HomeMy WebLinkAbout2020-08-13; Housing Commission; ; Recommendation to City Council for approval of revisions to Council PolicyHOUSING COMMISSION
Meeting Date:
To:
From:
Staff Contact:
Subject:
August 13, 2020
Housing Commission
David de Cordova, Housing Services Manager
David de Cordova, Housing Services Manager
david.decordova@carlsbadca.gov, 760-434-2935
Recommendation to City Council for approval of revisions to Council Policy
Statement 73 -City Option to Purchase Resale Affordable Housing, and
approval of the Affordable Housing Resale Program Guidelines
Recommended Action
Adopt a resolution recommending that the City Council revisions to Council Policy
Statement 73 -City Option to Purchase Resa le Affordable Housing, and approving the
Affordable Housing Resale Program Guidelines.
Executive Summary
The City of Carlsbad Affordable Housing Resale Program is designed to assist qualified lower-
income households to purchase city-owned residential property at an affordable price. With the
City Council's authorization, the city purchased these units with the goal of preserving,
extending and enhancing their long-term affordability and to provide additional housing
opportunity to underserved populations.
Council Policy Statement 73 -City Option to Purchase Resa le Affordable Housing was adopted
to provide guidance to staff as to when the city's option to purchase a restricted affordable
housing ownership unit may be accepted or declined. Proposed revisions to Council Policy
Statement 73 and the recommended resa le guidelines provide the overarching framework for
implementing the Affordable Housing Resale Program.
Discussion
Background
Creating opportunities for affordable homeownership continues to be an important policy goal
within the city's Housing Element and Consolidated Plan programs. 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. To date, approximately 2,300 affordable housing units
have been provided through the program, including more than 300 original ownership units.
Under the initial requirements of the lnclusionary 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 loss of one-third
of the for-sale affordable units in the city.
To more effectively implement inclusionary housing requirements, the program was changed to
require a restricted affordable housing ownership 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
unit could be sold to a non-low-income household with the repayment of the city subsidy loan
with a share of equity.
Program changes also required that the city would have the option 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 a·nd 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 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 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.
Council Policy Statement 73 -City Option to Purchase Resale Affordable Housing
Council Policy 73 -City Option to Purchase Resale Affordable Housing was adopted in 2008 to
provide guidance to staff as to when the city's option to purchase a restricted affordable
housing ownership unit may be accepted or declined by the city. Because the restricted unit
must be sold to another low income homebuyer at an affordable price during the first fifteen
years of ownership, there generally was no benefit to the city to exercise the option to
purchase because there was no risk that the unit affordability will be lost to market conditions.
In cases where staff determined that it may be in the city's best interest to purchase the
property during the first fifteen years, the matter would be presented to the City Council with a
recommendation for consideration and action to accept or decline the purchase option.
City Council Policy Statement 73 provides that, 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 accept or decline the purchase option.
Purchases of Resale Affordable Housing Units
In 2018, the· City Council began authorizing staff to exercise the city's option to purchase
restricted affordable housing ownership units as they come up for sale. To date, the city has
purchased seven restricted affordable units and is in the process of acquiring an eighth: six two-
bedroom units, one three bedroom and one four-bedroom unit. All but one of the units are in
the Mulberry neighborhood of Bressi Ranch. The four bedroom unit is located in the Rose Bay
neighborhood at Bay Collection in southwest Carlsbad.
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. To resell these units
requires updated guidance from City Council Policy 73 and the approval of written guidelines
for resale procedures.
Revised· Council Policy Statement 73 -City Option to Purchase Resale Affordable Housing
Revised Council Policy Statement 73 (Exhibit 1, Attachment A) will align with and support the
Affordable Housing Resale Program Guidelines (Exhibit 1, Attachment B). The revised policy
expands guidance to staff in determining whether to: a) exercise the city's option to purchase
restricted affordable housing ownership units for resale to eligible buyers; b) assign its option
to a designated purchaser; or c) decline its option altogether. The revised policy includes
guiding principles to assist in the decision to accept or decline the option to purchase restricted
affordable housing ownership units and how to prioritize the purchase 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. The revised policy will.
Affordable Housing Resale Program Guidelines
The Affordable Housing Resale Program Guidelines provide background information and a
program overview to describe the purpose and basic features of the program. The guidelines
provide details about buyer eligibility requirements, notification and market of units to be
offered for sale, the application submittal process, screening, sorting and verification of
applications, 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 percent of the San Diego County Area Median Income (AMI [Exhibit 31). Priority
consideration will be given to qualified applicants whose total household income is less than or
equal to 50 percent of AMI, and applicants who currently have a high housing cost burden (i.e.,
50 percent or more of household income). Qualified applicants will 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 an available
unit. Applicants on the waiting list will be considered for the opportunity to purchase a
restricted affordable housing ownership unit as additional units become available. Consistent
with Council Policy Statement 73, the waiting list will also be utilized when the city determines
to assign its purchase option to an eligible buyer, rather than purchasing the unit (and later re-
selling it) directly.
