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HomeMy WebLinkAbout2020-12-08; City Council; ; Amendments to City Council Policy No. 73 – City Option to Purchase Resale Affordable Housing, and new Affordable Housing Resale Program Guidelines (All districts)Meeting Date: To: From: Staff Contact: Subject: Dec. 8, 2020 Mayor and City Council Scott Chadwick, City Manager David de Cordova, Housing Services Manager David.decordova@carlsbadca.gov, 760-434-2935 Amendments to City Council Policy No. 73 – City Option to Purchase Resale Affordable Housing, and new Affordable Housing Resale Program Guidelines (All districts) Recommended Action Adopt a resolution (Exhibit 1) approving the following: 1.Amendments to City Council Policy Statement No. 73 - City Option to Purchase Resale Affordable Housing (Attachment A to Exhibit 1) 2.New Affordable Housing Resale Program Guidelines (Attachment B to Exhibit 1). Executive Summary The City of Carlsbad’s Affordable Housing Resale Program is designed to assist qualified lower- income households to purchase city-owned residential property at an affordable price. Under the program, the city purchases affordable housing units that are at risk of converting to market-rate with the intent of extending the affordability restriction on the property and reselling the unit to qualified lower-income families. This helps the city preserve, extend and enhance the existing affordable housing stock in Carlsbad. To date, the city has acquired and holds title to a total of eight units. The City Council authorized the purchase of a ninth unit in October. City Council Policy Statement No. 73 – City Option to Purchase Resale Affordable Housing – establishes the framework for how existing affordable housing units are acquired. However, with limited funding options and an increasing number of at-risk units, staff is recommending that the policy be revised to provide direction on how to better prioritize the city’s purchase of future at- risk affordable homes. Furthermore, the policy currently lacks direction on how the purchased units are to be resold once they are acquired by the city. In response, staff is recommending revisions to the existing policy to help address these issues. In addition, staff proposes the adoption of a new set of Affordable Housing Resale Program guidelines to provide greater detail about buyer eligibility requirements, notification and marketing of units, application process, creation of a waiting list and other program details. The revised policy and new guidelines have been reviewed by the Housing Commission and the City Council Municipal Code Update Subcommittee, with both groups recommending approval of the draft policy and guidelines, with minor modifications as described in this staff report. Pursuant to City Council Policy No. 1, this new policy must receive four affirmative votes of the City Council to be approved. Dec. 8, 2020 Item #12 Page 1 of 56 Discussion Background Creating opportunities for affordable homeownership continues to be an important policy goal within the city’s Housing Element and Community Development Block Grant Consolidated Plan. The city has administered an inclusionary housing program since 1993 that requires all residential developments greater than six units to restrict 15% of the total number of homes in a project as affordable to low-income households. This obligation is fulfilled through construction of a variety of rental or ownership units. To date, approximately 2,300 affordable housing units have been provided through the program, including about 320 original ownership units. Under the initial requirements of the Inclusionary Housing Program, low-income homebuyers were required to execute a resale agreement that allowed them to sell their homes at market rate to a non-low-income homebuyer if they repaid the city outstanding loan amounts and paid a share of the equity from the sale to the city. This initial policy resulted in the permanent loss of one-third of the for-sale affordable units in the city. To more effectively implement inclusionary housing requirements and preserve affordable units, the City Council in 2008 adopted City Council Policy Statement No. 73 – City Option to Purchase Resale Affordable Housing. Under the policy, a restricted affordable housing unit could only be sold to the city, another low-income household, or assigned to a city-designated purchaser1 during the first 15 years of the 30-year affordability term. After the initial 15 years – and if the city declined to exercise its option to purchase/assign – the resale agreement permits the owner to sell the unit at market value to a non-low-income buyer. Upon the sale of the unit, the city recaptures its subsidy, together with whatever equity is received from the sale up through the 30th year of the resale agreement. The unit’s affordability restrictions are removed and the revenue from the loan payoff and shared equity is deposited into the city's Housing Trust Fund to create additional opportunities for affordable housing within the city. Staff estimates that more than half of the remaining 200 existing affordable ownership units will be at risk of conversion to market rate housing by the end of 2022. While the affordability restrictions grant the city the right to purchase most of these units at an affordable price, housing funds are limited and in high demand for a variety of affordable housing uses. Revised City Council Policy No. 73 To help address this issue, the proposed revisions to City Council Policy Statement No. 73 (Attachment A to Exhibit 1, Exhibit 2 is a version showing the revisions) significantly expand guidance to staff in determining when to accept or decline the option to buy a restricted affordable housing ownership unit and how to prioritize the resale of available units. The policy also describes an alternative to assign the city’s purchase option to an eligible purchaser drawn from a waiting list maintained in accordance with the Affordable Housing Resale Program guidelines. New Affordable Housing Resale Program Guidelines The newly proposed Affordable Housing Resale Program Guidelines provide background information and a program overview to describe the purpose and basic features of the program. The recommended guidelines provide details about buyer eligibility requirements, notification 1 A “city-designated purchaser” is defined as another public agency, a nonprofit corporation, or an eligible low-income purchaser. Dec. 8, 2020 Item #12 Page 2 of 56 and marketing of units to be offered for sale; the application submittal process, screening, sorting and verification of applications; and creation of a waiting list should there be more qualified buyers than available units, and other program details. Baseline eligibility criteria include a requirement that applicants reside in San Diego County and that total household income is limited to no more than 80% of the San Diego County area median income (Exhibit 3). Priority consideration will be given to qualified applicants whose total household income is less than or equal to 50% of area median income and applicants who currently have a high housing cost burden, which is 50 percent or more of household income. Qualified applicants would be selected first from these priority categories and in the order that complete applications are accepted. Interest in this program is likely to be high, and staff anticipates receiving more applications than units initially available under this program. The guidelines propose to establish a waiting list for qualified applicants who were not afforded the opportunity to purchase a currently available unit. Applicants on the waiting list would be considered for the opportunity to purchase a restricted affordable housing ownership unit as additional units become available. Consistent with City Council Policy Statement No. 73, the waiting list would also be utilized when the city determines to assign its purchase option to an eligible buyer, rather than purchasing the unit directly and then later reselling it. Housing Commission Staff presented the proposed amendments to City Council Policy Statement No. 73 and the Affordable Housing Resale Program guidelines to the Housing Commission on Aug. 13, 2020. After receiving public comments (Exhibit 4), the commission deliberated on the proposal and recommended that the City Council approve the City Council Policy Statement No. 73 amendments as presented by staff. The Housing Commission also recommended that the City Council approve the Affordable Housing Resale Program Guidelines with a modification to increase the eligibility waiting period from five years to seven years for a buyer who has previously participated in an affordable housing homebuyer program. A majority of Housing Commissioners expressed interest in applying a Carlsbad resident preference in the application process for an affordable housing resale unit. After some discussion about the potential for unintended fair-housing discrimination due to disparities in Carlsbad’s racial/ethnic composition as compared to the San Diego region as a whole, the Housing Commission recommended that the City Council consider including an application preference to residents of any of the north San Diego County cities of Carlsbad, Oceanside, Vista, San Marcos or Escondido, to the extent consistent with applicable law. The Housing Commission’s rationale was that the North County subregion was demographically more similar to the larger San Diego region, thereby mitigating potential disparate impact of applying a local preference. Commissioner Allen Manzano supported the first two recommendations, but opposed application of any local preference in the resale of the affordable units. The overall motion carried 3-1-1, with Commissioner Manzano opposed and Commissioner John Nguyen-Cleary absent (Exhibits 5 and 6). Municipal Code and City Council Policy Update Subcommittee The Municipal Code and City Council Policy Update Subcommittee met on Oct. 28 to consider the proposed