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HomeMy WebLinkAbout2022-02-10; Housing Commission; ; Proposed revisions to the City’s inclusionary housing policies and in-lieu feeMeeting Date: Feb. 10, 2022 To: Housing Commissioners From: Jeff Murphy, Community Development Director Staff Contact: Jeff Murphy, Community Development Director jeff.murphy@carlsbadca.gov or 760-602-2783 Subject: Proposed revisions to the city’s inclusionary housing policies and in-lieu fee Recommended Action Adopt a resolution (Exhibit 1) recommending that the City Council approve the consolidation of Council Policy Statements Nos. 57, 58 and 68 into a single revised Council Policy Statement and recommend adjustments to the Inclusionary Housing Program in-lieu fee amount. Executive Summary The City Council directed staff to return with recommendations on an updated inclusionary housing in-lieu fee for areas inside and outside the Village and Barrio Master Plan (VBMP) area. In April 2021, Keyser Marston Associates (KMA) finalized an analysis, which provides varying options for how the city’s current in-lieu fee can be adjusted. Also included in this staff report are recommendations on how the City Council’s current inclusionary housing policies can be combined and revised to simplify and improve the regulatory framework in order to successfully continue providing affordable housing in the city. Updating the city’s inclusionary housing program is on the Housing Commission’s FY2021-22 Work Program and is therefore being presented before the Housing Commission for discussion and recommendation prior to City Council consideration. Specifically, the Housing Commission is being asked to make recommendations on the proposed in-lieu fee and the changes proposed to City Council policies on inclusionary housing. Discussion Background On Aug. 20, 2019 and Dec. 17, 2019 (Exhibits 2 and 3), the City Council approved minute motions directing staff to return for consideration the initiation of an analysis of the city’s inclusionary housing program. On May 5, 2020, following a staff presentation on the topic, the City Council provided direction and funding for a study that would provide recommendations on an updated inclusionary housing in-lieu fee, calculation methodologies and related inclusionary housing policy options for areas inside and outside the VBMP area. The sections below provide an overview of the current inclusionary housing program and possible options and changes being proposed to streamline and improve upon the program. Current Inclusionary Housing Program Carlsbad, like many coastal cities in California, struggles with both a housing shortage and housing affordability. To help address this shortfall, the city’s inclusionary housing laws, originally adopted in 1993, established the legal basis for requiring inclusionary housing in new residential development in the city. The law applies to all development projects that include residential units and requires that a minimum of 15% of Feb. 10, 2022 Item #3 Page 1 of 163 HOUSING COMMISSION Staff Report the units be affordable to lower-income households. Under this program, roughly 2,500 affordable units have been built in the past 25 years. In the past two years alone, a total of 812 housing units were approved, of which 116 were made affordable for lower income families. While the construction of affordable units is preferred, the city ordinance allows development of six or fewer dwelling units to satisfy their inclusionary requirement through the payment of a fee in-lieu of building the unit. When initially adopted in 1993, the in-lieu fee was formulated using the affordability gap method, meaning that the in-lieu fee was based on the typical difference in cost to produce a market rate unit versus that of a lower-income affordable unit. The fee was initially set at $11,485 per market rate unit. The fee was recalculated in 1996 based on 15% of the city’s per unit subsidy for the Villa Loma Apartment project, which was $30,100, resulting in a reduction of the fee to $4,515 per market rate unit. The fee amount has remained unchanged since 1996. Through the in-lieu fee, about $1.7 million has been deposited into the city’s Housing Trust Fund (HTF) over the past twenty years. The in-lieu fee is only one source of HTF funding; housing credit purchase, impact fees, loan interest, and federal and state grants all contribute revenue towards the HTF, which has totaled roughly $39.5 million in deposits over the past 20 years. Additional information on the source and use of HTF monies is provided in Exhibit 4. In addition to the in-lieu fee, the city’s inclusionary housing program includes Council Policy Statement No. 57, No. 58 and No. 68 (Exhibits 4-6), which details the implementation procedures to allow projects, under specified conditions, to propose alternative means of compliance from the strict adherence of the city’s inclusionary regulations. The procedures specified in the policies for implementing alternative means of compliance have been found to meet the intent of the inclusionary housing ordinance regulations as well as the city’s adopted Housing Element. Recommendations on In-Lieu Fees In April 2021, KMA finalized their report entitled Inclusionary Housing In-Lieu Fee Update (Exhibit 7). The report reviewed the city’s existing inclusionary regulations and historical results in terms of unit production and in-lieu fee revenue, and then combined data pertaining to inclusionary housing in-lieu fees and/or affordable housing impact fees currently being charged by other cities in San Diego County. KMA then reviewed market trends data, land values, development cost estimates, and other industry standards for both rental and for-sale residential development and then prepared pro forma financial models to estimate the residual land value generated by each residential prototype under two scenarios: 1)100% market-rate; and, 2)Assuming the city’s existing inclusionary requirement of 15% at low income. Based on the KMA report, Table I below provides different ways the city could charge an inclusionary in-lieu fee on future residential projects. TABLE I SUMMARY OF DIFFERENT IN-LIEU FEE RATES Current Rates KM – Citywide Rates KM - Inside VBMP Rates $4,515/unit1 $8,529/unit2 $31,240/unit $15/sf3 $25/sf3 $34,490/unit $25/sf3 $35/sf3 1 Current city in-lieu fee as established in 1996. 2 Assumes an annual CPI adjustment applied to the 1996 rate. 3 Applies to the net building area, which means the aggregate gross floor area of all the unrestricted dwelling units within a development, excluding areas outside the dwelling unit’s habitable space such as garages, carports, parking areas, porches, patios, and excluding common areas such as lobbies, common hallways, stairways, elevators and equipment spaces. The tables below provide scenarios showing different ways the city could charge an inclusionary in-lieu fee on future small residential projects and how those rates could financially impact new development. Table 2 shows Feb. 10, 2022 Item #3 Page 2 of 163 what the potential fee generate for a single-family home on a single residential lot; Table 3 provides an example of what the fee could generate for a four-unit complex; and, Table 4 reflects the potential fee amount for a six-unit complex. The scenarios are for discussion purposes only. While the unit size is typical, the development scenarios identified assume that all unit sizes are static; actual unit sizes found in new development projects typically vary (provide options), resulting in varying in-lieu rates. TABLE 2 SINGLE-FAMILY DEVELOPMENT (ONE HOME) Current Rates KM - Citywide Rates KM - Inside VBMP Rates Flat Fee Flat Fee Flat Fee $15/SF $25/SF Flat Fee $25/SF $35/SF SFD – 2,200 sf 1 $4,515 $8,529 $31,240 $33,000 $55,000 $34,940 $55,000 $77,000 SFD – 1,500 sf $4,515 $8,529 $31,240 $22,500 $37,500 $34,940 $37,500 $52,500 SFD – 3,200 sf $4,515 $8,529 $31,240 $48,000 $80,000 $34,940 $80,000 $112,000 TABLE 3 FOUR-UNIT APARTMENT COMPLEX Current Rates KM - Citywide Rates KM - Inside VBMP Rates Flat Fee Flat Fee Flat Fee $15/SF $25/SF Flat Fee $25/SF $35/SF Apt Unit – 991 sf $18,060 $34,116 $124,960 $59,460 $99,100 $139,760 $99,100 $138,740 Apt Unit – 1,200 sf $18,060 $34,116 $124,960 $72,000 $120,000 $139,760 $120,000 $168,000 Apt Unit – 1,800 sf $18,060 $34,116 $124,960 $108,000 $180,000 $139,760 $180,000 $252,000 TABLE 4 SIX-UNIT APARTMENT COMPLEX Current Rates KM - Citywide Rates KM - Inside VBMP RATES Flat Fee Flat Fee Flat Fee $15/SF $25/SF Flat Fee $25/SF $35/SF Apt Unit – 991sf $27,090 $51,174 $187,440 $89,190 $148,650 $209,640 $148,650 $208,110 Apt Unit – 1,200 sf $27,090 $51,174 $187,440 $108,000 $180,000 $209,640 $180,000 $252,000 Apt Unit – 1,800 sf $27,090 $51,174 $187,440 $162,000 $270,000 $209,640 $270,000 $378,000 Staff recommends that for property owners who are looking to build a single-family residence on a single lot, the in-lieu fee be adjusted from $4,515 to $8,529, which is the result of the annual CPI adjustment being applied to the current 1996 rate, to arrive at a current CPI adjusted rate (April 2021). For all other qualifying projects, however, we recommend charging a rate of $15 per net building area1 for each proposed market-rate unit. Recommendations on Revisions to Implementing Policies As reflected above, there are currently three Council Policy Statements (No. 57, No. 58, and No. 68) that provide applicants with the implementation procedures for alternative ways of complying with the city’s Inclusionary Housing Program. The policies have been in place for several years (going back to 1995) and a lot has changed in how inclusionary housing requirements can be achieved in today’s housing market. As such, 1 “Net building area” means the aggregate gross floor area of all the unrestricted dwelling units within a development, excluding areas outside the dwelling unit’s habitable space such as garages, carports, parking areas, porches, patios, open space, and excluding common areas such as lobbies, common hallways, stairways, elevators and equipment spaces. Feb. 10, 2022 Item #3 Page 3 of 163 staff is proposing to consolidate the policies into one policy statement and expand upon the implementing procedures for alternative means of compliance (consistent with the city’s current inclusionary housing ordinance) in order to accommodate the unique challenges facing developers in providing affordable housing in Carlsbad. The sections below follow the sections in the revised policy (Attachment A to Exhibit 1) and provide an overview of the changes being proposed. Staff also developed an Informational Bulletin that helps the public better understand the city’s inclusionary housing requirements in simple to understand terms (Exhibit 8). • In-Lieu Fee The current inclusionary housing ordinance allows developments proposing a total of six or fewer units to satisfy their affordable housing obligation through payment of the inclusionary housing in-lieu fee. Under the revised policy, the in-lieu fee may be waived if a detached or attached accessory dwelling unit is constructed concurrent with construction of the new home, deed restricted for low-income households for 30-years, and occupied by income-qualified families. This allowance only applies to property owners who are constructing one single-family residence on a single lot. • Inclusionary Affordability Requirement and Credit Adjustment Under the inclusionary ordinance, developments proposing a total of seven or more units must provide at least 15% of the development’s units as affordable to lower income households. Current policy No. 68 allows applicants to reduce this 15% requirement to 12.5% if certain conditions are met (e.g., units are affordable to very low and extremely low-income households). Refer to the Info- Bulletin for an example showing how the allowance can be applied to a theoretical development project (Exhibit 8). One of the conditions under the current policy is that the development be limited to for-sale product. To encourage more housing development that offers lower affordability levels, staff is proposing to eliminate this requirement and allow rental products to participate. Also, the inclusionary ordinance uses the term “lower-income housing” when referring to the 15% inclusionary housing requirement. The proposed policy clarifies that the default affordability level of the required inclusionary housing unit is “low-income,” which means affordable to households earning less than 80% of the area median income (AMI) for San Diego County as determined annually by the U.S. Department of Housing and Urban Development. The affordability is set at the 70% income level for rental households and 80% for ownership units. This helps tie the policy to the definitions provided in the current ordinance. Lastly, a new provision to the policy is proposed that allows developers to apply any combination of income categories towards their 15% inclusionary requirement (e.g., moderate, low, very low, and/or extremely low-income), as long as the total average gross income restriction does not exceed 80% AMI. This offers additional flexibility for the developer when financing their development and provides the city with affordable units of varying affordability levels, which will help achieve its Housing Element housing targets. • Use of Accessory Dwelling Units The current inclusionary housing ordinance allows an applicant to construct up to 15 accessory dwelling units (ADU) to satisfy their inclusionary requirements. However, the ordinance or the current policies do not provide implementation procedures for the use of accessory dwelling units to satisfy inclusionary requirements. The revised policy proposes specific implementation procedures for use of the ADU alternative, as reflected below. o The project proposes 200 or more residential detached units; and, o The ADUs are an attached or detached housing product type; and, Feb. 10, 2022 Item #3 Page 4 of 163 o The ADU shall have an affordability term (low-income) of at least 30 years; and, o The property owner shall be required to income qualify the tenant and restrict rents to not exceed 70% of the area median income for San Diego County. •Combined Inclusionary Housing (Off-Site Compliance) The city’s inclusionary ordinance encourages that affordable inclusionary units be constructed on-site but recognizes that circumstances may arise in which the public interest would better be served by constructing the units at an alternative site. Current policy No. 57 sets forth the criteria (in the form of questions) for when the City Council can authorize this off-site compliance alternative. Since land use decisions are based on findings, the revised policy converts the questions into findings that must be made by the decision-making authority in order to approve the request. This is in keeping with current practices. The processing steps and worksheet that are included in the current policy have been removed as it is more appropriate to have those processing steps part of a department processing guide. Lastly, the revised policy clarifies a long-standing practice of calculating inclusionary housing requirement for off-site compliance; specifically, the inclusionary calculation requirements shall be based on the total number of market-rate units to be provided, as opposed to the total number of residential units in the project. Refer to the Info-Bulletin for an example explaining how the allowance can be applied to a theoretical development project (Exhibit 8). •Inclusionary Housing Credit Purchase Program The inclusionary ordinance provides that inclusionary units created which exceed the final requirement for a project may, subject to City Council approval, be utilized by a developer to satisfy inclusionary requirements of other projects. This is referred to as a combined inclusionary housing project, and in instances where the city is financially participating in the combined inclusionary housing project, the City Council can approve and designate a combined inclusionary housing project as an Affordable Housing Credit Bank project, in which the city may sell affordable housing credits to other developers who make a request to purchase affordable housing credits as an alternative way of satisfying the inclusionary housing requirement for their project. In this manner, the city can recoup its financial investment in the project and then use these funds to assist additional affordable housing projects. It is important to also note that when the city financially participates in a combined inclusionary housing project the financial assistance comes in the form of a low-interest loan to the project, with the developer paying off the loan amount to the city over the life of the project. Between the sale of the credits and the repayment of the loan, the city ultimately receives funds that are twice the amount of the initial financial assistance with all of these received funds deposited into the Housing Trust Fund and then used to assist additional affordable housing projects. The first project to be established as an Affordable Housing Credit Bank project was the 344-unit affordable housing project known as the Villa Loma Apartments in 1995. Pursuant to the Council Policy No. 58, the per unit credit purchase price was originally set at $28,000. This fee was established by dividing the subsidy amount ($4.1M city funds + $0.9M developer contribution) by the 184 excess affordable housing units created in the project. Those credits were then purchased by other developers to satisfy inclusionary requirements of other residential developments in the southwest and southeast quadrants. Since then, the City Council has approved Affordable Housing Credit Bank projects for three other city-assisted affordable housing projects: Cassia Heights Apartments, Roosevelt Gardens, and Tavarua Senior Apartments. All of these three projects were 100% affordable housing projects in which the city financially participated. Collectively, affordable housing credit purchases from these four bank projects have resulted in about $8.6M in deposits to the HTF during the 20-year period. Feb. 10, 2022 Item #3 Page 5 of 163 The revised policy includes language that memorializes how an Affordable Housing Credit Bank project is established, clarifies the eligibility requirements for developers wishing to purchase credits, and clearly states the formula used to establish the credit purchase price, as reflected below. o The revised policy provides findings that the City Council must make for an Affordable Housing Credit Bank project to be established. Once the bank is approved by the City Council, the sale of the credits to other developers for their projects can be approved administratively so long as the project complies with the city’s inclusionary ordinance and the policy. It should be noted that the affordable units intended for purchase must be more than the minimum number of units required under the city’s Inclusionary Housing Ordinance with one exception --- all of the units in a 