HomeMy WebLinkAbout2016-03-22; City Council; 22248; Approving a request to provide $1,280,000 in financial cash assistance from Carlsbad Housing Trust for Quarry Creek Affordable HousingCITY OF CARLSBAD-AGENDA BILL 11
AB# 22,248 APPROVAL OF CITY FINANCIAL ASSISTANCE FROM THE DEPT. DIRECTOR
MTG. 3/22/16 HOUSING TRUST FUND TO CHELSEA INVESTMENT CITY ATTORNEY f.!_t(__
DEPT. CEO CORPORATION IN THE AMOUNT OF $1,280,000 FOR THE CITY MANAGER
QUARRY CREEK AFFORDABLE HOUSING DEVELOPMENT ~~~/-
WITHIN THE QUARRY CREEK MASTER PLAN
RECOMMENDED ACTION:
Adopt a resolution approving a request to provide financial assistance to Chelsea Investment Corporation
in the form of a construction loan of $1,280,000 from the city's Housing Trust fund and to authorize the
City Manager or designee to prepare and execute the related loan documents for construction of 64
affordable apartment homes restricted for low income families in the northeast quadrant of the city and
within the Quarry Creek Master Plan development.
ITEM EXPLANATION:
The proposed project by Chelsea Investment Corporation is a 64 unit affordable housing development to
be constructed in partnership with Cornerstone Communities to satisfy the inclusionary housing
obligations of the Quarry Creek Master Plan development. The Quarry Creek Master Plan was previously
approved by the City Council which includes the development of a minimum of 64 homes affordable to
lower income households. Chelsea Investment Corporation has been selected by Cornerstone
Communities to development, own, and operate the proposed affordable housing development. The
Planning Commission approved the site development plan (SDP 15-17} for the affordable development
on March 16, 2016.
Chelsea Investment Corporation is experienced and has recognized expertise in developing high-quality
affordable apartment communities throughout San Diego County, including Carlsbad; the proposed
development will be the fourth in Carlsbad for this development team. Chelsea has history of building
high quality housing developments in Carlsbad, and operating them in a successful manner.
The Quarry Creek affordable development is anticipated to consist of 5, two and three story, garden style
walk up buildings with surface level parking. The proposed development includes 12 one bedroom (19%),
32 two bedroom (50%) and 20 three bedroom (31%) rental homes. Of the 64 rental homes, 56 will be
affordable to households earning 60% of the San Diego County Area Median Income (AMI), and 7 units
will be affordable to households earning 50% of AMI. A manager's unit will have rent set at 70% of AMI.
DEPARTMENT CONTACT: Debbie Fountain 760-434-2935 debbie.fountain@carlsbadca.gov
FOR CITY CLERKS USE ONLY. \Z(" COUNCIL ACTION: APPROVED CONTINUED TO DATE SPECIFIC D
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Financial Assistance-Chelsea Investment Corporation
March 22, 2016
Pagel
The developer has provided a development proforma for review. Staff and the Housing Commission
have reviewed the development proforma and considered the reasonableness of the development costs
as well as the key variables determining the need for subsidies. The Housing Commission reviewed the
financial assistance request from Chelsea Investment Corporation at their meeting on January 14, 2016,
and is recommending approval of the request in the full amount of $1,280,000.
Below is a summary of the project proforma for City Council consideration:
Uses Total %of Total Per Unit
Land $1 0% $0
Direct Construction $11,106,728 54% $173,542
Offsites/lnfrastructure $2,835,000 14% $44,296
Architecture/Engineering $358,589 2% $5,602
Impact Fees $1,671,733 8% $26,120
Other indirect/soft costs $4A17J50 22% $69,027
(incl. developer fee of $2.5 million)
Total $20,389,801 100% $318,590
«" ',,:'''(>,
7T-
Sources Total %of Total Per Unit
Bond Proceeds $5,624,000 28% $87,875
Tax Credit Equity $8,956,184 44% $139,940
Subordinate Financing $563A50 3% $8,803
Deferred Developer Fee $1,131,167 6% $17,674
Master Developer Funds $2,835,000 14% $44,296
City Contribution $1,280,000 6% $20,000
Total $20,389,801 100% $318,590
The city's contribution, if approved by the City Council, will be provided to the project during
construction and will be provided in the form of a residual receipts loan secured by a note and deed of
trust. The loan will begin accruing interest after the completion of construction of the improvements.
The outstanding principal and accrued interest on the city loan will be amortized over 55 years and
repaid from cash surplus in equal annual installments of principal and interest. In the event that there
is not adequate cash surplus to repay the city loan, the outstanding balance shall accrue with simple
interest at 3% per annum.
The financial assistance will be provided from the city's Housing Trust Fund. With approval of the City
Council, the City Manager, or designee in consultation with the City Attorney, will prepare the final loan
documents which will include a Financial Assistance/Loan Agreement, Regulatory Agreement,
Promissory Note and Deed of Trust to set forth the terms of the financial assistance and its repayment
over time.