amendments to City Council Policy Statement No. 73 and the draft Affordable Housing Resale Program guidelines. The subcommittee concurred with the staff and Housing Commission recommendations with two exceptions: Dec. 8, 2020 Item #12 Page 3 of 56 1) No residency preference be incorporated into the program other than the base requirement that a buyer must be a current San Diego County area resident 2) Subsequent resales of the affordable units be restricted to eligible lower-income buyers throughout the entire 30-year affordability term, rather than only the first 15 years. The attached Affordable Housing Resale Program guidelines reflect these additional recommendations. Fiscal Analysis The eight restricted affordable housing ownership units owned by the city to date have been purchased from Community Development Block Grant funds, while a ninth unit is in the process of being purchased using Housing Trust Fund money. In keeping with the draft revised City Council Policy Statement No. 73, it is expected that purchases of additional units in the future would continue to be made from special affordable housing funds, such as Community Development Block Grant, or local housing trust fund monies, rather than the General Fund. Costs to prepare and resell the units will be covered from sale proceeds, with remaining proceeds to be returned to their source funds for reinvestment in creating additional affordable housing opportunities. Next Steps Staff will prepare marketing, outreach and application materials to initiate and promote the program, and coordinate with the city’s real estate manager to market and sell the nine city- owned affordable units. Staff will begin marketing the units in the first quarter of 2021. Environmental Evaluation (CEQA) This action does not constitute a “project” within the meaning of the California Environmental Quality Act under Public Resources Code section 21065 in that it has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment and therefore does not require environmental review. Public Notification and Outreach Public notice of this item was posted in keeping with the Ralph M. Brown Act and it was available for public viewing and review at least 72 hours before the scheduled meeting date. Exhibits 1. City Council resolution Attachment A - Revised City Council Policy Statement No. 73 Attachment B - Affordable Housing Resale Program Guidelines 2. City Council Policy Statement No. 73 revisions version 3. 2020 Carlsbad income limits table 4. Aug. 13, 2020 Housing Commission public comments 5. Aug. 13, 2020 Housing Commission meeting minutes 6. Housing Commission resolution Dec. 8, 2020 Item #12 Page 4 of 56 RESOLUTION NO. 2020-234 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD, CALIFORNIA, APPROVING AMENDMENTS TO CITY COUNCIL POLICY STATEMENT NO. 73 REGARDING THE CITY OPTION TO PURCHASE RESALE AFFORDABLE HOUSING, AND APPROVING AFFORDABLE HOUSING RESALE PROGRAM GUIDELINES WHEREAS, since 1993, the city has administered an inclusionary housing program that requires all residential developments greater than six units to restrict 15 percent of the total number of homes in a project as affordable to low-income households. This obligation is fulfilled through construction of a variety of rental or ownership units, resulting in the production of approximately 2,300 affordable units overall and more than 300 restricted affordable housing ownership units to date; and WHEREAS, homebuyers of these restricted affordable housing ownership units are required to execute agreements with the city that restrict sales of the units to other eligible low-income buyers and grants the city the option to purchase the units at a restricted price or assign its option to another eligible purchaser; and WHEREAS, to resell these units requires updated guidance from City Council Policy Statement No. 73 and the approval of written guidelines for resale procedures, which have been prepared by Community Development Department staff; and WHEREAS, on Aug. 13, 2020, staff presented the draft amended City Council Policy Statement No. 73 and Affordable Housing Resale Program Guidelines for their consideration; and WHEREAS, based on information provided in the Housing Commission staff report and considering testimony of all persons desiring to be heard at the Aug. 13, 2020 public meeting, the Housing Commission recommended that the City Council approve said City Council Policy Statement No. 73 amendments and Affordable Housing Resale Program Guidelines; and WHEREAS, the Municipal Code and City Council Policy Update Subcommittee (Mayor Pro Tem Blackburn and Councilmember Schumacher) met on Oct. 28, 2020, to consider the proposed City Council Policy Statement No. 73 amendments and the Affordable Housing Resale Program Guidelines as recommended by the Housing Commission, and directed that said documents as contained in Attachment A and Attachment B of this resolution be forwarded to the City Council for consideration. Dec. 8, 2020 Item #12 Page 5 of 56 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That City Council Policy Statement No. 73 is approved as shown in Attachment A. 3. That the Affordable Housing Resale Program Guidelines are approved as shown in Attachment B. PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of Carlsbad on the 8th day of December, 2020, by the following vote, to wit: AYES: Hall, Blackburn, Acosta, Bhat-Patel, Schumacher. NAYS: None. ABSENT: None. MATT HALL, Mayor BARBARA ENGLESON, Citirgrk (SEAL) N--tAAA,CO" Dec. 8, 2020 Item #12 Page 6 of 56 City of Carlsbad Attachment A Policy No. 73 Date Issued: 12-08-2020 Effective Date: 12-08-2020 Resolution No. 2020-234 Cancellation Date: N/A Supersedes No. 73, issued 1/22/08 Council Policy Statement Category: AFFORDABLE HOUSING Specific Subject: City Option to Purchase Resale Affordable Housing PURPOSE: To provide procedural guidelines for staff when exercising the city's option to purchase restricted affordable housing ownership units that were created under the Inclusionary Housing Program. The city's primary interest in exercising its option to purchase affordable units is to preserve, extend and enhance affordability covenants to subsequent lower-income purchasers and to provide additional housing opportunity to underserved populations. The policy will establish the authority, selection criteria, and resale requirements for the identification, acquisition and disposition of these affordable units. BACKGROUND: The city's Inclusionary Housing Ordinance requires developers of residential projects with more than six units to provide fifteen percent of the homes to lower income households at an affordable price. Developers may satisfy the ordinance requirements by providing rental or for sale (ownership) units. Ownership units produced under the Inclusionary Housing Program have affordability restrictions for 30 years. Under the initial requirements of the Inclusionary Housing Program, low-income homebuyers were required to execute resale agreements that allowed them to sell their homes at market rate to a non-low-income homebuyer if they repaid the city any outstanding loan amounts and paid the city a share of the equity from the sale. This initial policy resulted in the loss of many of the for-sale affordable units in the city. To more effectively implement inclusionary housing requirements (CMC 21.85.040(E)), the policy was changed to require a restricted unit to be sold to another low -income household during the first 15 years of the 30-year affordability term. In year 16 and later, the home could be sold to a non-low-income household with the repayment of the city subsidy loan with a share of equity (also referred to as contingent interest). The revised policy also required that the city would be given an option, or first right of refusal, to purchase the affordable unit at a restricted price upon notice of intent to sell from the owner. The city could also assign its option to a "city-designated purchaser", defined as another public agency, a nonprofit corporation, or an eligible low-income purchaser. The restricted price option to purchase or assign is a requirement for participation in the homeownership program and applies throughout the entire 30-year term of the loan. For the restricted affordable housing ownership units, if the city declines its option to purchase the unit or to assign the option to a city-designated purchaser, the owner is required to resell the Page 1 of 3 Dec. 8, 2020 Item #12 Page 7 of 56 Policy No. 73 affordable home to another low-income household during the first 15 years of ownership at a restricted affordable price established by the city. After the initial 15 years, and if the city declines to exercise its option to purchase or to assign its option to a city-designated purchaser, the resale agreement permits the owner to sell the unit at market value to a non-low-income buyer and the city recaptures its subsidy together with shared equity (contingent interest) up through the 30th year of the resale agreement. The revenue from the loan payoff and shared equity is deposited into the city's Housing Trust Fund to create additional opportunities for affordable housing within the city. POLICY: By adopting this policy, the City Council grants authority to the City Manager, or designee, to accept or decline the option to purchase a restricted affordable housing ownership unit at a restricted low- income price during the full term of the resale agreement. This policy shall apply to all units restricted under a Resale Restriction Agreement and Option to Purchase in order for a housing development to comply with the requirements of the city's Inclusionary Housing Program. The decision to accept or decline the option to purchase a restricted affordable housing ownership unit will be guided by the following principles: 1. The unit would be at-risk of conversion to market rate if the city declines its option to purchase it; or 2. The public interest is served well through purchase of the unit by the city and resale