100% affordable housing project, which the city financially participates, may be eligible for purchase. o Staff is not recommending any changes to current policy on how credit purchase price is established. Under current policy, the purchase price for each unit (credit) shall be determined by dividing the “local financial contribution” to a credit bank project by the total number of affordable units in the project that are in excess of inclusionary requirements, or in the case of an 100% affordable housing project, the total number of units in the project. The local (city’s) financial contribution shall consist of all city financial assistance provided to the project (e.g., loans, expenditures, hard/soft costs, land costs and accrued interest). The credit price shall be adjusted annually by the Consumer Price Index (CPI) and set by the City Council as part of their annual approval of the Master Fee Schedule. o The revised policy limits the types of projects that are eligible to make a request to purchase affordable housing credits as an alternative way of satisfying the inclusionary housing requirement for their project; specifically, projects proposing more than seven, but no more than 50 residential units are eligible to make a request to purchase affordable housing credits to satisfy their inclusionary housing requirements. o The revised policy also establishes the amount of credits that need to be purchased based on project size, as reflected below. ▪7 to 20 units – 1.0 credit for each required inclusionary unit ▪21 to 35 units – 1.5 credits for each required inclusionary unit ▪36 to 50 units – 2.0 credits for each required inclusionary unit o The revised policy establishes findings that the decision-making authority for the development project must make to approve the purchase and sale of a credit from an established affordable housing bank. o The revised policy clarifies when payment will occur and includes a provision that applicants must purchase the affordable credits from the oldest established affordable housing credit bank project that is located within the same or adjacent city quadrant in which the market-rate units are located. This prevents applicants from “credit shopping.” o The policy also clarifies the proximity of the affordable housing credit bank from the proposed development project. CMC §21.85.080 states that the combined project must be in the same city quadrant, or contiguous quadrant in which the proposed market-rate units are proposed. The policy clarifies that “contiguous” includes quadrants that share a common border. For example, the northeast and southwest quadrants are considered contiguous to the northwest quadrant because they share a common border (El Camino Real and Palomar Airport Road, respectively). As such, a development project in the southwest quadrant is eligible to purchase credits from an affordable housing credit bank that is in the northwest quadrant. Feb. 10, 2022 Item #3 Page 6 of 163 •Other Alternative Means of compliance not Specified Consistent with the inclusionary housing ordinance, the revised policy includes language informing applicants that the City Council may approve alternatives that are not authorized by this policy where the proposed alternative supports specific housing element policies and goals and assists the city in meeting its state housing requirements. Alternatives may include, but are not limited to, acquisition and rehabilitation of affordable units, conversion of existing market-rate units to affordable units, construction of special needs housing projects or programs (e.g., shelters, transitional housing), the construction of accessory dwelling units beyond what is allowed under the policy , an affordable housing credit bank that does not utilize city funding, or the purchase of housing credits for projects greater than 50 residential units. •Approval Authority The revised policy simplifies the approval process where the decision-making authority responsible for the approving underlying permit application(s) for a project shall have the authority to consider and approve alternative methods to satisfy the project’s inclusionary housing requirement if they are found consistent with the policy. All projects will be conditioned to require that an Affordable Housing Agreement be reviewed, approved, and recorded prior to Final Map or issuance of building permits, whichever comes first. Affordable Housing Agreements that are consistent with the policy and that do not request financial assistance from the city shall be considered for approval by the Housing & Homeless Services Director, after review and recommendation of the Affordable Housing Policy Team. Agreements that deviate from the policy or request city financial assistance shall be considered by the City Council, after review and recommendation of the Affordable Housing Policy Team and the Housing Commission. Fiscal Analysis No city funding is being requested Environmental Evaluation (CEQA) The proposed action that is being considered is covered by the general rule under State CEQA Guidelines 15061(b)(3), where the activity is covered by the common sense exemption that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The proposed action seeks to combine three longstanding Council Policy Statements (No. 57, No. 58 and No. 68) that were developed in an effort to help implement the city’s Inclusionary Housing Program, which was adopted in 1993, into a single revised Council Policy Statement (No. 57). The revised policy language does not significantly alter the intent or purpose of the current policies, but streamlines application, clarifies inconsistent and conflicting language, and memorializes longstanding processing practices. The adjustments in the inclusionary housing in-lieu fee amounts being considered are based on an economic analysis prepared by Keyser Marston Associates, Inc. dated April 2021 specifically for the City of Carlsbad that evaluated area specific market trends data, land values, development cost estimates, and other industry standards for both rental and for-sale residential development and then prepared pro forma financial models to estimate the residual land value generated by each residential prototype in determining options for different in-lieu fee amounts. Given the scope of the proposed action, it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, and therefore is found not to be subject to CEQA. Public Notification Public notice of this item was posted in keeping with the Ralph M. Brown Act and it was available for public viewing and review at least 72 hours before the scheduled meeting date. Exhibits 1.Housing Commission resolution Feb. 10, 2022 Item #3 Page 7 of 163 A. Draft Revised Council Policy Statement (No. 57) 2. Aug. 20, 2019 Minute Motion 3. Dec. 17, 2019 Minute Motion 4. Council Policy Statement #57 5. Council Policy Statement #58 6. Council Policy Statement #68 7. KMA Inclusionary Housing In-Lieu Fee Update Report 8. Informational Bulletin – Inclusionary Housing Program Feb. 10, 2022 Item #3 Page 8 of 163 RESOLUTION NO. 2022-003 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, RECOMMENDING THAT THE CITY COUNCIL APPROVE THE CONSOLIDATION OF COUNCIL POLICY STATEMENTS 57, 58 AND 68 INTO A SINGLE REVISED COUNCIL POLICY STATEMENT AND RECOMMEND ADJUSTMENTS TO THE INCLUSIONARY HOUSING PROGRAM IN-LIEU FEE AMOUNT. WHEREAS, it is in the best interest of the public to establish reasonable standards relating to provision of affordable housing for all income levels; and WHEREAS, the city’s Inclusionary Housing Ordinance was established in April 1993 and requires that all residential developments greater than six units restrict 15percent of the total number of homes in a project as affordable to low-income households; and WHEREAS, while this obligation is fulfilled through construction of a variety of rental or ownership units, residential developments less than seven may satisfy their inclusionary housing obligation through payment of inclusionary housing in-lieu fees; and WHEREAS, in 2015, in California Building Industry Association v. City of San Jose, the California Supreme Court indicated that cities have “broad discretion to regulate the use of real property to serve the legitimate interests of the general public and the community at large” and upheld an ordinance requiring all new residential developments set-aside at least 15 percent of the for-sale units at a price affordable to low or moderate income households; and WHEREAS, in September 2017, Governor Gavin Newsom signed AB 1505 (Bloom), which reinstated a municipality’s right to apply inclusionary requirements to rental housing; and WHEREAS, Goal 10-G.2 of the city’s 2021-2029 Housing Element directs the city to provide sufficient new, affordable housing opportunities in all quadrants of the city to meet the needs of current lower- and moderate-income households and those with special needs, and a fair share proportion of future lower- and moderate-income households; and WHEREAS, as described in Program 2.1 of the city’s 2021-2029 Housing Element, the city will continue to implement its Inclusionary Housing Ordinance, which requires a minimum of 15 percent of all residential projects of seven or more units be restricted and affordable to lower-income households; and WHEREAS, as described in Objective 2.1.a of the city’s 2021-2029 Housing Element, the city shall complete a Gap Analysis of the city’s inclusionary housing in-lieu fee to determine a fee amount necessary and appropriate to reflect market conditions and ensure fees collected are adequate to facilitate the development of affordable units; and WHEREAS, described in Objective 2.1.c of the city’s 2021-2029 Housing Element, the city shall amend its Inclusionary Housing Ordinance to reflect the updated in-lieu fee and revise the ordinance as necessary to maximize production of affordable units without adversely affecting market-rate development; and WHEREAS, the City desires to update its inclusionary housing program policies and fees in a manner consistent with state law and consistent with case law which became effective since the inclusionary rules were last updated; and WHEREAS, at their publicly noticed Feb. 10, 2022 meeting, the Housing Commission considered the proposed inclusionary housing policy as shown in Attachment A to this resolution, the adjusted in- lieu fees as reflected in the staff report, and public testimony when deliberating on this subject; and 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 the Housing Commission hereby recommends that the City Council approve revised Council Policy Statement #57, attached hereto as Attachment A. 3.That the Housing Commission hereby recommends that the City Council adjust the inclusionary in-lieu fee amount as follows: a.For a new single-family dwelling on a single-family lot, increase the in-lieu fee from $4,515 to $8,529, adjusted annually based on a price index that most closely responds to housing cost inflation. b.For all other qualifying residential development projects, change the in-lieu fee methodology from $4,515 per market-rate unit to $20 per square foot of net building area for each market-rate unit, phased in over the next five years and then adjusted annually after the five years based on a price index that most closely responds to housing cost inflation. 4. Recommend that the City Council evaluate the feasibility of increasing the number of units eligible to participate in payment of the in-lieu fee from six units to 20 units and consider changing the housing credit purchase price to a flat rate based on the Affordability Gap per Affordable Unit rate as determined in the April 2021 Inclusionary Housing In-Lieu Fee Update Report prepared by Keyser Marston & Associates. PASSED, APPROVED AND ADOPTED at a meeting of the Housing Commission of the City of Carlsbad on the 10th day of February 2022, by the following vote, to wit: AYES: Nguyen-Cleary, Cole, Manzano NAYS: None ABSENT: Cortes-Torres __________________________________ JOHN NGYUEN-CLEARY, Chairperson CARLSBAD HOUSING COMMISSION ATTEST: _________________________ MANDY MILLS Housing & Homeless Services Director Council Policy Statement Category: AFFORDABLE HOUISNG Specific Subject: Inclusionary Housing Ordinance – Alternative Means of Compliance PURPOSE: Carlsbad Municipal Code (CMC) §21.85.100, of the city’s Inclusionary Housing Ordinance, sets forth the City Council’s ability to make available certain allowances and provisions for development applications that would result in meeting the city’s affordable housing needs. To assist in achieving this end, the City Council developed this policy to provide alternatives means of compliance for meeting the city’s growing affordable housing needs. The provisions contained in Policy No. 57 (Off-site and Combined Inclusionary Housing Projects), Policy No. 58 (Sale of Affordable Housing Credits), and Policy No. 68 (Inclusionary Housing Incentive Credit Schedule) have been combined into this revised Policy No. 57. Policy Nos. 58 and 68 were then subsequently rescinded to have a single City Council Policy that administers the inclusionary housing program. BACKGROUND: The city’s Inclusionary Housing Ordinance (CMC §21.85) was passed by the City Council in April 1993 and established the legal basis for requiring inclusionary housing in new residential development in the city. Under the program, all residential developments are required to comply with the code, projects with seven or more units are required to restrict 15 percent of the total number of homes as affordable to lower income households. This obligation is fulfilled through construction of rental or ownership units, or through other alternative means of compliance. POLICY: It is the policy of the City Council that the following Alternative Means of Compliance satisfy the intent and requirements of CMC §21.85, 2021-2029 Housing Element Goals 10-G.2 and 10-G.4, and Housing Element Policies 10-P.13 and 10-P.35. 1.In-Lieu Fee Pursuant to CMC §21.85.110, developments proposing a total of six or fewer units may satisfy their affordable housing obligation through payment of inclusionary housing in-lieu fees. As an alternative for property owners who are constructing one single-family residence on a single lot, an Accessory Dwelling Unit (detached or attached) or Junior Accessory Dwelling Unit may be constructed concurrent with construction of the market-rate unit. The ADU or JADU must be deed restricted for occupancy by income and rent qualified low- income households for 30-years. Policy No. 57 Date Issued: DRAFT Effective Date: Resolution No. Cancellation Date: N/A Supersedes No. 57, 58 and 68 Attachment A Feb. 10, 2022 Item #3 Page 12 of 163 2.Inclusionary Affordability Requirement and Credit Adjustment CMC §21.85.030.B states that not less than 15% of the total units in a residential development of seven or more units shall be restricted to “lower-income households.“ Household income qualification is defined as 80% or below of the area median income for San Diego County. The affordability is set at the 70% income level for rental households and 80% for ownership units. To assist the city in providing housing at varying affordability levels (e.g., moderate, low-, very- and extremely low-income), developers shall have the following options for satisfying the inclusionary ordinance: a.At least 15% of the total units are restricted for low-income households (default requirement as defined in CMC §21.85.020); or, b.At least 15% of the total units are restricted at any combination of income categories (e.g., moderate, low, very low, and/or extremely low-income) as long as the total average gross income restriction does not exceed 80% of the area median income for San Diego County as determined annually by the U.S. Department of Housing and Urban Development (affordable housing levels are defined in CMC §21.85.020); or, c.A residential development can receive an incentive credit of 1.2 per inclusionary unit, thereby reducing the inclusionary housing requirement from 15% to 12.5% 1, under the following conditions. 1.All affordable units must be made available to very low or extremely low-income households, or combination thereof. 2.The units are located on the same site as the market-rate units. 3.No financial assistance from the city is required. 3.Use of Accessory Dwelling Units Pursuant to CMC §21.85.070.B, an applicant may construct up to 15 accessory dwelling units (ADU) to satisfy their inclusionary requirements. The standards below provide additional specifications for when this allowance can be used. a.The project proposes 200 or more residential detached units; and, b.The ADUs are an attached or detached housing product type; and, c.The ADU shall have an affordability term (low-income) of at least 30 years; and, d.The property owner shall be required to income qualify the tenant under 80% of the area median income for San Diego County and restrict rents to not exceed the affordable rent for 70% of the area median income for the unit size. 1 Example. An applicant proposes a 78-unit residential development, which requires that 15% of the units be reserved for low-income (12 inclusionary units). If the above standards are applied, the inclusionary units can be adjusted by 1.2, thereby reducing the total number of affordable units from 12 to 10 (12 divided by 1.2 equals 10). Under this scenario, 10 units in a 78-unit development projects equates to 12.8%, which meets the minimum inclusionary housing requirement of 12.5%. Feb. 10, 2022 Item #3 Page 13 of 163 Refer to Section 1 of this policy on the use of an ADU to satisfy inclusionary requirements on a single lot to be developed with one single-family residence. 4. Combined Inclusionary Housing (Off-Site Compliance) Circumstances may arise in which the public interest would be better served by allowing some or all inclusionary units associated with a proposed residential development project to be produced and operated at an alternate off-site(s) location. This alternative is described as a “Combined Inclusionary Housing Project” or “Combined Project.” a. Inclusionary Housing Calculation The inclusionary housing calculation requirement shall be based on 15% of the total number of market-rate units to be provided on-site and the inclusionary/affordable units to be provided off-site.2 b. Required Findings Consistent with CMC §21.85.080.B, the City Council delegates approval authority of any proposed Combined Projects to the decision-making authority of the proposed development project so long as the findings below are met. Notwithstanding, the City Council shall retain final approval authority of the Affordable Housing Agreement on any Combined Project that requires financial assistance from the city. The findings below shall be included as part of the Affordable Housing Agreement decision documents. 