approval that would allow for the purchase of credits in Villa Loma. The Policy 57 Committee reviewed the project, and they recommended approval of the alternative that was in the condition. The applicant is here with a positive recommendation from the Committee to purchase credits in Villa Loma because the on-site proposed project is not feasible. Market-rate developers are not interested in the project. The applicant is asking that the alternative that was put into place when the project was approved which allows purchase of credits be recommended to the City Council by the Housing Commission. Mr. Henthorn pointed out that this project is probably the first of a bunch of these the Commission will see. He added that Staff is beginning to look seriously at what remains in the southwest quadrant to be developed. The largest parcel remaining to be developed south of Palomar Airport Road in the southwest quadrant, outside of the Poinsettia Shore project, is 30 acres. There are parcels that range from two acres down to 30 acres. The rest of the land to be developed is covered by Master Plans and covered by agreements with the Villa Loma project, the Aviara project. In Zone 21, the largest parcel is a mitigation bank parcel. According to Mr. Henthorn, the Commission is going to see a number of projects coming forward with this very same issue. The best thing that can happen in this instance, is to look to an alternative like this to provide a funding mechanism to have somebody come in and continue to explore the provision of affordable housing in increments that are viable--in 40-, 50-unit increments. The goal of having every sixth unit in a development be affordable has been acknowledged as being laudable, but not achievable. Mr. Henthorn pointed out the condominium alternative using the Sambi project and the lack of progress on the condo deal. There is a lot of litigation with the condo market right now, according to Mr. Henthorn. Mr. Henthorn stated that he happens to represent a lot of properties in the southwest quadrant, and he will be coming before the Housing Commission probably 40 times with the same issue. He added that this is a 30-acre parcel and one of the larger remaining developable parcels in the whole southwest quadrant. Mr. Henthorn is asking for the recommendation of the Staff and the Policy 57 HOUSING COMMISSION MINUTES August 14, 1997 Page 7 Committee to allow this project to make its contribution to the implementation of the City’s Housing Element through the payment of the funding to purchase the credits in the Villa Loma project. Vice Chairperson Wellman asked if there were any questions of Mr. Henthorn. Vice Chairperson Wellman asked if the cost of purchasing units in Villa Loma is considerably less than what the applicant would have to pay to develop on-site in some form. Mr. Henthorn responded it is about a wash. Vice Chairperson Wellman asked if the City provided the necessary funding, would that resolve the feasibility issue in building the apartment units. Mr. Henthom responded that it would resolve the financial feasibility issue, but not the land use issues. Vice Chairperson Wellman stated that there are many more non-profit developers than the three that Mr. Henthorn contacted. Those developers the applicant inquired of tend to do large projects. Vice Chairperson Wellman added that there are developers that do smaller projects, including local developers in Carlsbad and a group in Escondido. Vice Chairperson Wellman asked Mr. Henthom if he inquired of any of the smaller developers. Mr. Henthorn stated that their concem was to get someone in who understood tax credits and who could bring the funding to the project to make it happen. Mr. Henthom said one of the keys is knowing how to deal with other components of the financing. Taking the tax credit aspect away creates other problems because now you have to go look for traditional funding sources. If you ask any of the non-profits, it’s very, very scarce; and when you can find them, they are very difficult to deal with and very costly. Vice Chairperson Wellman commented that there is a funding source with City funds. Mr. Henthorn responded it depends on how much money the City wants to put into the deal. He added that it is an economy of scale thing. Vice Chairperson Wellman commented that the Commission needs to discuss these kinds of units--big units, small units, integrated units, units in a certain area, etc. Mr. Henthorn agreed that there are a number of policies that have to be addressed as future development continues in this area. He added what the Commission is seeing tonight is just the beginning. Commissioner Latas inquired about the number of times Mr. Henthorn will be coming before the Commission with other projects and asked if all the projects will be in the 50- to 100-unit range. Mr. Henthom responded that some projects will be relatively small, like this project with 17 units. There are some parcels that will not handle much more than 17 or 18 units. Probably the largest increment of development will be in the vicinity of 25 to 30 units on any individual property, unless other properties get a density bonus or want to do apartments or possibly do a combined Inclusionary project. Commissioner Calverley asked about the density bonus the applicant received on this property to cover costs to provide the affordable housing. She also asked about the size of the lot onto which the applicant was originally going to build the affordable units. HOUSING COMMISSION MINUTES August 14,1997 Page 8 Mr. Henthorn responded that the density bonus goes away if this project is approved as presented tonight. In response to the second question, Mr. Henthorn said the lot is about one acre. Commissioner Calverley commented that the applicant paid $1,300,000 for the 31 acres in 1989. She questioned the applicant’s improvement costs of three quarters of a million dollars for grading one acre of land. Mr. Henthorn stated that the proforma on the entire site shows the costs. He added that the proforma is valid and was reviewed by Staff. He suggested comparing this proforma to the Laurel Tree site or some other project, adding that there are other projects it can be compared to. The applicant’s proforma has been compared with the Laurel Tree proforma according to Mr. Henthom. Commissioner Calverley commented that she would like to see the proforma. Mr. Henthorn commented that if one cannot get a developer to build the project, the numbers on the proforma mean nothing. Commissioner Scarpelli asked about the rollback number of the 92 homes. The way the City calculates their density program, with 116 total units, the project rolls back to where the aggregate number of units in a project would be 96; therefore, the 92 number is the rolled backed number according to Mr. Henthom. Vice Chairperson Wellman asked the Commission if they had a chance to see where the development is located. Mr. Ruiz displayed a map showing the Commission the location of the applicant’s project. The apartments, if built, would be located in the southwest corner. Mr. Henthom answered questions the Commissioners had about the location of the project in relation to other streets in the area. Mr. Henthom explained that there is a SDG&E easement located in the area in addition to a large slope making some of the area unavailable for roads. There being no other persons desiring to address the Commission on this topic, Vice Chairperson Wellman declared the public testimony closed and opened the item for discussion among the Commission members. Commissioner Scarpelli commented that this project has raised some concern regarding the availability of other property for affordable housing. Commissioner Scarpelli wonders if the Commission has looked at all the alternatives before passing on this recommendation. Initially Commissioner Scarpelli agreed with Staffs recommendation. He added that if a project of this size (92 homes without the density) cannot get affordable housing, then we are in serious trouble. And if there are not very large projects in the southwest quadrant to look at, the Commission needs to seriously evaluate this project for other alternatives or solutions. Vice Chairperson Wellman commented that she has similar kinds of reservations. She commented that the Commission needs more evidence to review the feasibility issues. Vice Chairperson Wellman said that by using different sources of funding other than tax credits, there may be other ways to build the apartments or something else on-site. She commented about the findings of the Policy 57 Committee of there not being enough transportation and said this is in a state of flux in Carlsbad right now with different proposals with North County Transit. She added that she does not find the worksheet particularly helpful. In looking at the worksheet and the information that was presented on this project, she would answer the questions differently to show that this project could be developed on- site. She added that the Commission needs more study if there are a lot more of these types of projects coming before the Commission. If the Commission makes a finding on this 3 1 -acre project that the on-site option is not feasible, than the