Fiscal Analysis
All the restricted affordable housing ownership units owned by the city to date have been
purchased from Community Development Block Grant (CDBG) funds. Pursuant to the draft
revised Council Policy Statement 73, it is expected that purchases of additional units in the
future would be made from special funds, such as CDBG, or local housing trust fund monies,
rather than the General Fund. Revenue received from the sale of these properties will be
returned to their source funds for reinvestment in creating additional affordable housing
opportunities.
Next Steps
Staff intends to share the Housing Commission's recommendation with the City Council
Carlsbad Municipal Code and Policy Update Subcommittee (Councilmembers Blackburn and
Schumacher) in September. Staff will then present the final revised Council Policy Statement 73
to the full City Council, reflecting the recommendations of the Housing Commission and the
Council Subcommittee. If the request is approved by the City Council, staff will begin
implementing the Affordable Housing Resale Program.
Environmental Evaluation (CEQA)
Pursuant to Public Resources Code section 21065, this action does not constitute a "project"
within the meaning of CEQA in that it has no potential to cause either a direct physical change
in the environment, or a reasonably foreseea ble indirect physical change in the environment,
and therefore, does not require environmental review.
Public Notification
This item was noticed in accordance with the Ralph M. Brown Act and was available for public
viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1. Housing Commission resolution
Attachment A -Revised Council Policy Statement 73
Attachment B -Affordable Housing Resale Program Guidelines
2. Council Policy Statement 73 redline version
3. 2020 Carlsbad Income Limits Table
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 of 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
I
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 Attach~ent B.
PASSED, APPROVED AND ADOPTED at a Special Meeting of the Housing Commission of the City
of Carlsbad on the 13th day of August 2020, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
JOHN NGYUEN-CLEARY, Chairperson
CARLSBAD HOUSING COMMISSION
ATTEST:
DAVID DE CORDOVA
Principal Planner
{city of
Carlsbad
Council Policy Statement
Category: AFFORDABLE HOUSING
Policy No.
Date Issued:
Effective Date:
Resolution No.
Cancellation Date:
Supersedes No.
Specific Subject: City Option to Purchase Resale Affordable Housing
PURPOSE:
73
XX-XX-2020
XX-XX-2020
2020-XXX
N/A
73, issued 1/22/08
To provide procedural guidelines for staff when exercising the city's option to purchase restricted
affordable housing ownership units that were created under the lnclusionary 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 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.
Ownership units produced under the lnclusionary 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 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 of3
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 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
2. The public interest is served well through purchase of the unit by the city and resale to a
qualified lower-income household; or
3. An underserved population will benefit greater from the city's purchase and resale of the
unit; or
4. An affordable housing opportunity will be enhanced through the city's purchase and resale of
the unit; and
5. Special funding (such as CDBG, HOME, Successor Housing Agency funds) is available and/or is
required to be expended in a timely manner and the city's purchase of the unit is a qualified
expenditure of these funds; or
6. When special funding is unavailable, sufficient Housing Trust Fund dollars are available to
purchase the unit.
The City Manager, or designee, will consider options to purchase as written notices of intent to sell
from restricted affordable housing ownership units are received. If the city receives notices of intent
to sell from multiple owners at a given time, the City Manager, or designee, may rank order them
based on the principles above. For example, an affordable unit that is at-risk of conversion to market
rate (i.e., can be sold to a market rate purchaser after 15 years) will be prioritized for acquisition over
a unit that is not at-risk (i.e., must be sold to a low-income buyer). Other factors, such as purchase
price, amount of available funding, size, location and condition of the unit may be taken into account
when rank ordering multiple options to purchase units.
Upon a decision by the City Manager, or designee, to exercise the option to purchase a restricted
affordable housing ownership unit, the City Manager, or designee, will proceed accordingly to
complete the purchase transaction and present it to the City Council for consideration and final
action, accepting the Grant Deed for the property.
Page 2 of3
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 purchas~ option to another public agency, nonprofit corporation, or an
eligible purchaser not on the waiting list will require City Council approval.
If the city is unable to accept or assign its option to a city-designated purchaser, then the City
Manager, or designee, is authorized to decline the option and allow the restricted affordable housing
ownership unit to be sold according to the terms of the resale agreement. The City Manager's, or
designee's, decision to decline the option to purchase will be valid for no more than 180 days. If the
unit owner has not completed the sale of their home within this time frame, the unit owner will be
required to file another notice of intent to sell and grant the city another opportunity to exercise or
assign its option to purchase the unit at an affordable price~
All sales of city-owned restricted affordable housing ownership units require City Council approval.