1. The site has not or will not receive a density increase or density bonus to increase the number of total residential units permitted on the master development site. 2. Site conditions make it physically infeasible to accommodate the inclusionary units on-site. 3. Significant price and product type disparities make it financially infeasible to accommodate the inclusionary units on-site. 4. There is a documented lack of development capacity to deliver affordable housing on-site. 5. The off-site option provides greater financial feasibility and cost effectiveness than the on-site alternative. 6. The off-site option provides better access to jobs, schools, transit, and services. 2 Example: An applicant proposes to satisfy its inclusionary requirements for a 112-unit project by building 15% of the total units for low-income households off-site. If the 112 units are to remain as the total market-rate units on the site, the total number of residential units needs to be recalculated before calculating the required number of inclusionary units to be provided off-site. If 85% of the total units for market rate are now 112 units then the “total residential unit count” is recalculated and becomes 132 units (112 ÷ 0.85 = 131.8, rounded up to 132). Using the new total residential unit count of 132 units the total number of inclusionary units required for this project becomes 20 units (132 X 0.15 = 19.8, rounded to 20), which results in an off-site inclusionary housing compliance requirement of 17.9% for this project (20 ÷ 112 = 17.85%). Feb. 10, 2022 Item #3 Page 14 of 163 7. The off-site option supports affordable housing goals and policies as expressed in the city’s Housing Element. 5. Inclusionary Housing Credit Purchase Program In certain circumstances, it may be in the city’s best interest to financially invest in projects or ventures that further increase the availability and overall number of affordable housing units in the city. Pursuant to §21.85.090, inclusionary units created which exceed the final requirement for a project may, subject to City Council approval in the affordable housing agreement, be utilized by a developer to satisfy other inclusionary requirements for which it is obligated or market the units to other developers as a combined project subject to the requirements of Section 21.85.080. a. Affordable Housing Credit Bank – Establishment 1. Bank Establishment Consistent with §21.85.090, this policy authorizes the establishment of an affordable housing credit bank where affordable units that are constructed in excess of inclusionary requirements can be purchased from the city by qualifying developers to satisfy their respective inclusionary housing requirements. The City Council shall approve the creation of an affordable housing credit bank, subject to the following findings. i. The affordable units intended for purchase are in excess of the minimum number of units required under the city’s Inclusionary Housing Ordinance; or ii. The affordable units intended for purchase are part of a 100% affordable housing project; and iii. The affordable excess units are constructed and received final inspection; and iv. The city financially contributed to the construction of the affordable housing project that the affordable excess units are a part. This policy does not authorize a developer to sell excess affordable units that are constructed without city financial assistance. However, developers may pursue approval for such an action, consistent with CMC §21.85.090 and Section 6 of this policy. 2. Credit Pricing The price for each unit (credit) shall be determined by dividing the “local financial contribution” by the total number of affordable units that are in excess of inclusionary requirements. The local (city’s) financial contribution shall consist of all city financial assistance provided to the project (e.g., loans, expenditures, hard/soft costs, and accrued interest). The credit price shall be adjusted annually by the Consumer Price Index (CPI) and set by the City Feb. 10, 2022 Item #3 Page 15 of 163 Council as part of their annual approval of the Master Fee Schedule. b. Affordable Housing Credit Bank – Administration 1. Project Eligibility Projects proposing more than seven, but no more than 50 residential units are eligible to purchase affordable housing credits to satisfy their inclusionary housing requirements. Projects greater than 50 residential units may pursue approval of eligibility to purchase affordable housing credits consistent with CMC §21.85.070 and Section 6 of this policy. 2. Credit Purchase Ratio The amount of credits to be purchased shall be based on the following scale. i. 7 to 20 units – 1.0 credit for each required inclusionary unit ii. 21 to 35 units – 1.5 credits for each required inclusionary unit iii. 36 to 50 units – 2.0 credits for each required inclusionary unit 3. Credit Purchase Findings Authority to approve a credit purchase from an established affordable housing credit bank shall be given to the decision-making authority of the proposed development permit, so long as the findings below are met. Should a request to purchase credits occur after discretionary approval, the Community Development Director and the Housing & Homeless Services Director shall have the authority to approve credits, subject to the findings below. If the findings can be made, the Community Development Director, or designee shall determine via a substantial compliance determination that the credit purchase satisfies the project condition to construct the inclusionary unit, without the need to process an amendment to the permit. i. The affordable housing credit bank project site is located in the same city quadrant in which the market-rate units are located, or is contiguous to the quadrant in which the market-rate units are proposed; and, ii. There are sufficient housing credits available to purchase. 4. Proximity to Bank CMC §21.85.080 states that the credit purchase must be from an affordable housing credit bank that is within the same city quadrant, or contiguous quadrant in which the proposed market-rate units are proposed. This policy shall clarify that “contiguous” includes quadrants that share a common border (e.g., the northeast and southwest quadrants are considered contiguous to the northwest quadrant because they share a common border). Feb. 10, 2022 Item #3 Page 16 of 163 5. Credit Payment Considering how credit pricing is established (Section 5.a.2), it is anticipated that the credit purchase price will vary. As such, applicants must pay the credit price of available credits from the oldest affordable housing credit bank project that is located within the same city quadrant in which the market-rate units are located, or is contiguous to the quadrant in which the market-rate units are proposed. Funds from housing credit deposits/purchases shall be deposited to the Housing Trust Fund. i. Payment of housing credit purchases shall be due prior to recordation of the final map or issuance of a building permit, in situations where the project does not include a subdivision. ii. Payments shall be deposited to the Housing Trust Fund pursuant to Council Policy No. 90. iii. If the project entitlements or above-mentioned due dates expire, the credits will be made available to another project(s), subject to this process. 6. Other Alternative Means of Compliance not Specified The City Council may approve, pursuant to CMC §21.85.070, alternatives that are not authorized by this policy where the proposed alternative supports specific housing element policies and goals and assists the city in meeting its state housing requirements. Alternatives may include, but are not limited to, acquisition and rehabilitation of affordable units, conversion of existing market-rate units to affordable units, construction of special needs housing projects or programs (e.g., shelters, transitional housing), the construction of accessory dwelling units, or the purchase of housing credits for projects greater than 50 residential units. 7. Approval Authority Approval authority for development projects subject to this policy is as follows: a. The decision-making authority for the underlying permit application(s) shall have the authority to consider and approve projects found consistent with this policy; this includes consideration and approval of the findings for Combined Inclusionary Housing Projects (Section 5.b.3). b. Development projects that propose an alternative means of compliance that is not consistent with this policy shall be considered by the City Council, after review and recommendation of the Affordable Housing Policy Team and the Housing Commission. c. A project condition shall be added to all projects subject to this policy requiring that an Affordable Housing Agreement, consistent with §21.85.140, be reviewed, approved, and recorded prior to Final Map or issuance of building permits, whichever comes first. Approval authority of the Affordable Housing Agreement is as follows: Feb. 10, 2022 Item #3 Page 17 of 163 1.Affordable Housing Agreements that are consistent with §21.85 and this policy and do not request financial assistance from the city shall be considered for approval by the Housing and Homeless Services Director, after review and recommendation of the Affordable Housing Policy Team. 2.Affordable Housing Agreements that propose a deviation(s) to this policy or include a request for financial assistance shall be considered by the City Council, after review and recommendation of the Affordable Housing Policy Team and the Housing Commission. Related Policy a.Policy No. 90 Feb. 10, 2022 Item #3 Page 18 of 163 EXHIBIT 2 Feb. 10, 2022 Item #3 Page 19 of 163 CITY COUNCIL Minutes August 20, 2019 5 p.m. CALL TO ORDER: 5:00 p.m. ROLL CALL: Blackburn, Bhat-Patel, Schumacher, Hamilton. Absent: Hall. ANNOUNCEMENT OF CONCURRENT MEETINGS: None. Council Chamber 1200 Carlsbad Village Drive Carlsbad, CA 92008 PLEDGE OF ALLEGIANCE: Mayor Pro Tern Bhat-Patel led the Pledge of Allegiance. INVOCATION: None. APPROVAL OF MINUTES: Minutes of the Regular Meeting held June 25, 2019. Minutes of the Special Meeting held July 9, 2019. Minutes of the Regular Meeting held July 9, 2019. Minutes of the Regular Meeting held July 16, 2019. Minutes of the Special Meeting held July 23, 2019. Minutes of the Regular Meeting held July 23, 2019. Motion by Council Member Blackburn, seconded by Council Member Schumacher, to approve the minutes as presented. Motion carried, 4/0/1 (Hall -Absent). PRESENTATIONS: None. CONSENT CALENDAR: Item No .. 2 was pulled for discussion by a member of the public. Motion by Council Member Blackburn, seconded by Council Member Schumacher, to approve Consent Calendar Item Nos. 1 and 3 through 7. Motion carried, 4/0/1 (Hall -Absent). 1. REPORT ON CITY INVESTMENTS -Acceptance of report on City Investments as of June 30, 2019. (Staff contact: Craig Lindholm, City Treasurer; Laura Rocha, Administrative Services) 2. AWARD OF CONTRACT FOR TRANSPORTATION DEMAND MANAGEMENT SERVICES - Adoption of a Resolution approving a Professional Services .Agreement with UrbanTrans North America to provide Professional Transportation Demand Management Consulting Services in an amount not to exceed $199,000 annually for a term of two years. (Staff contact: Claudia Huerta, Community & Economic Development) Feb. 10, 2022 Item #3 Page 20 of 163 August 20, 2019 Carlsbad City Council Regular Meeting Page 7 for short-term vacation rentals. He also explained the differences, level of review, and past streamlining efforts for projects in the Village and Barrio areas. In response to an inquiry by Council Member Hamilton, City Planner Don Neu explained that while a timeline target may be feasible, delays may occur due to certain items like architectural design standards. He also shared staff would need further direction from Council on what else they want to modify in the plan. Mr. Neu also shared an option on how to process the amendments. City Attorney Celia Brewer titled and introduced the Ordinance. Motion by Council Member Blackburn, seconded by Council Member Schumacher, to introduce Ordinance No. CS-357 acknowledging receipt of the California Coastal Commission's Resolution of Certification including suggested modifications for LCPA 14-01, and approving the associated suggested modifications to the Village and Barrio Master Plan and Local Coastal Program. Motion carried, 4/0/1 (Hall -Absent). Minute Motion by Council Member Hamilton, seconded by Council Member Schumacher, to direct staff to bring back for Council consideration in two months, a workplan that includes a timeline to address the following amendment package for the Village and Barrio Master Plan: 1) Decision making authority for the entire Village ,and Barrio Master Plan to City Council; 2) Permitted uses vital to a live, work, play community; 3) Parking-in-lieu fees to be directed to a specific area for parking and the potential for public/private partnerships for a specific zoned parking structure; 4) Traffic impact analysis and mitigation fees specific to the Village and Barrio Master Plan area and roadway conditions outside of the Coastal Zone; 5) Objective architectural, historical and design standards within the Village and Barrio Master Plan area; 6) Solutions and options to avoid housing-in-lieu payments in the Village and Barrio area; 7) Village and Barrio specific inclusionary policy; and to allow for general conversation regarding additional components of the plan. Motion carried, 4/0/1 (Hall -Absent). Mayor Pro Tern Bhat Patel announced that Item No. 10 will be continued to the City Council meeting on August 27, 2019. 10. PURE PROJECT BREWERY AND TASTING ROOM-Adoption of a Resolution approving a Minor Site Development Plan and Conditional Use Permit for a 2,206-square-foot brewery and tasting room located at 2825 State Street in the Village Center District of the Village and Barrio Master Plan and within Local Facilities Management Zone 1; and, Adoption of a Resolution approving a Parking In-Lieu Fee Program Participation Agreement between the City of Carlsbad and Russell Satterly, Susan Satterly and Lindo Mino, property owners, for the project known as Pure Project Brewery and Tasting Room located at 2825 State Street in the Village Center District of the Village and Barrio Master Plan and within Local Facilities Management Zone 1. Case Name: Pure Project Brewery and Tasting Room. Case No.: SDP 2019-0002/CUP 2018-0021 (DEV2018-0196). (Staff contact: Shannon Harker, Community & Economic Development) EXHIBIT 3 Feb. 10, 2022 Item #3 Page 21 of 163 CITY COUNCIL Minutes Dec. 17, 2019 6 p.m. CALL TO ORDER: 6:00 p.m. ROLL CALL: Hall, Blackburn, Bhat-Patel, Schumacher. Council Chamber 1200 Carlsbad Village Drive Carlsbad, CA 92008 ANNOUNCEMENT OF CONCURRENT MEETINGS: Mayor Hall announced that the City Council is serving as the Carlsbad Municipal Water District Board of Directors on Item Nos. 12, 13, 14, and 17. PLEDGE OF ALLEGIANCE: Mayor Pro Tern Bhat-Patel led the Pledge of Allegiance. INVOCATION: None. APPROVAL OF MINUTES: Minutes of the Special Meeting held Dec. 10, 2019 Motion by Mayor Pro Tern Bhat-Patel, seconded by Council Member Blackburn, to approve the Minutes of the Special Meeting held on Dec. 10, 2019 as presented. Motion carried unanimously, 4/0. PRESENTATIONS: None. PUBLIC COMMENT: Glenn Bernard spoke about banning thoroughbred horse racing. He also spoke about the misconceptions of corporations. Fred Sandquist, President of the Batiquitos Lagoon Foundation spoke about the draft Local Coastal Program update that was presented to the Planning Commission. David Hiff, member of the Batiquitos Lagoon Foundation spoke about the Local Coastal Permit Program's recent meeting at the Faraday Center and the need to have a further workshop. Julie Ajdour spoke about her concerns over the ad-hoc committee for the Viffage Barrio Master Plan not incfuding input from the homeowners in the area. PUBLIC REPORT OF ACTION TAKEN IN CLOSED SESSION: None. Feb. 10, 2022 Item #3 Page 22 of 163 Dec. 17,2019 Carlsbad City Council Regular Meeting Page 7 Mayor Hall opened the duly noticed Public Hearing at 6:56 p.m. Seeing no one wishing to speak, Mayor Hall closed the duly noticed Public Hearing at 6:56 p.m. City Attorney Celia Brewer titled Ordinance No. CS-368 Motion by Mayor Pro Tern Bhat-Patel, seconded by Council Member Blackburn, to introduce Ordinance No. CS-368 and adopt Resolution No. 2019-265. Motion carried unanimously, 4/0. 19. AMENDMENT TO THE CONDITIONS OF THE TENTATIVE TRACT MAP AND SITE DEVELOPMENT PLAN FOR PROJECT LOCATED AT 2646 STATE STREET -THE SEAGLASS -Adoption of Resolution No. 2019-266 approving Amendment No. Amend 2019-0006 and Amendment No. Amend 2019-009, amendments to Tentative Tract Map No. CT 2018-0004 and Site Development Plan No. SDP 201s~oo21, to satisfy the inclusionary requirement with the purchase of one inclusionary housing credit from Tavarua for an eight-unit, residential air- space condominium project located at 2646 State Street. Case No. Amend 2019-006/SDP 2019-0009 (DEV2017-0236). (Staff contact: Shannon Harker, Community & Economic Development) City Manager's Recommendation: Take public input, close the public hearing and adopt the resolution. City Planner Don Neu and Associate Planner Shannon Harker presented the report and reviewed a PowerPoint presentation (on file in the Office of the City Clerk). Mayor Hall opened the duly noticed Public Hearing at 7:15 p.m. Seeing no one wishing to speak, Mayor Hall closed the duly noticed Public Hearing at 7:15 p.m. Council Member Blackburn expressed concern over the price of an inclusionary housing unit being bought for $84,000. He also added that the policy needs to be reviewed soon. Minute Motion by Council Member Schumacher, seconded by Mayor Pro Tern Bhat-Patel to place on a future agenda item the initiation of a nexus study of the Housing In-Lieu fee and Housing Credits -4/0. Motion by Mayor Pro Tern Bhat-Patel, seconded by Council Member Blackburn, to adopt Resolution No. 2019-266. Motion carried, 3/1. (Schumacher-No) 20. SAN DIEGO COUNTY ACQUISITION OF PROPERTY WITHIN THE MCCLELLAN-PALOMAR AIRPORT RUNWAY PROTECTION ZONE -Adoption of a resolution pursuant to California EXHIBIT 4 Feb. 10, 2022 Item #3 Page 23 of 163 r CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Off-site and Combined Inclusionary Housing Projects Policy No. --"'-57'------- Date Issued August 8, 1995 Effective Date August 8. 