The Housing Commission recommends approval (4-0, Smith absent) by the City Council of the financial
assistance request by Chelsea Investment Corporation in the amount of $1,280,000, or $20,000 per unit,
for the Quarry Creek affordable development. The Housing Commission has determined that the Quarry
Creek affordable apartment development is proposed by a capable development team that is
Financial Assistance-Chelsea Investment Corporation
March 22, 2016
Page3
committed to providing affordable housing for low income households, and that the financing structure
is sound. The three key underwriting goals of the city have been met with a strong, experienced
borrower, reasonable project costs and a high degree of leveraging. City housing goals are supported
by the project's unit mix and affordability, and the rent levels are below those required by the
inclusionary housing ordinance which makes the project eligible for city funding assistance.
FISCAL IMPACT:
If approved, the city will provide $1,280,000 in financial assistance to Chelsea Investment Corporation
for construction of the Quarry Creek Affordable development in the form of a residual receipts loan.
This funding will be provided from the city's Housing Trust Fund, which has a current balance of
approximately $14 million.
In its role as a lender to the project, the city is exposed to 3 risks inherent to real estate development.
These risks generally include 1) predevelopment (project does not get constructed; 2) construction
(project cannot be completed, cost overruns, contractor problems); and 3) operation (revenue does not
cover expenses). Adding to this risk, any city financial assistance will be subordinated to conventional
financing.
A number of factors mitigate the risks noted above. First, the development team has a strong track
record with similar affordable housing developments both inside and outside the city. Second, the
presence of other major financial commitments, such as tax credit investment, is also key as this means
that other stakeholders depend on the success of the project both short and long term. Finally, the
position of the city and other subordinated financing is a feature that helps to attract the necessary (low
or no cost) private financing and helps the development to be financially successful over the long term.
The public benefit realized from the financial assistance is an affordable housing development that has
lower rents than those required by the inclusionary housing ordinance, and more affordable to lower
income households at 50% and 60% of the San Diego County Area Median Income. The Housing Trust
Funds may only be used for the development or provision of affordable housing for lower income
households located within Carlsbad.
ENVIRONMENTAL IMPACT:
Pursuant to the California Environmental Quality Act (CEQA) and the Environmental Protection
Ordinance (Title 19) of the Carlsbad Municipal Code, staff conducted an environmental impact
assessment to determine if the proposed project could have any potentially significant impact on the
environment. Documents referenced for the analysis included the Certified Environmental Impact
Report for Quarry Creek which was certified by the City Council in April, 2014 (EIR 11-02, State
Clearinghouse #2012021039). The project is consistent with the project description of the
Environmental Impact Report and therefore within the scope identified within that CEQA document.
Master Plan level mitigation measures have been incorporated in the overall design of the Master Plan
project or have been placed as conditions of approval such that all potentially significant impacts have
been mitigated to below a level of significance.
Financial Assistance -Chelsea Investment Corporation
March 22, 2016
Page4
EXHIBITS:
1. City Council Resolution approving a request to provide financial assistance to Chelsea Investment
Corporation from the city's Housing Trust Fund in the form of a construction loan in the amount of
$1,280,000 from the City's Housing Trust fund and authorizing the City Manager or designee to
prepare and execute the related loan documents for construction of 64 affordable apartment
homes restricted for low income families in the northeast quadrant of the city and within the
Quarry Creek Master Plan development.
2. Site Plan and Elevation Illustrations
3. Correspondence from Chelsea Investment Corporation requesting financial assistance
4. Housing Commission Resolution No. 2016-01
5. Housing Commission Minutes, dated January 14, 2016
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RESOLUTION NO. 2016-057
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING A REQUEST TO PROVIDE $1,280,000 IN
FINANCIAL CASH ASSISTANCE IN THE FORM OF A RESIDUAL
RECEIPTS LOAN FROM THE CARLSBAD HOUSING TRUST FUND TO
CHELSEA INVESTMENT CORPORATION FOR CONSTRUCTION OF
SIXTY-FOUR {64) AFFORDABLE FAMILY APARTMENT HOMES
RESTRICTED FOR LOW INCOME FAMILIES ON PROPERTY IN THE
NORTHEAST QUADRANT OF THE CITY OF CARLSBAD AND WITHIN
THE QUARRY CREEK MASTER PLAN
DEVELOPMENT.
WHEREAS, the Chelsea Investment Corporation has proposed to construct 64
apartment family homes to be affordable to lower income households within the City of
Carlsbad and has requested financial assistance from the City of Carlsbad to assist in the
financing of said affordable housing project; and
WHEREAS, the Housing Commission did, on the 14th day of January, 2016, hold a
public meeting to review and consider the request for financial assistance for the construction
of said 64 affordable family apartment homes by the affordable housing developer, Chelsea
Investment Corporation; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons
desiring to be heard, said Commission considered all factors relating to the proposal to
construct said affordable family rental homes and recommended approval of the financial
assistance request to the City Council; and
WHEREAS, the City Council did, on the date of this resolution, hold a regular
public meeting to review and consider the request for financial assistance from the Chelsea
Investment Corporation for construction of 64 apartment family homes within the Quarry
Creek Master Plan development.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
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1.
2.
The above recitations are true and correct.
The request for financial assistance is consistent with the goals and
objectives of the City of Carlsbad's Housing Element, Consolidated Plan, the lnclusionary
Housing Ordinance, and the Carlsbad General Plan.
3. The request for financial assistance will assist the affordable housing
developer to construct a total of 64, one, two and three bedroom affordable family apartment
homes which will be affordable to households ranging from 50% to 60% of area median income
for San Diego County. The project, therefore, has the ability to effectively serve the city's
housing needs and priorities as expressed in the Housing Element and the Consolidated Plan.