next applicant with a similar sized project may think the Commission has set a policy that they will either go for larger project of 50 or more or go to second dwelling units, which there are some reservations about. It seems nobody HOUSING COMMISSION MINUTES August 14, 1997 Page 9 is building many apartments, even though most low-income people are in apartments because that is what they can afford. Vice Chairperson Wellman added that just because the City got such a good financial deal with Villa Loma, they should not rule out considering spending more than $10,000 per unit on other projects. Vice Chairperson Wellman would like to see affordable housing integrated in the quadrant in smaller developments. Commissioner Scarpelli asked the applicant if he had looked at the feasibility of working something together with the developers of Laurel Tree and this property. Mr. Henthorn responded affirmatively and explained one of the alternatives that is available is working with the Mariner’s Point project which had 300 units at one time until the school district acquired part of the site. They had an obligation of approximately 90 units, and 175 of those units went away when the school district acquired the site. This made available 19 additional units in the Laurel Tree project. Mr. Henthorn stated they explored with them the possibility of participating in those 19 units. They are amenable to that. It is a viable alternative. They control the credits. The applicant has discussed this with Staff. It has already been approved with a specific plan amendment, and when the Laurel Tree project was approved, it was approved as a combined site for Zone 20. Commissioner Scarpelli asked why this option was rejected. Ms. Fountain responded that it was a Staff decision, because whether the applicant goes with Villa Loma or Laurel Tree, they are going off-site either way. Staff felt more comfortable buying credits in Villa Loma because the project is already built and the City needs to start recovering their costs. At this point, Laurel Tree is not in need of money except for getting the tax credits approved. Letting TRC buy into Laurel Tree is not going to help it get financed. Staff thinks there are going to be excess units, but this has not been confirmed yet, so Staff feels more comfortable recommending that if the applicant is going to buy credits, that they be in the Villa Loma project. Mr. Henthorn added that the money comes into the Housing Trust Fund, which ultimately ends up in Laurel Tree anyway. Commissioner Scarpelli asked if anybody has looked into the possibility of moving these affordable units into the other project if Laurel Tree goes to option 2. Ms. Fountain responded that either way the applicant is going off-site. If the hope is to get more units out of doing this, that is something that would have to be looked at. Ms. Fountain does not know if there is a guarantee because of the site constraints. It will probably result in getting less units if Laurel Tree goes to a condo project rather than more units. Ms Fountain said there are a lot of unknowns with the second option. Mr. Henthorn commented that it all boils down to being the same amount of money whether it goes to Laurel Tree directly or whether it goes into the Housing Trust Fund--the money still ends up the same location. Commissioner Calverley expressed her concern for projects with less than 350 units, or less than 50 affordable units, automatically going into a combined project. Commissioner Latas asked for a projected build-out for this quadrant to determine if Laurel Tree and Villa Loma will take care of everything. Vice Chairperson Wellman asked if Staff could provide the Commission with this information. Vice Chairperson Wellman asked Staff for a report next month concerning the southwest and southeast quadrants with regard to proposed developments and hture developments to build-out; and how many affordable units will be necessary for the quadrant; and how many of those will need to go into a combined project. HOUSING COMMISSION MINUTES August 14,1997 Page 10 Ms. Fountain understands that the Commission needs information about all the market-rate projects that are in the southwest and southeast quadrants that have requirements to do affordable housing. She asked the Commission if they would like to know what the affordable housing number is and how it is proposing to meet the requirement or does the Commission want information on the total number of units being proposed. Commissioner Walker responded that the Commission wants to know what the requirements are in the quadrant in order to see whether or not the Laurel Tree and Villa Loma projects will satisfy those requirements. Ms. Walker added that based upon the information presented tonight, the Commission is assuming that future projects will request to be combined projects. Assuming this, the Commission needs a number as to what the total would be in those quadrants. Ms. Fountain stated that the City’s Growth Management Plan could provide some insight as to all the projects out there and their maximum development potential on the site. From plans already submitted Staff has reports that show the number of the affordable housing projects that are in process. Ms. Fountain added that Staff has been thinking about the combined projects on a pretty regular basis. When the Inclusionary Housing Ordinance started, everybody had an ideal of what it looked like, and over time it has developed a little bit differently from the ideal--the market is driving things a little bit differently. Ms. Fountain added that Staff has been thinking about being more creative, for instance, by buying existing apartment projects and converting them so they are restricted. It appears that Staff will see small projects coming forward not knowing how to do the project with affordable housing. She added that there has been controversy over the second dwelling units, which at one time was considered the “savior” of the affordable housing process. Staff is constantly thinking of alternative ways to help the developers meet their requirement and meet the City’s goal of getting affordable housing. Ms. Fountain said Staff can pull the report together probably, but maybe not by the next meeting. Staff may be able to provide it at the meeting in October. She expressed concern in the meantime for the Ocean Bluff project and how they will meet their requirement, which affects them financially in being able to go forward with their market-rate project. Vice Chairperson Wellman requested that Staff provide the Commission with a report on the southwest quadrant by the next meeting and a report on the southeast quadrant at the following meeting. Ms. Fountain responded that Staff will “give it their best shot.” Mr. Henthorn showed a desire to speak and the Commissioners wanted to get feedback from him. He said he would like to make a request of the Commission by working with Staff to get the information to the Commission next month. He said they have done quite a bit of work with the zone plan in this quadrant. He also said he would like to request, if possible, to continue this item until next month and allow it to be discussed possibly in a broader context. ACTION: Motion by Commissioner Scarpelli, and duly seconded, to CONTINUE TO THE NEXT MEETING Housing Commission Resolution No. 97-0 10, recommending that the City Council approve a request by the Ocean Bluff Partnership to purchase 16.24 affordable housing credits in the Villa Loma Housing Project in order to satisfy the affordable housing obligation of the Ocean Bluff Project under the City’s Inclusionary Housing Ordinance. Calverley, Escobedo, Latas, Rose, Scarpelli, Walker, Wellman VOTE: 7-0-0 AYES: NOES: None ABSTAIN: None ANNOUNCEMENTS: Ms. Fountain gave the status of Laurel Tree and said there has not been a formal announcement yet as to all the final allocations from the Tax Credit Allocation Committee, but added that things are looking a little bit more favorably right HOUSING COMMISSION MINUTES August 14, 1997 Page 11 now for Laurel Tree. The Tax Credit Committee has initiated some additional review of the application and Ms. Fountain explained that some projects start falling out as the Committee completes their review; so the MAAC project is looking really good at this point. In the meantime, they are still moving forward to collect the funds from the developers who are participating in the project--Kaiza and Lennar, who owns the Mariner’s Point project, so they can go ahead and purchase the property because the option expires on September 8. After collecting the developers’ money, they will buy the property and the rest of the money will go into a trust fund. The issue was raised whether or not the City had to reserve those credits in Villa Loma. As soon as the developers put in their money, they are released from their obligation, which releases the credits from Villa Loma, which means they are available to someone else. If the funding does not go through this time, they may try one more time before they go to the condo project. Ms. Fountain discussed the issue of the Grand Jury Report about the use of the Redevelopment Agency Low to Moderate Income Housing Fund. Ms. Fountain