19 9 5 Cancellation Date ------Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. BACKGROUND The City's Inclusionary Housing Ordinance (CMC Chapter 21.85) establishes certain requirements under which residential developers must provide housing that is affordable to lower-income households as a condition of project approval and permit issuance. The Ordinance provides that inclusionary units "should be built on-site and, wherever reasonably possible, be distributed throughout the project site." The Ordinance also provides that "circumstances may arise ... in which the public interest would be served by allowing some or all of the inclusionary units associated with one project site to be produced and operated at an alternative site or sites." This alternative is described as a "Combined Inclusionary Housing Project" or "Combined Project". The Ordinance, in addressing Combined Projects, states that "it is the exclusive prerogative of the final decision making authority of the City to determine whether or not it is in the public interest to authorize the residential sites to form a Combined Inclusionary Housing Project. " PURPOSE It is the purpose of this policy to establish the criteria which will be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. POLICY The following criteria will be applied in order to make the necessary public interest finding. Each criteria is defined in terms of specific questions which, when affirmatively answered, would support an off-site option: Page 1 of 4 Feb. 10, 2022 Item #3 Page 24 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Off-site and Combined Inclusionary Housing Projects Policy No. --=57~----- Date Issued August 8, 1995 Effective Date August 8. 1995 Cancellation Date ------Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. 1. Feasibility of the On-site Proposal. ► Are there significant feasibility issues due to factors such as project size, site constraints, and competition from multiple projects that make an on-site option impractical? ► Will an affordable housing product be difficult to integrate into the proposed market development because of significant price and product type disparity? ► Does the on-site development entity lack the capacity to deliver the proposed affordable housing on-site? 2. Relative Advantages/Disadvantages of the Off-site Proposal ► Does the off-site option offer greater feasibility and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance and when applying the City's Affordable Housing Financial Assistance Policy. ► Does the off-site proposal have location advantages over the on-site alternative, such as proximity to jobs, schools, transportation, services; less impact on other existing developments, etc.? ► Does the off-site option offer a development entity with the capacity to deliver the proposed project? ► Does the off-site option satisfy multiple developer obligations that would be difficult to satisfy with multiple projects? Page 2 of 4 Feb. 10, 2022 Item #3 Page 25 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. __ 5~7~----- Date Issued August 8. 1995 Effective Date August 8. 1995 Cancellation Date _____ _ Supersedes No. ______ _ General Subject: AFFORDABLE HOUSING Specific Subject: Off-site and Combined Inclusionary Housing Projects Copies to: City Council, City Manager, City Attorney, Departmlnt and Division Heads, Employee Bulletin Boards, Press, File. 3. Advancing Housing Goals ► Does the off-site proposal advance and/or support City housing goals and policies as expressed in the Housing Element, CHAS and Inclusionary Housing Ordinance? It is likely that off-site proposals will involve "mixed" results with the application of the above criteria. The "public interest" finding shall be made when a Combined Project Review Committee made up of the City Manager, City Attorney, Community Development Director, Financial Management Director, Planning Director, Housing & Redevelopment Director, and the Mayor (ex-officio), reaches consensus that a proposal substantially and affirmatively satisfies the above criteria and that this conclusion can be appropriately documented through the use of a Combined/Off-site Project Evaluation Assessment Worksheet. (Attachment 1). PROCEDURE 1. Projects with an inclusionary housing obligation will be processed according to the requirements of the Inclusionary Housing Ordinance. 2. Project approvals must be conditioned with the option to propose an off-site method (i.e., Combined Project) of satisfying the inclusionary obligation. A project proposing an off-site option may or may not also propose an on-site option. 3. Prior to final map or issuance of building permits, applicants must submit an Affordable Housing Agreement as described in the Inclusionary Housing Ordinance which specifically describes any off- site proposal. 4. Off-site proposals in the form of a draft Affordable Housing Agreement will be reviewed by the Combined Project Review Committee and it will be determined if the necessary findings can be made by staff. Page 3 of 4 Feb. 10, 2022 Item #3 Page 26 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. -~5~7~----- Date Issued August 8, 1995 Effective Date August 8, 1995 Cancellation Date _____ _ Supersedes No. ______ _ General Subject: AFFORDABLE HOUSING Specific Subject: Off-site and Combined Inclusionary Housing Projects Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. 5. Staff's findings and recommendation, including the Combined/Off-site Project Assessment Worksheet, will accompany the Affordable Housing Agreement to the Housing Commission for action. 6. Prior to final map or issuance of building permits, the proposed Affordable Housing Agreement will be considered by City Council along with the recommendation of staff and Housing Commission. 7. City Council will be the final decision making authority in determining whether an off-site proposal is in the public interest and permitting this option. Page 4 of 4 Feb. 10, 2022 Item #3 Page 27 of 163 I 1. 2. 3. 4. 5. 6. OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET BACK~ROUND Applicant Name and Address: Off-site or Combined Project Name: Description of Project with lnclusionary Housing Obligation: Proposed On-site Project Description (if any): Proposed Off-site Project Description: Description of On-site Project Constraints: Attachment "1" to Council Policy Statement No. 57 I Feb. 10, 2022 Item #3 Page 28 of 163 WORKSHEET . . . ASSESSMENT·CONCLUSION . (Check appropriate box) . -cc DOES NOT SUPPORT SUPPORTsOff.SfTE ASSESSMENT CRITERIA ·. Off..SITE PROPOSAL wr;;oNCLUSIVE PROPOSAL 1. Feasibility of the On-site Proposal. a. Are there significant feasibility issues due to factors such as project size, site constraints, amount and availability of required subsidy, and competition from multiple projects that make an on-site option impractical? Brief Narrative: b. Will an affordable housing product be difficult to integrate into the proposed market development because of significant price and product type disparity? Brief Narrative: C. Does the on-site development entity have the capacity to deliver the proposed affordable housing on-site? Brief Narrative: 2. Relative Advantages/Disadvantages of the Off- site Proposal. a. Does the off-site option offer greater feasibility and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance? 2 Feb. 10, 2022 Item #3 Page 29 of 163 '' '' . WORKSHEET .. ASSESSMENT CONCLUSION (Check appropriate box) . '· DOES NOT SUPPORT .. SUPPORTS Off'SITE ASSESSMENT CRfTERIA <JFF..SITE PROPOSAL INCONCLUSIVE PROPOSAL Brief Narrative: b. Does the off-site proposal have location advantages over the on-site alternative, such as proximity to jobs, schools, transportation, services; less impact on other existing developments, etc.? Brief Narrative: C. Does the off-site option offer a development entity with the capacity to deliver the proposed project? Brief Narrative: d. Does the off-site option satisfy multiple developer obligations that would be difficult to satisfy with multiple projects? Brief Narrative: 3. Advancing Housing Goals and Strategv a. Does the off-site proposal advance and/or support City housing goals and policies expressed in the Housing Element, CHAS and lnclusionary Housing Ordinance? Brief Narrative: DOES NOT SUPPORT SUPPO«TS.OFF-SFTE SUMMARY Off',SITE-PROPOSAL INCONCLUSIVE. PROPOSAL . . ·•·.··. 3 Feb. 10, 2022 Item #3 Page 30 of 163 Date Considered by Review Committee: Review Committee Action: Action: ar 4 EXHIBIT 5 Feb. 10, 2022 Item #3 Page 31 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Sale of Affordable Housing Credits Page 1 of 4 Policy No. -~5=8 _____ _ Date Issued September 12, 1995 Effective Date Sept. 12. 1995 Cancellation Date _____ _ Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. PURPOSE To establish a policy to be followed by City Council and City staff in selling Affordable Housing Credits, controlled by the City, to developers who will use the Credits to satisfy obligations to provide affordable housing pursuant to the City's Inclusionary Housing Ordinance (CMC Chapter 21.85). BACKGROUND In the development of the 344-unit affordable housing project known as Villa Lorna in the Southwest Quadrant of the City, the developers and the City created a project which may be treated as a Combined Project as defined in the City's Inclusionary Housing Ordinance. With City Council approval, Combined Projects allow "some or all of the inclusionary units associated with one residential project site to be produced and operated at an alternative site". The "alternative site" becomes a Combined Project. Villa Loma was conceived and developed with City participation based on the creation of 184 excess affordable housing units which would be available to satisfy other developers' inclusionary housing obligations thus making it a potential Combined Project. City financial participation in the project was also based on the concept of recovering costs through the sale of the excess units. Furthermore, Villa Lorna was structured to give the City control of these units (Affordable Housing Credits or "Credits") and their sale to potential Combined Project participants. Therefore, it is necessary to establish a policy to guide the City in the effective implementation of these Affordable Housing Credit sales transactions. POLICY Two basic factors will be considered in a Credit sale transaction --the financial aspect, which is the Credit pricing --this determines cost to a purchaser and revenue to the City; and the affordable housing aspect, which is the use of this mechanism to satisfy a developer's obligation under the Inclusionary Housing Ordinance. Based on these considerations, the following will guide Credit sales: Feb. 10, 2022 Item #3 Page 32 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Sale of Affordable Housing Credits Page 2 of 4 Policy No. -~5=8 _____ _ Date Issued __ S=e=p~t~-~1=2_, ~1~9~9=5- Effective Date Sept. 12, 1995 Cancellation Date _____ _ Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. ► Price. The Credit price will be determined according to the following formula which divides the local financial contribution provided to the Villa Loma project by the total number of Credits available. The local financial contribution consists of all City financial assistance provided to the project ( either as loans or expenditures for land including accrued interest on such amounts for the period of time they are outstanding); and the local developer contribution to the project provided in order to satisfy an affordable housing obligation): Affordable Housing Credit Pricing Formula + Number of Affordable Local Financial Contribution Housing Credits Available City Contribution $4.2 Million* Developer Contribution (Aviara Land Associates) .9 TOT AL $5.1 Million * To be adjusted with the addition of interest. 184 = Unit Price of Affordable Housing Credits (Rounded to nearest $1,000)* $28,000* ► Terms of Purchase and Sale. The commitment to purchase and sell Credits will be accomplished through an Affordable Housing Agreement as required by the Inclusionary Housing Ordinance. This Agreement will contain the terms of the Credit sale and will acknowledge the satisfaction of an affordable housing obligation through participation in a Combined Project (Villa Loma). Feb. 10, 2022 Item #3 Page 33 of 163 t CITY OF CARLSBAD COUNCIL POLICY STATEMENT Page 3 of 4 Policy No. ------"'5-"-8 _____ _ Date Issued Sept. 12. 1995 Effective Date Sept. 12. 1995 Cancellation Date _____ _ Supersedes No. ______ _ General Subject: AFFORDABLE HOUSING Specific Subject: Sale of Affordable Housing Credits Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. ► Selection of Purchasers. The following procedure will apply to the selection of purchasers and allocation of Credits: 1. Project Review. Staff, through the Combined Project Review Committee (see Council Policy No. 57) will review all applications and approved projects with inclusionary requirements and determine which projects will be recommended to satisfy their obligations through the purchase of Credits. If the number of acceptable projects have affordable housing requirements which exceed the available number of Credits, projects will be ranked and allocated Credits accordingly. Projects will be reviewed and ranked using the following criteria: a) The immediacy of the need to satisfy an affordable housing obligation with respect to the market rate project that is generating the obligation. b) The readiness and capacity of the developer to enter into an Affordable Housing Agreement and perform under its terms. c) The acceptability of the Combined Project as an off-site option in lieu of the satisfaction of the affordable housing obligation on-site with respect to the project that is generating the obligation (see Council Policy No. 57). 2. Electing to Purchase Credits. Developers will be notified of staffs recommendation to permit the purchase of Credits and given the opportunity to accept or reject this option. 3. Reservation of Credits. Developers wishing to use the option of purchasing Credits must have their projects approved with conditions allowing this option. In addition to Planning Commission approval, the recommendation of the Housing Commission will be required for the Credit purchase option of satisfying the Inclusionary Housing Obligation. When a project is approved (e.g., tentative map) with the Credit purchase condition, a reservation of the Credits is made for the project. Feb. 10, 2022 Item #3 Page 34 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Sale of Affordable Housing Credits Page 4 of 4 Policy No. -~5"'8'--------- Date Issued Sept. 12, 1995 Effective Date Sept. 12, 1995 Cancellation Date ------Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. 4. Affordable Housing Agreement. Within sixty (60) days of the approval of the Credit purchase condition, the developer must deliver to the Housing and Redevelopment Director a signed Affordable Housing Agreement in the form prescribed by the City with a non-refundable deposit in an amount equal to 10% of the total Credit sale price. The Affordable Housing Agreement will be scheduled for City Council consideration and, if and when approved, will be executed by the City. The Affordable Housing Agreement will require payment of the balance of the purchase price upon execution and prior to final map or issuance of a building permit. 5. Failure of Developer to Perform or Denial of Purchase Option. If the developer is unable to perform as required, or is denied the option of purchasing Credits, the Credits will be made available to another project(s), subject to this process. 6. This policy is subject to all other requirements of the Inclusionary Housing Ordinance. EXHIBIT 6 Feb. 10, 2022 Item #3 Page 35 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT Page 1 Policy No. Date Issued 68 10/19/04 Effective Date ___ 10=/ ..... 19=/-=04...;...._ ___ _ Cancellation Date NIA --------Supersedes No. N/A General Subject: Affordable Housing Specific Subject: lnclusionary Housing Incentive Credit Schedule Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads, Employee Bulletin Boards, Press, File PURPOSE: Pursuant to 21.85.060 of the Carlsbad Municipal Code, the City Council shall adopt a schedule of inclusionary housing incentive credit to specify developer eligibility for extra credit to reduce his/her total inclusionary housing requirement to less than 15% of all residential units approved. The noted schedule is set forth within this City Council Policy, and it may be amended from time to time to reflect any changes in the incentive credit(s) policy. BACKGROUND: When the lnclusionary Housing Ordinance (CMC 21.85) was adopted in 1993, and then amended in 2000, it was the City Council's expressed intent to allow housing developers to reduce their total inclusionary housing obligation to less than 15% if the developers provided a more desirable product or otherwise made a proposal which went above and beyond the intent of the Ordinance in terms of product type or affordability of those units. At the time of the Ordinance development, this policy on the schedule for incentive credits (giving more than one unit credit) was not adopted. The schedule is being adopted at this time to guide the City in its application of the requirements for affordable housing development. POLICY: The City Council will grant incentive credit based on the criteria and conditions set forth in the chart below. The project must meet all of the noted product criteria and development conditions to qualify for the incentive credit. s Feb. 10, 2022 Item #3 Page 36 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Affordable Housing Policy No. Date Issued 68 10/19/04 Page2 Effective Date ""'"10=/--'-19=J-=04...;...._ ___ _ Cancellation Date .a..;N=/A ________ _ Supersedes No. N/A Specific Subject: lnclusionary Housing Incentive Credit Schedule Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads, Employee Bulletin Boards, Press, File lnclusionary Housing Incentive Credit Schedule Desirable Product & Development Conditions Product: Newly Constructed For-Sale Town Home, Condominium, or Single Family Home Development Conditions: 1. The unit must be affordable to very low (50% or below AMI) or extremely low income (30% or below AMI) households. 2. The unit is a for-sale product. 3. The unit must be located on the same site as the development that has the inclusionary requirement. 4. The developer must not be obtaining any financial assistance from the Citv. Incentive Credit 1.2 per unit Minimum lnclusionary Housing Requirement 12.5% (of total housing units) Feb. 10, 2022 Item #3 Page 37 of 163 CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. Date Issued Page 3 68 10/19/04 Effective Date _,_10=/-'-19=}"""04 _______ _ Cancellation Date N/A -----------Supersedes No. N/A General Subject: Affordable Housing Specific Subject: lnclusionary Housing Incentive Credit Schedule Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads, Employee Bulletin Boards, Press, File To assist with application of the above noted incentive credit schedule, the following examples are provided for further explanation purposes. Example 1 -Small to Medium Size Project: Developer proposes to build a total of 78 for-sale town homes within a new development, which has an inclusionary housing requirement. Per current lnclusionary Housing requirements, the developer must provide 12 of those units (15%) as affordable to low income households (80% of the AMI or below). Under the above noted credit schedule, the developer could receive extra credit if 1) the affordable product within that development is also a for-sale town home, and 2) it will be affordable to very low or extremely low income households (50% of AMI or below), and 3) the developer obtains no financial assistance from the City. The credit would work as follows: 12 low income for-sale affordable units + 1.2 unit credit = 10 very low income units (Developer could provide 1 O very low income units rather than 12 low income units) 10 units + 78 total housing units = 12.8% of the total units 12.8% exceeds the 12.5% minimum Under this scenario, the developer meets all of the extra credit criteria and could be allowed to construct 1 O units rather than 12 units (2 fewer units), and would satisfy the City's inclusionary housing requirements. Example 2 -Large Size Project: Developer proposes to build a total of 1078 for-sale town homes within a development. Per current lnclusionary Housing Ordinance requirements, the developer must provide 162 of those units (15%) as affordable to low income households (80% of the AMI or below). Under the noted credit policy above, the developer would receive extra credit if 1) the affordable product within that development is also a for-sale town home, and 2) it will be affordable to very low or extremely low income households (50% of AMI or below), and 3) the developer obtains no financial assistance from the City. The credit would work as follows: 7 Feb. 10, 2022 Item #3 Page 38 of 163 Page4 CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. .a:.6=8 ______ _ Date Issued 10/19/04 ..a.