to a qualified lower-income household; or 3. An underserved population will benefit greater from the city's purchase and resale of the unit; or 4. An affordable housing opportunity will be enhanced through the city's purchase and resale of the unit; and 5. Special funding (such as CDBG, HOME, Successor Housing Agency funds) is available and/or is required to be expended in a timely manner and the city's purchase of the unit is a qualified expenditure of these funds; or 6. When special funding is unavailable, sufficient Housing Trust Fund dollars are available to purchase the unit. The City Manager, or designee, will consider options to purchase as written notices of intent to sell from restricted affordable housing ownership units are received. If the city receives notices of intent to sell from multiple owners at a given time, the City Manager, or designee, may rank order them based on the principles above. For example, an affordable unit that is at-risk of conversion to market rate (i.e., can be sold to a market rate purchaser after 15 years) will be prioritized for acquisition over a unit that is not at-risk (i.e., must be sold to a low-income buyer). Other factors, such as purchase price, amount of available funding, size, location and condition of the unit may be taken into account when rank ordering multiple options to purchase units. Upon a decision by the City Manager, or designee, to exercise the option to purchase a restricted affordable housing ownership unit, the City Manager, or designee, will proceed accordingly to complete the purchase transaction and present it to the City Council for consideration and final action, accepting the Grant Deed for the property. Page 2 of 3 Dec. 8, 2020 Item #12 Page 8 of 56 Policy No. 73 Upon approval of the City Council of the acquisition and completion of the purchase transaction, the restricted affordable housing ownership unit will be resold by the city according to the Affordable Housing Resale Program Guidelines recommended for approval by the Housing Commission and approved by the City Council, and which may be amended from time to time to update policies, process and/or resale priorities. As an alternative to accepting the option to purchase the restricted affordable housing ownership unit, the City Manager, or designee, is authorized to assign the city's option to an eligible low-income purchaser. This alternative is appropriate when: a) there is insufficient funding available or there are higher priority uses for the available funding; and b) the unit would be at-risk of conversion to market rate if the city declines its option to purchase it. In such a case the City Manager, or designee, will assign the city's purchase option to an eligible purchaser drawn from a waiting list maintained in accordance with the Affordable Housing Resale Program Guidelines. Assignment of the city's purchase option to another public agency, nonprofit corporation, or an eligible purchaser not on the waiting list will require City Council approval. If the city is unable to accept or assign its option to a city-designated purchaser, then the City Manager, or designee, is authorized to decline the option and allow the restricted affordable housing ownership unit to be sold according to the terms of the resale agreement. The City Manager's, or designee's, decision to decline the option to purchase will be valid for no more than 180 days. If the unit owner has not completed the sale of their home within this time frame, the unit owner will be required to file another notice of intent to sell and grant the city another opportunity to exercise or assign its option to purchase the unit at an affordable price. All sales of city-owned restricted affordable housing ownership units require City Council approval. Page 3 of 3 Dec. 8, 2020 Item #12 Page 9 of 56 (City of Carlsbad Attachment B CITY OF CARLSBAD AFFORDABLE HOUSING RESALE PROGRAM GUIDELINES PROGRA OUND In 2018, the Carlsbad City Council authorized staff to exercise the city's option to purchase restricted affordable housing ownership units when the original lower-income buyer provided notice of intent to sell the unit during the 30-year regulatory/loan term. These units were originally constructed by a private residential developer in Carlsbad to satisfy the requirements of the city's Inclusionary Housing Ordinance and initially sold to a qualified lower-income buyer at an affordable restricted price. Because the units are substantially subsidized to a below market price affordable to lower-income households, the city holds a "silent" second loan on the property that equals the value of the price subsidy (the difference between the fair market value of the unit and the restricted price for a lower income household). As part of the loan agreement between the city and the homeowner, the city has an option to purchase the unit at the time they are made available for sale by the homeowner; this option may be exercised at any time of sale during the 30-year term of the loan and the city pays the restricted price for the unit, calculated at the time of sale. The City Council has subsequently approved use of federal Community Development Block Grant (CDBG) funds to purchase these units with the intent of preserving and extending the long-term affordability of the units. Because federal and potentially local housing funds have and will be used to purchase these units, the city intends to enhance the public benefit of the program through these resale guidelines by providing affordable homeownership opportunities to lower-income households and potentially providing a larger secondary loan if determined to be needed by the city to allow for the purchase by a qualifying buyer who meets the city's priorities. 2. PROGRAM OVERVIEW The City of Carlsbad Affordable Housing Resale Program is a homeownership program specifically designed to assist qualified lower-income households to purchase a city-owned residential property at an affordable price; these affordable units (under city ownership) were purchased from the original low-income homeowner at the time the owner decided to sell the unit and provided required notice to the city of the owner's intent to sell the unit. The price the qualified buyer will pay for the unit will be set by the city to ensure that total housing costs for the qualified buyer will not exceed 30 percent of the gross household income of the buyer. Pricing will be based on incomes ranging from 50 to 80 percent of the San Diego Area Median Income (AMI). The difference between the fair market value of the property at time of sale to the qualified buyer and the actual price paid by the qualified buyer will continue to be Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t August 2020 1 Dec. 8, 2020 Item #12 Page 10 of 56 structured as a secondary loan documented in a promissory note executed by the new homeowner and with the city as the beneficiary. The loan will become immediately due and payable to the City of Carlsbad if the homeowner fails to comply with the terms of the loan and the requirements set forth within these resale program guidelines. The unit may be sold by the new owner but may only be sold to an eligible buyer at a price that is affordable to the designated income level set forth within the 30-year loan agreement. The city will retain an option to repurchase the unit again at a restricted price throughout the term of the agreement when the owner decides to sell at a later date. PROGRAM REQUIREMENTS AND BUYER ELIGIBILITY The city has established basic threshold eligibility criteria for participation in this affordable housing homebuyer program. A. The buyer must currently be living in San Diego County. B. The buyer has not purchased a unit under any other First-Time Homebuyer or Affordable For-Sale Housing Program administered by the City of Carlsbad in the past seven years. C. The buyer's income may not exceed the maximum income limit for the resale program which shall be 80 percent of the San Diego County Area Median Income (AMI) as established by the US Department of Housing & Urban Development and as published by the State Department of Housing and Community Development and in effect at the time of the buyer's application, adjusted for household size. D. The buyer must have a minimum income which allows for the total of all housing costs to not exceed 30 percent of the total gross household income for the buyer. The minimum income shall be determined on a case-by-case basis taking into consideration the size and market value of the unit, the homeowner association fees (if any) and other related housing costs (including a utility allowance) at the time of application to purchase one of the units. E. At time of application for a particular unit, the buyer's household size shall meet the following minimum and maximum household size: Unit Size Household Size Minimum Maximum 1 bedroom 1 3 2 bedrooms 2 5 3 bedrooms 3 7 4 bedrooms 4 9 Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 2 Dec. 8, 2020 Item #12 Page 11 of 56 This requirement is intended to promote efficient use of available affordable housing and to prevent overcrowding at the time of sale; however, this does not limit future growth in the household size after the purchase. The buyer must execute legal documents that prohibit the unit or any portion thereof from being used as a short or long-term rental, and require the owner to use the unit as their primary residence for no less than 10 months out of each calendar year. F. Co-borrowers or co-signers who will not occupy the property as their primary residence are not permitted. A non-borrowing spouse is considered a co- borrower if they will occupy the property, even if they will not be on the loan for the first mortgage. Student dependents who live outside San Diego County at or near their college will not be counted as a household member. G. For the purpose of determining household size, any person claimed as a household member must have lived with the borrower for a minimum of twelve