HomeMy WebLinkAbout2005-08-11; Housing Commission; MinutesMinutes of: HOUSING COMMISSION
Time of Meeting: 6:00 P.M.
Date of Meeting: August 11, 2005
Place of Meeting: CITY COUNCIL CHAMBERS
CALL TO ORDER
Chairperson Scarpelli called the Meeting to order at 6:00 p.m.
PLEDGE OF ALLEGIANCE
Margaret Schraml led the Pledge of Allegiance.
ROLL CALL
Present: Commissioners: Doris Ritchie
Edward Scarpelli
Margaret Schraml
Bobbie Smith
Absent: Renee Huston
Staff Present: Housing and Redevelopment Director: Debbie Fountain
APPROVAL OF MINUTES
Minutes of June 9, 2005, were approved as written.
VOTE: 3-0
AYES: 3-0
NOES: None
ABSTAIN: 1 (Doris Ritchie was not present at the June 9, 2005, meeting)
NEW BUSINESS
Ms. Debbie Fountain, Director of Housing and Redevelopment, began with her presentation. This item is unique
because normally items are brought to the Housing Commission before a project has been constructed because
financial assistance is requested to help construct the project. In this particular case, Village By The Sea is already
constructed; they provided 65 condominiums and town homes total and about 8,600 square feet of retail space. This
project is in the downtown area by the commuter rail station on Carlsbad Village Boulevard and Christensen and
Washington. It occupies an entire block.
The units were constructed and they were preparing to sell the eleven affordable units for low income persons with
the anticipation that the buyers would be getting low interest loans from CalFHA, which is a housing agency through
the State of California that provides different home buyer assistance programs. They were hoping all of their buyers
would qualify for the 4% low interest loans the state has to help low income buyers to purchase homes. Originally
they received approval from the state that the buyers could participate in this program so they qualified all of their
buyers and told them they would be able to move into these units. It came to a stop because CalFHA changed their
position and said our program was not consistent with their guidelines for approving their loan programs. This is
about our restrictions we place on the units that when the units are sold, we share in the appreciation that comes back
to the city. We then recycle that money and use it for other projects.
As background information, our current restrictions state when they sell the unit, they have to sell to a low-income
person at a restricted price. For the first 15 years of their restriction, if they want to sell it, they have to sell it to
another low-income person, again at the restricted price. After 15 years, they can sell to a non-low income person at
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AUGUST 11, 2005
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a market rate price, but then we recapture our subsidy in the project, whatever that may be, our subsidy also includes
the developer subsidy that goes into the project as well as any cash we put into the project. Then we also share in the
appreciation.
The state agency said that shared appreciation amount we require to come back to the city, doesn't meet then-
guidelines and now they won't approve the program. The developer came to our office trying to figure out how we
can get these buyers still into these homes. I suggested they request financial assistance from the city and they have
made that request. This money would not go to the developers. This money would go specifically to the buyers as
down payment assistance. What that does is help reduce the total loan amount they need to take out. That will help
reduce their payments and make up for some of the difference in interest rate because it will go from about 4% to
about 5.25%, which is a large increase. With this financial assistance to the buyers and some additional assistance
from the developer, we will be able to still get these buyers into the units. The recommendation to the Housing
Commission is to approve $220,000 in assistance to these eleven buyers, which will amount to $20,000 per buyer.
This is consistent with what we have done on other projects such as the Bressi Ranch project. We have also done
this on other projects.
We didn't actually require the developer to do their proformas that we normally do because they are not asking for
the funding for construction. It is just assistance to the buyers themselves.
Commissioner Ritchie asked if this project was completed already?
Ms. Fountain said the project is already complete and they are ready to move into their units as soon as they can get
their financing in place.
Commissioner Ritchie asked how long Ms. Fountain thinks it will take?
Ms. Fountain said it will take maybe a couple of months for them to finish getting all of their loans and everything
else into place.
Commissioner Smith commented that almost every day she uses public transportation. It has been wonderful to see
how beautiful the Village By The Sea development is. I realize how anxious these people are to get into their homes.
