HomeMy WebLinkAbout2020-12-08; City Council; Resolution 2020-233RESOLUTION NO. 2020-233
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING CITY COUNCIL POLICY NO. 90 - ADMINISTRATION
OF THE CARLSBAD HOUSING TRUST FUND
WHEREAS, the City Council finds that the Carlsbad Housing Trust Fund is an integral part of the
city's inclusionary housing program and important affordable housing financing tool, responsible for
producing many of the approximately 2,300 affordable units in Carlsbad; and,
WHEREAS, The General Plan Housing Element and Inclusionary Housing Ordinance (Carlsbad
Municipal Code Chapter 21.85) outline the appropriate uses of the Housing Trust Fund; and
WHEREAS, the City Council desires to approve a new policy to ensure that consistent
procedures are followed for the administration, tracking and distribution of Housing Trust Fund
monies.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2. That the City Council hereby approves a new City Council Policy No. 90, entitled
Administration of the Carlsbad Housing Trust Fund, attached hereto as Attachment A.
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
\AA,1911(IDUVLA,
BARBARA ENGLESON, City
(SEAL)
Dec. 8, 2020 Item #11 Page 6 of 83
City of
Carlsbad
Attachment A
Policy No. 90
Date Issued: 12-08-2020
Effective Date: 12-08-2020
Resolution No. 2020-233
Cancellation Date:
Supersedes No. N/A
Council Policy Statement
Category: AFFORDABLE HOUSING
Specific Subject: Administration of the Housing Trust Fund
PURPOSE:
Pursuant to Carlsbad Municipal Code (CMC) Sections 21.85.110(D) and 21.85.120, all fees collected under
the Inclusionary Housing Ordinance shall be deposited into a Housing Trust Fund and expended for the
affordable housing needs of lower-income households, consistent with the General Plan Housing Element
and the CMC.
21.85.110 In-lieu fees. (D) All in-lieu fees collected hereunder shall be deposited in a
housing trust fund. Said fund shall be administered by the city and shall be used only for
the purpose of providing funding assistance for the provision of affordable housing and
reasonable costs of administration consistent with the policies and programs contained
in the housing element of the general plan.
21.85.120 Collection of fees. All fees collected under this chapter shall be deposited into
a housing trust fund and shall be expended only for the affordable housing needs of
lower-income households, and reasonable costs of administration consistent with the
purpose of this chapter.
Funding from the fund, which should be leveraged to the extent feasible with state, federal and private
sector subsidy capital, is intended to aid in the production, acquisition, rehabilitation and preservation of
housing affordable to extremely low-, very low- and low-income households, and those experiencing
homelessness.
BACKGROUND:
The city's Inclusionary Housing Ordinance was established in April 1993 and requires that all residential
developments greater than six units restrict 15 percent of the total number of homes in a project as
affordable to lower income households. This obligation is fulfilled through construction of a variety of
rental or ownership units, both on- and off-site. Some developments have the option to satisfy a portion or
all of their affordable housing obligation through payment of inclusionary housing in-lieu fees or by
purchasing affordable housing credits, when available.
For the city to receive and use these fee payments, an implementation mechanism was needed to ensure
that the funds collected were applied appropriately. As a result, the Housing Trust Fund was established to
confirm that fees collected were applied only towards the affordable housing needs of lower income
households, and for reasonable costs of administration consistent with the purposes of the General Plan
Housing Element and Inclusionary Housing Ordinance (Carlsbad Municipal Code Sections 21.85.110 and
21.85.120). The Housing Trust Fund receives revenue from other sources, including interest from loans,
housing credit purchases, housing impact fees, and interest earned on the fund balance.
Page 1 of 5
Dec. 8, 2020 Item #11 Page 7 of 83
Policy No. 90
Over the past 20-years, the Housing Trust Fund has been used to support a variety of affordable housing
development and services for lower income and homeless individuals and families. As a local fund, the City
Council determines how Housing Trust Fund money can be spent, provided expenditures are consistent
with the purposes of the Inclusionary Housing Ordinance and the policies and programs in the General Plan
Housing Element.
POLICY:
It is the policy of the City Council that the Housing Trust Fund shall be administered as follows. It is the
expectation of the City Council that contractors and vendors who receive monies from the HTF shall also
comply with these policies, as appropriate.
1. Use of the Funds
a. "Affordable housing" as used in this policy shall have the same meaning as in CMC Section
21.85.020(A).
b. Housing Trust Fund dollars may be used for new construction, acquisition and/or
rehabilitation, subsidy or other means to assist other governmental agencies, nonprofit groups
and private organizations or individuals in creating or maintaining affordable housing.
c. For new construction and acquisition/rehabilitation projects, Housing Trust Fund dollars are
intended to offer "gap" financing. The subsidy required should be the minimum amount
necessary to both ensure the feasibility of a project and the affordability of the units. Projects
are expected to support as much debt as feasible and to attract as much equity investment as
is typical for similar projects.
d. Low-interest loans are the generally preferred form for distributing housing trust fund dollars
for work in all stages of housing development. However, grants may also be considered.
e. Housing Trust Fund dollars may be used to provide new affordable rental or ownership housing
units.
f. Housing Trust Fund dollars shall not be used to satisfy a development's inclusionary housing
requirement but may be used to assist in exceeding the requirement by increasing the number
of affordable units and/or expanding affordability to very low- or extremely low-income
households, or to encourage a preferable product type.
g. Financial assistance requests will be evaluated by the Affordable Housing Policy Team and
presented to the Housing Commission for review and recommendation to the City Council. The
City Council is the final decision-maker for financial assistance requests.
h. Housing Trust Fund dollars may be used to cover reasonable administrative costs' that are
necessary to administer the fund. The level of administrative expenses will be determined by
the City Council as part of the annual budget. However, administrative expenses shall not
exceed 5% of the available housing trust fund balance as of the end of the prior fiscal year.