=c...;..:.;..;:;...:'------- E ff e ct iv e Date -=-10=/--=-1=9/=0..,_4 ____ _ Cancellation Date N/A .:..:.:.:-=--------Supersedes No. N/A General Subject: Affordable Housing Specific Subject: lnclusionary Housing Incentive Credit Schedule Copies to: City Council, City Manager, City Attorney, Department Heads and Division Heads, Employee Bulletin Boards, Press, File 162 low income for-sale affordable units+ 1.2 unit credit= 135 units (Developer could provide 135 very low income units rather than 162 low income units) 135 + 1078 total housing units = 12.5% 12.5% is the minimum inclusionary housing requirement permitted under this policy Under this scenario, the developer meets all of the extra credit criteria and could be allowed to construct 135 units rather than 162 units (27 fewer units), and would satisfy the City's inclusionary housing requirements. PROCEDURE: The request for affordable housing incentive credit will be processed together with all other entitlements to allow for development of a housing project. As long as a project is consistent with this City Council policy, the incentive credit may be granted by either the Planning Commission, Design Review Board, Housing and Redevelopment Commission, and/or City Council. INCLUSIONARY HOUSING IN-LIEU FEE UPDATE Prepared for: City of Carlsbad Prepared by: Keyser Marston Associates, Inc. April 2021 EXHIBIT 7 Feb. 10, 2022 Item #3 Page 39 of 163 TABLE OF CONTENTS I. Introduction ....................................................................................................................................... 1 II. Key Findings ....................................................................................................................................... 3 III. In-Lieu Fee Financial Analysis: Citywide ........................................................................................... 8 IV. In-Lieu Fee Financial Analysis: Village and Barrio Master Plan Area .............................................. 16 V. Limiting Conditions .......................................................................................................................... 22 APPENDICES Appendix 1 Comparison of Affordable Housing Fees, San Diego County Appendix 2 Key Assumptions and Findings - 15% Low Income Appendix 3 In-Lieu Fee Financial Analysis – Citywide Appendix 4 In-Lieu Fee Financial Analysis - Village and Barrio Appendix 5 Viability of 20% Low Income Inclusionary Requirement Appendix 6 Estimate of Affordable Sales Prices and Rents Appendix 7 Residential Market Data Feb. 10, 2022 Item #3 Page 40 of 163 I. INTRODUCTION A. Objective This report presents the economic analysis prepared by Keyser Marston Associates, Inc. (KMA) for the City of Carlsbad (City) to evaluate the potential of updating the City’s existing inclusionary housing in- lieu fee. B. City of Carlsbad Existing Inclusionary Housing Ordinance The City’s Inclusionary Housing Ordinance (CMC §21.85) was established in 1993 and requires that all residential developments proposing seven or more units 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, both on and off-site. Affordable rental units must be restricted for 55 years; affordable for-sale units must remain affordable for 30 years after the initial sale of the unit.1 Some developments (specifically, projects of six or fewer dwelling units) have the option to satisfy their affordable housing obligation through payment of an inclusionary housing in-lieu fee. Six or fewer units was used as the eligibility threshold because the affordable unit calculation resulted in a number of less than one (i.e., 6 units multiplied by 15% equals 0.9 units). The in-lieu fee was initially set at $11,485.46 per market-rate unit. The fee was recalculated in 1996 based on 15% of the City’s per-unit subsidy for the Villa Loma Apartment community ($30,100), resulting in a reduction of the fee to $4,515 per market-rate unit. The fee amount has remained unchanged since. Through this fee, roughly $1.7 million has been collected since inception of the program. C. Methodology KMA performed the following key work tasks in completing this analysis. 1. Reviewed the City’s existing Inclusionary Ordinance and historical results in terms of unit production and in-lieu fee revenue. 2. Compiled data pertaining to inclusionary housing in-lieu fees and/or affordable housing impact fees currently being charged by other cities in San Diego County. 1 After the first 15 years, the owner of an affordable unit may sell at a market price if the City does not exercise its option to purchase at an affordable price. In this case, the City recaptures its subsidy plus a proportionate share of any appreciation. Funds recaptured by the City shall be used in assisting other eligible households with home purchases at affordable prices. Feb. 10, 2022 Item #3 Page 41 of 163 3. Reviewed market trends data, land values, development cost estimates, and other industry standards for both rental and for-sale residential development. 4. Formulated residential development prototypes in coordination with City planning staff. 5. Prepared pro forma financial models to estimate the residual land value generated by each residential prototype under two scenarios: (a) at 100% market-rate; and (b) assuming the City’s existing inclusionary requirement of 15% at Low Income. D. Organization of Report This report is organized into the following key sections: • Following this introduction, Section II presents the KMA key findings. • Section III presents the Citywide in-lieu fee financial analysis. • Section IV presents the financial analysis for an in-lieu fee for the Village and Barrio Master Plan area (Village/Barrio). • Section V presents limiting conditions pertaining to this report. Feb. 10, 2022 Item #3 Page 42 of 163 II. KEY FINDINGS A. Potential Fee Levels The City requested that KMA analyze potential inclusionary in-lieu fee levels Citywide and within the Village/Barrio. In order to provide the City with a framework for setting possible fee levels, KMA considered two approaches: (1) the economic impact of incorporating affordable housing on-site; and (2) the funding level required for the market-rate developer or City to implement targeted inclusionary housing production in an off-site location. Potential Fee Levels As presented in Table II-1, based on the findings from the two approaches noted above, the City may wish to consider a Citywide in-lieu fee of up to $31,240 per market-rate unit, or between $15 and $25 per square foot (SF) of market-rate residential living area. In the Village/Barrio, the City may wish to consider a potential fee of up to $34,940 per market-rate unit, or between $25 and $35 per SF of market-rate residential living area. Table II-1: Potential Fee Levels – 15% Low Income Citywide Village/Barrio Per Market-Rate Unit $31,240 $34,940 Per Net SF Market- Rate Unit $15 - $25 $25 - $35 As noted above, the fee levels are expressed on both a per-unit and per-SF basis. A per-SF in-lieu fee, as compared to a flat fee approach, recognizes the various residential unit sizes produced both Citywide and in the Village/Barrio and avoids overly burdening the production of small units. Potential Fee Level Adjustments Some jurisdictions apply an automatic adjustment to their in-lieu fee on an annual basis. This provision ensures that the fees charged will adjust annually to reflect changes in housing production costs. There are a number of potential indices that could be used to adjust fee levels in the future. A review of potential indices that could be used to adjust the fee in the future is presented in Table II-2. Feb. 10, 2022 Item #3 Page 43 of 163 Table II-2: Potential Indices for Fee Level Adjustment Index Concept / Description Advantages Disadvantages #1 Building Cost Index (BCI) Fees go up or down based on building construction costs. Published by Engineering News Record (ENR). Available at national average and for 20 cities (not Carlsbad or San Diego; Los Angeles is nearest city available). Very well established. Consistent fee burden over time relative to construction costs. May not trend with changes in non- construction development costs (land, other soft costs). May not trend with cost to produce affordable units. Only addresses cost side of the equation. #2 Construction Costs Index (CCI) Also published by ENR and similar to Building Cost Index but with different weighting of labor and material cost categories. Same as above. Same as above. #3 Consumer Price Index (CPI) Published by the U.S. Bureau of Labor Statistics. Available for major metro areas including San Diego. Very well established. Generally tracks with inflation. Produced by neutral governmental agency. May not trend with: - Construction costs (consistent fee burden) or - Cost to produce affordable units (consistent ability to mitigate impacts) As shown below in Table II-3, between 1996 and 2020, the average annual growth range for the above indices ranged between 2.57% and 2.69%. Had the annual growth rates from these indices been applied to the City’s existing $4,515 in-lieu fee in 1996, the in-lieu fee would have increased to between $8,308 and $8,528 per market-rate unit in 2020. Feb. 10, 2022 Item #3 Page 44 of 163 Table II-3: Estimated Fee Level Adjustment – Existing In-Lieu Fee Building Cost Index (BCI) Construction Cost Index (CCI) Consumer Price Index (CPI) Existing In-Lieu Fee $4,515 $4,515 $4,515 Average Annual Growth Rate, 1996-2020 2.61% 2.57% 2.69% Estimated In-Lieu Fee, 2020 $8,387 $8,308 $8,529 B. Economic Impact of Potential Fee Levels The KMA analysis also estimated the economic impact of the potential fee levels on project feasibility. The economic impact of the in-lieu fees was measured against residual land value and developer profit. Residual land value is defined as the as the maximum land value supported by a proposed development. It is calculated by estimating the total value upon completion (or total available funding sources) and subtracting the estimated total development costs (other than land acquisition costs) required to develop the project. Specifically, the residual land value for each residential prototype is derived from the following calculation. Exhibit II-1: Residual Land Value Calculation Table II-4 provides a summary of the economic impact as measured by comparing: (a) the residual land value and developer profit generated from the optimal approach to fulfilling the City’s existing 15% inclusionary requirement, whether on-site or off-site production, against (b) the residual land value and developer profit resulting from a potential in-lieu fee of $15 to $25 per SF of market-rate residential living area Citywide and a potential in-lieu fee of $25 to $35 per SF in the Village/Barrio. The figures noted below reflect the average outcome for the four (4) Citywide and four (4) Village/Barrio residential development prototypes evaluated in this study. Total Value at Completion Estimated Development Costs (excluding land) Residual Land Value = - Feb. 10, 2022 Item #3 Page 45 of 163 Table II-4: Estimated Impact of Potential In-Lieu Fee – 15% Low Income Citywide Village/Barrio Average Impact for Four (4) Residential Development Prototypes Average Impact for Four (4) Residential Development Prototypes Potential Fee Levels $15/SF $25/SF $25/SF $35/SF Impact on Residual Land Value 7.8% -4.5% 3.3% -3.1% Impact on Developer Profit -3.2% -5.3% -3.8% -5.4% As shown in Table II-4, the potential in-lieu fee levels have relatively minor economic impacts on residential development projects when compared to a developer’s existing options for compliance with the inclusionary requirement, i.e., producing inclusionary units either on- or off-site. The “low” potential fee level demonstrates either a positive or minor negative impact as compared to existing compliance methods. The “high” fee demonstrates relatively minor negative impacts as compared to existing compliance methods. For any new or increased in-lieu fee, a period of adjustment may be needed for the development marketplace to adjust to the new fee. Specifically, developers and landowners will need to consider how to incorporate increased fees into their financial pro formas and/or evaluate alternative means of compliance. C. Survey of San Diego County Jurisdictions KMA conducted a survey of inclusionary in-lieu fees and affordable housing impact fees in other San Diego County communities. The survey is summarized in Table II-5 below in comparison with potential fee levels for the City of Carlsbad. Detailed information on each jurisdiction’s inclusionary program and fee levels is presented in Appendix 1. City Table II-5: Comparison of Affordable Housing Fees, Carlsbad vs. San Diego County Jurisdictions City of Carlsbad San Diego County Jurisdictions (range of findings) (1) Inclusionary Housing Required Threshold 7 units 1 unit - 50 units % of Affordable Units Required 15% 10% - 20% Feb. 10, 2022 Item #3 Page 46 of 163 Table II-5: Comparison of Affordable Housing Fees, Carlsbad vs. San Diego County Jurisdictions City of Carlsbad San Diego County Jurisdictions (range of findings) (1) In-Lieu Fee Option Available to projects Up to 6 units Available to rental or fractional units only - Available to all project of all sizes In-Lieu Fee Amount Current Fee: $4,515/unit Potential Fee Levels: • Citywide: $31,240/unit $15 - $25/SF • Village/Barrio: $34,940/unit $25 - $35/SF $500/Unit $8.82/SF - $7,000/Unit $31.00/SF (1) See Appendix 1 for a detailed survey of San Diego County jurisdictions. Inclusionary housing programs and in-lieu fees vary widely throughout the County, with varying amounts of fee levels and threshold requirements for the payment of in-lieu fees. For example, some jurisdictions allow the payment of an in-lieu fee for projects of all sizes; others, like the City, limit the payment of in-lieu fees to only those projects that meet specific criteria. Feb. 10, 2022 Item #3 Page 47 of 163 III. IN-LIEU FEE FINANCIAL ANALYSIS: CITYWIDE A. Residential Development Prototypes Table III-1 provides a summary of the residential development prototypes identified for the Citywide in- lieu fee financial analysis. The Citywide prototypes are illustrative of the types of development projects occurring, and anticipated to occur, throughout the City. Three (3) new construction for-sale residential prototypes and one (1) new construction rental residential prototype were identified based on discussions with City staff. While this level of feasibility analysis is useful for conceptual planning purposes, the actual circumstances for individual projects – physical, planning, market, financial, and other factors – will likely vary from the findings presented in this report. Table III-1: Project Descriptions for Development Prototypes - Citywide FOR-SALE RENTAL Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Site Area 10.0 Acres 5.0 Acres 3.0 Acres 5.0 Acres Density (Units/Acre) 3.2 6.0 15.0 25.0 Number of Units 32 Units 30 Units 45 Units 125 Units Unit Mix 3 and 4 Bedrooms 3 and 4 Bedrooms 2 and 3 Bedrooms 1, 2, and 3 Bedrooms Stories 2 Stories 2 Stories 2 Stories 3 Stories Average Unit Size 3,203 SF 2,200 SF 1,580 SF 991 SF B. Projected Market Sales Prices and Rent KMA surveyed new for-sale and rental developments throughout the City. The purpose of the survey was to derive estimates of the currently achievable market prices and rental rates for the types of developments likely to be constructed in the City. The base case market-rate sales prices and monthly rent estimates that are used in the Citywide financial feasibility analyses are presented in Table III-2. Table III-2: Projected Market Sales Prices and Rents - Citywide FOR-SALE RENTAL Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Average $/SF $439/SF $477/SF $467/SF $2.74/SF Average Unit Size 3,203 SF 2,200 SF 1,580 SF 991 SF Average Market Price/ Monthly Rent $1,406,000 $1,050,000 $738,000 $2,720 Feb. 10, 2022 Item #3 Page 48 of 163 C. Affordable Price and Rent Calculation For the purposes of this financial analysis, the maximum affordable sales prices and rents for the income-restricted units were calculated based on the standards imposed by California Health and Safety Codes Section 50052.5 (ownership) and Section 50053 (rental). The detailed calculations are presented in Appendix 6; the key assumptions and results are summarized below. Affordable Sales Price • The price restrictions were calculated for three different for-sale residential prototypes (single- family large lot, single-family medium lot, and townhomes). • The household income information used in the calculations is based on 2020 income statistics for San Diego County as a whole. The household incomes are published annually by the U.S. Department of Housing and Urban Development (HUD). • Household size appropriate for the unit were based on the City’s Inclusionary Housing Calculations guidelines. • Maximum monthly ownership housing payments were calculated as equal to 1/12 x 30% x 80% Area Median Income (AMI) adjusted for household size. • Housing-related costs reflecting the specifics of each residential prototype and current lending industry underwriting criteria were determined as follows: o Utilities based on the City of Carlsbad utility allowance schedule, effective December 1, 2019, and the assumption that the homeowner’s utility costs are comprised of gas cooking and water heating, gas heating, other basic electric services, water and sewer, and trash. o Homeowner Association (HOA) dues, reflecting an allowance for structure insurance, maintenance, and reserves. o Property taxes, assuming a typical City tax rate of 1.20% of assessed value. o Supportable mortgage, assuming a 30-year loan, 4.5% interest rate, and a 10.0% down payment. Feb. 10, 2022 Item #3 Page 49 of 163 Affordable Rent • The household income