These are first time buyers, and I definitely would like to approve that we adopt the Resolution.
Commissioner Smith made a motion that the Housing Commission adopt Resolution 2005-005 recommending
approval to the City Council to provide $220,000 in financial assistance from the Housing Trust Fund in the form of
low income home buyer down payment assistance for eleven affordable for-sale condominium units within the
Village By The Sea development within the Village Redevelopment area.
Commissioner Ritchie seconded the motion.
Commissioner Ritchie asked if Ms. Fountain had a schedule of the prices of the two, three and four bedroom
condominiums?
Chairperson Scarpelli said there is a schedule provided on the second page.
Ms. Fountain said at the bottom in the last paragraph it says "the maximum prices for the affordable unit." It is
$182,700 for two bedrooms, $211,100 for three bedrooms and $227,400 for four bedrooms.
Chairperson Scarpelli commented that on page 2 there is a breakdown of the size and number of units.
Commissioner Schraml asked if all the prospective buyers are going through the same lending agency?
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Ms. Fountain said they have a preferred lender they are using. The buyers are allowed to use other lenders. They
will need to be qualified through the preferred lender, but they can find another lender. We cannot legally require
them to use one lender.
Commissioner Schraml asked if they will be reporting the funds they receive from the city as gift income?
Ms. Fountain answered yes, as a down payment assistance, which would be a gift.
Commissioner Schraml asked if it will have to be a gift?
Ms. Fountain said it is a silent second so when they sell the unit, we get that cash back.
Commissioner Schraml asked if she had heard whether or not the lending agencies will be acceptable to this?
Ms. Fountain answered we haven't had any problem with other projects in being able to do this so I don't anticipate
any problems with it.
Commissioner Ritchie commented that doesn't think she's ever seen any information about what kind of income
qualifies. Is this earned income?
Ms. Fountain asked if she meant in terms of what their gross household income is for qualifying?
Commissioner Ritchie answered yes.
Ms. Fountain said they look at everything that is income into the family. If you are receiving child support
payments, your employment, your salaries, all of that will go into your gross household income number.
Chairperson Scarpelli called the motion to a vote.
VOTE: 4-0-0
AYES: Ritchie, Scarpelli, Schraml, and Smith
NOES: None
ABSTAIN: None
DIRECTOR'S REPORT
Ms. Debbie Fountain will give an update on the affordable housing programs and projects. We have had 1,580 units
constructed to date. In addition, we look at them in each quadrant. About 1,260 of those units are in the form of
apartments. In town homes, we have about 148. In second dwelling units, there are about 170. Those make up our
total units constructed as of this date. These are units that are actually on the ground with people living in them. We
did see the one project, Village By The Sea, that is on there that do not have people in them at this date. People will
be moving in permanently soon.
Regarding the units under construction, we have the Summit project, which is a mixed income project, and a portion
of them will be affordable, twenty-nine units. This project is behind the Vons off of Marron and El Camino Real.
Carlsbad Family Apartments is the Affirmed Housing project that was before you not too long ago for financial
assistance. This project successfully received its tax credits. They received those on the first application. They are
moving forward to get their building permits. They hope to have building permits by November of this year. They
probably start actual construction sometime after the first of the year.
Chairperson Scarpelli commented there still is a sign on that site regarding the property for sale. Is that the adjacent
property?
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AUGUST 11, 2005
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Ms. Fountain answered yes. It is next door to the property. The city actually owns that property now because we
purchased that. We have a contract with Affirmed Housing to build these apartments. They will probably change
their name and be called Cassia Heights Apartments.
Ms. Fountain continued, the Roosevelt Street Apartments is the project we had at the last meeting that has a fairly
expensive price tag on it. The Council is still considering that project. It was on this week for approval, and the
Council continued it to September to think about it some more and get some more information. That is still in the
pending status.
Chairperson Scarpelli reiterated that Council is still reviewing that request. Exactly what are they reviewing? Are
they reviewing the cost factor and is it possible they may not approve it?