4. That based on the information provided to the City Council during its
public meeting to consider said request for financial assistance and the recommendation of
approval by the Housing Commission, the City Council hereby approves the financial assistance
request of Chelsea Investment Corporation for up to $1,280,000 in financial cash assistance
from the Carlsbad Housing Trust Fund for the construction of sixty-four (64) affordable family
apartment homes within the Northeast Quadrant of the City of Carlsbad and within the Quarry
Creek Master Plan development, and to provide said assistance in the form of a residual
receipts loan for the purpose of construction and permanent financing for said project.
5. That the City Council authorizes the City Manager or his designee to
prepare and execute all documents related to provision of the City/ Agency assistance, including
but not limited to a Financial Assistance Loan Agreement, Note, Deed of Trust and Regulatory
Agreement, subject to review and approval by the City Attorney.
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6. That the City Council authorizes the Administrative Services Director to
appropriate and disburse said funds to said developer according to the terms of the financial
assistance agreement and related documents.
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1 PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council of
2 the City of Carlsbad, California, held on the 22nd of March, 2016, by the following vote, to wit:
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AYES: Council Members Hall, Wood, Schumacher, Blackburn, Packard.
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NOES: None.
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6 ABSENT: None.
7 ABSTAIN: None.
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9 MATT HALL, Mayor
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11 ATTEST:
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~ c .-~" / c--J .. V/t'i_ . .c:. (/1~~----~ Jl~c: J-"-'..._ __ _
\/
14 BARBARA ENGLESON, City Clerk
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I
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Quarry Cree
Planning Area R-1
Chelsea Investment
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Proposed Site Plan
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BUILDING FOUR
CHELSEA INVESTMENT CORPORATION
NOTTOSCA~E
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2 . 29 . 2016
NORTH ELEVA TlON
SOUTH ELEVATION
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CHELSEA
INVESTMENT CORPORATION
October 13, 2016
Ms. Debbie Fountain
Housing and Neighborhood Services Director
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad CA 92088
Finance
Development
Management
5993 Avenida Encinas, Suite 101
Carlsbad, CA 92008
Tel (760) 456-6ooo
Fax (760) 456-6001
www.chelseainvestco.com
Subject: Quarry Creek Affordable Housing Financial Assistance and Project Consideration
Dear Debbie:
We are pleased to have the opportunity to develop another affordable housing project in the City
of Carlsbad. As you are aware, we are working with Cornerstone Communities to finance and
develop a 64 unit affordable housing complex within the Quarry Creek master planned
development.
Our design team has submitted a formal design package to the Planning Department for its
review, with the intended goal that the Site Development Plan for the affordable site, pursuant to
the terms of the Mfordable Housing Agreement, receive Planning Commission approval by
December 31,2015.
We respectfully request the following assistance from the City of Carlsbad in order to
development a successful affordable housing project at Quarry Creek:
1. We request that the City provide a residual receipts loan to the project of $20,000 per
unit, or $1,280,000, at 3.0% simple interest with a term of 55 years, and repaid from 50%
of project cash flow. Please see financing summary attached.
2. We request that the City allow for a "modification" of the City parking requirements as
contemplated in the Mfordable Housing Agreement. The affordable housing project is
seeking a reduction of the applicable parking ratio as well as waiver for covered parking.
We have obtained a parking study from the engineering firm of Linscott, Law &
Greenspan (copy attached), and have also completed parking surveys at the three
affordable housing complexes Chelsea currently owns and operates in the City of
Carlsbad in support of our request for a reduction of the parking. The parking surveys are
attached.
Please refer to the attached two-page summary that provides a bullet point overview in support
of our request for assistance from the City of Carlsbad.
We have submitted the project to the Planning department for formal review and approval of the
Site Development Plan. We respectfully request your consideration of our request for financial
assistance for the Quarry Creek affordable project, and for the modification of the parking
requirement for the project. Our goal is to receive City approval for the financial assistance and
modification of the parking requirement concurrent with the approval of the Site Development
Plan, with the further goal of closing the financing and beginning construction of the affordable
housing project in the Spring of 2016.
Please let me know if you have any questions or need any additional information. Your
consideration is very much appreciated.
Lr~' ~
Cheri Hoffman lf(;t-rn
President
Chelsea Investment Corporation
Attachments: Bullet point summary, financing summary, parking surveys
Quarry Creek: Support for Financial Assistance from City of Carlsbad:
1. Per the approved "Affordable Housing Agreement" for Quarry Creek the project is
required to provide only 10 percent of the affordable units as 3 bedrooms. (64 units x
10% = 6.4 units). The project as planned will provide for 20, 3 bedroom units or over
31%. The mix of units is ( 12 one bedrooms, 32 two bedrooms and 20 three bedrooms)
Our desire is to create a "family" oriented project which we believe addresses the greatest
need for affordable housing in Carlsbad, particularly given the aggregate waiting list for
our three projects in Carlsbad is in excess of 2,000 households. Developing a project with
an increased number of three bedroom units increases the overall square footage of the
project, with a corresponding increase of total construction costs.
2. The builder is selling us the property for $1 dollar and will be building over $2.8 million
dollars of infrastructure to support the 64 units of affordable housing.