consecutive months immediately prior to purchase and must provide evidence they will live in the subject property after purchase. In addition, any non- borrowing person listed as having no income on the application must be indicated as a dependent on the applicant's tax return for the previous year to be considered a household member. Appendix A provides a quick review summary of eligibility requirements, documentation requirements and clarifications of the standards. NOTIFICATION OF AFFORDABLE UNIT FOR SALE BY THE CITY In an effort to be fair and ensure those that meet the priority criteria set forth by the city have an opportunity to purchase one of the city-owned affordable units, the city will open an application period when there are units available for purchase. The application period will remain open for a period of 60 days, or longer if needed to receive enough qualified applications. A. Outreach Strategies o The city will utilize print media and electronic media to inform the public of affordable for-sale housing opportunities. o The city will target outreach to minority and special needs populations that may not otherwise have the opportunity to access affordable housing opportunities. o The city will communicate the status of affordable housing availability to a variety of agencies including social service agencies, Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 3 Dec. 8, 2020 Item #12 Page 12 of 56 nonprofit agencies, and special interest groups in the community, advising them of eligibility factors and guidelines so that they can make appropriate referrals. B. Public Noticing and Application Period o The city will provide notice in local newspapers and the city website when affordable housing units will be offered for sale. The notices will announce when the application period will open and provide information on how to apply to purchase an affordable unit. Notices will be sent 15 days prior to the opening date of the application period. o Applications for the purchase of an affordable unit must be filed with the City of Carlsbad, Housing Services Division by the date and time specified in the public notice. Applications will be date and time stamped in the order in which they are received. C. Marketing. o Informational materials for applicants will include a general description such as the locations and number of affordable units, number of bedrooms, number of parking/garage spaces per unit, amenities, pricing, etc. o Marketing materials will include photos of the exterior and interiors of available units. APPLICATION PROCESS A. Once the application period is opened by the city, an interested buyer will be able to download the application from the city's website (www.carlsbadca.gov/housing), complete it, provide the required back-up documentation and then return the original, signed application and supporting documents to: City of Carlsbad 1200 Carlsbad Village Drive, Carlsbad, CA 92008 Attn: Homebuyer Program, Housing Services. o Application forms will be mailed to interested buyers upon request. B. The potential buyer shall be required to complete both a program and uniform residential loan application to purchase the unit and must provide all pertinent documentation requested by the City of Carlsbad to determine eligibility as well as to determine sorting priority (see Section 6 below). Applications will only be accepted if all documentation is provided at the time the application is submitted to the city. Incomplete applications will be returned to the potential buyer with a list of required documentation to be submitted to the city; applications may not be resubmitted until all required documentation is available and included with the completed application. Community Development Housing Services 1200 Carlsbad Village Drive Carlsbad, CA 92008 I 760-434-2810 t December 2020 4 Dec. 8, 2020 Item #12 Page 13 of 56 Please note that all applications must be signed and dated and may be noted on credit reports as an application for a loan. C. Submission of an incomplete application will be returned to the applicant, and the application will not be considered for the purchase of an existing unit until it is accepted as complete. A resubmitted application will be date and time stamped when it is received. If the resubmitted application is accepted as complete, the resubmittal date and time will be used for sorting as described in Section 6 below. It is important to review the application closely and ensure that the application is complete, signed and dated, and that all pertinent documents are included upon initial submission. D. Persons with disabilities are entitled to request a reasonable accommodation in rules, policies, practices, or services, or to request a reasonable modification in the application process and purchasing process, when such accommodations or modifications may be necessary to afford persons with disabilities an equal opportunity to housing. . APPLICATION SORTING At the conclusion of the application period, based on the following criteria, all verified complete applications will be placed in one of three eligibility lists, and in the order that applications were accepted as complete: List A List B List C Applicant household has Applicant household has All other eligible applicants BOTH EITHER Gross annual household Gross annual household income that is 50 percent of income that is 50 percent of Area Median Income or less, adjusted for household size Area Median Income or less, adjusted for household size AND OR Current housing cost burden Current housing cost burden of 50 percent of gross of 50 percent of gross household income or greater household income or greater Applicants will be selected first from List A in the order in which applications were accepted as complete. If units are still available after selection of applicants from List A has been completed, then applicants from List B will be selected in the order in which applications were accepted as complete. If units are still available after selection of applicants from List B has been completed, then applicants from List C will be selected in the order in which applications were accepted as complete. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 5 Dec. 8, 2020 Item #12 Page 14 of 56 Once all units are purchased by applicants on the eligibility list, remaining eligible applicants will be kept on a waiting list as provided in Section 7 below. If units still remain after all applicants from the eligibility lists have been considered and provided an opportunity to purchase a unit, then any remaining units will be sold to an eligible purchaser on a first-come, first-served basis. WAITING LIST AND ASSIGNMENT OF OPTION TO PURCHASE If there are more qualifying buyers than units available at the time of application, the applicant will be placed on a waiting list (with the same rank order) following the completed sale of the last affordable unit until the next application period is opened by the city. The applicant will then be considered for the opportunity to purchase a restricted affordable housing unit at that time. As described in Section 1, in many cases the city has the option to purchase an existing affordable unit when the homeowner chooses to sell. The city also has the right to assign its option to an eligible purchaser rather than purchasing the unit outright and then re-selling it. Accordingly, whenever an owner of an affordable unit notifies the city of their intent to sell, the city may assign its purchase option to an eligible buyer on the waiting list created under this program. Note that in these cases, the qualifying household income limits and affordable unit sales prices will be determined by the terms of the original resale restriction agreement with the owner, generally set at 80 percent AMI and adjusted for household size. Therefore, the waiting list will be screened for applicants meeting the qualifying income requirements, who will then be selected in their ranked order. Applicants should notify the city of any changes in email or mailing address to ensure that the city has the most current contact information for communications regarding unit availability or any program changes. Applicants on the waiting list will be contacted to update their application at the time additional units are made available for purchase. INCOME QUAUFYING FOR PROGRAM ELIGIBILITY The household's gross annual income must not exceed the income restriction set forth within these program guidelines and as noted above (maximum 80 percent of AMI for San Diego County, adjusted for household size). Gross income will be calculated according to these guidelines. The combined gross annual income of all members of the household age 18 and older who are currently living together and have lived together for 12 months or more and will be living in the property must be included in the determination of income. The household's income must be projected as an annual income. It will be assumed that today's circumstances will continue for the next 12 months, unless there is verifiable evidence to the contrary. All households must be income-qualified no more than 60 days prior to the purchase closing date. For the purpose of determining income eligibility, all income is included even if there is less than a two-year work history. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 6 Dec. 8, 2020 Item #12 Page 15 of 56 HOUSING DEBT-TO-INCOME RATIO (HOUSING AFFORDABILITY) The buyer/borrower's monthly housing costs/debt—including principal, interest, property taxes, property insurance, and if applicable, private mortgage insurance and homeowner's association dues—shall not exceed 30 percent of the buyer/borrower's gross monthly income; this is known as the housing debt-to-income ratio. Please note that the income of a non-borrowing spouse is included when calculating this ratio if s/he has a work history of two or more years. All household monthly debt (including home loan, car loans, credit card debt, etc.) shall not exceed 50 percent of the buyer household's gross monthly income. 