said she had a chart showing the expenditures that Staff prepared for the Grand Jury in response and the City Attorney is working on the response right now. Ms. Fountain explained that the problem was caused by accounting principles and added that Carlsbad has not had any problem spending their money, but when the reports go to the State, and the State reports to the public, they tend to leave out some information. All the money that Carlsbad gives through the low/mod fund is provided as loans. For accounting principles, they are recorded as loan receivables, not as expenditures. When the State looks at the reports, they only look for expenditures, and the only expenditures listed on the reports are admin funds. When the State looks at the Carlsbad reports, they believe that 100 percent of the money has been spent on admin, which is incorrect because Carlsbad issued $2,000,000 worth of loans to help the Villa Loma project, so those are outstanding. The State does not give the City credit for having spent the money or for having the money available to spend on another project until it is repaid. Ms. Fountain said this is an accounting issue that has gotten blown out of proportion. Staff is responding to the Grand Jury and believes the issue will be resolved. She said the chart of expenditures was available for the Commissioners to review. She added that the City does spend money on admin--there is a lot of time that goes into developing affordable housing projects. She said the Commission will get a copy of the response that the City is providing to the Grand Jury. Lastly, Ms. Fountain stated that she is not sure what is going to happen with the Housing and Redevelopment Department right now. She is the Acting Director, and there hasn’t been a decision made as to whether the City will recruit for a new director or whether they will reorganize the City. All of this is being studied right now, Ms. Fountain said, and she will keep the Commission informed of the changes, if any. .... .... _... HOUSING COMMISSION MINUTES August 14, 1997 Page 12 Commissioner Latas commented that he would like to review the Commission’s Secondary Dwelling Unit Guidelines because last month the Commission got into extensive debate about laundry and sound proofing. He added that perhaps these kinds of things should be added to the Guidelines so that developers will not be surprised about the Commission’s expectations. Vice Chairperson Wellman asked that this item be added to the agenda for next month. ADJOURNMENT: By proper motion, the Regular meeting of August 14, 1997 was adjourned at 7:37 p.m. NEXT SCHEDULED MEETING September 11, 1997 Respectfully submitted, n DEBBIE FOUNTAIN Acting Housing and Redevelopment Director KATHY VAN PELT Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED. me City of Carfsbad Housing & Redevefopment Department A REPORT TO THE HOUSING COMMISSION 1 Item No. 1 Staff Craig D. Ruiz Management Analyst DATE: AUGUST 14,1997 SUBJECT: MAR VISTA AT LA COSTA - APPLICATION TO PURCHASE AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 97-009, recommending that the City Council APPROVE a request by TRC Development Corporation to purchase 2.55 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Mar Vista at La Costa project under the City’s Inclusionary Housing Ordinance. 11. BACKGROUND TRC Development is currently processing an application for tentative map (CT 97-08) to develop 17 single family homes on approximately 2.5 acres. The project is designed around three cull-de-sac streets and includes home sites with a minimum parcel of 3,500 square feet. The development of 17 homes will require the developer to provide 2.55 units of housing affordable to lower income households as required by the City’s Inclusionary Housing Ordinance. It is the applicant’s position that there are significant constraints on the site which would make it difficult to provide the affordable housing units on-site. Therefore, the applicant is requesting to purchase Affordable Housing Credits (“credits”) in the Villa Loma project in lieu of on-site construction. The City’s Inclusionary Housing Ordinance permits off-site satisfaction of an inclusionary requirement through participation in a Combined Inclusionary Housing Project (“Combined Project”) if the City Council determines that it is in the public interest. Purchase of credits in the Villa Loma project constitutes participation in a Combined Project. Policies RegardinP Off-Site Proiects and Purchase of Affordable Housinp Credits The City Council has adopted two policies which deal with off-site or Combined Projects and the sale of Affordable Housing Credits. Council Policy 57 was developed to MAR VISTA AT LA COSTA AUGUST 14,1997 PAGE 2 establish the criteria to be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. This policy requires review of the request and an action recommendation from the Combined Project Review Committee consisting of the Housing and Redevelopment Director, City Manager, Financial Management Director, Community Development Director, Planning Director and City Attorney. The Mayor is an ex-officio member of the Committee. This Committee has reviewed the subject request and is recommending approval. Council Policy 58 was established to determine the price of credits and the mechanism to satisfy a developers obligation under the City’s Inclusionary Housing Ordinance. Based upon this policy, the current cost to purchase a housing credit in the Villa Lorna project is $32,220 per unit. The Mar Vista Project, therefore, will be required to pay to the City of Carlsbad a total of $82,16 1, if approved. . RECOMMENDATION The Council Policies require staff to evaluate the request for off-site satisfaction of the inclusionary housing obligation and the purchase of credits based upon three primary criteria. The criteria includes: 1) feasibility of on-site proposal; 2) relative advantages/disadvantages of an off-site proposal; and 3) the advancement of housing goals and strategies. The following is a summary of staffs analysis of the criteria for the project. Feasibility of On-site ProDosal 0 The small scale of the developable area, and the physical constraints caused by the large slope areas effectively precludes all types of on-site affordable housing projects. Also, the small scale of the affordable housing project makes the development economically unfeasible due the significant financial subsidy which would be required for the project. Further, the small scale of the affordable housing project makes it unlikely that the project will generate interest from funding sources. Relative AdvantaPeslDisadvantaves of an Off-site Proposal 0 The participation in the off-site project will allow the City to recover the costs associated with the development of excess affordable housing units. 0 The Villa Loma project has locational advantages over the on-site project in terms of direct access to jobs, public transportation, schools, parks as well as other amenities and services due to the being located directly on a major thoroughfare. MAR VISTA AT LA COSTA AUGUST 14,1997 PAGE 3 Advancinp Housinp Goals and Stratepies 0 The recovery of the City’s investment in the Villa Loma Project will provide for additional financial resources which are needed to further affordable housing development in the community. Based upon the analysis of the above criteria, it is staffs opinion that adequate justification has been provided to make the finding that the off-site satisfaction of the inclusionary housing requirement is in the public interest. Therefore, staff is recommending that the request to purchase credits be recommended for approval by the Housing Commission. EXHIBITS 1. Housing Commission Resolution No. 97-009 2. Applicant Request to Purchase Credits 3. Draft Affordable Housing Agreement 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 HOUSING COMMISSION RESOLUTION NO. 97-009 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, TO RECOMMEND THAT THE CITY COUNCIL APPROVE A REQUEST BY TRC DEVELOPMENT CORPORATION TO PURCHASE 2.55 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT IN ORDER TO SATISFY THE AFFORDABLE HOUSING OBLIGATION OF THE MAR VISTA AT LA COSTA PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING ORDINANCE. APPLICANT: TRC DEVELOPMENT CASE NO: CT 97-0SPUD 07-05 WHEREAS, TRC Development has made application for Tentative Map CT 97- 08 and Planned Unit Development PUD 97-05 with the City of Carlsbad for the development of a 17 unit residential subdivision; WHEREAS, the subdivision of land for 17 residential units requires the developer to provide 2.55 units of housing affordable to lower income households as required by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance; WHEREAS, the Villa Loma housing project was conceived and developed with City participation based on the creation of 184 excess affordable housing units which would be available to satisfy other developers inclusionary housing obligation; WHEREAS, TRC Development has requested to purchase Affordable Housing Credits as a means to satisfy their affordable housing obligations as permitted by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance and consistent with City Council Policies 57 and 58; WHEREAS, the request to purchase Affordable Housing Credits has been submitted to the City of Carlsbad’s Housing Commission for review and consideration; 1 2 3 4 5 6 7 0 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 20 WHEREAS, said Housing Commission did, on the 14* day of August, 1997, hold a public meeting to consider said request for the purchase of Affordable Housing Credits by TRC Development; WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all persons desiring to be heard, said Commission considered all factors relating to the application and request to purchase Affordable Housing Credits; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 2. The project is consistent with the goals and objectives of the City of Carlsbad’s Housing Element and Comprehensive Housing Affordability Strategy, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. 