information used in the calculations of affordable rent were based on 2020 income statistics for San Diego County as a whole. The household incomes are published annually by HUD. • The household size appropriate for the unit based on the City’s Inclusionary Housing Calculations guidelines. • Maximum monthly rental housing payment calculated as equal to 1/12 x 30% x 70% AMI (adjusted for household size), less adjustments for certain tenant-paid utilities. • Utilities based on the City of Carlsbad utility allowance schedule, effective December 1, 2019, and the assumption that the tenant’s utility costs are comprised of gas cooking and water heating, gas heating, and other basic electric services. The resulting average affordable sales prices and rents for each of the Citywide residential prototypes are presented in Table III-3. Table III-3: Affordable Sales Prices and Rents FOR-SALE RENTAL Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Average Affordable Sales Price and Monthly Rent @ Low Income $415,000 $415,000 $330,000 $1,781 D. Approach 1: Economic Impact of Incorporating Affordable Housing On-Site To estimate the economic impact of incorporating inclusionary housing requirements on-site, KMA prepared financial pro forma models for each Citywide residential development prototype. The financial pro forma models present comparative impacts of: (a) a 100% market-rate residential development, as compared to (b) the City’s current inclusionary housing requirement. Appendix 3 provides the detailed pro forma analyses prepared by KMA for each Citywide residential development prototype. Attachments A through D within Appendix 3 are organized as follows: Table 1 Project Description Table 2 Estimate of Development Costs Table 3 Estimate of Sales Proceeds or Annual Revenue and Residual Land Value Feb. 10, 2022 Item #3 Page 50 of 163 Each attachment displays a financial pro forma model estimating the residual land value for: (1) a base case consisting of a 100% market-rate development; and (2) a development that complies with the City’s existing inclusionary requirement, i.e., 15% at Low Income. The base case residual land value outcome can then be measured against the residual land value that is generated when the 15% Low Income requirement is imposed. The economic impact of incorporating the City’s existing inclusionary requirement on-site, is summarized in Table III-4. Table III-4: Economic Impact of Incorporating Affordable Housing On-Site - Citywide FOR-SALE RENTAL Average Residual Land Value Per Unit Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments 100% Market-Rate $285,000 $237,000 $147,000 $114,000 $196,000 85% Market-Rate / 15% Low Income $150,000 $145,000 $92,000 $84,000 $118,000 Economic Impact of Incorporating Affordable Housing On-Site Per Market-Rate Unit $135,000 $92,000 $55,000 $30,000 $78,000 Per Market-Rate Net SF $42.15 $41.82 $34.81 $30.27 $37.26 As shown in Table III-4, the economic impact of including 15% Low Income units on-site is estimated to range from $30,000 to $135,000 per unit, or $30 to $42 per SF, of market-rate residential living area. E. Approach 2: Funding Level Required to Implement Inclusionary Housing Production in an Off-Site Location KMA also prepared estimates of the affordability gaps associated with developing affordable housing in an off-site location. The purpose of this financial analysis was to estimate the funding gap that would be required for either a market-rate residential developer or the City to create the targeted inclusionary housing production in a separate off-site location. As detailed in Appendix 3, Attachment E, the analysis assumed the off-site affordable housing project to be rental apartments, in a stacked flat configuration over tuck-under parking, consisting of 60 units on a 2.0-acre site. KMA estimated the development costs, operating budget, and anticipated funding sources for this off-site affordable housing development prototype. The KMA analysis assumed that the affordable development is financed with Low Income Housing Tax Credits (Tax Credits) and Multi-family Housing Program (MHP) funds. The development budget was also assumed to include the payment of prevailing wages. Additional key assumptions used in the affordability gap analysis are as follows: Feb. 10, 2022 Item #3 Page 51 of 163 • Total development costs, excluding acquisition, estimated at $392,000 per unit. • Acquisition costs estimated at $100,000 per unit. • Monthly rents at an average of 50% AMI in order to competitively apply for 4% Tax Credits. The resulting stabilized annual net operating income generated by the affordable units are shown in Table III-5. Table III-5: Off-Site Affordable Units – Net Operating Income – Citywide Per Unit Per Year 50% AMI Average Monthly Rent, 2020 $1,171 Effective Gross Income $13,450 (Less) Operating Expenses ($6,417) Net Operating Income $7,033 Funding sources available for the affordable units are assumed to include a combination of first mortgage debt, Tax Credit equity investment, State of California MHP funds, funding from the Federal Home Loan Bank Affordable Housing Program (AHP), deferred developer fee/General Partner equity contribution, and income during lease-up. These potential funding sources are itemized in Table III-6. Table III-6: Off-Site Affordable Units – Sources of Fund per Unit - Citywide Supportable Permanent Loan $113,000 Low Income Housing Tax Credit Equity $134,000 Multifamily Housing Program $50,000 Affordable Housing Program $10,000 Deferred Developer Fee/General Partner Equity $7,000 Income During Lease-Up $1,000 Total Sources of Funds $315,000 As shown in Table III-7, the affordability gap for the affordable units is estimated at $177,000 per Low Income unit. This figure is calculated as the difference between total development costs and total funding sources. Feb. 10, 2022 Item #3 Page 52 of 163 Table III-7: Off-Site Affordable Units – Affordability Gap per Unit - Citywide Total Sources of Funds $315,000 (Less) Total Development Costs ($492,000) Affordability Gap per Affordable Unit $177,000 As shown above, KMA estimates that a Low Income rental unit developed Citywide has an estimated financing gap of $177,000. In other words, for the market-rate developer or City to facilitate creation of off-site Low Income units Citywide, it would need to contribute $177,000 per affordable rental unit. As shown in Table III-8, under the City’s existing inclusionary requirement, the required number of off-site Low Income units is calculated against the total number of market-rate units approved plus the inclusionary units produced. This equates to $31,240 per market-rate unit developed (i.e., $177,000 ÷ 85% x 15%). Table III-8: Estimate of Funding Gap for Off-Site Low Income Units - Citywide Affordability Gap per Off-Site Low-Income Unit $177,000 Per Market-Rate Unit @ 15% Inclusionary Set-Aside $31,240 This funding gap outcome can be expressed on both a per-unit basis and per-SF basis relative to the market-rate residential development. KMA estimates that the City would need to receive an in-lieu fee ranging from $10 to $32 per SF, depending on the market-rate prototype, or an average of $19 per SF market-rate residential living area, as shown in Table III-9. Table III-9: Funding Level Required to Create Affordable Housing Off-Site - Citywide FOR-SALE RENTAL Average Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Per Market-Rate Unit $31,240 $31,240 $31,240 $31,240 $31,240 Per Market-Rate Net SF $9.75 $14.20 $19.77 $31.52 $18.81 F. Range of Potential In-Lieu Fees As summarized in Table III-10, in view of Approaches 1 and 2 above, the City may wish to consider a Citywide in-lieu fee of $31,240 per unit, or between $15 and $25 per SF of market-rate residential living area. Feb. 10, 2022 Item #3 Page 53 of 163 Table III-10: Potential Fee Levels – 15% Low Income - Citywide Approach to Setting Fee Levels Potential Fee Levels Approach 1: On-Site Production Approach 2: Off-Site Production Per Market-Rate Unit $30,000 - $135,000 Average: $78,000 $31,240 $31,240 Per Market-Rate Net SF $30 - $42 Average: $37 $10 - $32 Average: $19 $15 - $25 G. Economic Impact of In-Lieu Fee Levels The KMA analysis also estimated the economic impact of the potential fee levels on project feasibility. For each residential prototype, KMA first compared the residual land value generated from incorporating affordable units on-site within a market-rate development vs. the funding level required for inclusionary housing production off-site. The approach that yielded the higher residual land value was deemed the “optimal approach” to inclusionary production that a developer would most likely choose. KMA then compared the residual land value from the optimal approach to the residual land value generated when imposing a potential in-lieu fee of $15 to $25 per SF of market-rate residential living area. The difference in residual land value reflects the economic impact of the potential fee levels. The KMA findings are summarized in Table III-11, below. Table III-11: Economic Impact of Potential In-Lieu Fee on Project Feasibility - Residual Land Value - Citywide FOR-SALE RENTAL Average Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Residual Land Value ($/SF Site Area) Approach 1: On-Site Production $11 $20 $32 $48 $28 Approach 2: Off-Site Production $19 $28 $40 $47 $34 Optimal Approach (On-Site vs. Off-Site Production) Residual Land Value ($/SF Site Area) $19 $28 $40 $48 $34 Off-Site Off-Site Off-Site On-Site --- In-Lieu Fee @ $15/Net SF Residual Land Value ($/SF Site Area) $18 $28 $42 $57 $36 % Change -5.4% -1.0% 6.4% 17.0% 7.8% In-Lieu Fee @ $25/Net SF Residual Land Value ($/SF Site Area) $15 $25 $37 $51 $32 % Change -18.0% -11.7% -7.3% 5.3% -4.5% Feb. 10, 2022 Item #3 Page 54 of 163 KMA also analyzed the impact of the potential fee levels on the market-rate residential developer’s profit, assuming that the base case land value is held constant. The results of this analysis are summarized in Table III-12. Table III-12: Economic Impact of Potential In-Lieu Fee on Project Feasibility – Developer Profit - Citywide FOR-SALE RENTAL Average Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Optimal Approach (On-Site vs. Off-Site Production) Developer Profit (% of Value) 10.0% 10.0% 10.0% 10.0% 10.0% Off-Site Off-Site Off-Site On-Site --- In-Lieu Fee @ $15/Net SF Developer Profit (% of Value) 6.8% 6.9% 6.8% 6.8% 6.8% % Change -3.2% -3.1% -3.2% -3.2% -3.2% In-Lieu Fee @ $25/Net SF Developer Profit (% of Value) 4.5% 4.8% 4.6% 4.7% 4.7% % Change -5.5% -5.2% -5.4% -5.3% -5.3% The results shown in Tables III-11 and III-12 demonstrate that potential in-lieu fee levels between $15 and $25 per SF for residential development projects Citywide will have relatively minor impacts on developers’ financial pro formas, when compared to existing compliance methods of producing inclusionary units either on- or off-site. Feb. 10, 2022 Item #3 Page 55 of 163 IV. IN-LIEU FEE FINANCIAL ANALYSIS: VILLAGE AND BARRIO MASTER PLAN AREA A. Residential Development Prototypes Table IV-1 provides a summary of the residential development prototypes identified for the Village/Barrio in-lieu fee financial analysis. The Village/Barrio prototypes are illustrative of the types of development projects occurring and anticipated to occur in the Village/Barrio. Three new construction for-sale residential prototypes and one new construction rental residential prototype were identified based on discussion with City staff. While this level of feasibility analysis is useful for conceptual planning purposes, the actual circumstances for individual projects – physical, planning, market, financial, and other factors – will likely vary from the findings presented in this report. Table IV-1: Project Descriptions for Development Prototypes – Village/Barrio FOR-SALE RENTAL Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Site Area 0.50 Acres 0.50 Acres 0.50 Acres 0.50 Acres Density (Units/Acre) 23.0 35.0 14.0 30.0 Number of Units 11 Units 17 Units 7 Units 15 Units Unit Mix 1, 2 and 3 Bedrooms 1, 2, and 3 Bedrooms 2 and 3 Bedrooms 1 and 2 Bedrooms Stories 3 Stories 4 Stories 3 Stories 3 Stories Average Unit Size 1,209 SF 1,194 SF 1,429 SF 857 SF Retail SF --- 3,000 SF --- --- B. Projected Market Sales Prices and Rent KMA surveyed new for-sale and rental developments in the Village/Barrio. The purpose of the survey was to derive estimates of the currently achievable market prices and rental rates for the types of developments likely to be constructed in the Village/Barrio. The base case market-rate sales prices and monthly rent estimates that are used in the Village/Barrio financial feasibility analyses are presented in Table IV-2. Feb. 10, 2022 Item #3 Page 56 of 163 Table IV-2: Projected Market Sales Prices and Rents – Village/Barrio FOR-SALE RENTAL Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Average $/SF $773/SF $765/SF $512/SF $3.42/SF Average Unit Size 1,209 SF 1,194 SF 1,429 SF 857 SF Average Market Price/ Monthly Rent $935,000 $914,000 $732,000 $2,933 C. Affordable Price and Rent Calculation The maximum affordable sales prices and rents for the income-restricted units in the Village/Barrio used the same standards, assumptions, and calculations described in Section III. The detailed calculations are presented in Appendix 6 and the resulting average affordable sales prices and rents for the Village/Barrio residential development prototypes are presented in Table IV-3. Table IV-3: Affordable Sales Prices and Rents - Village/Barrio FOR-SALE RENTAL Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Average Affordable Sales Price and Monthly Rent @ Low Income $316,000 $265,000 $384,000 $1,667 D. Approach 1: Economic Impact of Incorporating Affordable Housing On-Site To estimate the economic impact of incorporating inclusionary housing requirements on-site, KMA prepared financial pro forma models for each Village/Barrio residential development prototype. The financial pro forma models present comparative impacts of: (a) a 100% market-rate residential development, as compared to (b) the City’s current inclusionary housing requirement. Appendix 4, Attachments F through I, provide the detailed pro forma analyses for each Village/Barrio residential development prototype. Each attachment displays a financial pro forma model estimating the residual land value for: (1) a base case consisting of a 100% market-rate development; and (2) a development that complies with the City’s existing inclusionary requirement, i.e., 15% at Low Income. The base case residual land value outcome can then be measured against the residual land value that is generated when the 15% Low Income requirement is imposed. The economic impact of incorporating the City’s existing inclusionary requirement on-site is summarized in Table IV-4. Feb. 10, 2022 Item #3 Page 57 of 163 Table IV-4: Economic Impact of Incorporating Affordable Housing On-Site – Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Residual Land Value Per Unit Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under 100% Market-Rate $297,000 $263,000 $167,000 $109,000 $209,000 85% Market-Rate / 15% Low Income $187,000 $174,000 $122,000 $78,000 $140,000 Economic Impact of Incorporating Affordable Housing On-Site Per Market-Rate Unit $110,000 $89,000 $45,000 $31,000 $68,750 Per Market-Rate Net SF $90.98 $74.53 $31.50 $36.19 $58.30 As shown in Table IV-4, the economic impact of including 15% Low Income units on-site is estimated to range from $31,000 to $110,000 per unit, or $32 to $91 per SF of market-rate residential living area in the Village/Barrio. E. Approach 2: Funding Level Required to Implement Inclusionary Housing Production in an Off-Site Location KMA prepared estimates of the affordability gaps associated with developing affordable housing in an off-site location. The purpose of this financial analysis was to estimate the funding gap that would be required for either a market-rate residential developer or the City to create the targeted inclusionary housing production in a separate off-site location. As detailed in Appendix 4, Attachment J, the analysis assumed the affordable housing project to be rental apartments, in a stacked flat configuration over podium parking, consisting of 20 units on a 0.50- acre site. KMA estimated the development costs, operating budget, and anticipated funding sources for the off-site affordable housing development prototype. The KMA analysis assumed that the affordable development is financed with either 4% or 9% Tax Credits. As shown in Table IV-5, the average affordability gap for the affordable units is estimated to average $198,000 per Low Income unit. These figures are calculated as the difference between total development costs and total funding sources. Feb. 10, 2022 Item #3 Page 58 of 163 Table IV-5: Off-Site Affordable Units – Affordability Gap per Unit – Village/Barrio 4% Tax Credits 9% Tax Credits Average Total Sources of Funds $262,000 $291,000 $276,000 (Less) Total Development Costs $490,000 $458,000 $474,000 Affordability Gap per Affordable Unit $228,000 $167,000 $198,000 As shown above, KMA estimates that a Low Income rental unit developed in the Village/Barrio has an estimated average financing gap of $198,000. In other words, for the market-rate developer or City to facilitate creation of off-site Low Income units in the Village/Barrio, it would need to contribute $198,000 per affordable rental unit. As shown in Table IV-6, under the City’s existing inclusionary requirement, the required number of off-site Low Income units is calculated against the total number of market-rate units approved plus inclusionary units produced. This equates to $34,940 per market-rate unit developed (i.e., $198,000 ÷ 85% x 15%). Table IV-6: Estimate of Funding Gap for Off-Site Low-Income Units – Village/Barrio Affordability Gap per Off-Site Low Income Unit $198,000 Per Market-Rate Unit @ 15% Inclusionary Set-Aside $34,940 This funding gap outcome can be expressed on both a per-unit basis and per-SF basis relative to the market-rate residential development. KMA estimates that the City would need to receive an in-lieu fee of $34,940 per market-rate unit, or a per-SF fee ranging between $24 and $41, depending on the market-rate prototype, or an average of $31 per SF living area, as shown in Table IV-7. Table IV-7: Funding Level Required to Create Affordable Housing Off-Site – Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Per Market-Rate Unit $34,940 $34,940 $34,940 $34,940 $34,940 Per Market-Rate Net SF $28.90 $29.26 $24.46 $40.79 $30.85 F. Range of Potential In-Lieu Fees As summarized in Table IV-8, in view of Approaches 1 and 2 above, the City may wish to consider a Village/Barrio in-lieu fee of $34,940 per market-rate unit, or between $25 and $35 per SF of market-rate residential living area. Feb. 10, 2022 Item #3 Page 59 of 163 Table IV-8: Potential Fee Levels – 15% Low Income – Village/Barrio Approach to Setting Fee Levels Potential Fee Levels Approach 1: On-Site Production Approach 2: Off-Site Production Per Market-Rate Unit $31,000 - $110,000 