3. The project has been located in a very good location, cJose to transit, shopping, schools,
and employment opportunities.
4. The affordable units will be built with the "first phase" of the project and will come
online very early to allow for low income families to be some of the first residents at for
Quarry Creek.
5. Chelsea Investments has investigated additional viable forms of financing to make this
project work and keep the City request at a minimum.
Quarry Creek: Support for modification of parking standards
1. Chelsea has built and owns three other projects in Carlsbad and both projects are
significantly "overparked" based on the needs of the residents. Parking surveys are
attached.
2. The family projects we own in Carlsbad, as well as our experience in other locations,
show that affordable family projects are truly occupied with family's with fewer cars than
the "typical" 2 and 3 bedroom apartments that are occupied by non-families with multiple
roommate situations.
3. Based on the prime location of this project near transit, shopping and employment
opportunities. this project will also function well with a modified parking standard.
4. Allowing for few parking spaces, allows for projects to have less impermeable surfaces,
less heat absorbing areas, more trees, etc. all of which makes for "greener" projects.
5. Multiple Cities have modified their parking ordinances to allow for even less parking
spaces than we are proposing, based on the reduced parking needs of affordable and more
urban projects.
PROJECT SUMMARY
PROJECT SOURCES & USES
Quarry Creek Affordable Housing Project, Carlsbad
Bond Financed with 4% Tax Credits
64 Units
FINANCING ASSUMPTIONS
Assumes 2 & 3-story garden style walk up with surface parking
(costs exclude slope and retaining wall installation)
4% Tax Rate
Annual Federal Tax Credits
Federal Tax Credit Price
Solar Equity
Oct-15 3.21%
809,157
1.1000
1.0000
Develo~ment Costs:
Payment to Seller
Direct Construction (includes Owner Contingency $173,543/unit
Offsitellnfrastructure allocation $44,296.88/uni!
A&E
Impact Fees
Other lndirecVSoft Costs
Total DeveloQment Costs
Sources:
Federal LIHTC Equity
Solar Equity
Subordinate Financing
Accrued Interest
Permanent Loan
Deferred Developer Fee
Gap $0/unlt
Contribution of infrastructure costs
City/Local Agency Financing $20,00D.GO/unlt
Total Sources ------
$1
$ 11,106,728
$ 2,835,000
$ 358,589
$ 1,671,733
$ 4,417,750
$ 20,389,801
$ 8,810,834
$ 145,350
$ 440,000
$ 123,450
$ 5,624,000
$ 1,131,167
$ -
$ 2,835,000
$ 1,280,000
$ 20,389,80'1_
Opr. Exp./UniUYear
Replacement Reserves/UniUYear
Vacancy Rate
DCR
Perm Loan Amort
Interest Rate-Permanent Loan
Interest Rate -Construction Loan
Construction to perm loan
Construction only loan
Total Bond Allocation
Prevailing Wage (YIN):
Housing Type-"Family"
$
$
5,103
250
5.00%
1.15
35
5.75%
4.00%
$5,624,000
$7,286,000
$12,910,000
No
PROJECT UNIT & INCOME MIX 2015
1BR mE
Net SF: 563 800
preliminary:
AMI 19,05% 50.00%
130% 88% 10 29
50% 11% 2 3
40% 0% 0
30% 0% 0
Mgr. . 0
Totals 12 32
• Mgr unit restricted to 70% AMI
Net unitl!easeable SF
Community Bldg
Common Area/Circulation
Est Gross Buildable Area
3BR Totals
1,024
31.75%
17 56
2 I
0 Q
0 Q
1 1 20 64
Estimated Sq.Ft.
52,836
1,600
11,096
65,532
CHELSEA PROPERTY PARKING SURVEY
JGien Ridge I
Name of Property
lcarlsbad
City
lfrom 6 L27 L2014 to 7 L02 [2014
Period of Survey
Name of Person
Conducting Survey
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Unit Type Count
1501 Studio 20%
Total Spaces 1BR 17 35%
2BR 29 40% I No 3BR 32 45%
Seniors Y/N Total Units 78 50%
Total BRs 171 55%
60%
Total Units
8:00AM 5:00PM 9:00PM
Number of Number of Number of
Cars Parked Cars Parked Cars Parked
74 82 95
65 76 102
72 84 97
74 81 122
68 80 119
84 67 108
72 54 124
Avg Cars Parked
Peak Cars Parked
Avg Cars per Unit (avg time)
Avg Cars per Unit (peak time)
Avg Cars per Bedroom (avg time)
Avg Cars per Bedroom (peak time)
Total Unused Spaces at Peak Time
Percentage of Parking lot Unused at Peak Time
Office Phone
AMI Count
27
28
23
78
85.7
119.0
1.10
1.53
0.50
0.70
31.0
21%
CHELSEA PROPERTY PARKING SURVEY
I Mariposa
Name of Property
fcarlsbad I
City
lfrom 9L19L2015 to 9f25L2015
Period of Survey
I Lisa Shelley
Name of Person
Conducting Survey
I
Mon
Tue
Wed
Thu
Fri
Sat
Sun
Unit Type Count
2101 Studio 20%
Total Spaces 1BR 10 30%
2BR 64 40%
fNo 3BR 32 45%
Seniors Y/N Total Units 106 50%
Total BRs 234 55%
60%
Total Units
8:00AM 5:00PM 9:00PM
Number of Number of Number of
Cars Parked Cars Parked Cars Parked
105 128 113
100 120 155
106 110 140
100 99 130
98 88 163
117 100 123
110 90 163