3. Based upon the analysis contained within the Housing Commission Staff Report, the Housing Commission finds that the off-site satisfaction of the inclusionary housing requirement is in the public interest. 4. That based on the information provided within the Housing Commission Staff Report and testimony presented during the public meeting of the Housing Commission on August 14, 1997 the Commission recommends that the City Council APPROVE a request by TRC Development Corporation to purchase 2.55 affordable housing credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Mar Vista at La Costa project under the city’s inclusionary housing ordinance. 5. That the Housing Commission recommends that the City Manager or his designee is authorized to execute the Affordable Housing Agreement in substantially the form presented in the Exhibit 3 for the Housing Commission Staff Report and to execute such other documents, or take other actions as may be necessary or appropriate to assist the developer in acquiring the Affordable Housing Credits. KC RESO. NO. 97-009 PAGE 2 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 ieneral Conditions: . Within sixty (60) days of the City Council approval of Developer's request to purchase Affordable Housing Credits, and prior to receiving Final Map approval, Developer shall execute this Agreement and pay to the City the sum of $ 82,161 as its payment for two and fifty-five one-hundredths (2.55) Credits. Execution of this Agreement by the parties and payment of the sum of $ 82,161 to the City by the Developer shall fully satisfy the Developer's affordable housing obligation pursuant to Chapter 2 1.85 of the Carlsbad Municipal Code and the above-referenced conditions of approval. Upon execution of this Agreement and receipt of the above payment from developer, City will record an appropriate release of the developer's obligation. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing 'omission of the City of Carlsbad, California, held on the 141h day of August, 1997, by le following vote, to wit: AYES: NOES: ABSENT: MICHAEL SCHLEHUBER, Chairperson Housing Commission lEBBIE FOUNTAIN ousing and Redevelopment Director x - EXHIBIT 2 Avalon Homes July 16, 1997 Via Facsimile and U.S. Mail (760) 720-2037 Evan Becker Director, Housing and Redevelopment CITY OF CARLSBAD 2965 Roosevelt, Suite B Carlsbad, CA. 92008 S-CT: MARVISTA AT LA COSTA PHASE I & II - AFFORDABLE HOUSING REQUIREMENTS ,,’ Tentative Tract 97-08 (17 lots) and Tentative Parcel Map 97-05 (4 lots) North West corner of El Fuerte Street and Unicornio Ave. Dear Evan: To meet the City of Carlsbad’s inclusionary housing requirements of 2.55 units on Marvista I, TM 97-08 I have enclosed a completed OCIHPA worksheet to provide evidence of meeting the criteria to apply for and obtain affordable housing credits pursuant to Policy 57 & 58 of the City’s Housing Ordinance (CMC Chapter 21.85). This policy allows housing tracts in the Southwest Quadrant of the city to apply for and purchase affordable housing credits from the 344 unit affordable housing project known as Villa Loma. It is my understanding that Marvista 11, Tentative Parcel map 97-05 consisting of 4 units qualifies to pay in-lieu fees for the 4 units as the tentative parcel map has less than 7 units. The City of Carlsbad’s planning department is processing Marvista I & I1 as two different projects and their inclusionary housing obligations should be considered separately. The Planing Department cannot complete there review of this project until there is a consensus that the above project qualifies for the purchase of affordable housing credits. Please inform me as quickly as possibIe on the status of credits available for purchase for these projects and the time required to process and approve this application. To assist you I have included 8 M X 11 copies of the tentative maps. 26440 La Alameda. Suite 370 Mission Viejo, CA. 92691 - Te!: (714) 582-4111 - Fax: (714) 5824115 Evan Becker July 16, 1997 Page 2 I you have any questions or need additional information do hesitate to call me. Please sign ihe enclosed copy of this letter as a receipt that you have received this letter. I have enclosed a self addressed envelope with postage to expedite this process. Thank you for your diligent assistance in this matter. Sincerely, Avalon Homes n Scott B. Redsun President cc: Debbie Fountain Dennis Turner - Planning Department .I Received by: Date OFFSITE AND COMBINED fiWL USIOffAR Y HOUSIffG PROJECT ASSESSMEff T WORXTHEET BACKGROUND 1. Applicant Name and Address: TRC Development Corporation Dba: Avalon Homes 26440 La Alameda, Suite 370 Mission Viejo, CA 9269 1 (714) 582-41 11 2. Off-site or Combined Project Name: 344 unit affordable housing project known as Villa Lorna 3. Description of Project with Inclusionary Housing Obligation: Marvista I & II is a small infill project located at the northwest comer of El Fuerte Street and Unicornio Avenue. The project consists of 5 previously graded lots totaling approximately 3.13 acres. The project will provide 17 units and 4 units respectively of single family housing ranging in size from 1,800 to 2,050 square feet, with a minimum lot size of 3,500 square feet. There are four small cul-de-sacs with 4 to 6 unit in each cul-de-sac. 4. Proposed On-site Project Description (if any): None 5. Proposed Off-site Project Description: 344 unit affordable housing project known as Villa Loma. Marvista at La Costa I will be required to purchase 2.55 credits and Marvista at La Costa I1 qualifies for in-lieu fees as the tentative parcel map has less than 7 units. 6. Description of On-site Project Constraints: The project of 3+ acres offers very little opportunity to provide on-site affordable housing. The project is surrounded by existing housing and hlly developed street system. There are 4 private cul-de-sacs with 4 to 6 units in each one. A private park will be provided to the residences of Marvista I & 11. A homeowners association will maintain the private park, slopes and fiont yards. Attachment “1” to Council Pilicy Statement No. 57 PROJECT DESCRIP~ION/EXPLANATION PROJECT NAME: Marvi sta APPLICANT NAME: TRC DeveloDment Coruoration Please describe fully the proposed project. Include any details necessary to adequately explain the scope and/or operation of the proposed project. You may also include any background information and supporting statements regarding the reasons for, or appropriateness of, the application. Use an addendum sheet if necessary. Description/Explanation: . Located in the La Costa region of Carlsbad, Marvista will be a small enclave of 17 single family ' homes, with a minium lot size of 3,500 square feet. Marvista is designed around 3 small cull-du- sac streets, 32 feet in width. There will be no more than 6 homes on any one cull-du-sac offering their residence a quite friendly atmosphere. Marvista will offer its residences a common area park featuring a shuffle board court and a picnic area for both active and passive usage. In addition, residences will be provided fiont yard landscaping which will be maintained by the Marvista Homeowners Association. This Homeowners will also be responsible for the maintenance of common area landscaping, slope landscaping and private streets. Marvista will offer two floor plans ranging is size from 1,870 to 2,020 square feet, with each floor plan offering up to 4 bedrooms and 2.5 baths. We have developed 3 distinctive architectural styles for Marvista. Both floor plans will offer a California Cottage elevation which is accented by fi-ont porches, wood siding and window shutters. In addition to the California Cottage style, Plan one will offer an elevation reflecting the Beach Bungalow style of architecture which is denoted by shingle siding and rock accents. The second elevation for Plan 2 is accented by shutters and rock accents reflecting the California Spanish style of architecture. Marvista will also include 4 additional homes which is being developed on a lot not contiguous to this project. They are separated by one lot, these 4 units will be offer the same amenities as the 17 units. Currently, the land to be developed consists of four .6 acre lots which have previously been graded in super pad condition. The surrounding area consists of a wide variety of residential developments which include condominiums, townhomes, small lot single