Page 3 of3
{city of
Carlsbad
CITY OF CARLSBAD
Attachment B
AFFORDABLE HOUSING RESALE PROGRAM GUIDELINES
j 1. PROGRAM BACKGROUND
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 se ll 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 lnclusionary 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 differe nce 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.
I 2. PROGRAM OVERVIEW
The City of Carlsbad Affordable Housing Re sale 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 origi.nal 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 en sure that total housing costs for
the qualified buyer will not exceed 30 percent of the gross house hold income of the buyer.
Pricing will be based on incomes ranging from 50 to 80 percent of the San Diego Area Median
Income (AMI). The difference between the fair market value of the property at time of sale to
the qualified buyer and the actual price paid by the qualified buyer will continue to be
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 1
structured as a secondary loan documented in a promissory note executed by the new
homeowner and w ith the city as the ben eficiary. Th e loan will become immediately due and
payable to the City of Carlsbad if the homeowner fail s 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. Th e city will retain an ·
option to repurchase the unit again at a restricted price throughout the t erm of the agreement
when the owner decides to sell at a later date.
Ii ' PROGRAM REQUIREMENTS AND BUYER ELIGIBILITY 11
The city ha s established basic threshold eligibi!ity 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 oth~r First-Time Homebuyer or
Affordable For-Sale Housing Program administered by the City of Carlsbad in the past
five years.
C. The buyer's income may not exceed the maximum income limit for the resa le program
which shall be 80 percent of the San Diego County Area Median Income (AMI} as
established by the US Department of H0using & 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, adjust ed for household size.
D. The buyer must hay_e 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. Th e
minimum income shall be determined on a case-by-case basis t aking into consideration
the size and market value ofthe unit, the homeowner association fees (if any} and other
related housing costs (including a utility allowance} at the time of application to
purchase one of the units.
E. At time of application for a particular unit, the buyer's household size shall meet the
following minimum and maximum household size:
Unit Size Household Size
Minimum Maximum
1 bedroom 1 3
2 bedrooms 2 5
3 bedrooms 3 7
4 bedrooms 4 9
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 2
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 cli imed as a
household member must-have lived with the borrower for a minimum of twelve
consecutive months im~·e:~-i~tely prior to purchase and must provid·~ evidence
they will live in the subjectprop~(ty after purchase. In addition, any non-
borrowing person listed as h~y.jng no inqo_me on the application must be
indicated as a dependent on the :~ppli~~ht'sta~ return for the previous year to be
considered a· household member/ }\ ... ·:· :;:·~··· . ·::::\·. ,:::::::::.~··· ··::v:··· .... :·
Appendix A proviife~ a quick ~evjew sumri{~r/~f eligibility requirements, documentation
requirements and ci~rifications df the stand°~/ds . . •, ··:::::·· :,: ::::·
.d?.7Z.:::;;;,;·.·-=i:~::\t\k.. •,:=:-::' • ·.;,; -z~~ ··~:::·=·
I 4. NOTIFICATION OF AFFORDABLE UNIT FOR SALE BY THE CITY
In an effo.rt.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 th~re are units available for purchase. The application period will
remain open for a JJ.~riod of-60 days, or longer if needed to receive enough qualified
applications. ··· ··::·:::·····~;:";.:?
A. Outreach Strategies
o The city will utilize print media and electronic media to inform the
public of affordable for-sale housing opportunities.
o The city will target outreach to minority and special needs
populations that may not otherwise have the opportunity to access
affordable housing opportunities.
o The city will communicate the status of affordable housing
availability to a variety of agencies including social service agencies,
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 3
ts.
nonprofit agencies, and special interest groups in the community,
ad vising 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 i~clude a general
description such as the locations a"nd numaer 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 suppprting documents to:
City of Carlsbad
1200 Carlsbad Village Drive, Ca rl sbad, 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 req uired
documentation to be submitted to the city; applications may not be resubmitted until all
required documentation is available and included with the completed application.
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 4
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 ~ .. i~9bilities an equal opportunity to housing.
~ 6. APPLICATION SORTING
~ .•. ····=·::-;:,'"
At the conclusion of the application 1:i'~riod, based on :the following criteria, all verified complete
applications will be placed in one of..tbree eligibility lists, and in the order that applications were ,... .•
accepted as complete:
List-·B :::~·h
Applicant house~~l~_has . -~:::::=~=·: ·J. Applicant h9usehold has
BOTH ··:~· ... ::>:, J,:. .... EITHER . . .. :::--·:~tr·· :·· .....