Administrative costs include, but not limited to personnel expenses and maintenance and operational (M&O)
expenses that are specifically related to the administration of the HTF. Funds may also be used to supplement
administrative and operational support for other housing programs such as Section 8 and CDBG. Housing Trust Fund
dollars shall not be used for the following M&O costs: travel and training.
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Policy No. 90
The annual budget process for the housing trust fund shall be guided by General Plan Housing
Element policies and programs, the Inclusionary Housing Ordinance, and the following general
affordable housing priorities, in descending order:
1. Construction of new affordable housing
2. Preservation of housing at-risk of conversion to market rate
3. Acquisition/rehabilitation of distressed/at-risk affordable housing
4. Rental assistance and homelessness programs'
5. Land acquisition for future affordable units
6. Conversion of market rate units to affordable housing
j. City HTF dollars must be expended within 24-months following fund commitment.
2. Housing Trust Fund Annual Report
a. Staff shall provide a Housing Trust Fund Annual Report to the City Council. The report shall
include the following:
1. Summary of the use of the funds consistent with this policy
2. Summary of the projects assisted with Housing Trust Fund dollars over the past year
3. Financial status of the Housing Trust Fund
4. A summary of administrative and non-project expenses made in the prior year
5. Review of prior year funding priorities and accomplishments
6. Summary of pending assistance requests and confirmation of upcoming year funding
priorities
7. Summary of denied assistance requests, if any, and brief statement of reasons for the
denial
b. The Housing Trust Fund Annual Report shall be reviewed by the Affordable Housing Policy
Team and the Housing Commission. The Housing Commission shall make a recommendation
to the City Council.
3. Affordable Housing Project Evaluation
a. In addition to the review requirements and evaluation criteria specified under CMC Sections
21.85.130, and 21.85.140 and City Council Policy 57 — Off-site and Combined Inclusionary
Housing Projects, projects that provide the following will be given additional consideration
when ranked against other projects.
1. Projects that provide the greatest benefit per dollar of funds spent towards the lowest
household income groups. Priority shall be given to projects that best assist the
following income categories, reflected in priority order.
• Extremely low-income households
• Very low-income households
• Low-income households
• Moderate-income households
2 "Rental assistance and homelessness programs" include, but not limited to programs and services that provide
short-term rental assistance, short-term shelters, food delivery, and social services to vulnerable populations.
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Policy No. 90
2. Projects that demonstrate higher equity in the project.
3. Projects that demonstrate a lower loan-to-value ratio.
4. Projects that have other funding sources identified and committed.
5. Projects that benefit the highest percentage of lower income families, provide the
lowest affordability, include the greater percentage of affordable units or maintain
longer periods of affordability.
6. Projects that use Housing Trust Fund dollars as a match or to leverage other
conventual and below-market resources, including tax credits, state and federal
funding programs and other funding sources.
7. Projects proposed by an applicant with a successful history of project development
and/or property management, as appropriate.
4. Affordability Covenant and Form of Financial Assistance
a. Whenever Housing Trust Fund dollars are used for the creation, acquisition, and/or
rehabilitation of affordable housing, the city shall impose enforceable requirements on the
owner of the housing units that the units remain affordable for a period of not less than 55
years for rental units, or 30 years for ownership units, in accordance with CMC Chapter 21.85.
1. When Housing Trust Fund dollars are used to create affordable rental housing, long-
term affordability shall be enforced by restricting rents that may be charged to
tenants.
2. When Housing Trust Fund dollars are used to create affordable ownership housing,
long-term affordability shall be enforced by imposing resale restrictions that maintain
an equitable balance between the interests of the owner-occupant and the city.
3. When Housing Trust Fund dollars are used to fund programs which are not described
above, the city shall develop appropriate mechanisms to ensure ongoing affordability.
b. The affordability restriction requirements described in this section shall be enforced by a
covenant running with the land.
c. The financial assistance structure may take several forms and is tailored to the financial needs
of the individual projects and is negotiated on an individual basis depending upon project cash
flow and the senior lender's underwriting guidelines. Example forms of assistance may include:
fixed interest rate loans, interest-only, deferred payment and/or residual receipts loans, land
acquisition and ground lease-back.
5. Administration
a. The annual Housing Trust Fund budget shall be administered by the Community Development
Director or designee, who shall have the authority to govern the fund consistent with housing
element policies and programs, CMC Chapter 21.85, and this policy.
b. Housing Trust Fund dollars are held in a separate account until disbursed consistent with this
policy.
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Policy No. 90
c. The Community Development Director, in coordination with the Finance Director, shall ensure
that Housing Trust Fund dollars are awarded, encumbered or otherwise obligated for uses
consistent with General Plan Housing Element policies and programs, CMC Chapter 21.85, and
this policy, and in a manner consistent with the city's financial policies and ordinances.
6. Related Policies
a. City Council Policy No. 57 — Off-site and Combined Inclusionary Housing Projects
b. City Council Policy No. 73 —City Option to Purchase Resale Affordable Housing
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