family homes and single family homes on large lots. Marvista will blend in will the existing community and offer the residences of Carlsbad uniquely designed moderately priced single family homes. Rev. 4/91 ProjDescfrm I. I i i I I ! I j ; i I ! f 1 I I i j I ! I ! I i i I ! I EXHIBIT 3 AFFORDABLE HOUSING AGREEMENT This AFFORDABLE HOUSING MITIGATION AGREEMENT, entered into this day of I 19 , by and between the CITY OF CARLSBAD, a Municipal Corporation (hereinafter referred to as the llCityll), and TRC Development Corporation, (hereinafter referred to as the "Developer"), is made with reference to the following: A. Developer is the owner and developer of property generally located at the northwest corner of Unicornio Street and El Fuerte Street and Local Facilities Management Zone 6 in the" City of Carlsbad, in the County of San Diego, California (hereinafter referred to as the "subject property"). . The subject property is more particularly described in Exhibit "A", which is attached hereto and is incorporated herein by this reference. B. Developer wishes to construct 17 single family homes upon the subject property. The Planning Commission has approved Carlsbad Tract/Parcel Map CT 97-08,and Planned Development 97-05. The Planning Commission issued these approvals subject to conditions of discretionary approval. C. The Developer was conditioned with the ability to satisfy its affordable housing obligation in accordance with Chapter 21.85 of the Carlsbad Municipal Code by purchasing two and fifty-five one-hundredths (2.55) Affordable Housing Credits (Credits) in the Villa Loma affordable housing project. D. Pursuant to the above-referenced conditions of approval, and in accordance with City Council Policies 57 and 58, the Developer has received approval from the City Council by Resolution No. 97- , dated , 1997, to purchase Credits in the off-site project known as Villa Loma. The City controls and has available these Credits in Villa Loma and the project meets the requirements of a Combined Inclusionary Housing Project as defined in Chapter 21.85 of the Carlsbad Municipal Code. Purchasing Credits according to the terms of this Agreement satisfies the developer's affordable housing obligation in accordance with Chapter 21.85 of the Carlsbad Municipal Code and the developer's conditions of approval. NOW, THEREFORE, it is mutually agreed by and between the, undersigned parties as follows: 1. SATISFACTION OF AFFORDABLE HOUSING OBLIGATION AND CONDITIONS OF TENTATIVE MAP APPROVAL THROUGH THE PURCHASE OF AFFORDABLE HOUSING CREDITS Within sixty (60) days of the City Council approval of Developer's request to purchase Affordable Housing Credits, and prior to receiving Final Map approval, Developer shall execute this Agreement and pay to the City the sum of $ 82,161 as its payment for two and fifty-five one-hundredths (2.55) Credits. Execution of this Agreement by the parties and payment of the sum of $ 82,161 to the City by the Developer shall fully satisfy the Developer's affordable housing obligation pursuant to Chapter 21.85 of the Carlsbad Municipal Code and the above-referenced conditions of approval. Upon execution of this Agreement and receipt of the above payment from developer, City will record an appropriate release of the developer's obligation. Failure of the Developer to perform according to the terms of this Agreement will be a failure to satisfy the Tentative Map Conditions with respect to the subject property and Chapter 21.85 of the Carlsbad Municipal Code; and the City may exercise any and all remedies available to it with respect to the Developer's failure to satisfy the Tentative Map Conditions including but not limited to withholding the issue of building permits for the subject property. 2. CITY ACKNOWLEDGES DEVELOPER PAYMENT. By executing this Agreement, City acknowledges receipt of Developer's payment under the terms of this Agreement. By executing this Agreement, developer waives any and all rights to other means of satisfying the affordable housing obligations required by Chapter 21.85 of the Carlsbad Municipal Code and the conditions of approval. 4. HOLD HARMLESS. The undersigned developer (hereinafter referred to as "Indemnitor"), for and in consideration of the City of Carlsbad's approval of this Agreement, and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged by Indemnitor, does hereby covenant, undertake and agree that it will indemnify and hold harmless (without limit as to amount) the City of Carlsbad and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees") , and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgements . and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to this Agreement, and to protect and defend Indemnitees, and any of them with respect thereto. 5. NOTICES. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addresses set forth below: TO THE CITY OF CARLSBAD: City of Carlsbad Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 TO THE DEVELOPER: TRC Development Corporation 26440 La Alemeda, Suite 370 Mission Viejo, California 92691 sent Any party may change the address to which notices are to be notifying the other parties of the new address, in the manner set forth above. . 6. INTEGRATED AGREEMENT. This Agreement constitutes the entire agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. 7. DURATION OF AGREEMENT. This Agreement shall terminate and become null and void when the City has received the payment described in Paragraph 1, except as to the indemnity and hold harmless provisions setforth in Paragraph 4. 8. SEVERABILITY. In the event any limitation, condition, restriction,.' covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless, be and remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written . DEVELOPER TRC Development Corporation By : Signature CITY OF CARLSBAD A Municipal Corporation By : MARTIN ORENYAK Community Development APPROVED AS TO FORM: Print Name Title: - RONALD R. BALL City Attorney Dir EXHIBIT "Arr PROPERTY DESCRIPTION Lot 518, 519, 520, 521 of La Costa Meadows Unit No. 3 in the City of Carlsbad, County of San Diego, State of California, according to map thereof No. 7076, filed in the office of the County Recorder of San Diego, October 6, 1971. -viii- S I me City of Carlsbad Housing & Redevelopment Depadment I A REPORT TO THE HOUSING COMMISSION Item No. 2 Staff Craig D. Ruiz Management Analyst DATE: AUGUST 14,1997 SUBJECT: OCEAN BLUFF - APPLICATION TO PURCHASE AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 97-010, recommending that the City Council APPROVE a request by the Ocean Bluff Partnership to purchase 16.24 Affordable Housing Credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Ocean Bluff development under the City’s Inclusionary Housing Ordinance. 11. BACKGROUND The applicant, Ocean Bluff Partnership, has received approval for a tentative map (CT 93-09) to develop 92 single family homes on approximately 31 acres. The project will include homes of upwards of 3,000 square feet on parcels between 7,500 and 13,000 square feet. The subdivision is required to provide 16.24 units of housing affordable to lower income households as required by the City’s Inclusionary Housing Ordinance. To satisfy this requirement, the developer has also received approval of Site Development Plan SDP 93-07 for the development of a 16 unit affordable multi-family apartment project. When CT 3-09 was approved by the City Council, a condition of approval for the project allowed for the developer, upon showing that an on-site contribution is not appropriate, to purchase Affordable Housing Credits in the Villa Loma housing project. The developer believes that there are significant constraints which preclude the development of an on-site affordable housing project. Therefore, the developer is requesting to purchase Affordable Housing Credits (“credits”) in the Villa Loma project in lieu of on-site construction. The City’s Inclusionary Housing Ordinance permits off-site satisfaction of an inclusionary requirement through participation in a Combined Inclusionary Housing Project (“Combined Project”) if the City Council determines that it is in the public interest. Purchase of credits in the Villa Loma project constitutes participation in a Combined Project. OCEAN BLUFF AUGUST 14,1997 PAGE 2 Policies Repardinp Off-Site Proiects and Purchase of Affordable Housinp Credits The City Council has adopted two policies which deal with off-site or Combined Projects and the sale of Affordable Housing Credits. Council Policy 57 was developed to establish the criteria to be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. This policy requires review of the request and an action recommendation from the Combined Project Review (Staff) Committee consisting of the Housing and Redevelopment Director, City Manager, Financial Management Director, Community Development Director, Planning Director and City Attorney. The Mayor is an ex-officio member of the Committee. This committee has reviewed the subject request and is recommending approval. Council Policy 58 was established to determine the price of credits and the mechanism to satisfy a developers obligation under the City’s Inclusionary Housing Ordinance. Based upon this policy, the current cost to purchase a credit in the Villa Loma project is $32,220. The Ocean Bluff Project, therefore, will be required to pay to the City of Carlsbad a total of $523,252, if approved by the City Council. RECOMMENDATION The Council Policies require staff to evaluate the request for off-site satisfaction of the inclusionary housing obligation and the purchase of credits based upon three primary criteria. The criteria includes: 1) feasibility of on-site proposal; 2) relative-advantages/disadvantages of an off-site proposal; and 3) the advancement of housing goals and strategies. The following is a summary of staffs analysis of the criteria for the project. Feasibility of On-site Proposal 0 The small scale of the affordable housing project makes the development economically unfeasible due the significant financial subsidy which would be required for the project. Further, the small scale of the affordable housing project makes it unlikely that the project will generate interest from funding sources. 