)
)
)
)
Avg Cars Parked
Peak Cars Parked
Avg Cars per Unit (avg time
Avg Cars per Unit {peak time
Avg Cars per Bedroom (avg time
Avg Cars per Bedroom (peak time
Total Unused Spaces at Peak Time
Percentage of Parking Lot Unused at Peak Time
1760-729-9300
Office Phone
AMI Count
10
22
74
106
117.0
163.0
1.10
1.54
0.50
0.70
47.0
22%
CHELSEA PROPERTY PARKING SURVEY
IHunter's Pointe
Name of Property
I carlsbad
City
ltrom 6 L27 L14 to 7Lo1L14
Period of Survey
IGaby Ortiz
6/30/2014 Man
7/1/2014 Tue
7/2/2014 Wed
7/3/2014 Thu
6/27/2014 Fri
6/28/2014 Sat
6/29/2014 Sun
Name of Person
Conducting Survey
Unit Type Count
3781 Studio 0 20%
Total Spaces 1BR 36 35%
2BR 60 40% I No 3BR 72 45%
Seniors Y/N Total Units 168 50%
Total BRs 372 55%
I Exempt
Total Units
8:00AM 5:00PM 9:00PM
Number of Number of Number of
Cars Parked Cars Parked Cars Parked
181 172 197
184 .150 191
182 145 187
188 147 196
138 150 178
153 126 162
142 153 169
Avg Cars Parked
Peak Cars Parked
Avg Cars per Unit (avg time)
Avg Cars per Unit (peak time)
Avg Cars per Bedroom (avg time)
Avg Cars per Bedroom (peak time}
Total Unused Spaces at Peak Time
Percentage of Parking Lot Unused at Peak Time
1(760} 744-5766
Office Phone
AMI Count
0
59
0
0
31
76
2
168
166.2
178.0
0.99
1.06
0.45
0.48
200.0
53%
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HOUSING COMMISSION RESOLUTION NO. 2016-001
THAT THE HOUSING COMMISSION RECOMMENDS APPROVAL TO THE CITY
COUNCIL OF $1,280,000 IN FINANCIAL CASH ASSISTANCE FROM THE
CARLSBAD HOUSING TRUST FUND TO CHELSEA INVESTMENT CORPORATION
FOR CONSTRUCTION OF SIXTY-FOUR (64) AFFORDABLE FAMILY APARTMENT
HOMES ON PROPERTY IN THE NORTHEAST QUADRANT OF THE CITY OF
CARLSBAD AND WITHIN THE QUARRY CREEK MASTER PLAN COMMUNITY.
WHEREAS, the Chelsea Investment Corporation has proposed to construct 64 apartment
family homes to be affordable to lower income households within the City of Carlsbad and has
requested financial assistance from the City of Carlsbad to assist in the financing of said
affordable housing project; and,
WHEREAS, the request for financial assist to construct said units has been submitted to
the City of Carlsbad's Housing Commission for review and consideration; and
WHEREAS, said Housing Commission did, on the 14th day of January, 2016, hold a
public meeting to consider the request for financial assistance for the construction of said 64
affordable family apartment homes by the affordable housing developer, Chelsea Investment
Corporation; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to
be heard, said Commission considered all factors relating to the proposal to construct said
affordable family rental homes.
22 NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission ofthe
23 City of Carlsbad, California, as follows:
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1. The above recitations are true and correct.
2. The request for financial assistance is consistent with the goals and objectives of
the City of Carlsbad's Housing Element, Consolidated Plan, the Inclusionary
Housing Ordinance, and the Carlsbad General Plan.
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4.
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'fbe request for financial assistance will assist the affordable housing developer to
construct a total of 64. one. two and three bedroom affordable Jitmily apanmcnt
homes which will be affordable to households ranging from 50% to 60% of area
median income for San Diego County. The project, theret<)re, has the ability to
c1Tectively serve the City's housing needs and priorities as expressed in the
Housing Element and the Consolidated Plan.
'fhat based on the information provided within the !lousing Cornmission StafT
Report and testimony presented during the public meeting of the Housing
Commission on January 14. 2016. the !lousing Commission hereby ADOPTS
Resolution No. 2016-01, recommending APPROVAL to the City Council to
provide up $1,280,000 in financial cash assistance Jrom the Carlsbad Housing
Trust Fund to Chelsea Investment CoqJoration for the construction of sixty-tour
(64) affordable family apartment homes within the Northeast Quadrant or the City
of Carlsbad. and within the Quarry Creek Master Plan Community.
That the Housing Commission recommends that the City Manager or his or her
designee be authorized by the City Council to prepare and execute all documents
related to provision of the City/Agency assistance, including but not limited to a
Financial Assistance Loan Agreement. Note. Deed of Trust and Regulatory
Agreement. subject to review and approval by the City Attorney.