Gross annual:household Grci's·s annual household
income that is SO percent of } income that is SO percent of ........
Area Median Income or less, Area Median Income or less,
adjusted for household size adj~.?ted for household size
AND
Current housi ng cost burden
of SO percent of gross
household income or greater
OR
Current housing cost burden
of SO percent of gross
household income or greater
List C
All other eligible applicants
Applicants will be selected first from List A in the order in which applications were accepted as
complete. If units are still available after selection of applicants from List A has been completed,
then applicants from List B will be selected in the order in which applications were accepted as
complete. If units are still available after selection of applicants from List B has been completed,
then applicants from List C will be selected in the order in which applications were accepted as
complete.
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 5
Once all units are purchased by applicants on the eligibility list, remaining eligible applica nts 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 conside red and provided an opportunity to purchase a unit,
then any remaining units will be sold to an eligible purcha ser on a first-come, first -served basis.
11. WAITING LIST AND ASSIGNMENT OF OPTION TO PURCHASE
If there are more qualifyin g buyers than units ava il able at the time of application, the applica nt
will be placed on a waiting list (with the sam e rank order) following the completed sa le of the
last affordable unit until the next application period is opened by the city. The applicant will
then be con sidered for the opportunity to purchase a restricted affordable housing unit at that
time.
As described in Section 1, in many cases the city has t he option to purchase an existing
affordable unit when the homeowner chooses to sell. The city also has the right t o assign its
option to an eligible purchaser rather than purchasing the unit outright ·a~:d then re-se lling it.
Accordingly, wheneve r an owner of an affordable unit notifies the city oftheir 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 qual.\.fying household income limits and afford ab le unit
sales prices will be determined by the terms ·qf the original resale restriction agree ment w ith
t he owner, generally set at 80 perce nt AM I and ac;ljusted for house hold size. Therefore, the
waiting list will be screened for applica nts meeting the qualifying income requirements, w ho
w ill t hen be se lected in t heir ranked order. ~=;~
Applica nts 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 rega rding unit availability or
any program changes. Applicants on the waiting list will be contacted to updat e their
application at the time additional units are made availabl e for purchase.
I 8. INCOME QUALIFYING FOR PROGRAM ELIGIBILITY
The household's gross annual income must not exceed the income restriction set forth wit hin
these program guidelines and as noted above (maximum 80 percent of AMI for San Diego
County, adjust ed for house hold size). Gross income will be ca lculat ed according to these
guidelines. The combined gross annual income of all members of t he house hold age 18 and older
who are current ly 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 cont inue for
the next 12 months, unless there is verifiable evid ence to the contrary. All households must be
income-qualified no more than 60 days prior to the purchase closing date. For the purpose of
det ermining income eligibility, all in come is included even if there is less than a two-year work
history.
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 6
j 9. HOUSING DEBT-TO-l~COME 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 ifs/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.
I 10. ' INCOME FOR DEBT-TO-INCOME CALCULATIONS
Program guidelines require the combined inc~me of all persons on title, including a non-borrowing
spouse (if applicable), to be included in the calcµli;!tion otine<;>me. The household's actual /average
income will be calculated for underwriting purpbib ... It Will be assumed that today's
circumstances will continue for the r:iext 12 month{\1nless there is verifiable evidence to the . ;:,.·-····· contrary. Applicants, co-applicants a~.~· non-borrowing sp9.~ses must have a minimum of a two-
year continuous work history. ·
h . .;~;:,::::J;~::•:•:•. \l:\: ·<-.::w.g:~l:·.:.: .. ··====::{it=· ·. ··:· .d~~ t 11. DOWN PAYMENT REQUIREMENTS
··:--:_:::·::· ::=·
The following down ·p~y,n~nt r_efqy)rements sn~II apply to this affordable housing resale program
with the intent of requWY~lmf~'frriaLi~yestment by the buyer to extend the opportunity for
homeownership to a larg~} p~p.µlatiori: of lower income households. But, there is also a cap to
the cash investment-to ensure.~aximum 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 o(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 i~·clude 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 Disa bility or Veterans Disability, in which case a down payment
sufficient to bring their housing debt-to-income ratio to no less than 30
percent may be accepted.
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 7
o As the program is designed for lower-income buyers w ith limited assets
but sufficient income to support a first mortgage pa yment, large down
pa yments from family members with significant assets to assist the
buye rs qualify for the mortgage loan w ill not be co nsidered.