0. DEBT-TO-INCOME CALCULATIONS Program guidelines require the combined income of all persons on title, including a non-borrowing spouse (if applicable), to be included in the calculation of income. The household's actual /average income will be calculated for underwriting purposes. It will be assumed that today's circumstances will continue for the next 12 months, unless there is verifiable evidence to the contrary. Applicants, co-applicants and non-borrowing spouses must have a minimum of a two- year continuous work history. DOWN PAYMENT REQUIREMENTS The following down payment requirements shall apply to this affordable housing resale program with the intent of requiring minimal investment by the buyer to extend the opportunity for homeownership to a larger population of lower income households. But, there is also a cap to the cash investment to ensure maximum public benefit. An all-cash transaction will not be permitted, except where exceptional circumstances demonstrate that is necessary to serve a special population such as very-low or extremely low-income seniors or the disabled. B. Minimum required down payment is three percent of the purchase price. o The borrower's down payment must be from their personal funds or a gift from an immediate family member. Immediate family members include the following people: father, mother, brother, sister, grandparent, uncle, aunt or child. C. Maximum down payment: 20 percent of the purchase price. o An exception to the maximum down payment guideline may be made for buyers whose sole source of income is derived from Social Security, Social Security Disability or Veterans Disability, in which case a down payment sufficient to bring their housing debt-to-income ratio to no less than 30 percent may be accepted. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 7 Dec. 8, 2020 Item #12 Page 16 of 56 o As the program is designed for lower-income buyers with limited assets but sufficient income to support a first mortgage payment, large down payments from family members with significant assets to assist the buyers qualify for the mortgage loan will not be considered. D. All-cash transactions are not permitted. An exception may be made for buyers whose sole source of income is derived from Social Security, Social Security Disability or Veterans Disability, and the proposed payment for property taxes, homeowners association (HOA) dues and homeowners insurance is equal to or greater than 30 percent of their income. The buyer must meet all eligibility requirements, have acceptable credit and have sufficient income to support the HOA, property taxes and monthly debt obligations. 1.2. ASSET LIMITATION At the time eligibility is determined, the liquid assets of all household members, including children, must not exceed an amount equal to the maximum income limit set for the particular affordable unit, as adjusted for household size. A. The term "liquid assets" refers to cash and assets, which are readily convertible to cash within a reasonable period, including but not limited to savings and checking accounts, certificates of deposit of any term, marketable securities, money market and similar accounts, mutual fund shares, and insurance policy cash values. B. The term "liquid assets" shall not include retirement account funds if those accounts are not accessible to the buyer. C. An exception may be made for buyers whose sole source of income is derived from Social Security, Social Security Disability or Veterans Disability and a down payment of more than 20 percent is required to reduce their housing debt-to- income ratio to no more than 30 percent. In this case, the borrower's assets must not exceed an amount equal to the maximum income limit (50 percent of San Diego County Area Median Income), as adjusted for household size after the maximum allowable down payment contribution. D. The minimum household reserve requirement is $1,000. The reserves must be from liquid assets. 13. CREDIT GUIDELINES A. Minimum credit score: 640 B. No foreclosure or bankruptcy (Chapter 7 or 13) within the last seven years C. A letter of explanation is required for all derogatory reporting dated within two Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 8 Dec. 8, 2020 Item #12 Page 17 of 56 years prior to the close of escrow D. All collections, charge-offs and judgments must be paid or settled with the creditor through escrow or prior to the close of escrow. Back-up documentation showing the account has been paid is required if paid outside of escrow E. A credit report for a non-borrowing spouse is required. All debt of the non- borrowing spouse will be used in the debt-to-income ratio calculations 14. FIRST TRUST DEED LOAN The borrower shall secure a 30-year fixed rate loan from a private lender. No adjustable rate loans or other financing programs shall be permitted. Conventional, Federal Housing Administration (FHA) and Veterans Administration (VA) financing are acceptable. First trust deed lenders are required to collect and manage an impound account for payment of taxes, assessments and property insurance for the term of the first mortgage. 15 HOMEBUYER EDUCATION CLASS All applicants, co-applicants and non-borrowing spouses, whether on title or not, are required to attend a homebuyer education class given by a City of Carlsbad-approved Homebuyer Education Provider. 16. OCCUPANCY REQUIREMENTS As long as the borrower(s) owns the affordable unit, the borrower(s) must reside in the unit as their principal place of residence. The borrower(s) shall not rent or lease all or any part of the restricted unit at any time. The unit shall be occupied full time (at least 10 months out of the year) and may not be used at any time as a vacation home or short- term vacation rental, or allow any other rental transaction or similar use. Borrower(s) must comply with annual occupancy certification requirements and submit the certification to the city upon request. 17. AFFORDABLE RESALE RESTRICTIONS On the date of the sale of each Affordable Housing Resale Housing Program property, the city will record resale restrictions on the property. The resale restrictions will include income restrictions for new buyers, future sales price restrictions, initial occupancy restrictions, and length of restriction (30 years). Note that future buyer income restrictions and future sales price limits shall apply throughout the entire 30-year affordability term. The resale restrictions are included in the following documents: A. Declaration of Restrictive Covenants Regarding Restrictions on Transfer of Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 9 Dec. 8, 2020 Item #12 Page 18 of 56 Property, Occupancy Restrictions, Refinancing Restrictions, and Option to Purchase B. Deed of Trust C. Promissory Note D. Notice of Affordability Restrictions E. Buyer's Disclosure Statement 18. CITY'S CONTINUING ROLE The City of Carlsbad is the Affordable Housing Homeownership Program administrator and secondary lender. As the program administrator, the city is responsible for oversight and compliance of the affordable resale restrictions. The city's responsibilities include but are not limited to: A. Managing the Affordable Housing Homeownership Program interest and waiting list B. Calculating the sales price for affordable for-sale units at the time of the first sale and foreach subsequent sale C. Ensuring that upon resale, the property is in a "move-in" ready condition D. Verifying eligibility of buyers that participate in the program E. Monitoring owner-occupancy compliance The city may use third parties to assist in administering the program. The City of Carlsbad is a lien holder on each unit and has no further ownership interest in the properties after the initial sale of the unit. 19. REFINANCE The Deed of Trust and Promissory Note to the city may be subordinated to the refinancing of the existing first trust deed loan in order to lower the interest rate and subsequent monthly payment only. Refinancing that increases the current principal balance (except for reasonable costs of refinance) or increases the monthly mortgage payment will not be permitted. Mortgage loans or equity lines of credit junior in lien priority to the city deed of trust are not permitted. No reverse mortgages will be approved for the affordable units. All refinances are subject to prior written approval by the city. 20. PROPERTY CONDITION Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 10 Dec. 8, 2020 Item #12 Page 19 of 56 Units offered under this program will be sold by the City "as is", which the City has determined is in "move in condition". The city will make no repairs and is not responsible for any defects in the construction of the units or any repairs or replacements that may be required for the units. All buyers are encouraged to engage the services of a home inspector to provide for a full home inspection prior to close of escrow on the purchase transaction. The potential buyer will be permitted to cancel escrow if there are any conditions in the unit which are unacceptable to the buyer and with the understanding that the city will make no repairs or correct any identified defects. At the time the new owner decides to resell the purchased affordable unit, the unit shall be restored to "move in condition" prior to providing the Notice of Intent to Sell to the City of Carlsbad. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 11 Dec. 8, 2020 Item #12 Page 20 of 56 These guidelines are provided as a basis for the determination of program eligibility and underwriting of Affordable Housing Resale Program loans. The City of Carlsbad at its sole and reasonable discretion, and with the City Manager's approval, may make exceptions to any guideline set forth herein, if not inconsistent with City Council Policy No. 73. Please be aware that reporting fraudulent, untrue and/or incomplete documentation is a serious program violation. This could lead to the termination of your participation in the Affordable Housing Resale Program. It is also important to acknowledge that Title 18, Section 1001 of the United States Code, states that a person is guilty of a felony for knowingly and willingly making false or fraudulent statements to any department or agency of the United States. It is very important to provide complete and accurate information as requested by the City of Carlsbad. EQUAL HOUSING OPPORTUNITY The City of Carlsbad is committed to affirmatively furthering fair housing by promoting fair and equal housing opportunities for individuals living in the City of Carlsbad and San Diego County. This commitment extends to all housing programs managed or owned by the city and to all grant-funded programs provided by the city. It is the policy of the city to provide services without regard to race, color, religion, national origin, ancestry, age, gender, source of income, familial status or physical/mental disability. Community Development Housing Services 1200 Carlsbad Village Drive Carlsbad, CA 92008 760-434-2810 t December 2020 12 Dec. 8, 2020 Item #12 Page 21 of 56 Appendix A Summary of Applicant Eligibility and related standards and acceptable documentation: Applicant Eligibility Standards Co-Signers Co-signers who will not occupy the property are prohibited. Documentation • If married: spouse must sign city forms, disclosures and promissory note, regardless of vesting. • If divorced: copy of final divorce decree and judgment from the court. • Death certificate for deceased spouse. • Non-U.S. Citizen: copy of permanent alien registration card (green card). All borrowers must be a U.S. Citizen or Permanent Resident. • Copy of driver's license or other government-issued photo ID. Income (Required for ALL household members over the age of 18) Standards Alimony and Child Support Copy of divorce decree and/or child support agreement, with six months proof of payment. To be used for eligibility and underwriting. Support must continue for 12 months or more. Disability Income Copy of award letter from payer. Social Security Income Copy of award letter from payer. Pension Income Copy of award letter or W-2 from payer. Workers Compensation Benefits Copy of award letter from payer. Unemployment Compensation Copy of award letter from payer. Financial Aid (student loans, etc.) Copy of award letter from payer. Interest or Dividend Income Two years 1040s, copies of current statements verifying buyer's assets. Tax Returns & W-2s Three years of signed tax returns. Two years W- 2s for all employers. Salaried / Wage Earners Most recent pay stubs covering a minimum of two month's income. Pay stubs to reflect year- to date earnings and deductions. If there are multiple employers, all pay stubs showing year- to-date earnings. Part-Time Employment Most recent pay stubs covering a minimum of two months. Pay stubs to reflect year-to-date earnings and deductions. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 13 Dec. 8, 2020 Item #12 Page 22 of 56 Bonus and Overtime Income Must be documented on pay stub. Will be used if there is a two-year history and likelihood of continuation. Self-Employed Two years of tax returns with schedule C and a year-to-date signed profit and loss statement. Must have a minimum two-year history of self-employed income. Commission Only Two years of tax returns with schedule C and a year-to-date signed and dated profit and loss statement or most current pay stubs covering a minimum of one month. Must have a minimum two-year history of commission income. Assets (Required for ALL households members over age 18) Standards Checking and Savings Accounts Three months most recent bank statements for ALL accounts. Stocks and Bonds Must be verified by brokerage firm or similar company and statement of account. Saving Bonds Copy of bond. 401K or Retirement Accounts Copy of account statement and letter from employer verifying that borrower does not have access to the funds, if applicable. Liabilities Standards Alimony/Child Support Included as debt if more than six months remaining. Copy of divorce decree. Installment Loans Included as debt if more than six months remaining. Revolving Accounts Payment stated on credit report or application is used, whichever is higher. If payment is not stated, the higher of $10 or 5% of the outstanding balance owed is used. Student Loan If loan is deferred for one year or more, it is not included as a monthly obligation. If less than a year deferment or borrower making payments, it is included as a debt. Credit History Standards Credit Reports Must be a "three repository merged" credit report. Any items not belonging to borrower must be removed from the report. Credit report cannot be dated more than 60 days from underwriting. Minimum credit score: 640. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 14 Dec. 8, 2020 Item #12 Page 23 of 56 Collections All unpaid collections must be paid. Need letter of explanation from borrower. Derogatory Credit Letter of explanation is required for all derogatory credit. No accounts can be past due at the time of loan application. Bankruptcy No bankruptcy (Chapter 7 or 13) within the last seven years. Short Sales / Foreclosures No short sale or foreclosure within the last seven years. Judgments, Garnishments and Involuntary Liens No outstanding judgments, garnishments or involuntary liens are allowed. Inquiries Any inquiries within the last 90 days must be explained. No or Limited Credit History Alternative credit history is required. Utility payment records (at least three months most recent statements), rental payments (past 12 months) or other personal loans (past 12 months). Need three forms of credit history, at least one must be a rental history. Community Development Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t December 2020 15 Dec. 8, 2020 Item #12 Page 24 of 56 Page 1 of 4 Council Policy Statement Category: AFFORDABLE HOUSING  Specific Subject: City Option to Purchase Resale Affordable Housing  PURPOSE:  To provide procedural guidelines to city employees as to when the city's for staff when exercising the  city’s option to purchase a restricted affordable housing ownership units that were created under the  Inclusionary Housing Program. The city’s primary interest in exercising its option to purchase  affordable units is to preserve, extend and enhance affordability covenants to subsequent lower‐ income purchasers and to provide additional housing opportunity to underserved populations. The  policy will establish the authority, selection criteria, and resale requirements for the identification,  acquisition and disposition of these affordable units.   may be accepted or declined by the City  Manager, or designee, and/or the City Council. This policy will allow the City Manager, or designee, to  decline the city's option, and to make recommendations to the City Council on when it would be  appropriate to exercise the City's option to purchase an affordable housing ownership unit.  BACKGROUND:  The cCity's lnclusionary Housing Ordinance requires developers of residential projects with more than  six units to provide fifteen percent of the homes to lower income households at an affordable price.  Developers may satisfy the ordinance requirements by providing rental or for sale (ownership) units.  Some developers are able to use alternatives such as second dwelling units or the purchase of  affordable housing credits to meet the lnclusionary Housing Ordinance requirements if approved by  the City Council.  Ownership units produced under the Inclusionary Housing Program have affordability restrictions for  30 years. Under the initial requirements of the lnclusionary Housing Program, low‐ income  homebuyers were required to execute Resale Agreements resale agreements that allowed them to  sell their homes at market rate to a non‐low‐ income homebuyer if they repaid the Citycity any  outstanding loan amounts and paid the city a share of the equity from the sale, to the City. This initial  policy did resultresulted in the loss of many of the for‐sale affordable units in the Citycity. Therefore,  To more effectively implement inclusionary housing requirements (CMC 21.85.040(E)), the policy was  changed to require athe restricted unit to be sold to another low ‐income household during the first  15 years of a the 30‐year affordability term. In year 16 and later, the home could be sold to a non‐low‐ income household with the repayment of the city subsidy loan with a share of equity (also referred to  as contingent interest).   The revised policy also required that the city would be given an option, or first right of refusal, to  purchase the affordable unit at a restricted price upon notice of intent to sell from the owner. The city  Policy No. 73  Date Issued: XX‐XX‐2020  Effective Date: XX‐XX‐2020  Resolution No. 2020‐XXX  Cancellation Date: N/A  Supersedes No. 73, issued 1/22/08  EXHIBIT 2 Dec. 8, 2020 Item #12 Page 25 of 56 Policy No. 73 Page 2 of 4 could also assign its option to a “city‐designated purchaser”, defined as another public agency, a  nonprofit corporation, or an eligible low‐income purchaser. The restricted price option to purchase or  assign is a requirement for participation in the homeownership program and applies throughout the  entire 30‐year term of the loan.    A new Resale Restriction Agreement and Option to Purchase (Agreement), which givesFor the City an  option to purchase restricted affordable housing ownership units, if the city declines its option to  purchase the unit or to assign the option to a city‐designated purchaser, the unit at a low income  restricted price in the event the owner is required needs to sell the property prior to the end of the  term of the Agreement, replaced the initial Resale Agreement. Agreements for affordable units in the  Village Redevelopment Area, and units assisted with Redevelopment Low/Mod Housing Set Aside  Funds, have an affordability term of 45 years while all others have a term of 30 years.     