Ms. Fountain answered that the City Council is still looking at the numbers to see if they want to put that much
money into the project. The other piece of information they asked us to bring back was: "Are there any apartment
buildings within the area that we could purchase that would have a lower per unit cost." We will be looking into
that. They also asked us for any other options that we could think of. We will be doing that analysis for them. We
have actually done that analysis twice, but timing is everything so we don't know what will be available at any given
time. There may be more available now then there was when we were looking at it a year ago. This item will go
back to the City Council on September 13, 2005.
For the town homes, RoseBay and Bressi Ranch are currently qualifying buyers for those projects. Bressi Ranch is
probably the furthest along. They have sold about forty units. They are still under construction in building units and
moving towards selling those. Then RoseBay has just started to get into the process of selling their units.
Laguna Point is under construction. That is in the downtown area, right across the street from the Roosevelt Street
project. They have three units within that project. They have an interest list that they have had to close because they
have had so many people on it, but they haven't started selling those units yet. They will probably start selling them
soon.
We still have quite a few projects in the planning stages; Robertson Ranch off of El Camino Real is in the planning
stages. The Hunters Pointe project that the Housing Commission has recommended approval of financial assistance
is still in the planning stages. They just opened La Paloma, which was their first project, and Hunters Pointe will be
their second project. That financial assistance request will be going to the City Council next week on Tuesday for
their approval. They will probably start moving forward fairly quickly. They still need to submit an application for
some housing monies from the state as well so they will go into the next cycle.
That is an overview of where our numbers are right now. Going hand in hand with that, I passed out an article that
was in the Washington Post written by David Broder. We have gotten some national attention from this article for
our inclusionary housing program. I have already received a number of e-mails from people who live in other cities
asking how we did it, what we did, why we did it, because they want to make their City Councils do it. David Broder
himself came and toured the La Paloma project and talked to residents that were living there and heard their stories.
One of them he actually included in the article. He also talked about our inclusionary program and what it means to
the area in terms of providing affordable housing.
One more issue I would like to feed back to you. The City Council did consider your request for general fund
monies for the Section 8 Program and declined to fund that. It is not that they don't support the Section 8 Program,
but the feeling was that we will have to make some cuts sooner or later and since we were already in the process of
notifying people that their rent portions were going up, we should just proceed with that. It doesn't mean that in
future years if something happens, they might not reconsider that position.
There will also be a World Housing Conference in San Diego in September and I have been invited to speak at that
conference.
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Commissioner Schraml commented that she is very pleased with what Carlsbad has done in the way of affordable
housing, but I still have some concerns on what is available for seniors. Driving around different communities, I
notice they are building new facilities for seniors only. Does Carlsbad have anything?
Ms. Fountain answered we do have a couple of developers who are currently looking at senior-only condominium
projects. I haven't had anyone looking at senior rental projects. One is on Harding Street, but they don't have any
applications as of yet. They are evaluating if the community would support the project because it would be a higher
density project. Usually when developers come into my office and we talk about what some of our needs are, I
always share with them there is an expressed need for senior housing. For it to qualify as a senior-only project, it
does have to be 35 units or more. So they have to have a fairly good sized project then just a small six-unit project.
Some developers are looking at that, but I can't say yet that we have any applications in.
Commissioner Schraml asked if Ms. Fountain had any idea of what the city's feeling is on it?
Ms. Fountain said she thinks there is support for it. It is just one of the needs we have within the community. We
have a large need for family housing for low-income people, and we have a need for senior housing. Senior housing
isn't as high of a priority as the large family low income, but it doesn't mean that it is not something that isn't
considered desirable to have. We are just trying to balance all of the needs within the community.
Commissioner Schraml asked i how many senior housing complexes there are in Carlsbad?
Ms. Fountain said she didn't know off the top of her head, but she can probably get that for her. We have a list in
our office. We have two on Jefferson and we have the Tyler Court apartments which are senior only at 75 units.