D. All-ca sh transactions are not permitted. An exception may be m ad e for buyers
whose sole source of income is derived from Social Security, Social Security
Disability or Veterans Disability, and the proposed pa yment for property t axes,
homeowners association (HOA) dues and homeow ners insurance is eq ual t o or
greater than 30 percent of their income. Th e buyer must meet al l eligibilit y
requirements, have acceptable credit and have sufficient incom e t o support the
HOA, property taxes and monthly debt obligations.
j 12. ASSET LIMITATION : rm JP :+===¥4
At the time eligibility is determined, the liquid asset s of all household members, incl uding
children, must not exceed an amount equal t o the maximum income limit set for t he
particular affordable unit, as adjusted for household siz·e.
A. The term "liquid assets" refers to cash and assets, which are rea dily convertible to
cash within a reasonable period, including but not limited to savings and checking
accounts, ce.rtificates of deposit of any term, marketable securities, money market
and similar accounts, mutual fund shares, and insurance policy cash va lues.
B. The t erm "liquid assets" shall not include retirement acco unt funds if those
accounts are not accessible to the buyer.
C. An exception may be made fot'buyers whose sole source of income is derived
from Soc ial Security, Social Security Disa bility or Veterans Dis ability and a down
payment of more than 20 p~_rcent is required t o reduce their housing debt -t o-
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 (SO percent of San
Diego County Area Median Income), as adjusted for household size after t he
maximum allowable down payment contribution.
D. Th e minimum household reserve requirement is $1,000. Th e 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 yea rs
C. A letter of explanation is required for all derogatory reporting dat ed within two
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020
]
8
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 outsi de 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
I 1.4. FIRST TRUST DEED LOAN = The borrower shall secure a 30-year fixed rate loa_ri from_ a private lender. No adjustable
rate loans or other financing programs shall be pern.,itted. ~o~ve ntional, 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 firit·mortgage.
j 1s. HOMEBUYER EDUCATION CLASS
' •.•.•,•:->~::;:{' ·::. :•:·.·.
All applicants, co-applicants and ri<in:-borrowing spouses·; whether on title or not, are
required to attend a homebuyer edJ}~_tion\l~s~ giyen by a City of Carlsbad-approved
Homebuyer Education P;:rovider. ··t· · ·. ··
,..,..... '\~J~ti@\fV ~ttf@jf-jJ, 'W
j 16. · ~CCUPANCY REQUIREMENTS :
As long ~sJhe borrower(s) o~·nsth,l affordabf~\mit, the borrower(s) must reside in the
uni_r~i ;f~dir prini jpal place of residence. The b~:rrower(s) shall not rent or lea se all or any
pah:Wf the restridi a·unit at aJy time. The unit shall be occupied full time (at least 10
months out of the year.) .a.nd may not be used at an y time as a vacation home or short-
term va·c;:ation rental, or all0w any other rental transaction or similar use. Borrower(s)
must comply with annual occupancy certification requirements and submit the
certification to tbe city upon request . . .
j 11. AFFORDABLE RESALE RESTRICTIONS
On the date of the sa le of each Affordable Housing Resale Housing Program property,
the city will record resale restrictions on the property. The resale restrict ions will include
income restrictions for new buyers, future sales price restrictions, initial occupancy
restrictions, and length of re striction (30 years). The resale restrictions are included in
the following documents:
A. Declaration of Restrictive Covenants Rega rding Restrictions on Transfer of
Property, Occupancy Restrictions, Refinancing Restrictions, and Option to
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 9
Purchase
B. Deed of Trust
C. Promissory Note
D. Notice of Affordability Restrictions
E. Buyer's Disclosure Statement
! 1s. 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 ,rmove-in" read y condition
D. Verifying eligibility of buyers that participate in the program
E. Monitoring owner-occupancy compliance
The city may use thi~d parties to assist in administering the program. .. :•:
The City of Carlsbad is ~ li~_n hold~r on each unit and has no further ownership interest in the
properties after the initial sale of the unit.
.... ··"'·"
I 19. REFINANCE = The Deed of Trust and Promissory Note to the city m ay 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.
I 20. PROPERTY CONDITION
Units offered under this program w ill be sold by the City "as is", which the City has
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 10
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 purchase.d:\affordable unit, the unit shall
be restored to "move in condition" prior to providing UJ~i~fftice of Intent to Sell to the • ··==~::::::::~;:·~ City of Carlsbad. .-:::::=::::::::::::::: ...
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 11
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.
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 grantjunded 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 stat~s or physical/mental disability.
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 12
Appendix A
Summary of Applicant Eligibility and related standards and acceptable documentation:
Anplicant Elig· . ibility.. -• I"'. .. '"''·'.. ,. .· .,.. , .. l .;, ..
Co-Signers Co-signers who will not occupy the property
are prohibited.
Documentation • If married: spouse must sign city forms,
disclosures and pr:o.rnissory note,
regardless of ~~t.tf'.fii
• If divorced.~J1i)t(of final divorce decree
and judg@.iftfii4~Jhe court.