Duringto resell the affordable home to another low‐income household during the first fifteen 15 years  of ownershipthe Agreement, if the City does not use its option to purchase the property at a low  income restricted price, the owner must resell the unit to a lower income household at an affordable  price. at a restricted affordable price established by the city. After the initial fifteen 15 years, and if  the city declines to exercise its option to purchase or to assign its option to a city‐designated  purchaser, the resale agreement permits the owner mayto sell the unit at market value to a non ‐low  incomenon‐low‐income buyer if the City does not use its option to purchase. When the unit is sold at  market value, the seller must repay the City loans and share theand the city recaptures its subsidy  together with shared equity (contingent interest) up through the 30th year of the resale agreement.  The revenue from the sale with the City. This revenue loan payoff and shared equity is deposited into  the cCity's Housing Trust Fund to create additional opportunities for future affordable housing  purposeswithin the city.    POLICY:    ThroughBy adopting this policy, the City Council grants authority to the City Manager, or designee, to  accept or decline the option to purchase an restricted affordable housing ownership unit at a  restricted low‐ income price during the first fifteen years of a Resale Restriction Agreement and  Option to Purchase. Because the restricted unit must be sold to another low income homebuyer at a  restricted price during the first fifteen years of ownership, there is no benefit to the City to exercise  the option to purchase and there is no risk that the unit affordability will be lost to market conditions.  If the City Manager, or designee, believes that it may be in the City's best interest to purchase the  property during the first fifteen years, the matter will be presented to the City Council with a  recommendation for consideration and action to accept/decline the purchase option. After the initial  fifteen years, all notices of a low income homebuyer's intent  to sell will be presented to the City  Council for consideration and a decision as to whether or not to accept/decline the purchase option.   the full term of the resale agreement. This policy shall apply to all units restricted under a Resale  Restriction Agreement and Option to Purchase in order for a housing development to comply with the  requirements of the cCity's lnclusionary Housing Program. The decision to accept or decline the  option to purchase a restricted affordable housing ownership unit will be guided by the following  principles:  1. The unit would be at‐risk of conversion to market rate if the city declines its option to  purchase it; or   Dec. 8, 2020 Item #12 Page 26 of 56 Policy No. 73 Page 3 of 4 2. The public interest is served well through purchase of the unit by the city and resale to a  qualified lower‐income household; or  3. An underserved population will benefit greater from the city’s purchase and resale of the  unit; or  4. An affordable housing opportunity will be enhanced through the city’s purchase and resale of  the unit; and  5. Special funding (such as CDBG, HOME, Successor Housing Agency funds) is available and/or is  required to be expended in a timely manner and the city’s purchase of the unit is a qualified  expenditure of these funds; or  6. When special funding is unavailable, sufficient Housing Trust Fund dollars are available to  purchase the unit.  The City Manager, or designee, will consider options to purchase as written notices of intent to sell  from restricted affordable housing ownership units are received. If the city receives notices of intent  to sell from multiple owners at a given time, the City Manager, or designee, may rank order them  based on the principles above. For example, an affordable unit that is at‐risk of conversion to market  rate (i.e., can be sold to a market rate purchaser after 15 years) will be prioritized for acquisition over  a unit that is not at‐risk (i.e., must be sold to a low‐income buyer). Other factors, such as purchase  price, amount of available funding, size, location and condition of the unit may be taken into account  when rank ordering multiple options to purchase units.    Upon a decision by the City Manager, or designee, to exercise the option to purchase a restricted  affordable housing ownership unit, the City Manager, or designee, will proceed accordingly to  complete the purchase transaction and present it to the City Council for consideration and final  action, accepting the Grant Deed for the property.     Upon approval of the City Council of the acquisition and completion of the purchase transaction, the  restricted affordable housing ownership unit will be resold by the city according to the Affordable  Housing Resale Program Guidelines recommended for approval by the Housing Commission and  approved by the City Council, and which may be amended from time to time to update policies,  process and/or resale priorities.    As an alternative to accepting the option to purchase the restricted affordable housing ownership  unit, the City Manager, or designee, is authorized to assign the city’s option to an eligible low‐income  purchaser. This alternative is appropriate when: a) there is insufficient funding available or there are  higher priority uses for the available funding; and b) the unit would be at‐risk of conversion to market  rate if the city declines its option to purchase it. In such a case the City Manager, or designee, will  assign the city’s purchase option to an eligible purchaser drawn from a waiting list maintained in  accordance with the Affordable Housing Resale Program Guidelines.     Assignment of the city’s purchase option to another public agency, nonprofit corporation, or an  eligible purchaser not on the waiting list will require City Council approval.    If the city is unable to accept or assign its option to a city‐designated purchaser, then the City  Manager, or designee, is authorized to decline the option and allow the restricted affordable housing  ownership unit to be sold according to the terms of the resale agreement. The City Manager’s, or  Dec. 8, 2020 Item #12 Page 27 of 56 Policy No. 73 Page 4 of 4 designee’s, decision to decline the option to purchase will be valid for no more than 180 days. If the  unit owner has not completed the sale of their home within this time frame, the unit owner will be  required to file another notice of intent to sell and grant the city another opportunity to exercise or  assign its option to purchase the unit at an affordable price.    All sales of city‐owned restricted affordable housing ownership units require City Council approval.      Dec. 8, 2020 Item #12 Page 28 of 56 Extremely Low Income 30%35%40%45% Income Income Income Income Household Size Annual* Monthly 30% Monthly Annual Monthly 30% Monthly Annual Monthly 30% Monthly Annual Monthly 30% Monthly 1 24,300$ 2,025$ 608$ 28,350$ 2,363$ 709$ 32,400$ 2,700$ 810$ 36,450$ 3,038$ 911$ 2 27,750 2,313 694 32,400 2,700 810 37,000 3,083 925 41,600 3,467 1,040 3 31,200 2,600 780 36,400 3,033 910 41,600 3,467 1,040 46,800 3,900 1,170 4 34,650 2,888 866 40,450 3,371 1,011 46,200 3,850 1,155 52,000 4,333 1,300 5 37,450 3,121 936 43,700 3,642 1,093 49,950 4,163 1,249 56,200 4,683 1,405 6 40,200 3,350 1,005 46,900 3,908 1,173 53,600 4,467 1,340 60,300 5,025 1,508 7 43,000 3,583 1,075 50,200 4,183 1,255 57,350 4,779 1,434 64,500 5,375 1,613 8 45,750 3,813 1,144 53,400 4,450 1,335 61,000 5,083 1,525 68,650 5,721 1,716 Very Low Income Low Income 50%60%70%80% Income Income Income Income Household Size Annual* Monthly 30% Monthly Annual Monthly 30% Monthly Annual Monthly 30% Monthly Annual* Monthly 30% Monthly 1 40,450$ 3,371$ 1,011$ 48,550$ 4,046$ 1,214$ 56,650$ 4,721$ 1,416$ 64,700$ 5,392$ 1,618$ 2 46,200 3,850 1,155 55,450 4,621 1,386 64,700 5,392 1,618 73,950 6,163 1,849 3 52,000 4,333 1,300 62,400 5,200 1,560 72,800 6,067 1,820 83,200 6,933 2,080 4 57,750 4,813 1,444 69,300 5,775 1,733 80,850 6,738 2,021 92,400 7,700 2,310 5 62,400 5,200 1,560 74,900 6,242 1,873 87,350 7,279 2,184 99,800 8,317 2,495 6 67,000 5,583 1,675 80,400 6,700 2,010 93,800 7,817 2,345 107,200 8,933 2,680 7 71,650 5,971 1,791 86,000 7,167 2,150 100,300 8,358 2,508 114,600 9,550 2,865 8 76,250 6,354 1,906 91,500 7,625 2,288 106,750 8,896 2,669 122,000 10,167 3,050 Median Income Moderate Income 100%110%120%140% Income Income Income Income Household Size Annual** Monthly 30% Monthly Annual Monthly 30% Monthly Annual** Monthly 30% Monthly Annual Monthly 30% Monthly 1 64,900$ 5,408$ 1,623$ 71,400$ 5,950$ 1,785$ 77,900$ 6,492$ 1,948$ 90,900$ 7,575$ 2,273$ 2 74,150 6,179 1,854 81,600 6,800 2,040 89,000 7,417 2,225 103,850 8,654 2,596 3 83,450 6,954 2,086 91,800 7,650 2,295 100,150 8,346 2,504 116,850 9,738 2,921 4 92,700 7,725 2,318 102,000 8,500 2,550 111,250 9,271 2,781 129,800 10,817 3,245 5 100,100 8,342 2,503 110,150 9,179 2,754 120,150 10,013 3,004 140,150 11,679 3,504 6 107,550 8,963 2,689 118,350 9,863 2,959 129,050 10,754 3,226 150,600 12,550 3,765 7 114,950 9,579 2,874 126,450 10,538 3,161 137,950 11,496 3,449 160,950 13,413 4,024 8 122,350 10,196 3,059 134,600 11,217 3,365 146,850 12,238 3,671 171,300 14,275 4,283 The annual household income limits denoted by asterisk are determined by the U.S. Department of Housing and Urban Development (*) or the California Department of Housing and Community Development (**), and published by the California Department of Housing and Community Development. Allother income limits are calculated by the City of Carlsbad. EXHIBIT 3 Dec. 8, 2020 Item #12 Page 29 of 56 From:liberty_sage@yahoo.com To:Housing Subject:Comment for Housing Commision meeting on August 13th Date:Tuesday, August 11, 2020 8:09:08 AM Hello, I emailed a comment yesterday for the Housing Commission meeting taking place on August 13th and after looking over the docket I realized I cited the wrong page in my email. For clarity I am sending my comment again with the correct pages below. Thank you, Liberty Isbell Malter Hello, I