PASSED, ;\PPROVED. AND ADOPTED at a meeting of the Housing Cornmission of
the Citv of Carlsbad. California. held on the 9th of July, 2009, by the following vote, to wit: '" ,,
A YES: CARRILLO, !GOE, NEWMAN AND WILLJAMS
NOES: NONL
ABSENT: Stv1llll
ABSTAIN: NON!~:
SUSAN IGOE, CHAIRPERSON
CARLSBAD HOUSING COMMISSION
DEBBIE FOUNTAIN,
HOUSING AND NEIGHBORHOOD SERVICES DIRECTOR
Minutes of:
Time of Meeting:
Date of Meeting:
Place of Meeting:
CALL TO ORDER
HOUSING COMMISSION
6:00P.M.
JANUARY 14,2016
COUNCIL CHAMBERS
Chairperson lgoe called the Meeting to order at 6:00 p.m.
PLEDGE OF ALLEGIANCE
Debbie Fountain led with the Pledge of Allegiance.
ROLLCALL
Present:
Absent:
Staff Present:
Commissioners: Susan lgoe, Chairperson
Arline Carrillo
Alan Newman
Shaunee Williams
Bobbie Smith
Housing & Neighborhood Services Director: Debbie Fountain
APPROVAl OF MINUTES
Minutes of March 12, 2015, meeting were approved as written. Minutes of December 10, 2015, were
approved with one change, "Arline Carrillo has lived in Carlsbad since she was 11 years old."
ITEM NOT ON AGENDA
There were no items not on the agenda.
NEW BUSINESS
Debbie Fountain, Director of Housing & Neighborhood Services, said there are two items on the agenda
tonight. The first one is Quarry Creek Affordable Ap_artments. The proposed project by Chelsea
Investment Corporation is a 64 unit affordable housing development to be constructed in partnership •
with Cornerstone Communities to satisfy the inclusionary housing obligations of the Quarry Creek Master ·
Plan development. The Quarry Creek Master Plan was previously approved by the City Council, and the .
Planning Commission will consider the Site Development Plan for the proposed affordable development
early in February 2016. The Quarry Creek development is located in the Northeast Quadrant ofthe city,
on the south side of Haymar Drive, and borders the City of Oceanside. The affordable rental homes will ·
be constructed within the first phase of the Quarry Creek Master Plan development.
The 64 unit affordable housing apartment development is anticipated to have fourteen, two-and three-·
story buildings with 116 surface level parking spaces. This would include 12 one-bedroom (19%), 32 two-•
bedroom (50%) and 20 three-bedroom (31%) rental homes. Of the 64 units, 56 will be affordable to :
households earning 60% of the San Diego Median Income, and 7 units will be affordable to households •
earning 50% of AMI.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 2 of8
Chels.ea Investment Corporation will develop, own and.operate the affordable housing project. Chelsea .
is experienced in affordable housing in San Diego County. This is the fourth affordable housing .
development in Carlsbad for them. Chelsea has a history of building top quality housing developments in
Carlsbad.
Page three has a summary proforma for the review of the Housing Commission.
The city assistance will be in the form of a residual receipts loan secured by a note and deed oftrust. The •
loan will begin accruing after the completion of construction of the improvements. The outstanding ·
principal and accrue-d interest on the loan will be amortized over 55 years and repaid from cash surplus in ·.
equal annual installments of principal and interest. If they are una~fi:! to pay, it will be rolled over into the •
next year to pay.
With a recommendation from the Housing Commission arid approtialof the City Council, appropriate
documents, including a Financial Assistance Agreemetrt, .Regulatory Agrt:i1ement, Promissory Note and .
Deed of Trust, will be prepared and executed to s@t f9rth the terms of thefinancial assistance and its ·
repayment.
Cheri Hoffman, Chelsea Corporation, commented the}JtJfrastrll·ttUr!=! work is extensive. We have the •
development impact fees to make up those costs. Quarry Cr~e~ will be 64 units of affordable housing ..
The tax credit program lets the project ciperclte independently) Which will allow them to have a mortgage;
27% of the project cost. When residents move in1 they are self~sqstaining, and 35% of their income will -
pay for their rent. This rent will sustain the project.·
Commissioner Carrillo asked if th@ rent is lowe do begin·WHih; ·.
··-_-:·
Ms. Hoffman said yes, theyare 35% below the mar~etrent. Because of the subsidiary Chelsea receives,
it allows them to lower the rent. ·
Commissioner'CarriHo asked aboutthe income figures. '·_ ·
Ms. Hoffman said 60% of the area median income. The AMI is about $80,000 for a family of four. The
households who move into this projects are· _under that limit. They are people employed in schools or
other public ser\tices.
Commissioner Williams asked if tenants have to reestablish annually.
Ms. Hoffman answered, yes<we. db annual recertification. According to the Tax Credit Regulation if a
person makes more money, we do not evict them. We follow a 140% rule. When we do the recertification .
and your income .does not exceed the 140%, you are able to stay. If you are over the 140%, you will be •
moved to a unit at a higher rate.
Commissioner Newman asked if they have real numbers, not just percentages. How much will it rent for?
Ms. Fountain said at the 60% of the AMI a two-bedroom unit, and a family of four, $1,215 would be the
maximum rent. The tax credit rules are adjusted a little more. We use the HUD household limit. State ·
tax credits will use the state percentages.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 3 of 8
Commissioner Newman commented that a two-bedroo.m at $1,250 would be a bargain.
Ms. Fountain added there is also a utility allowance. Ms. Hoffman said it is at 35%. In our agreements the •
rents in affordable complexes can never be more than 90%.