• Deatb(~E;~°rt°ificate ·tafaij~ceased spouse.
• ~:~f.fw-s=: Citizen: coi:MJt;e_ermanent alien
i,&tstration card (greer{fat:d). All ~-;::::=•:•:•. -.. ~:::=.·=:-
b~tttm~ers mus\ge a U.S. Cfti.fm. or
Perrir~J!.lt ~if(~ht. ~===(h:: ..
,:{\:;:,.-. • Copy ofijl}teiji::ficense or other ··==tf ··;:J'.-:~::::::::=:· • ·~~=====~·=:=:a:=~~·. " . ··;::~::t=::;::: ==~:==··· governmen~1S.sued photo ID.
Disability In.co.me ··===:)ft .... -=fl .. ·=:(:\::: .. =: .. ·= .. ==== .. =·;: •• Copy of.~ward letter from payer. ¥." •••••• ~ • ••• ·"' • ••• ••• • • • •. ,,_;!».
Pensj~iil:[jncome ····=:=.::::fb:.. ··=:::]\,... toP.@.f;;..award letter or W-2 from payer.
Worf(iji:~J:ompensationi\Jgpefits=::fa:l~:;;_ Copy.of award letter from payer.
UnemJfl&\tment Compens(t:ln ·-=··??:~. Copy of award letter from payer.
Financial Aiij\ft§tudent loansf~\f.) ··::::\ f(opy of award letter from payer.
Interest or Dfij{Efend Income 'till. Two years 1040s, copies of current statements
··====lffa.;. l}~ verifying buyer's assets.
Salaried I Wage Earners··==:fY
Part-Time Employment
Community Development
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.
Most recent pay stubs covering a minimum of
two months. Pay stubs to reflect year-to-date
earnings and deductions.
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 13
Bonus and Overtime Income
Self-Employed
Commission Only
Assets (Required for ALL households
members over age 18)
Checking and Savings Accounts
Stocks and Bonds
Saving Bonds
401K or Retirement Accounts
Liabilities
Alimony/Child Support
Installment Loans
Revolving Accounts
Student Loan
Credit History
Credit Reports
Community Development
Must be documented on pay stub. Will be used
if there is a two-year history and likelihood of
continuation.
Two yea rs 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.
Two years of tax returns with sc hedule 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.
Standards
Three months most recent bank statements for
ALL accounts.
Must be verifie9 by brokerage firm or similar
company and statement of account.
Copy of bond.
Copy o(account statement and letter from
employer verifying that borrower does not
have access to the funds, if applicable.
Standards
Included as debt if more than six months
remaini!Jg. Copy of divorce decree.
lncludea as debt if more than six months
remaining.
Payment stated on cre dit report or application
is use d, whichever is higher. If payment is not
stated, the higher of $10 or 5% of the
outstanding balance owed is used.
If loan is deferred for one yea r or more, it is not
included as a monthly obligation. If less than a
year deferment or borrower making payments,
it is included as a debt.
Standards
Must be a "three repository merged" credit
report. Any items not belonging to borrower
must be removed from the report. Credit
report cannot be dated more than 60 days from
underwriting. Minimum credit score: 640.
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 14
Collections All unpaid collections must be paid. Need letter
of explanation from borrower.
Derogatory Credit Letter of explanation is required for all
derogatory credit. No accounts can be past due
at the time of loan application.
Bankruptcy No bankruptcy (Chapter 7 or 13) within the last
seven years.
Short Sales I Foreclosures No short sale or foreclosure within the last
seven years. .•.••.•.
Judgments, Garnishments and No outstanding J~#,gijfents, garnishments or
Involuntary Liens involuntary lieofi~f allowed.
Inquiries Any inquiri~\Wltfiffotne last 90 days must be •········•·••····· .... •.•.•.• ..... explained. ~~=::::::::::· .. ··:::::::::::: ... ~-=·=·· ·.:,: .. :-:-:•:·.
No or Limited Credit History AlterrJ:~t!f~· credit hist'&cy)§_._required. Utility
pav.oW~trecords (at 1east\6:t~~ months most
ret~[t;$tatements), rental p~V.fu~_nts (past 12
monthlf~.r othe.ut~rsonal loa~ll~~-~t 12
.. ::::: .. months)?~,f~Jijfi:~· forms of cre'Jij\pJstory, at
\J)j/j))}:\; J~ast one m·i:t§[ijij a rental history. · ....... ...... ........
···tt))}
·.;\)}''
Community Development
Housing Services 1200 Carlsbad Village Drive I Carlsbad, CA 92008 I 760-434-2810 t
August 2020 15
{city of
Carlsbad
Council Policy Statement
Category: AFFORDABLE HOUSING
Policy No.