0 It will be difficult to integrate an affordable housing apartment project into an a community of single family detached homes which have an estimated base price range of $300,000 to $350,000. Relative AdvantaeeslDisadvantaees of an Off-site Prososal 0 The participation in the off-site project will allow the City to recover the costs associated with the development of excess affordable housing units. 0 The Villa Loma project has locational advantages over the on-site project in terms of direct access to jobs, public transportation, schools, parks as well as other amenities and services due to the being located directly on a major thoroughfare. OCEAN BLUFF AUGUST 14,1997 PAGE 3 Advancing Housinp Goals and Strategies 0 The recovery of the City’s investment in the Villa Loma Project will provide for additional financial resources which are needed to further affordable housing development in the community. Based upon the analysis of the above criteria, it is staffs opinion that adequate justification has been provided to make the finding that the off-site satisfaction of the inclusionary housing requirement is in the public interest. Therefore, staff is recommending that the request to purchase credits be recommended for approval by the Housing Commission. EXHIBITS 1. Housing Commission Resolution No. 97-0 10 2. Applicant Request to Purchase Credits 3. Draft Affordable Housing Agreement cr 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 HOUSING COMMISSION RESOLUTION NO. 97-010 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, TO RECOMMEND THAT THE CITY COUNCIL APPROVE A REQUEST BY THE OCEAN BLUFF PARTNERSHIP TO PURCHASE 16.24 AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA HOUSING PROJECT IN ORDER TO SATISFY THE AFFORDABLE HOUSING OBLIGATION OF THE OCEAN BLUFF PROJECT UNDER THE CITY’S INCLUSIONARY HOUSING ORDINANCE. APPLICANT: OCEAN BLUFF PARTNERSHIP CASE NO: CT 93-09 WHEREAS, the Ocean Bluff Partnership has received approval of Tentative Map CT 93- 09 for the development of a 92 unit residential development; WHEREAS, said subdivision of land requires the developer to provide 16.24 units of housing affordable to lower income households as required by Carlsbad Municipal Code Section 2 1.85 of the City’s Inclusionary Housing Ordinance; WHEREAS, the Villa Loma housing project was conceived and developed with City participation based on the creation of 184 excess affordable housing units which would be available to satisfy other developers inclusionary housing obligation; WHEREAS, Ocean Bluff Partnership has requested to purchase Affordable Housing Credits as a means to satisfy their affordable housing obligations as permitted by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance and consistent with City Council Policies 57 and 58; WHEREAS, the request to purchase Affordable Housing Credits has been submitted to the City of Carlsbad’s Housing Commission for review and consideration; WHEREAS, said Housing Commission did, on the 14‘h day of August, 1997, hold a public meeting to consider said request for the purchase of Affordable Housing Credits by the Ocean Bluff Partnership ; 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 - I WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, fall persons desiring to be heard, said Commission considered all factors relating to the )plication and request to purchase Affordable Housing Credits; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the ity of Carlsbad, California, as follows: 1. 2. 3. 4. 5. The above recitations are true and correct. The project is consistent with the goals and objectives of the City of Carlsbad's Housing Element and Comprehensive Housing Affordability Strategy, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. Based upon the analysis contained within the Housing Commission Staff Report, the Housing Commission finds that the off-site satisfaction of the inclusionary housing requirement is in the public interest. That based on the information provided within the Housing Commission Staff Report and testimony presented during the public meeting of the Housing Commission on August 14, 1997, the Housing Commission recommends that the City Council APPROVE a request by the Ocean Bluff Partnership to purchase 16.24 affordable housing credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the Ocean Bluff project under the city's inclusionary housing ordinance. That the Housing Commission recommends that the City Manager or his designee be authorized to execute the Affordable Housing Agreement in substantially the form presented in the Exhibit 3 for the Housing Commission Staff Report and to execute such other documents, or take other actions as may be necessary or appropriate to assist the developer in acquiring the Affordable Housing Credits. leneral Conditions: Within sixty (60) days of the City Council approval of Developer's request to purchase Affordable Housing Credits, and prior to receiving Final Map approval, Developer shall execute this Agreement and pay to the City the sum of $ 523,252 as its payment for sixteen and twenty four one-hundredths (16.24) Credits. Execution of this Agreement by the parties and payment of the sum of $ 523,252 to the City by the Developer shall fully satisfy the Developer's affordable housing obligation pursuant to Chapter 2 1.85 of the Carlsbad Municipal Code and the above-referenced conditions of approval. Upon execution of this Agreement and receipt of the above payment from developer, City will record an appropriate release of the developer's obligation. C RESO. NO 97-010 AGE 2 I 1 # b L c E - I E E ia 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 Housing Commission of the City of Carlsbad, California, held on the 14Ih day of August, 1997, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: MICHAEL SCHLEHUBER, Chairperson CARLSBAD HOUSING COMMISSION IEBBIE FOUNTAIN 9cting Housing and Redevelopment Director IC RES0 NO. 97-010 'AGE 3 EXHIBIT 2 - - CEAN BLUFF PARTNERS, -.P 7825 Fay Avenue, Suite 200 La Jolla, California 92037 (6 1 9) 456-3594 July 15, 1997 Mr. Evan Becker Housing and Redevelopment Director City of Carlsbad 2965 Roosevelt Street, Suite B Carlsbad, CA 92008 Subject: Ocean Bluff Project - Request to Purchase Affordable Housing Credits in the Villas at El Camino Real Project i Dear Mr. Becker: This letter serves as a formal request by the Ocean Bluff Partnership to purchase off-site affordable housing credits in the Villas at El Camino Real development to satisfy the Ocean Bluff (CT 93-09) project's inclusionary housing obligations. This request is made as a part of final map processing activities. The request is in compliance with and is specifically supported by the following actions previously taken by the City Council: The City's lnclusionary Housing Ordinance (CMC Chapter 21.85) establishes certain requirements under which residential developers must provide housing that is affordable to lower-income households as a condition of project approval and permit issuance. The ordinance provides that "circumstances may arise in which the public interest would be served by allowing some or all of the inclusionary units associated with one project site to be produced at an alternative site or sites." Planning Commission Resolution 3869, CT 93-09, .conditions also provide that "a second inclusionary housing option available to the developer shall be that the developer shall enter into an agreement with the City to purchase affordable credits from Villas at El Camino Real or participate in an off-site combined inclusionary project within the southwest quadrant and as appropriate, in accordance with the requirements set forth in Chapter 21.85 of the Carlsbad Municipal Code, the Zone 20 Specific Plan, and City Council Policies 57 and 58 dated September 12, 1985". In the case of the Ocean Bluff project, there are particular circumstances that warrant the provision of the inclusionary units off-site in combination with the existing Villas at El Camino Real Apartment project or other suitable location, pursuant to Council Policy 57 criteria. Significant feasibility issues affect the development of this project on-site. Contribution to the existing off-site project versus providing a small low-income apartment complex on-site will result in increased public benefit. 