have a comment I would like to submit for the Housing Commision meeting taking place on August 13th, 2020 in regards to the Housing Commission docket, specifically the Resale Program Guidelines Staff Report on page 27 and the draft Resale Program Guidelines that begin on page 36. My name is Liberty Malter. My husband and I purchased one of the two bedroom affordable units in the Rose Bay collection in 2017. Since that time we have had our daughter who is now nearly a year old and we are soon to become a family of four as we are expecting our second child. As such, we are quickly out growing our current home and would love more room as we expand our family. We believe a system should be in place that allows growing families to transition to larger affordable units as they become available, such as the four bedroom unit in the Rose Bay collection, as long as they still qualify for low income housing, which we do. This would still benefit the community as larger units can go to growing families that deserve them and the smaller units, such as our two bedroom, can go to qualifying applicants that don't need more than two bedrooms. Assisting us in this transition would allow us to stay in the community that we have grown in and love. Everyone's situation changes from year to year and we believe growing families should be given consideration for these larger units. We sincerely appreciate you taking the time to read our comment and hope you will consider it in your plans. Sincerely, The Malter Family CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is safe. EXHIBIT 4 Dec. 8, 2020 Item #12 Page 30 of 56 From:Jeremiah Moersch To:Housing Subject:08/13/20 Meeting comment to Housing Commission Date:Tuesday, August 11, 2020 4:45:38 PM Greetings, please have my comment read into the record. As a local real estate agent I've been proud to assist many individuals and families buy and sell their affordable units here in our community. Having prequalified thousands of buyers, I'm concerned about potential restrictions being too stringent. An example could be the household size. 2-3 bedroom units are most common and according to household size, this may prohibit a single individual from ever qualifying for a unit. Jeremiah Moersch, REALTOR® Realty Source, Inc. LIC# 01413437 760-533-2540 Schedule Consultation | Connect on Social Media CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is safe. Dec. 8, 2020 Item #12 Page 31 of 56 From:kyle malter To:Housing Subject:Comment for Housing Commission meeting on August 13th Date:Wednesday, August 12, 2020 4:12:16 PM Hello members of the Housing Commission, I would like to submit a comment for the Housing Commission meeting taking place on August 13th in regards to page 37 of the docket. Section 3, proposed rule B states that a buyer will not be eligible for a newly listed affordable unit if they have previously purchased an affordable unit in the past five years. I would strongly recommend that this rule be shortened to 3 years at the most. My wife and I purchased our 2 bedroom affordable unit in February of 2017 and in the last 3 years we have welcomed our daughter and are soon to become a family of 4. This proposed rule immediately disqualifies us from applying for a larger unit. Our situation has changed dramatically since we bought our 2 bedroom and we would love to apply for one of the larger units. Growing families will be penalized by this new rule, which doesn't seem fair. I hope you will consider my recommendation . Thank you, Kyle Malter CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is safe. Dec. 8, 2020 Item #12 Page 32 of 56 From:liberty_sage@yahoo.com To:Housing Subject:Question for Housing Commission meeting on August 13th Date:Thursday, August 13, 2020 1:21:40 PM Hello, I have a question to submit for the Housing Commission meeting taking place on August 13th at 3pm. In regards to the affordable units that the city has acquired, I was wondering if a decision has been made on who will be handling the sales when the units are eventually listed. If not today, when will that be decided? Thank you, Liberty Isbell Malter CAUTION: Do not open attachments or click on links unless you recognize the sender and know the content is safe. Dec. 8, 2020 Item #12 Page 33 of 56 HOUSING COMMISS ION Minutes MEETING OF: DATE OF MEETING: TIME OF MEETING: PLACE OF MEETING: HOUSING COMMISSION (Regular Meeting) August 13, 2020 3:00 P.M. VIA ZOOM CALL TO ORDER: Acting Chairperson Marissa Cortes-Torres called the meeting to order at 3:00 p.m. PLEDGE OF ALLEGIANCE: The Pledge of Allegiance was led by Acting Chairperson Marissa Cortes-Torres. ROLL CALL: Present: Absent: Shirley Cole, Marissa Cortes-Torres, Joy Evans, Allen Manzano John Nguyen-Cleary APPROVAL OF MINUTES: On a motion by Commissioner Manzano and seconded by Commissioner Cole the minutes of the following meeting was unanimously approved: Minutes of the Regular Meeting held February 13, 2020. PUBLIC COMMENTS: None. NEW BUSINESS: 1.REPORT -HOUSING TRUST FUND POLICY Jeff Murphy, Community Development Director, presented a draft Council Policy Statement regarding administration of the Carlsbad Housing Trust Fund. Staff Recommendation: Adopt resolution No public comments were received on this item. After a discussion regarding the Housing Trust Fund Policy, the HousingCommission recommended that the City Council adopt the Housing Trust Fund Policy Statement, with a modification to include in Housing Trust Fund annual EXHIBIT 5 Dec. 8, 2020 Item #12 Page 34 of 56 Dec. 8, 2020 Item #12 Page 35 of 56 Dec. 8, 2020 Item #12 Page 36 of 56 RESOLUTION NO. 2020-004 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, RECOMMENDING THAT THE CITY COUNCIL APPROVE AMENDMENTS TO COUNCIL POLICY STATEMENT 73 REGARDING THE CITY OPTION TO PURCHASE RESALE AFFORDABLE HOUSING, AND APPROVE THE AFFORDABLE HOUSING RESALE PROGRAM GUIDELINES WHEREAS, since 1993, the city has administered an inclusionary housing program that requires all residential developments greater than six units to restrict 15 percent of the total number of homes in a project as affordable to low-income households. This obligation is fulfilled through construction of a variety of rental or ownership units, resulting in the production of approximately 2,300 affordable units overall and more than 300 restricted affordable housing ownership units to date; and WHEREAS, homebuyers of these restricted affordable housing ownership units are required to execute agreements with the city that restrict sales 9f the units to other eligible low-income buyers and grant the city the option to purchase the unit at a restricted price or assign its option to another eligible purchaser; and WHEREAS, to resell these units requires updated guidance from City Council Policy 73 and the approval of written guidelines for resale procedures, which have been prepared by Community Development Department staff and attached hereto as Attachment A and Attachment B. NOW, THEREFORE, BE IT RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1.That the above recitations are true and correct. 2.That, based on information provided in the Housing Commission staff report and considering testimony of all persons desiring to be heard at the Aug. 13, 2020 public meeting, the Housing Commission hereby recommends that the City Council approve amendments to Council Policy Statement 73-City Option to Purchase Resale Affordable Housing, attached hereto as Attachment A. 3.That the Housing Commission hereby recommends that the City Council approve the Affordable Housing Resale Program Guidelines, attached hereto as Attachment B. EXHIBIT 6 Dec. 8, 2020 Item #12 Page 37 of 56 Dec. 8, 2020 Item #12 Page 38 of 56 Dec. 8, 2020 Item #12 Page 39 of 56 Dec. 8, 2020 Item #12 Page 40 of 56 Dec. 8, 2020 Item #12 Page 41 of 56 Dec. 8, 2020 Item #12 Page 42 of 56 Dec. 8, 2020 Item #12 Page 43 of 56 Dec. 8, 2020 Item #12 Page 44 of 56 Dec. 8, 2020 Item #12 Page 45 of 56 Dec. 8, 2020 Item #12 Page 46 of 56 Dec. 8, 2020 Item #12 Page 47 of 56 Dec. 8, 2020 Item #12 Page 48 of 56 Dec. 8, 2020 Item #12 Page 49 of 56 Dec. 8, 2020 Item #12 Page 50 of 56 Dec. 8, 2020 Item #12 Page 51 of 56 Dec. 8, 2020 Item #12 Page 52 of 56 Dec. 8, 2020 Item #12 Page 53 of 56 Dec. 8, 2020 Item #12 Page 54 of 56 Dec. 8, 2020 Item #12 Page 55 of 56 Dec. 8, 2020 Item #12 Page 56 of 56 David de Cordova Housing Services Manager Dec. 8, 2020 Carlsbad Affordable Housing Resale Program Background •1993 Inclusionary housing ordinance •2,300 affordable units, 300 ownership •Resale agreements grant city purchase option •Initial term –years 1 -15 •Extended term –years 16-30 2 Background •Approximately 100 units at-risk by end of 2022 •Eight units purchased, one purchase pending •Policy and guidelines required to sell units 3 Revised City Council Policy 73 4 •Expands guidance to staff when to accept or decline offer to purchase •Principles guide city purchase option decision •Assignment of purchase option New Affordable Housing Resale Program 5 •Announcement, marketing and application process •Buyer eligibility requirements •Pricing –50-80% AMI •Priority purchasers •Very -low income (≤ 50% AMI) •High housing cost burden (≥ 50% income) New Affordable Housing Resale Program 5 •Waiting list •City acquires additional units •City assigns it option to purchase Housing Commission Recommendations 8 •Recommended Policy 73 revisions as presented •Recommended approval of resale guidelines with revision: –Increase eligibility period from 5 to 7 years –Request Council to consider resident preference •Carlsbad, Oceanside, Vista, San Marcos or Escondido Council Policy Update Subcommittee Recommendations 8 •Concurred with staff and Housing Commission recommendations, except: –No local residency preference –Resale restrictions apply for 30 years Next Steps •Prepare marketing and application materials •Outreach and promote program •Begin sales program in Q1 2021 Recommendation •Adopt resolution approving: –Amendments to City Council Policy 73 –Affordable Housing Resale Program Guidelines