Average: $68,750 $34,940 $34,940 Per Market-Rate Net SF Residential $32 - $91 Average: $58 $24 - $41 Average: $31 $25 - $35 G. Economic Impact of In-Lieu Fee Levels The KMA analysis also estimated the economic impact of the potential fee levels on project feasibility. For each residential prototype, KMA first compared the residual land value generated from incorporating affordable units on-site within a market-rate development vs. the funding level required for inclusionary housing production off-site. The approach that yielded the higher residual land value was deemed the “optimal approach” to inclusionary production that a developer would most likely choose. KMA then compared the residual land value from the optimal approach to the residual land value generated when imposing a potential in-lieu fee of $25 to $35 per SF of market-rate residential living area. The difference in residual land value reflects the economic impact of the potential fee levels. The KMA findings are summarized in Table IV-9, below. Table IV-9: Economic Impact of Potential In-Lieu Fee on Project Feasibility - Residual Land Value – 15% Low Income - Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck- under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Residual Land Value ($/SF Site Area) Approach 1: On-Site Production $95 $136 $39 $53 $81 Approach 2: Off-Site Production $132 $178 $42 $51 $101 Optimal Approach (On-Site vs. Off-Site Production) Residual Land Value ($/SF Site Area) $132 $178 $42 $53 $102 Off-Site Off-Site Off-Site On-Site --- In-Lieu Fee @ $25/Net SF Residual Land Value ($/SF Site Area) $135 $182 $42 $60 $105 % Change 1.9% 2.4% -0.6% 13.1% 3.3% In-Lieu Fee @ $35/Net SF Residual Land Value ($/SF Site Area) $129 $173 $38 $54 $98 % Change -2.8% -2.9% -11.4% 2.0% -3.1% Feb. 10, 2022 Item #3 Page 60 of 163 KMA also analyzed the impact of the potential fee levels on the market-rate residential developer’s profit, assuming that the base case land value is held constant. The results of this analysis are summarized in Table IV-10. Table IV-10: Economic Impact of Potential In-Lieu Fee on Project Feasibility – Developer Profit – 15% Low Income - Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck- under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Optimal Approach (On-Site vs. Off-Site Production) Developer Profit (% of Value) 12.0% 12.0% 10.0% 12.0% 11.5% Off-Site Off-Site Off-Site On-Site --- In-Lieu Fee @ $25/Net SF Developer Profit (% of Value) 8.8% 9.0% 5.1% 7.7% 7.7% % Change -3.2% -3.0% -4.9% -4.3% -3.8% In-Lieu Fee @ $35/Net SF Developer Profit (% of Value) 7.5% 7.9% 3.2% 6.0% 6.1% % Change -4.5% -4.1% -6.8% -6.0% -5.4% The results shown in Tables IV-9 and IV-10 demonstrate that potential in-lieu fee levels between $25 and $35 per SF for residential development projects in the Village/Barrio will have relatively minor impacts on developers’ financial pro formas, when compared to existing compliance methods of producing inclusionary units either on- or off-site. Feb. 10, 2022 Item #3 Page 61 of 163 V. LIMITING CONDITIONS 1. The analysis contained in this document is based, in part, on data from secondary sources such as state and local government, planning agencies, real estate brokers, and other third parties. While KMA believes that these sources are reliable, we cannot guarantee their accuracy. 2. The analysis assumes that neither the local nor national economy will experience a major recession. If an unforeseen change occurs in the economy, the conclusions contained herein may no longer be valid. 3. The findings are based on economic rather than political considerations. Therefore, they should be construed neither as a representation nor opinion that government approvals for development can be secured. 4. Development opportunities are assumed to be achievable during the specified time frame. A change in development schedule requires that the conclusions contained herein be reviewed for validity. 5. The analysis, opinions, recommendations and conclusions of this document are KMA's informed judgment based on market and economic conditions as of the date of this report. Due to the volatility of market conditions and complex dynamics influencing the economic conditions of the building and development industry, conclusions and recommended actions contained herein should not be relied upon as sole input for final business decisions regarding current and future development and planning. 6. Any estimates of development costs, capitalization rates, income and/or expense projections are based on the best available project-specific data as well as the experiences of similar projects. They are not intended to be projections of the future for the specific project. No warranty or representation is made that any of the estimates or projections will actually materialize. 7. KMA is not advising or recommending any action be taken by City of Carlsbad with respect to any prospective, new or existing municipal financial products or issuance of municipal securities (including with respect to the structure, timing, terms and other similar matters concerning such financial products or issues). 8. KMA is not acting as a Municipal Advisor to the City of Carlsbad and does not assume any fiduciary duty hereunder, including, without limitation, a fiduciary duty to the City of Carlsbad pursuant to Section 15B of the Exchange Act with respect to the services provided hereunder and any information and material contained in KMA’s work product. Feb. 10, 2022 Item #3 Page 62 of 163 9. The City of Carlsbad shall discuss any such information and material contained in KMA’s work product with any and all internal and/or external advisors and experts, including its own municipal advisors, that it deems appropriate before acting on the information and material. Feb. 10, 2022 Item #3 Page 63 of 163 APPENDICES Appendix 1 Exhibit 1 – Comparison of Affordable Housing Fees, San Diego County Appendix 2 Key Assumptions and Findings – 15% Low Income • Table 1 – Key Assumptions – Citywide • Table 2 – Key Assumptions – Village and Barrio • Table 3 – Summary of Development Scenarios and Residual Land Value – Citywide • Table 4 - Summary of Development Scenarios and Residual Land Value – Village and Barrio • Table 5 – Estimate of Potential In-Lieu Fee – Approach 1: Economic Impact of Incorporating Affordable Housing On-Site – Citywide • Table 6 – Estimate of Potential In-Lieu Fee – Approach 2: Funding Level Required for Inclusionary Housing Funding Production Off-Site – Citywide • Table 7 – Impact of Potential In-Lieu Fee - Citywide • Table 8 – Estimate of Potential In-Lieu Fee – Approach 1: Economic Impact of Incorporating Affordable Housing On-Site – Village and Barrio • Table 9 – Estimate of Potential In-Lieu Fee – Approach 2: Funding Level Required for Inclusionary Housing Funding Production Off-Site – Village and Barrio • Table 10 – Impact of Potential In-Lieu Fee – Village and Barrio Appendix 3 In-Lieu Fee Financial Analysis – Citywide Prototypes • Attachment A – Single-Family Detached – Large Lot • Attachment B – Single-Family Detached – Medium Lot • Attachment C – Townhomes • Attachment D – Garden Apartments • Attachment E – Stacked Flats over Tuck-under Parking – 100% Affordable Appendix 4 In-Lieu Fee Financial Analysis - Village and Barrio Prototypes • Attachment F – Stacked Flats over Tuck-under Parking - Village • Attachment G – Mixed-Use Stacked Flats over Podium Parking - Village • Attachment H – Zero Lot Line Rowhomes – Barrio • Attachment I – Stacked Flats over Tuck-under Parking - Barrio • Attachment J – Stacked Flats over Podium Parking – 100% Affordable Feb. 10, 2022 Item #3 Page 64 of 163 Appendix 5 Viability of 20% Low Income Inclusionary Requirement • Table 1 – Key Assumptions – Citywide • Table 2 – Key Assumptions – Village and Barrio • Table 3 – Summary of Development Scenarios and Residual Land Value – Citywide • Table 4 - Summary of Development Scenarios and Residual Land Value – Village and Barrio • Table 5 – Economic Impact of Increasing to 20% Inclusionary Requirement - Citywide • Table 6 – Economic Impact of Increasing to 20% Inclusionary Requirement – Village and Barrio • Table 7 – Estimate of Potential In-Lieu Fee – Approach 1: Economic Impact of Incorporating Affordable Housing On-Site – Citywide • Table 8 – Estimate of Potential In-Lieu Fee – Approach 2: Funding Level Required for Inclusionary Housing Funding Production Off-Site – Citywide • Table 9 – Impact of Potential In-Lieu Fee - Citywide • Table 10 – Estimate of Potential In-Lieu Fee – Approach 1: Economic Impact of Incorporating Affordable Housing On-Site – Village and Barrio • Table 11 – Estimate of Potential In-Lieu Fee – Approach 2: Funding Level Required for Inclusionary Housing Funding Production Off-Site – Village and Barrio • Table 12 – Impact of Potential In-Lieu Fee – Village and Barrio Appendix 6 Estimate of Affordable Sales Prices and Rents • Worksheet 1 – Estimate of Affordable Sales Prices – Large Lot • Worksheet 2 – Estimate of Affordable Sales Prices – Medium Lot • Worksheet 3 – Estimate of Affordable Sales Prices –Townhomes • Worksheet 4 – Estimate of Affordable Rents – Garden Apartments/Stacked Flats over Tuck-under Parking • Worksheet 5 – Estimate of Affordable Rents - 100% Affordable • Worksheet 6 – Estimate of Affordable Sales Prices – Stacked Flats over Tuck-under Parking - Village • Worksheet 7 – Estimate of Affordable Sales Prices – Mixed-Use Stacked Flats - Village • Worksheet 8 – Estimate of Affordable Sales Prices – Rowhomes – Barrio Appendix 7 Residential Market Data • Worksheet 9 – Survey of Comparable Land Sales – Citywide • Worksheet 10 – Survey of Comparable Land Sales – Village, Barrio, and Adjacent Areas • Worksheet 11 – Single-Family Residential Home Sales – Citywide Feb. 10, 2022 Item #3 Page 65 of 163 • Worksheet 12 – Single-Family Residential Home Sales – Village, Barrio, and Adjacent Areas • Worksheet 13 – Attached Residential Home Sales – Citywide • Worksheet 14– Attached Residential Home Sales – Village, Barrio, and Adjacent Areas • Worksheet 15 – Survey of Comparable Apartment Complexes Feb. 10, 2022 Item #3 Page 66 of 163 APPENDIX 1 Inclusionary Housing In-Lieu Fee Update City of Carlsbad Exhibit 1 - Comparison of Affordable Housing Fees, San Diego County Feb. 10, 2022 Item #3 Page 67 of 163 EXHIBIT 1 COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY AFFORDABLE HOUSING IN-LIEU FEE STUDY CITY OF CARLSBAD Rental For-Sale Project Size Threshold % Affordable Units Required Fee Option Project Size Threshold Fee Type Amount Per Market-Rate Unit or Market-Rate SF Carlsbad Yes Yes 7 units 15% @ Low Income Yes In-Lieu Fee $4,515/Unit Chula Vista (1)Yes Yes 50 units 10%Yes In-Lieu Fee varies by project Coronado Yes Yes 2 units Rental Yes In-Lieu Fee $7,000/Unit 20% @ Low Income For-Sale Yes In-Lieu Fee $7,000/Unit 20% @ Moderate Income Del Mar Yes Yes 2 - 5 units 1 rental unit @ Low Income Yes In-Lieu Fee $31.02/SF 6 - 9 units 1 rental unit @ Low Income None None None None 10 -19 units None None None None 20 -29 units None None None None 30+ units None None None None20% rental units @ Low Income (at least 2 units @ Very Low Income and 2 units at Extremely Low Income) City Inclusionary Production Requirement Affordable Housing Fee available to projects up to 6 units available to projects of all sizes; < 50 units exempt (5% Low Income 5% Moderate Income) available to projects of all sizes available to projects of all sizes available to projects up to 5 units 20% rental units @ Low Income (at least 1 unit @ Very Low Income) 20% rental units @ Low Income (at least 1 unit @ Very Low Income and 1 unit at Extremely Low Income) Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 68 of 163I I EXHIBIT 1 COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY AFFORDABLE HOUSING IN-LIEU FEE STUDY CITY OF CARLSBAD Rental For-Sale Project Size Threshold % Affordable Units Required Fee Option Project Size Threshold Fee Type Amount Per Market-Rate Unit or Market-Rate SF City Inclusionary Production Requirement Affordable Housing Fee Encinitas Yes Yes 7 units 10% @ Very Low Income Yes In-Lieu Fee varies by project or 15% Low Income Escondido None None None None None None Oceanside Yes Yes 3 units Rental Yes In-Lieu Fee $8.82/SF 10% @ Low Income For-Sale Yes In-Lieu Fee $8.82/SF 10% @ Low or Moderate Income Poway Yes Yes 1 unit Rental Yes In-Lieu Fee $500/unit (3) 15% @ Very Low Income For-Sale Yes In-Lieu Fee $500/unit (3) 15% @ Low Income or 20% @ Moderate Income San Diego (2)Yes Yes 10 units Rental Yes In-Lieu Fee $25/SF Outside FUA 10% @ 60% AMI For-Sale Yes In-Lieu Fee $25/SF 10% @ 100% AMI or 15% @ 120% AMI San Diego Inside FUA Yes Yes 2 units 20% @ 65% AMI or less None None None None available to projects up to 6 units and fractional units No Requirement No Requirement available to projects of all sizes available to projects of all sizes available to projects of all sizes available to projects of all sizes available to projects of all sizes; <10 units exempt available to projects of all sizes; <10 units exempt Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 69 of 163I I I I I I EXHIBIT 1 COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY AFFORDABLE HOUSING IN-LIEU FEE STUDY CITY OF CARLSBAD Rental For-Sale Project Size Threshold % Affordable Units Required Fee Option Project Size Threshold Fee Type Amount Per Market-Rate Unit or Market-Rate SF City Inclusionary Production Requirement Affordable Housing Fee San Marcos No Yes In-Lieu Fee $9,300/unit 1 unit Solana Beach Yes Yes 5 units 15% @ Very Low or Yes Impact Fee $25.28/SF Low Income Vista None None None None None None (1)Excludes area of City west of I-805 identified as "Area of Low/Moderate Income Concentration". (2) (3)The base fee varies by zoning, with a maximum total of $500 per unit for all projects. available to all projects where calculation of required affordable units results in a fractional unit less than 0.5 No Requirement No Requirement Applies to development located outside of the Future Urbanizing Area (FUA). New ordinance approved by City Council December 11, 2019, effective July 1, 2020. Inclusionary Housing Ordinance to be phased in over five (5) years. Yes, as alternative to paying fee Pay in-lieu fee unless opting to produce inclusionary units of 15% @ Target Households (determined by City) available to projects of all sizes Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 70 of 163 APPENDIX 2 Key Assumptions and Findings - 15% Low Income Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 71 of 163 CITYWIDE 85% MARKET-RATE / 15% @ LOW TABLE 1 KEY ASSUMPTIONS - CITYWIDE PROTOTYPES INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.PROJECT DESCRIPTION Site Area 10.00 Acres 5.00 Acres 3.00 Acres 5.00 Acres 2.00 Acres Density - Residential 3.2 Units/Acre 6.0 Units/Acre 15.0 Units/Acre 25.0 Units/Acre 30.0 Units/Acre Number of UnitS 32 Units 30 Units 45 Units 125 Units 60 Units Average Unit Size 3,203 SF 2,200 SF 1,580 SF 991 SF 885 SF Retail SF --------------- Parking Ratio 2.00 Spaces/Unit 2.00 Spaces/Unit 2.27 Spaces/Unit 2.13 Spaces/Unit 1.53 Spaces/Unit II.DEVELOPMENT COSTS Off-Site Improvements $3 /SF Site $3 /SF Site $5 /SF Site $5 /SF Site $5 /SF Site On-Site Improvements $8 /SF Site $8 /SF Site $10 /SF Site $10 /SF Site $10 /SF Site Parking ------------$15,000 /Space Shell Construction - Residential $150 /SF GBA $160 /SF GBA $175 /SF GBA $170 /SF GBA $170 /SF GBA Shell Construction - Retail --------------- FF&E/Amenities $15,000 /Unit $10,000 /Unit $7,500 /Unit $10,000 /Unit $2,500 /Unit Architecture & Engineering 7.0%of Directs 7.0%of Directs 7.0%of Directs 7.0%of Directs 5.0%of Directs Permits and Fees - Residential $45,000 /Unit $45,000 /Unit $24,000 /Unit $17,000 /Unit $18,000 /Unit Permits and Fees - Retail --------------- Total Development Costs - Excl. Land $293 /SF GBA $308 /SF GBA $309 /SF GBA $294 /SF GBA $388 /SF GBA III.MARKET-RATE SALES PRICES / RENTS Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Mo. Rent Unit SF $/SF Mo. Rent Studio --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- One Bedroom --- --- --- --- --- --- --- --- --- 750 $3.00 $2,250 750 $1.40 $1,050 Two Bedroom --- --- --- --- --- --- 1,400 $480 $672,000 1,000 $2.75 $2,750 950 $1.32 $1,256 Three Bedroom 3,000 $450 $1,350,000 2,000 $500 $1,000,000 1,700 $460 $782,000 1,350 $2.50 $3,380 1,100 $1.32 $1,449 Four Bedroom 3,500 $425 $1,488,000 2,500 $450 $1,125,000 --- --- --- --- --- --- --- --- --- IV.RETAIL SPACE Retail --- --- --- --- --- Retail Cap Rate --- --- --- --- --- V.RESIDUAL LAND VALUE Cost of Sale 3.0%of Value 3.0%of Value 3.0%of Value ------ Target Developer Profit 10.0%of Value 10.0%of Value 10.0%of Value ------ Residual Land Value --- Per Unit --- Per SF Site Area $21 $33 $51 $65 --- VI.FINANCING GAP Financing Gap ------------(1) Per Unit ------------ (1) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. D Garden Apartments $14,216,000 $114,000 $9,117,000 CITYWIDE 100% AFFORDABLE E Stacked Flats over Tuck-Under ($10,620,000) ($177,000) $7,103,000 $6,609,000 $285,000 $237,000 $147,000 A B C Single-Family Detached - Large Lot Single-Family Detached - Medium Lot Townhomes 100% MARKET-RATE Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 72 of 163 VILLAGE AND BARRIO 85% MARKET-RATE / 15% @ LOW TABLE 2 KEY ASSUMPTIONS - VILLAGE AND BARRIO PROTOTYPES INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.PROJECT DESCRIPTION Site Area 0.50 Acres 0.50 Acres 0.50 Acres 0.50 Acres 0.50 Acres Density - Residential 23.0 Units/Acre 35.0 Units/Acre 14.0 Units/Acre 30.0 Units/Acre 40.0 Units/Acre Number of UnitS 11 Units 17 Units 7 Units 15 Units 20 Units Average Unit Size 1,209 SF 1,194 SF 1,429 SF 857 SF 605 SF Retail SF ---3,000 SF --------- Parking Ratio 1.82 Spaces/Unit 1.76 Spaces/Unit 2.29 Spaces/Unit 1.80 Spaces/Unit 1.15 Spaces/Unit II.DEVELOPMENT COSTS Off-Site Improvements $0 /SF Site $0 /SF Site $0 /SF Site $0 /SF Site $0 /SF Site On-Site Improvements $15 /SF Site $15 /SF Site $10 /SF Site $10 /SF Site $15 /SF Site Parking $15,000 /Space $30,000 /Space ---$15,000 /Space $30,000 /Space Shell Construction - Residential $190 /SF GBA $200 /SF GBA $195 /SF GBA $185 /SF GBA $180 /SF GBA Shell Construction - Retail ---$150 /SF GBA-Retail --------- FF&E/Amenities $7,500 /Unit $7,500 /Unit $7,500 /Unit $5,000 /Unit $3,500 /Unit Architecture & Engineering 5.0%of Directs 5.0%of Directs 5.0%of Directs 5.0%of Directs 5.0%of Directs Permits and Fees - Residential $18,000 /Unit $18,000 /Unit $24,000 /Unit $18,000 /Unit $18,000 /Unit Permits and Fees - Retail ---$11 /SF GBA-Retail --------- Total Development Costs - Excl. Land $360 /SF GBA $377 /SF GBA $329 /SF GBA $325 /SF GBA $478 /SF GBA III.MARKET-RATE SALES PRICES / RENTS Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Mo. Rent Unit SF $/SF Mo. Rent Studio --- --- --- --- --- --- --- --- --- --- --- --- 450 $2.19 $985 One Bedroom 950 $800 $760,000 950 $785 $746,000 --- --- --- 750 $3.60 $2,700 550 $1.91 $1,050 Two Bedroom 1,200 $775 $930,000 1,200 $765 $918,000 1,250 $550 $688,000 950 $3.30 $3,140 750 $1.67 $1,256 Three Bedroom 1,500 $750 $1,125,000 1,500 $750 $1,125,000 1,500 $500 $750,000 --- --- --- 995 $1.46 $1,449 Four Bedroom --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- IV.RETAIL SPACE Retail Rent --- $3.50 --- --- --- Retail Cap Rate --- 6.5%--- --- --- V.RESIDUAL LAND VALUE Cost of Sale 3.0%of Value 3.0%of Value 3.0%of Value ------ Target Developer Profit 12.0%of Value 12.0%of Value 10.0%of Value ------ Residual Land Value Per Unit Per SF Site Area $150 $206 $54 $75 VI.FINANCING GAP Financing Gap ------------(1) Per Unit ------------ (1) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. 