1 We understand this request will be evaluated by a staff Project Review Committee to determine compliance with the criteria defined in Policies 57 and 58. We will then take the Committee’s recommendation to the Housing Commission and City Council. As you know, we hope to expedite the process to Council since this issue must be resolved precedent to recording the final map. Please call if you need additional information or if we may be of any other assistance. Sincerely, Mr. Robert Wneteer cc: Mr. Jack Henthorn, Jack Henthorn & Associates 2 OCEAN BLUFF PROJECT OFFSITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET -- BACKGROUND The following background information is provided to assist you in your assessment. 1. 2. 3. 4. 5. Owner/Applicant Information: Ocean Bluff Partnership Attn: Mr. Robert Wineteer 7825 Fay Avenue Suite 200 La Jolla, CA 92137 456 3594 Off-sitelcombined Project Name: VILLAS AT EL CAMINO REAL APARTMENTS Applicant's Representative: Jack Henthorn & Associates Attn: Mr. Jack Henthorn Suite J 5431 Avenida Encinas Carlsbad, CA 92008 4 3 8 -4 0 9 0 ,.( Description of Project with lnclusionary Housing Obligation: Ocean Bluff, CT 93-09, is a proposed 92-lot single family development located on a 31.2-acre parcel with a 16.24-unit affordable housing obligation. On-site Affordable Housing Description: Ocean Bluff Affordable Housing, SOP 93-07, is a 16-unit multi-family, apartment project on one lot with units ranging from 1 to 3 bedrooms. The units would range in maximum rent from approximately $450 to $600, which is affordable to households earning incomes of 50% to 80% of the Area Median Income. To achieve feasibility, the project would require a subsidy of $362,737 (even assuming a fully constructed pad is provided by the developer and unit incomes are based on a 95% occupancy rate factor) , Proposed Off-site Project Description: The Villas at El Camino Real project is a 344-unit apartment development in which all units are restricted and affordable to households with incomes not exceeding 60% of the San Diego County Median. Villas at El Camino Real was developed by La Terraza Associates, with Bridge Housing Corporation as the Managing General Partner. The complex contains 1, 2, 3 & 4 bedroom units. Villas at El Camino Real was financed with assistance from the City of Carlsbad and the Carlsbad Redevelopment Agency. The assistance was structured in such a way as to create affordable units which would be marketed exclusively by the City to "other developers" in order to satisfy an affordable housing obligation. Villas at El Camino Real Apartments is a Combined Project according to the lnclusionary Housing Ordinance, and developers may participate in this as an "off-site" method of satisfying their affordable housing obligation. (This is also an approved site as per Specific Plan Amendment #203 for the Costa Do Sol project, currently called Greystone Cove.) 3 .. Participation in Villas at El Camino Real Apartments by the applicant would be in the form of a purchase of Affordable Housing Credits (Credits) under terms established by City Council Policies Number 57 and 58. If the applicant is afforded the opportunity to purchase Credits, the Ocean Bluff tentative map would require the purchase of 16.24 Credits to satisfy its inclusionary housing requirement. 6. Description of On-site Project Constraints: Specific constraints exist which would affect the on-site affordable project’s feasibility. These include the uneconomical scale of the affordable project and a the significant price difference between the affordable rental units and the proposed single-family market units that will be developed in and around this project. In addition to these constraints, the location of the Villas at El Camino Real project is superior to the on-site location. Access from the subject site to nearby jobs, shopping, transportation, schools, parks, bus stops and other services and amenities to the north and east will be limited. Direct routes will not be available to nearby Palomar Airport Road and El Camino Real until well after the units are constructed. Contrary to this, the Villas at El Camino Real project is already conveniently located with direct access onto El Camino Real, providing convenient access to needed setvices and jobs. 4 OCEAN BLUFF PROJECT OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET - WORKSHEET I. Feasibilih of the On-site Proposal a. Are there significant feasibility issues due to factors such as project size, site constraints, amount and availability of required subsidy, and competition from multiple projects that make an on-site option impractical? 0 0 The on-site affordable project is of marginal size as an apartment project. Given the small size of the project and its restricted rental structure, on site management and maintenance will be difficult. The market units in this project would be required to absorb over $5700 per unit so that land development costs could be contributed. This figure would rise to over $9600 per unit if the applicant is required to build the units on site and close the post land development gap of $362,737. Based on the estimated restricted rental prices of the affordable units the applicant will be facing an average subsidy requirement of approximately $22,700 per unit, beyond land contributions. This would result in each unit being subsidized with over $55,000. 0 b. Will an affordable housing product be difficult to intecrrate into the proposed market development because of significant price and product type disparity? 0 Price disparities will be substantial between the low-income rental apartment units restricted at $450- 600 rent and the approved higher-end single-family, detached product with an estimated base price range of $300,000 to $350,000. The integration of 16 affordable apartment units, sized at 600 to 1,000 sq. ft., into the single-family subdivision with homes over 3,000 square feet on 7,500 to 13,000 sq. ft. lots will result in major product type disparity on-site. The surrounding area will also be built-out with low density, single- family detached products consistent with the existing RLM land use designation and market demand. The on-site project would, therefore also result in substantial product disparity with the surrounding region. 0 c. Does the on-site development entity have the capacity to deliver the proposed affordable housing on-s i te? 0 0 The applicant is not experienced in the development of affordable housing. Affordable housing developers have advised the applicant that it is unlikely that this size of project will generate interest from funding sources. 2. Relative AdvantaqeslDisadvantanes of the Off-site Proposal. a. Does the off-site option offer greater feasibility and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance? 0 Villas at El Camino Real is built and has proven its feasibility; no additional assistance is required. Nearly 500 affordable units have been recently completed or are in process of approvals in the southwest quadrant. It is possible that affordable unit production could outpace market development. The applicant's participation in Villas at El Camino Real would permit the intended recovery of City investment provided to the project through utilizing "excess units". These funds could then be used 5 to provide additional affordable housing. Conversely, the developer’s on-site project would create the demand for additional new subsidy. The small size of the on site project could result in additional future subsidy requests related to operating costs. b. Does the off-site proposal have location advantages over the on-site alternative, such as proximity to jobs, schools, transportation, services; less impact on other existing develophents, etc.? 0 The Villas at El Camino Real location has advantages over the on-site project in terms of direct access to jobs, public transportation, schools, parks, as well as, other amenities and services due to being located directly on the major thoroughfare, El Camino Real. Villas at El Camino Real is a self-contained affordable development in an area designated for higher density residential development such as condominiums and townhomes. The on-site proposal could be a source of land use conflicts that typically occur when higher density development is permitted adjacent to larger lot single family development. 0 c. Does the off-site option offer a development entity with the capacity to deliver the proposed project? 0 The Villas at El Camino Real project is an existing project, developed and managed by a highly experienced and specialized affordable housing developer. d. Does the off-site option satisfy multiple developer obliaations that would be difficult to satisfy with multiple projects? 0 0 Villas at El Camino Real project was originally established as a Combined Project, specifically to address this purpose. The proposed on-site project would be one of several projects in the southwest quadrant competing for scarce financial assistance. Villas at El Camino Real has already been financed and built and thus, would not be competing for subsidy financing. 