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.
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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.
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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
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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
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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,
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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.
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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.
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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.
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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.
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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