Date Issued:
Effective Date:
Resolution No.
Cancellation Date:
Supersedes No.
Specific Subject: City Option to Purchase Resale Affordable Housing
PURPOSE:
Exhibit 2
73
XX-XX-2020
XX-XX-2020
2020-XXX
N/A
73, iss ued 1/22/08
To provide procedural guidelines to city employees as to w hen the city's for staff when exercising t he
city's option to purchase-a restricted affordable housing ownership units that were created under the
lnclusionary Housing Program. The city's primary interest in exercising its opt ion to purchase
affordable units is to preserve, extend and enhance affordability covenants to subsequent lower-
income purchasers and to provide addit ional housing opportunity to underserved populations. The
policy will establish the authority, selection criteria, and resale requirements for the identificat ion,
acquisition and disposition ofthese affordable units. rnay be accepted or declined by the City
Manager, or designee, and/or the City Council. This policy ·Nill allow the City Manager, or designee, to
decline the cit·r's option, and to make recommendations to the City Council on when it would be
appropriate to e><ercise the City's option to purchase an affordable housing ownership unit.
BACKGROUND:
The f Gity's lnclusionary Housing Ordinance requires developers of resident ial projects w ith 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 orfor sale (ownership) units.
Some developers are able to use alternatives such as second dwelling l:lnits or the pu rchase of
affordable housing credits to meet the lnclusionary Mousing Ordinance reql:lirements if appro>o1ed by
the City Col:lncil.
Ownership units produced under the lnclusionary Housing Program have affordability restrictions for
30 yea rs. 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 Gty<:J!y fillY
outst anding loan amounts and paid t he city a share of the equity from the sa le, t o the City. This initial
policy did resultresult ed in the loss of many of the for-sa le affordable units in the Gt,ycity. Therefore,
To more effectively implement inclusionary housing requirements (CMC 21.85.040(E)), the policy was
changed to require ~the 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 cit y subsidy loan with a share of equity (also referred to
as contingent interest).
Th e revised policy also required that the cit y would be give n 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
Page 1 of 4
Policy No. 73
could also assign its option to a "city-designated purchaser", defined as another public agency, a
nonprofit corporation, or an eligible low-income purchase r. 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 RestrictioR AgreemeRt aRe OptioR to P1:Jrchase (AgreemeRt}, v,·hich gi1JesFor the Gty-afl,
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 AgreemeRt. Agreements for affordable 1:.1nits in the
Village Redevelopment Area, and 1:.1nits assisted with Rede1•1elopment Lo•.v/Mod ~01:.1sing Set Aside
Funds, have an affordability term of 45 years while all ot hers have a term of 30 vears.
~to resell the affordable home to another low-income household during the first fifteeff-]d_years
of ownershipthe Agreement, if the City does not 1:.1se its option to p1:.1rchase the property at a low
income restricted price, the owner must resell the unit to a lower income household at an affordable
~ at a restricted affordable price established by the city. After the initial fifteeff-]d_years, and if
the city declines to exercise its option to purchase orto assign its option to a city-designated
purchaser, the resale agreement permits the owner ffia>f!o 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 1:.1nit is sold at
market val1:.1e, the seller m1:.1st 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 ,,,.•ith the City. This revenue loan payoff and shared equity is deposited into
the £City's Housing Trust Fund to create additional opportunities for .fu.tH.re-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 aH restricted affordable housing ownership unit at a
restricted low:-income price during the first fifteen years of a Resale RestrictioR AgreemeRt eRe
OptioR to P1:Jrchese. Beca1:.1se the restricted 1:.1nit must be sold to another low income homeb1:.1yer at a
restricted price d1:.1ring the first fifteen years of ownership, there is no benefit to the City to e>(ercise
the option to purchase and there is no risk that the 1:.1nit affordability 'A'ill be lost to market conditions.
If the City Manager, or designee, believes that it may be in the City's best interest to p1:.1rchase the
property d1:.1ring the first fifteen years, the matter will be presented to the City Co1:.1ncil with a
recommendation for consideration and action to accept/decline the p1:.1rchase option. After the initial
fifteen years, all notices of a lo•,,.. income homeb1:.1yer's intent to sell will be presented to the City
Co1:.1ncil 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 co mply with the
requirements of the £City'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
Page 2 of 4
Policy No. 73
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 enhan ced through the city's purchase and resale of
the un it; 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
expe nditure 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 t o 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, suc h as purchase
price, amount of ava ilable 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
rest ri cted affordable housing ownership unit will be resold by the city according to t he Affordable
Housing Resale Program Guidelines recommend ed for approval by the Housing Com mission and
approved by the City Coun cil, 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 bl 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 t he 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
Page 3 of 4
Policy No. 73
designee's, decision to decline the option to purchase will be valid for no more than 180 days. If the
unit owner has not completed the sale of their home within this time frame. the unit owner will be
required to file another notice of intent to sell and grant the city another opportunity to exercise or
assign its option to purchase the unit at an affordable price.