Ms. Hoffman said that 60% for the three-bedroom unit is close to $1,200 and at $1,024.
Commissioner Newman asked how long it will stay affordable.
Ms. Hoffman answered 55 years.
Commissioner Newman said then it will be market rate,
Ms. Hoffman answered theoretically. The lnclusionary Housing Ordinance says it must remain affordable
for 55 years.
; .·
Commissioner Newman said then direct construction is $173,000 on average.
Ms. Hoffman answered yes.
Commissioner Newman asked if there is sbmething else oth~r'than sticks and bricks.
Ms. Hoffman answered no. The normal WC:J{k incltidtis~the grading/landscaping, retaining walls and any.
site work. We do have some. contingency that is requir~~~by the investor, which is about a half a million.
Commissio.ner Newm$n rioticed the;'impact fees·are'mc'>re tha't-J· What the city is going to loan for this .
project.
Ms. Fountain said yes, that does happert
. .. -~ · ... ·
Commi?sioner Newmanasked si~·tejhere are 116 !1Jarking spaces on site, will there be any additional •
parking aVailable?
. .. . l .• . , . . .. .
Ms. Hoffman apologized for not h~Ving that Information.
Commissioner Newman presumedthey are going through the Planning Commission.
Mr. Chris Earl, Chelsea Corporation, said they did have a parking study and the parking sp~ces on site
should be enough.
Chairperson lgoe commented if they say two cars per unit, it should be enough.
Mr. Earl said that is correct.
Commissioner Carrillo asked when they are due to be open.
Ms. Hoffman said they are breaking ground in April of 2016 so in about a year.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 4 of8
Chairperson lgoe asked with the application process, how does that work ifthe family lives in Carlsbad?
Ms. Hoffman said they contracted to manage the complex with Cornerstone. We are active in the
oversight of the management. Six months before we plan occupancy, we will open a wait list; first come,
first served. As the people call in and fill out the form, they establish a place in line .. We will interview :
applications three months before occupancy for income information.
Commissioner Newman asked Ms. Fountain, what happens to our already large waiting list?
Ms. Fountain said all developments have their own waiting lists. Some have actually closed their waiting :
list because they are so large. We will first try to market to Carlsbad; but Fair Housing Law says we cannot:
restrict to Carlsbad only. Typically they are rented within 30 de3ys, ·
Ms. Hoffman said they will most likely have 100% leased.
Ms. Fountain said they generally like to market to Carlsbad employers ftfst .and people on our Rental •
Assistance Program. · ·
:.•
Commissioner Carrillo commented it is in a good location;_
Chairperson lgoe agreed.
Commissioner Newman made a motion to approve to·the Citytoi.mcil of $1,280,000 in financial cash ·
assistance from the Carlsbad Housing Trust FuMd to Chel:sea lnvestmehtCorporation for construction of·
64 affordable family apartment homes on property in the nc:rrth·ea.st quadrant of the City of Carlsbad and .
within the Quarry Creek Master Plan Community.
Commissioner lgoe seconded.
VOTE: 4-0
AYES:·
NOES:
ABS1AIN:
ABSENI:
Carrillo, lgpe, Newman and Williatns
N·eine
Norie .• ·
Smith
Ms. Fountain said the second item i$ an informational item only. Affirmed Housing would like to do a .
scattered site acquisition.to purchase two sites and demolish the residential that is currently there. They·.
would like to rebuild a rental product restricted to veterans, either homeless veterans or veterans and
their families. They plan for service enriched units with. a case manager.
Veterans are a special needs population within San Diego County, and they continue to experience a high •
unmet need for affordable housing. There is a high concentration of veterans, many of them homeless,
in North County San Diego and the area is also home to numerous important services for veterans and
their families. Carlsbad is an ideal location for housing for military veterans because of its close proximity
to Camp Pendleton and veteran's services.
Affirmed Housing has made a proposal to purchase existing residential properties within the Barrio
neighborhood and redevelop them into higher density, but relatively small apartment complexes to
provide permanent affordable housing.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 5 of8
Ms. Fountain requested feedback from the Housing Commission regarding this item. Staff is
understanding that this may be a concentration of a lot of affordable housing in one area.
Commissioner Carrillo commented that if you put all specialized low income housing in the Barrio, you are·
essentially making a Barrio.
Ms. Fountain agreed that could be a concern. Some cities do affordable housing as a tool, and most ·
people do not know it is a low-income affordable product. It can be a positive, but it can also be a concern '
when there is too much in one area.
Several years ago the city did give $75,000 per unit for Tavarua~' and Affirmed Housing would be asking .
for $85,000 per unit with this project.
Most affordable housing projects are not even identifiable because they are so nicely managed. They do
not allow for overcrowding of units. ~ acknowledg~this could be a concern with a concentration of .
affordable housing in one area. :z:+ I"S · ..... ·.·· · ·
Commissioner Carrillo said she is concerned about J~B~Ie hayi(lg;~to relocate. lsjhi.s at Chestnut and ·
Harding? <'.>
Ms. Fountain said the one they are looking'at is:fDrther sout~. T~e ether one is behind Oak and is already :
an existing apartment.
Commissioner Newman asked if there is a requ~st concHtion oh,doing bbth projects or would they move
forward if they only db one of them.
Ms. Fountain answered curretitly they want to do both of the projects.