There aren't any senior-only condominium projects. Most of the senior-only projects are the rental product, plus we
have a number of the assisted care facilities and retirement facilities that are throughout the city. We heard from the
Senior Commission that they would like to get a senior-only condominium project or town home project or
something like that because they are hearing from seniors as they move down from larger homes and trying to get
into smaller homes, that would be very beneficial for them. A lot of seniors do still want to own their own home and
not necessarily rent. We are looking at where those opportunities present themselves to move forward.
Commissioner Schraml commented her main concern would be senior housing for lower income. I am afraid the
seniors I am concerned about wouldn't be able to afford to purchase a unit.
Chairperson Scarpelli asked Commissioner Schraml if she was asking about rental units?
Commissioner Schraml answered right.
Ms. Fountain said that would be typically what we would find.
Commissioner Schraml asked if the city still owns Tyler Court?
Ms. Fountain answered yes.
Commissioner Schraml asked if there was any chance that the city would buy some complexes and run them for the
seniors, low-income seniors?
Ms. Fountain said the city can always look at that as an option. The problem the city has with buying existing
projects is relocation requirements. If you have people living within the complex and they don't meet your criteria,
you are legally obligated, if you ask them to move, for relocation expenses and those can be fairly expensive to move
people, especially in today's market. We always have to look at those very closely, but it is not something the city is
adverse to. It is just trying to find the right project. Tyler Court made sense for us because 75% of the people living
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there was on our Section 8 Program so we knew they were low income. We knew if we went in and restricted the
rents to low income people, we wouldn't have relocation issues. In some situations, you could have that if they
don't' meet your criteria, especially if you make it a senior-only project and you have non-seniors living there.
Commissioner Schraml said it is her understanding that the Jefferson complexes are probably 80% on voucher
assistance.
Ms. Fountain said staff has looked at those before when they have become available for purchase, but unfortunately
the price has been higher than we thought appropriate. That doesn't mean we won't look at them again.
Chairperson Scarpelli asked Ms. Fountain about the possibility of the eleven units on Roosevelt. What about the
possibility of higher density for seniors? For seniors, would it be a one-bedroom unit or a studio? Let's suppose that
staff does find something to buy, we will still own that property. With the possibility of making it higher density, it
might make it more worthwhile then to go ahead with it. This would be good because it is on a bus line, it is
downtown, and it is more convenient for seniors.
Ms. Fountain said that we are looking at that property, but we would have to get it to 35 units to qualify for a senior-
only project.
Chairperson Scarpelli said he doesn't know if you could get as high as 35.
Ms. Fountain commented that would be hard to get 35 on that property.
Chairperson Scarpelli said right you wouldn't be able to get 35 units in there unless you went up beyond the height
limit and use elevators.
Ms. Fountain said those are the types of things the City Council asked staff to look at, other options.
Commissioner Smith asked if she wanted to buy a home and she is on the Section 8 Assistance, how would she go
about applying for a home.
Ms. Fountain said you would be able to apply like any other person. The only issue there would be is whether or not
you have adequate income to be able to get a loan for an amount that would get you into the unit. If a unit is selling
for $180,000 and you can only qualify for a $90,000 loan, you have to figure out where the other $90,000 will come
from. If you happen to be fortunate and you have a family member that wants to gift you $90,000 or you combine it
with down payment assistance from the city, then you might still be able to afford the unit. The key still comes down
to being able to qualify for a private mortgage so your credit has to be such that you can qualify. There may be other
programs that might be able to assist you, but it will come down to how much money can you afford in terms of a
private loan and then what difference can be made to get you to the price of that unit.
The Bluffs project, which was approved by the City Council not too long ago, though not in the stage where it will
be constructed soon, but the same developer that did the Village By The Sea, Anastasi Development, is doing the
Bluffs project. It will have ten units that are affordable to very low income and it is a for sale product. If you are on
Section 8, that might get you closer to being able to afford one of those units. I am sure they will have a huge
interest list as well.
Commissioner Smith commented then you don't have to be on Section 8 to qualify for the homes.
Ms. Fountain answered no. You just have to meet the income tests.