All sales of city-owned restricted affordable housing ownership units require City Council approval.
Page 4 of 4
{city of
Carlsbad
Extremely Low Income
30%
Income
Household 30%
Size Annual* Monthly Monthly
1 s 24,300 s 2,025 s 608
2 27,750 2,313 694
3 31,200 2,600 780
4 34,650 2,888 866
5 37,450 3,121 936
6 40,200 3,350 1,005
7 43,000 3,583 1,075
8 45,750 3,813 1,144
Very Low Income
50%
Income
Household 30%
Size Annual* Monthly Monthly
1 s 40,450 s 3,371 s 1,011
2 46,200 3,850 1,155
3 52,000 4,333 1,300
4 57,750 4,813 1,444
5 62,400 5,200 1,560
6 67,000 5,583 1,675
7 71,650 5,971 1,791
8 76,250 6,354 1,906
Median Income
100%
Income
Household 30%
Size Annual** Monthly Monthly
1 s 64,900 s 5,408 s 1,623
2 74,150 6,179 1,854
3 83,450 6,954 2,086
4 92,700 7,725 2,318
5 100,100 8,342 2,503
6 107,550 8,963 2,689
7 114,950 9,579 2,874
8 122,350 10,196 3,059
s
s
s
City of Carlsbad
Household Income Limits
2020
35%
Income
30%
Annual Monthly Monthly Annual
40%
Income
Monthly
28,350 s 2,363 s 709 s 32,400 s 2,700
32,400 2,700 810 37,000 3,083
36,400 3,033 910 41,600 3,467
40,450 3,371 1,011 46,200 3,850
43,700 3,642 1,093 49,950 4,163
46,900 3,908 1,173 53,600 4,467
50,200 4,183 1,255 57,350 4,779
53,400 4,450 1,335 61,000 5,083
60% 70%
Income Income
30%
Annual Monthly Monthly Annual Monthly
48,550 s 4,046 s 1,214 s 56,650 s 4,721
55,450 4,621 1,386 64,700 5,392
62,400 5,200 1,560 72,800 6,067
69,300 5,775 1,733 80,850 6,738
74,900 6,242 1,873 87,350 7,279
80,400 6,700 2,010 93,800 7,817
86,000 7,167 2,150 100,300 8,358
91,500 7,625 2,288 106,750 8,896
Moderate Income
110% 120%
Income Income
30%
Annual Monthly Monthly Annual .. Monthly
71,400 s 5,950 s 1,785 $ 77,900 s 6,492
81,600 6,800 2,040 89,000 7,417
91,800 7,650 2,295 100,150 8,346
102,000 8,500 2,550 111,250 9,271
110,150 9,179 2,754 120,150 10,013
118,350 9,863 2,959 129,050 10,754
126,450 10,538 3,161 137,950 11,496
134,600 11,217 3,365 146,850 12,238
30%
Monthly
s 810 s
925
1,040
1,155
1,249
1,340
1,434
1,525
30%
Monthly s 1,416 s
1,618
1,820
2,021
2,184
2,345
2,508
2,669
30%
Monthly
s 1,948 s
2,225
2,504
2,781
3,004
3,226
3,449
3,671
Exhibit 3
4-person Household
Area Median Income:
$92,700
Effective Date: April 30, 2020
45%
Income
30%
Annual Monthly Monthly
36,450 s 3,038 s 911
41,600 3,467 1,040
46,800 3,900 1,170
52,000 4,333 1,300
56,200 4,683 1,405
60,300 5,025 1,508
64,500 5,375 1,613
68,650 5,721 1,716
Low Income
80%
Income
30%
Annual* Monthly Monthly
64,700 s 5,392 s 1,618
73,950 6,163 1,849
83,200 6,933 2,080
92,400 7,700 2,310
99,800 8,317 2,495
107,200 8,933 2,680
114,600 9,550 2,865
122,000 10,167 3,050
140%
Income
30%
Annual Monthly Monthly
90,900 s 7,575 s 2,273
103,850 8,654 2,596
116,850 9,738 2,921
129,800 10,817 3,245
140,150 11,679 3,504
150,600 12,550 3,765
160,950 13,413 4,024
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. All other income limits are calculated by the City of Carlsbad.
Carlsbad Income Limits (5/2/2020) San Diego-Carlsbad, CA MSA