. -. . . '
Commissoi9n~r Ne:wm<m commented that Tavaruais a very nice low-income facility.
Ms. Fount<.~ in said we do not want too mUch saturation of affordable housing in one location.
Commissioner N~wman commented the Oak Street location is probably less of an impact.
Commissioner Carrillo asked if ther.e is one owner on Oak.
Ms. Fountain answered yes .. ·
Chairperson lgoe said she likes the idea of the wrap around services. I assume like Tavarua, this would be
a quiet place with the wrap around services. Even though it is three stories high, I feel it is an acceptable ·
impact on the community.
Ms. Fountain said Affirmed Housing is an affordable housing development and currently manages Cassia
Heights. They are well known as well as a good developer. We do not have any concerns about them as
a developer or a manager. My concern was having too many affordable housing complexes in a small .
area.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 6 of 8
Commissioner Carrillo asked when they are building Carol arid Harding.
Ms. Fountain said they are currently in the permitting process so hopefully in 2017; they may begin earlier. ·
Commissioner Carrillo asked if there will be a relocation of people.
Ms. Fountain said all the people in there now will have to be relocated. They plan to do that early on.
Chairperson lgoe asked ifthat was in the financing.
Ms. Fountain answered yes.
Chairperson lgoe asked if they will be moved somewhere for a period of time.
. '. .
... :. . . . .
Ms. Fountain said that is part of the plan. Theywillbeableto havea:plan when the financing is done.
Their plan is to move in homeless families. They are.going to rehab the building so it will look much better -
in the end. Staff would like to find housing for veterans in Carlsbad since no\Aithere is money at the State ·
and Federal levels. I do want to work with this developer to build this type of housing in Carlsbad.
Currently we do not have a lot of restricted units in the Barrio.
Tuesday night we. had someone come to City Council because she had smoke damage in her unit and the _
owner put her into another unit in Oceansiqe. After rehabilitatingthe unit, the owner increased the rent .
and now she cannot go back to her originaLunit. You need to create a balance for moderate lower and
upper income people.
··:-.:~·:: 't'--
We looked at Carol an:;dH~rding anclWn:ew we c~ui~.IJ~~~ih that ar~~Y.,ith affordable housing to get rid of .
dilapidated buildings. W~}could have·~~positive irriW~C:t: The veterans housing would be a good balance, ·
almost like the senior housing-,-as longas it is service enriched. .
:.,.
Chairperson lgoe asked ifthis was part of the Barrio Master Plan.
Ms. Fountain said the Barrio Master Plan is supporting higher density so it is consistent. They are ·
requesting a higher density than what the Barrio Master Plan is, which is 30% and developer is proposing •
50% as they are smaller units.
Chairperson lgoe commented on the small units.
Commissioner Newman said half of them are studios.
Ms. Fountain said they will probably want a parking modification. Parking is the number one issue in my
experience working in the redevelopment area. Parking does not bring in money, units bring in money.
Commissioner Newman said it is expensive to dig a hole in the ground for parking.
Ms. Fountain said there is an industry issue as well as a marketing issue. If you do not have enough
parking, people may not want to live there. In affordable units, you do not tend to have roommate ·
situations which is when more cars are brought in. Villa Lama has a lot of roommates and they do not •
have enough parking. I do have confidence in this developer.
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 7 of 8
Commissioner Carrillo asked if there are a lot of veterans in Carlsbad.
Ms. Fountain answered yes we do, plus we have homeless veterans, most of them are living in their cars ..
Commissioner Carrillo agreed there is a need.
Ms. Fountain said yes there is a need. It is a special population we have not helped yet, but we should ·
try. We just have to decide where and how.
Commissioner Carrillo commented they are lower income.
Ms. Fountain said they do tend to be more in the lower incp~~·r~rige, especially for the ones who come :
out of the military still very young. ·
Commissioner Carrillo said she feels that mix in income would be nice.
Ms. Fountain said that may be something to look at'also.
Commissioner Williams said she likes tJ;rfs· project and likes the wi\w it would revitalize the area. We need :
to be mindful of how many low income· pr(Jjects .we put in the same block.
Commissioner Carrillo suggested maybe some time between projects,
.. . .
Ms. Fountain said she did have some discomfort with too much too fast. It is not that they are bad, just ·
the timing. Sometimes you have to hit it when the o·pportunity arises.
Commissioner Newman said he would encourage mcire market rate development.
Ms. Fountain saidth~ti:sw.hat happ.eJ1ed ~ith Caro.l and Harding. We have seen some of those duplexes .
and th~y are double frorhw~at they; paid. The Coi.n'lCiFthought they were too high.
Chairperson lgoe commented they are pre'-World War II.
Commission Newman said it is desirable because it is ocean close.
Chairperson lgoe said that is a good selling point.
Ms. Fountain said she appreciates the input. They may begin meeting with the City CounciL
Chairperson lgoe made a motion to adjourn the Housing Commission meeting, Commissioner Newman ·
seconded the motion.
ADJOURNMENT
By proper motion, the meeting of January 14, 2016, was adjourned at 7:20p.m.
Respectfully submitted,
HOUSING COMMISSION MINUTES
January 14, 2016
PAGE 8 of 8
Deborah Fountain
Housing & Neighborhood Services Director
PATRICIA CRESCENT!, Minutes Clerk .
MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITIEN MINUTES ARE APPROVED.
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