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Chairperson Scarpelli said the lenders in underwriting the buyer's qualifications, will also be looking at the ability to
repay the loan on a monthly basis. So they are looking at stability in the cash flow of the new borrower to assure
themselves of the fact they will have the ability to repay the loan.
Commissioner Schraml asked with the voucher program being in dire straights and its future unknown at this point,
has there been any discussion about, with all the creative financing going around, interest-only payments to help
qualify for low income?
Ms. Fountain said when staff looks at the programs for people to buy homes, we actually discourage them from
interest only or adjustable rate loans unless we know there is some cap that they won't have a huge balloon payment
that they could potentially lose their home as a result of not preparing for that. We look at those very closely.
Unfortunately, what happens is you can get way in over your head very quickly on buying a home. When you look at
the housing costs, we have to look at not only your mortgage payment but also the homeowner association dues, and
other expenses. If there isn't proper planning for all of that, you can lose your home. We have had some
homeowners that even if they get a $25 increase in their homeowner's association fee, it sends them to the point
where they are risking losing their home. So we have to be really careful when we approve programs for the low
income that we are not getting somebody to the point where they could potentially lose their home. Sometimes
private lenders might allow somebody to have a housing cost ratio of 50% or higher, where we will only let them go
to 35% of their gross household income. We try to limit their risk, but we can't control what other debt they get into
after they buy a home. So if they decide to buy a very expensive car, that might be beyond their means, or they get
in some other kind of credit card debt, they can easily lose thier home. We advise people the fixed rate interest is
probably their best bet so they know what their costs are going to be. We are cautious when it comes to the creative
financing.
Commissioner Schraml said again her concern is the existing people on the voucher program here in Carlsbad. I
have been surprised twice now by two things that have happened and I know your agency is fighting to keep the
program going and it is definitely appreciated. My concern is the 30-day notice to some of these elderly people who
are on a fixed income is not enough time for them to decide where they can go in this world. Most of them are alone.
Ms. Fountain asked if she means their rent portion increase?
Commissioner Schraml said some of them have had a two bedroom and now they have to pay the difference out of
their pocket. They are not being told to move, but obviously they are going to have to.
Ms. Fountain commented this is if they had a second bedroom for medical reasons.
Commissioner Schraml said they are only given a 30-day notice. The other thing I wasn't aware of was the
maximum for the one bedroom had been decreased. That was why I was hoping the City Council would just give us
and them a year and everybody would be notified just how bad the situation really is so they could start making plans
now.
Chairperson Scarpelli said we can go back to the City Council. Maybe what we need to do is to meet with the City
Council at the next meeting and make a presentation as the Housing Commission asking to re-evaluate their decision.
I can see at minimum they might be willing to look at cases on a case-by-case basis in an emergency such as
Commissioner Schraml just described to assist in those areas with funds we have available. Maybe through the
Director we could request to be placed on the agenda. If you'd like, this Commission could set up a meeting for us
to put down what we are going to request and be at the next, closest Council meeting. I don't wish to accept their
decision as the Chairperson of this Housing Commission. I think they just need more information. I think if they
had more information, we might see a different, more positive result.
Ms. Fountain said she can send the Housing Commission's request to the City Council.
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Chairperson Scarpelli stated we can request to speak to City Council on this issue, then we can set up meetings of the
Housing Commission with the Director and prepare our presentation to the City Council.
Ms. Fountain said she will send the request up to the City Manager and he will tell me when it can be scheduled for a
hearing. Their last meeting for the summer is next Tuesday, August 16, 2005. It won't be until September.
Chairperson Scarpelli asked if it would work for Commissioner Schraml?
Commissioner Schraml said yes it would.
CHAIRPERSON'S REPORT
The Chairperson has no report to make.
ADJOURNMENT
By proper motion, the meeting of August 11, 2005 was adjourned at 6:40 p.m.
Respectfully submitted,
Debbie Fountain
Housing and Redevelopment Director
PATRICIA CRESCENTI
Minutes Clerk
MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.