3. Advancinq Housinq Goals and Strateqy a. Does the off-site proposal advance and/or support City housing goals and policies expressed in the Housing Element, CHAS and lnclusionary Housing Ordinance? General Plan Housing Element and CHAS Goals: Villas at El Camino Real Apt. affordable project is targeted to the highest priority need identified, larger rental units for low income households. The recovery of City investment in Villas at El Camino Real through the applicant‘s participation will provide additional resources which are needed to assist further affordable housing development. Villas at El Camino Real provides a large quantity and diversity of affordable housing stock with its 344 units, including a generous supply of different size units to meet various housing needs of the community. lnclusionary Housing Ordinance Policies: Consistent with the City and public interests to use existing “excess” affordable units before supporting additional new construction. In conjunction with the combined Villas at El Camino Real project, Ocean Bluff will provide for 15% of the total units for affordable (lower income) residential units. The project also complies with the lnclusionary requirements as contained in the Zone 20 Specific Plan and the General Plan Housing Element. 6 Growth Management Zone, Specific Plan (SP 203), Ord. No. NS-257 Guidelines: Villas at El Camino Real is coordinated with surrounding properties by providing direct access to a major Circulation Element Roadway, El Camino Real, as well as circulation and pedestrian access to public facilities. Villas at El Camino Real affordable housing product is consistent with the anticipated clustered multi- family attached and stacked flat unit types identified in the Specific Plan. 0 Planning Commission Resolution No. 3869, Case No. CT 93-09, approved by City Council: The offsite provision of inclusionary housing is consistent with Condition #22 which reads: "Upon showing by the developer that an onsite contribution is not appropriate for the project, a second inclusionary housing option available to the developer shall be that prior to final map approval, the developer shall enter into an agreement with the City to purchase affordable credits from Villa Loma or participate in an offsite combined inclusionary project within the southwest quadrant and as appropriate, in accordance with the requirements set forth in Chapter 21.85 of the Carlsbad Municipal Code, the Zone 20 Specific Plan, and City Council Policies 57 and 58 dated September 12, 1985. Prior to City Council approval, the developer shall submit a signed Affordable housing Agreement to the Housing and Redevelopment Director." 7 EXHIBIT 3 - AFFORDABLE HOUSING AGREEMENT This AFFORDABLE HOUSING MITIGATION AGREEMENT, entered into this day of I 19 , by and between the CITY OF CARLSBAD, a Municipal Corporation (hereinafter referred to as the llCityl'), and OCEAN BLUFF PARTNERSHIP, (hereinafter referred to as the "Developer"), is made with reference to the following: A. Developer is the owner and developer of property generally located at the northwest corner of the future Poinsettia Lane and Blackrail Court in the Zone 20 Specific Plan.' area and Local. Facilities Management Zone in the City of Carlsbad, in the County of San Diego, California (hereinafter referred to as the "subject property"). . The subject property is more particularly described in Exhibit "A", which is attached hereto and is incorporated herein by this reference. B. Developer wishes to construct 92 single family homes upon the subject property. The City Council has approved Zone Change ZC93-04, Local Coastal Plan Amendment LCPA95-09, Carlsbad Tract/Parcel Map CT 93-09, Hillside Development Plan HDP 93'-09 and the Planning Commission has approved Site Development Plan SDP 93-07, for the proposed development. The City Council and Planning Commission issued these approvals subject to conditions of discretionary approval. C. The Developer was conditioned with the ability to satisfy its affordable housing obligation in accordance with Chapter 21.85 of the Carlsbad Municipal Code by purchasing sixteen and twenty four one-hundredths (16.24) Affordable Housing Credits (Credits) in the Villa Loma affordable housing project. D. Pursuant to the above-referenced conditions of approval, and in accordance with City Council Policies 57 and 58, the Developer has received approval from the City Council by Resolution No. 97- , dated , 1997, to purchase Credits in the off-site project known as Villa Loma. The City controls and has available these Credits in Villa Loma and the project meets the requirements of a Combined Inclusionary Housing Project as defined in Chapter 21.85 of the Carlsbad Municipal Code. Purchasing Credits according to the terms of this Agreement satisfies the developer's affordable housing obligation in' accordance with Chapter 21.85 of the Carlsbad Municipal Code and the developer's conditions of approval. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. SATISFACTION OF AFFORDABLE HOUSING OBLIGATION AND CONDITIONS OF TENTATIVE MAP APPROVAL THROUGH THE PURCHASE OF AFFORDABLE HOUSING CREDITS Within sixty (60) days of the City Council approval of Developer's request to purchase Affordable Housing Credits, and prior to receiving Final Map approval, Developer shall execute this Agreement and pay to the City the sum of $ 523,252 as its payment for sixteen and twenty four one-hundredths (16.24) Credits. Execution of this Agreement by the parties and payment of the sum of $ 523,252 to the City by the Developer shall fully satisfy the Developer's affordable housing obligation pursuant to Chapter 21.85 of the Carlsbad Municipal Code and the above- referenced conditions of approval. Upon execution of this Agreement and receipt of the above payment from developer, City will record an appropriate release of the developer's obligation. Failure of the Developer to perform according to the terms of this Agreement will be a failure to satisfy the Tentative Map Conditions with respect to the subject property and Chapter 21.85 of the Carlsbad Municipal Code; and the City may exercise any and all remedies available to it with respect to the Developer's failure to satisfy the Tentative Map Conditions including but not limited to withholding the issue of building permits for the subject property. 2. CITY ACKNOWLEDGES DEVELOPER PAYMENT. By executing this Agreement, City acknowledges receipt : of Developer's payment under the terms of this Agreement. 3. DEVELOPER WAIVES RIGHTS TO OTHER METHODS OF SATISFYING AFFORDABLE HOUSING OBLIGATION. By executing this Agreement, developer waives any and all rights to other means of satisfying the affordable housing obligations required by Chapter 21.85 of the Carlsbad Municipal Code and the conditions of approval. 4. HOLD HARMLESS. The undersigned developer (hereinafter referred to as "Indemnitor"), for and in consideration of the City of Carlsbad's approval of this Agreement, and for other good and valuable consideration, the receipt and sufficiency whereof is hereby acknowledged by Indemnitor, does hereby covenant, undertake and agree that it will indemnify and hold harmless (without limit as to amount) the City of Carlsbad and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees") , and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgements and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to this Agreement, and to protect and defend Indemnitees, and any Of them with respect thereto. 5. NOTICES. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addresses set forth below: TO THE CITY OF CARLSBAD: City of Carlsbad Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 TO THE DEVELOPER: Ocean Bluff Partnership Attn: Bob Wineteer 7825 Fay Avenue, Suite 200 La Jolla, California 92037 Any party may change the address to which notices are to be sent by notifying the other parties of the new address, in the manner set forth above. 6. INTEGRATED AGREEMENT. This Agreement constitutes the entire agreement between the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. 7. DURATION OF AGREEMENT. This Agreement shall terminate and become null and void when the City has received the payment described in Paragraph 1, except as to the indemnity and hold harmless provisions setforth in Paragraph 4. 8. SEVERABILITY. In the event any limitation, condition, restriction,: covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless, be and remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written. DEVELOPER CITY OF CARLSBAD Ocean Bluff Partnership A Municipal Corporation By : By: Signature MARTIN ORENYAK Community Development APPROVED AS TO FORM: Print Name Dir - RONALD R. BALL Title: City Attorney - EXHIBIT "A" PROPERTY DESCRIPTION Lot 3 in Section 22, Township 12 south, range 4 west, San Bernardino base and meridian in the County of San Diego, Sate of California, excepting therefrom those portions thereof lying north of the south boundary line of Rancho Agua Hedionda, as said south line was established May 5, 1913, by decree of the Superior Court of the State of California, in and for San Diego County, in that certain action (No. 16830) entitled Kelly Investment Company, a corporation, vs. Clarence Dayton Hillman and Bessie Olive Hillman. -viii- ,*