100% MARKET-RATE 100% AFFORDABLE VILLAGE AND BARRIO F G H I J ($198,000) --- Village - Stacked Flats over Tuck-under Village - Mixed-Use over Podium Barrio - Rowhomes Barrio - Stacked Flats over Tuck-under Stacked Flats over Podium $3,269,000 $4,477,000 $1,169,000 $1,637,000 ($3,960,000) --- ---$297,000 $263,000 $167,000 $109,000 Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 73 of 163 CITYWIDE 85% MARKET-RATE / 15% @ LOWTABLE 3 SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD $285,000/Unit $21/SF $237,000/Unit $33/SF $147,000/Unit $51/SF $114,000/Unit $65/SF ($177,000)/Unit ($122)/SF $150,000/Unit $11/SF $145,000/Unit $20/SF $92,000/Unit $32/SF $84,000/Unit $48/SF (1) Affordability not to exceed 80% Area Median Income (AMI). (2) Assumes maximum ownership payment at 30% of 80% AMI, adjusted for family size. (3) Assumes maximum rental payment at 30% of 70% AMI, adjusted for family size. (4) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. 100% Affordable w/4% Tax Credits (4) 85% @ Market-Rate 15% @ Affordable (1)(2) 85% @ Market-Rate 15% @ Affordable (1)(2) 85% @ Market-Rate 15% @ Affordable (1)(3) 100% @ Market-Rate 85% @ Market-Rate 15% @ Affordable (1)(2) 30 Units 2 Stories 3.00 Acres 15.0 Units/Acre 45 Units 2 Stories 6.0 Units/Acre 10.00 Acres 2.00 Acres 30.0 Units/Acre 60 Units 3 Stories Single-Family Detached Medium Lot Townhomes 5.00 Acres 5.00 Acres 100% Affordable CITYWIDE Garden Apartments FOR-SALE A B C D RENTAL Stacked Flats over Tuck-under Parking Single-Family Detached Large Lot E 100% @ Market-Rate 100% @ Market-Rate 100% Market-Rate and Mixed-Income 3.2 Units/Acre 32 Units 2 Stories 25.0 Units/Acre 125 Units 3 Stories 100% @ Market-Rate Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 74 of 163 VILLAGE AND BARRIO 85% MARKET-RATE / 15% @ LOW TABLE 4 SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD $297,000/Unit $150/SF $263,000/Unit $206/SF $167,000/Unit $54/SF $109,000/Unit $75/SF ($198,000)/Unit ($182)/SF $187,000/Unit $95/SF $174,000/Unit $136/SF $122,000/Unit $39/SF $78,000/Unit $53/SF (1) Assumes development will qualify for an affordable housing density bonus. (2) Affordability not to exceed 80% Area Median Income (AMI). (3) Assumes maximum ownership payment at 30% of 80% AMI, adjusted for family size. (4) Assumes maximum rental payment at 30% of 70% AMI, adjusted for family size. (5) Reflects average affordability gap per affordable unit for two alternative financing approaches (4% Tax Credits and 9% Tax Credits). 30.0 Units/Acre 15 Units 3 Stories 23.0 Units/Acre 11 Units 35.0 Units/Acre 17 Units 4 Stories 15.0 Units/Acre 7 Units 3 Stories 0.50 Acres 0.50 Acres Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Stacked Flats over Tuck-under Parking Zero Lot Line Rowhomes 100% Affordable w/ Tax Credits (5) J Stacked Flats over Podium Parking (1) 0.50 Acres Village / Barrio 40.0 Units/Acre 20 Units 3 Stories 85% @ Market-Rate 15% @ Affordable (2)(3) 85% @ Market-Rate 15% @ Affordable (2)(3) 85% @ Market-Rate 15% @ Affordable (2)(3) 85% @ Market-Rate 15% @ Affordable (2)(4) 100% @ Market-Rate 100% @ Market-Rate 100% @ Market-Rate 100% @ Market-Rate G FOR - SALE VILLAGE AND BARRIO 3 Stories 100% Market-Rate / Mixed-Income F H I RENTAL 100% Affordable Village General Village Center Barrio Center Barrio Perimeter 0.50 Acres0.50 Acres Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 75 of 163,___ CITYWIDE 85% MARKET-RATE / 15% @ LOW TABLE 5 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Residual Land Value A.100% Market-Rate Per Unit $285,000 $237,000 $147,000 $114,000 $196,000 B.85% Market-Rate / 15% Low Per Unit $150,000 $145,000 $92,000 $84,000 $118,000 II.Economic Impact of Incorporating Affordable Housing On-Site % Change % Change % Change % Change % Change Per Market-Rate Unit ($135,000)-47.4%($92,000)-38.8%($55,000)-37.4%($30,000)-26.3%($78,000)-39.8% Per Market-Rate Net SF ($42.15)($41.82)($34.81)($30.27)($37.26) Per SF Site Area ($9.92)($12.67)($18.94)($17.22)($14.69) CITYWIDE FOR-SALE RENTAL 30,000 Single-Family Detached Medium Lot Townhomes Garden Apartments Average EABCD Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 76 of 163 CITYWIDE 85% MARKET-RATE / 15% @ LOW TABLE 6 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Affordability Gap A.Residual Land Value per Affordable Unit (1)($77,000)($77,000)($77,000)($77,000)($77,000) B.Acquisition Costs (2)($100,000)($100,000)($100,000)($100,000)($100,000) C.Affordability Gap per Affordable Unit ($177,000)($177,000)($177,000)($177,000)($177,000) II.Funding Level Required for Inclusionary Housing Production Off-Site Affordability Gap per Market-Rate Unit @ 15%Low (3)($31,240)($31,240)($31,240)($31,240)($31,240) III. Economic Impact of Inclusionary Housing Production Off-Site % Change % Change % Change % Change % Change A.Residual Land Value - 100% Market-Rate $285,000 $237,000 $147,000 $114,000 $196,000 B.Residual Land Value less Affordability Gap $253,760 $205,760 $115,760 $82,760 $165,000 Per SF Site Area $18.64 $28.34 $39.86 $47.50 $38.21 C.Economic Impact of Off-Site Inclusionary Housing Per Market-Rate Unit ($31,240)-11.0%($31,240)-13.2%($31,240)-21.3%($31,240)-27.4%($31,240)-15.9% Per Market-Rate Net SF ($9.75)($14.20)($19.77)($31.52)($18.81) Per SF Site Area ($2.29)($4.30)($10.76)($17.93)($8.82) (1) Residual land value for 100% affordable stacked flats over tuck-under parking; see Attachment E. (2) KMA estimate based on recent experience in North County coastal areas. (3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 85%) x 15%]. CITYWIDE FOR-SALE RENTAL Single-Family Detached Large Lot Single-Family Detached Medium Lot Townhomes Garden Apartments Average A B C D E Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 77 of 163 CITYWIDE 85% MARKET-RATE / 15% @ LOWTABLE 7 IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Potential In-Lieu Fee: $15 - $25/Net SF Approach 1: Economic Impact of Incorporating Affordable Housing On-Site Residual Land Value Per Unit $150,000 $145,000 $92,000 $84,000 $118,000 Per SF Site Area $11 $20 $32 $48 $28 Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site Residual Land Value Per Unit $253,760 $205,760 $115,760 $82,760 $165,000 Per SF Site Area $19 $28 $40 $47 $34 I.Optimal Approach: On-Site vs. Off-Site Production A.Residual Land Value ($/SF Site Area)$19 $28 $40 $48 $34 Off-Site Off-Site Off-Site On-Site B.Developer Profit (% of Value)10.0%10.0%10.0%10.0%10.0% C.Total Development Costs - Per Net SF (1)$382 $415 $406 $411 $404 II.In-Lieu Fee @ $15/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Site Area $18 -5.4%$28 -1.0%$42 6.4%$57 17.0%$36 7.8% B.Developer Profit (% of Value)6.8%-3.2%6.9%-3.1%6.8%-3.2%6.8%-3.2%6.8%-3.2% C.In-Lieu Fee as % of Development Costs 3.9%3.6%3.7%3.6%3.7% III.In-Lieu Fee @ $25/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Site Area $15 -18.0%$25 -11.7%$37 -7.3%$51 5.3%$32 -4.5% B.Developer Profit (% of Value)4.5%-5.5%4.8%-5.2%4.6%-5.4%4.7%-5.3%4.7%-5.3% C.In-Lieu Fee as % of Development Costs 6.5%6.0%6.2%6.1%6.2% (1) Reflects total developments costs inclusive of residual land value. CITYWIDE FOR-SALE RENTAL Single-Family Detached Large Lot Single-Family Detached Medium Lot Townhomes Garden Apartments Average 15% LOW A B C D E Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 78 of 163I I I I I I I I I I VILLAGE AND BARRIO 85% MARKET-RATE / 15% @ LOW TABLE 8 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Residual Land Value A.100% Market-Rate Per Unit $297,000 $263,000 $167,000 $109,000 $209,000 $0 B.85% Market-Rate / 15% Low Per Unit $187,000 $174,000 $122,000 $78,000 $140,000 II.Economic Impact of Incorporating Affordable Housing On-Site % Change % Change % Change % Change % Change Per Market-Rate Unit ($110,000)-37.0%($89,000)-33.8%($45,000)-26.9%($31,000)-28.4%($68,750)-32.9% Per Market-Rate Net SF ($90.98)($74.53)($31.50)($36.19)($58.30) Per SF Site Area ($55.56)($69.47)($14.46)($21.35)($40.21) VILLAGE AND BARRIO Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking FOR-SALE Average RENTAL Village General Village Center Barrio Center Barrio Perimeter F G H I J Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 79 of 163 VILLAGE AND BARRIO 85% MARKET-RATE / 15% @ LOW TABLE 9 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Affordability Gap A.Residual Land Value per Affordable Unit (1)($48,000)($48,000)($48,000)($48,000)($48,000) B.Acquisition Costs (2)($150,000)($150,000)($150,000)($150,000)($150,000) C.Affordability Gap per Affordable Unit ($198,000)($198,000)($198,000)($198,000)($198,000) II.Funding Level Required for Inclusionary Housing Production Off-Site Affordability Gap per Market-Rate Unit @ 15%Low (3)($34,940)($34,940)($34,940)($34,940)($34,940) III. Economic Impact of Inclusionary Housing Production Off-Site % Change % Change % Change % Change % Change A.Residual Land Value - 100% Market-Rate $297,000 $263,000 $167,000 $109,000 $209,000 B.Residual Land Value less Affordability Gap $262,060 $228,060 $132,060 $74,060 $174,000 Per SF Site Area $132.35 $178.01 $42.44 $51.01 $101 C.Economic Impact of Off-Site Inclusionary Housing Per Market-Rate Unit ($34,940)-11.8%($34,940)-13.3%($34,940)-20.9%($34,940)-32.1%($34,940)-16.7% Per Market-Rate Net SF ($28.90)($29.26)($24.46)($40.79)($30.85) Per SF Site Area ($17.65)($27.27)($11.23)($24.06)($20.05) (1) Reflects average residual land value for two alternative financing approaches (4% Tax Credits and 9% Tax Credits). Assumes development of 100% affordable stacked flats over podium parking; see Attachment J. (2) KMA estimate based on recent experience in North County coastal areas. (3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 85%) x 15%]. VILLAGE AND BARRIO FOR-SALE Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking Average RENTAL Village General Village Center Barrio Center Barrio Perimeter F G H I J Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 80 of 163 VILLAGE AND BARRIO 85% MARKET-RATE / 15% @ LOWTABLE 10 IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Potential In-Lieu Fee: $25 - $35/Net SF Approach 1: Economic Impact of Incorporating Affordable Housing On-Site Residual Land Value Per Unit $187,000 $174,000 $122,000 $78,000 $140,000 Per SF Site Area $95 $136 $39 $53 $81 Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site Residual Land Value Per Unit $262,060 $228,060 $132,060 $74,060 $174,000 Per SF Site Area $132 $178 $42 $51 $101 I.Optimal Approach: On-Site vs. Off-Site Production A.Residual Land Value - Per SF Land $132 $178 $42 $53 $102 Off-Site Off-Site Off-Site On-Site B.Developer Profit (% of Value)12.0%12.0%10.0%12.0%11.5% C.Total Development Costs - Per Net SF (1)$657 $720 $446 $499 $581 II.In-Lieu Fee @ $25/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Land $135 1.9%$182 2.4%$42 -0.6%$60 13.1%$105 3.3% B.Developer Profit (% of Value)8.8%-3.2%9.0%-3.0%5.1%-4.9%7.7%-4.3%7.7%-3.8% C.In-Lieu Fee as % of Development Costs 3.8%3.5%5.6%5.0%4.1% III.In-Lieu Fee @ $35/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Land $129 -2.8%$173 -2.9%$38 -11.4%$54 2.0%$98 -3.1% B.Developer Profit (% of Value)7.5%-4.5%7.9%-4.1%3.2%-6.8%6.0%-6.0%6.1%-5.4% C.In-Lieu Fee as % of Development Costs 5.3%4.9%7.8%7.0%5.8% (1) Reflects total developments costs inclusive of residual land value. VILLAGE AND BARRIO FOR-SALE RENTAL Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking Average 15% LOW F G H I J Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 81 of 163I I I I I I I I I I APPENDIX 3 In-Lieu Fee Financial Analysis Citywide Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 82 of 163 CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - LARGE LOT TABLE A-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 10.00 Acres II.Gross Building Area Residential Area 102,500 SF 100% Common Area 0 SF 0% Total Gross Building Area (GBA)102,500 SF 100% III.Unit Mix One Bedroom 0 Units 0%- Two Bedroom 0 Units 0%- Three Bedroom 19 Units 59%3,000 SF Four Bedroom 13 Units 41%3,500 SF Total 32 Units 100%3,203 SF IV.Number of Stories 2 Stories V.Density 3.2 Units/Acre VI.Approximate Lot Size 10,900 SF/Lot VII.Construction Type VIII. Parking Parking Type Number of Spaces 2.0 Spaces/Unit 64 Spaces # of Units Unit Size Type V (Wood) Attached Garages Single-Family - Large Lot Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 83 of 163 CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - LARGE LOT TABLE A-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$1,089,000 $34,000 $2.50 Per SF Site On-Site Improvements/Landscaping (2)$3,267,000 $102,100 $7.50 Per SF Site Parking $0 $0 Included Below Shell Construction - Residential $15,375,000 $480,500 $150 Per SF GBA - Residential FF&E/Amenities $480,000 $15,000 Allowance Contingency $1,011,000 $31,600 5.0%of Directs Total Direct Costs $21,222,000 $663,200 $207 Per SF GBA II.Indirect Costs Architecture & Engineering $1,486,000 $46,400 7.0%of Directs Permits & Fees - Residential (3)$1,440,000 $45,000 $14 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$183,000 $5,700 $2 Per SF GBA Legal & Accounting $212,000 $6,600 1.0%of Directs Taxes & Insurance $1,350,000 $42,200 3.0%of Market Value Developer Fee $849,000 $26,500 4.0%of Directs Marketing/Sales $1,350,000 $42,200 3.0%of Market Value Contingency $344,000 $10,800 5.0%of Indirects Total Indirect Costs $7,214,000 $225,400 34.0%of Directs III.Financing Costs (5)$1,592,000 $49,800 7.5%of Directs IV.Total Development Costs (6)$30,028,000 $938,400 $293 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Includes loan fees, interest during construction, and interest during sales. (6)Excludes acquisition costs. Single-Family - Large Lot Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 84 of 163 CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - LARGE LOT TABLE A-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate Three Bedroom 3,000 SF 19 $450 $1,350,000 $25,650,000 16 $450 $1,350,000 $21,600,000 Four Bedroom 3,500 SF 13 $425 $1,488,000 $19,344,000 11 $425 $1,488,000 $16,368,000 Subtotal/Average 3,203 SF 32 $439 $1,406,000 $44,994,000 27 $439 $1,406,000 $37,968,000 B.Affordable (1) Three Bedroom 3,000 SF 0 $0 $0 $0 3 $131 $393,000 $1,179,000 Four Bedroom 3,500 SF 0 $0 $0 $0 2 $128 $447,000 $894,000 Subtotal/Average 3,203 SF 0 $0 $0 $0 5 $130 $415,000 $2,073,000 C.Total/Average 3,203 SF 32 $439 $1,406,000 $44,994,000 32 $391 $1,251,000 $40,041,000 II.Total Gross Sales Proceeds $44,994,000 $40,041,000 (Less) Cost of Sale 3.0%of Value ($1,350,000)3.0%of Value ($1,201,000) (Less) Target Developer Profit 10.0%of Value ($4,499,000)10.0%of Value ($4,004,000) III.Total Net Sales Proceeds $39,145,000 $34,836,000 (Less) Development Costs ($30,028,000)($30,028,000) IV.Residual Land Value $9,117,000 $4,808,000 Per Unit $285,000 $150,000 Per SF Site $21 $11 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 2. Unit Size Single-Family - Large Lot 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 85 of 163I I I I I I CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - MEDIUM LOT TABLE B-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 5.00 Acres II.Gross Building Area Residential Area 66,000 SF 100% Common Area 0 SF 0% Total Gross Building Area (GBA)66,000 SF 100% III.Unit Mix One Bedroom 0 Units 0%- Two Bedroom 0 Units 0%- Three Bedroom 18 Units 60%2,000 SF Four Bedroom 12 Units 40%2,500 SF Total 30 Units 100%2,200 SF IV.Number of Stories 2 Stories V.Density 6.0 Units/Acre VI.Approximate Lot Size 5,800 SF/Lot VII.Construction Type VIII. Parking Parking Type Number of Spaces 2.0 Spaces/Unit 60 Spaces # of Units Unit Size Type V (Wood) Attached Garages Single Family - Medium Lot Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 86 of 163 CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - MEDIUM LOT TABLE B-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$653,000 $21,800 $3 Per SF Site On-Site Improvements/Landscaping (2)$1,742,000 $58,100 $8 Per SF Site Parking $0 $0 Included Below Shell Construction - Residential $10,560,000 $352,000 $160 Per SF GBA - Residential FF&E/Amenities $300,000 $10,000 Allowance Contingency $663,000 $22,100 5.0%of Directs Total Direct Costs $13,918,000 $463,900 $211 Per SF GBA II.Indirect Costs Architecture & Engineering $974,000 $32,500 7.0%of Directs Permits & Fees - Residential (3)$1,350,000 $45,000 $20 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$106,000 $3,500 $2 Per SF GBA Legal & Accounting $209,000 $7,000 1.5%of Directs Taxes & Insurance $945,000 $31,500 3.0%of Market Value Developer Fee $557,000 $18,600 4.0%of Directs Marketing/Sales $945,000 $31,500 3.0%of Market Value Contingency $254,000 $8,500 5.0%of Indirects Total Indirect Costs $5,340,000 $178,000 38.4%of Directs III.Financing Costs (5)$1,044,000 $34,800 7.5%of Directs IV.Total Development Costs (6)$20,302,000 $676,700 $308 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Includes loan fees, interest during construction, and interest during sales. (6)Excludes acquisition costs. Single Family - Medium Lot Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 87 of 163 CITYWIDE - FOR-SALE SINGLE-FAMILY DETACHED - MEDIUM LOT TABLE B-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate Three Bedroom 2,000 SF 18 $500 $1,000,000 $18,000,000 15 $500 $1,000,000 $15,000,000 Four Bedroom 2,500 SF 12 $450 $1,125,000 $13,500,000 10 $450 $1,125,000 $11,250,000 Subtotal/Average 2,200 SF 30 $477 $1,050,000 $31,500,000 25 $477 $1,050,000 $26,250,000 B.Affordable (1) Three Bedroom 2,000 SF 0 $0 $0 $0 3 $197 $393,000 $1,179,000 Four Bedroom 2,500 SF 0 $0 $0 $0 2 $179 $447,000 $894,000 Subtotal/Average 2,200 SF 0 $0 $0 $0 5 $189 $415,000 $2,073,000 C.Total/Average 2,200 SF 30 $477 $1,050,000 $31,500,000 30 $429 $944,000 $28,323,000 II.Total Gross Sales Proceeds $31,500,000 $28,323,000 (Less) Cost of Sale 3.0%of Value ($945,000)3.0%of Value ($850,000) (Less) Target Developer Profit 10.0%of Value ($3,150,000)10.0%of Value ($2,832,000) III.Total Net Sales Proceeds $27,405,000 $24,641,000 (Less) Development Costs ($20,302,000)($20,302,000) IV.Residual Land Value $7,103,000 $4,339,000 Per Unit $237,000 $145,000 Per SF Site $33 $20 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 3. Unit Size Single Family - Medium Lot 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 88 of 163I I I I I I CITYWIDE - FOR-SALE TOWNHOMES TABLE C-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 3.00 Acres II.Gross Building Area Residential Area 71,100 SF 99% Common Area 1,000 SF (1)1% Total Gross Building Area (GBA)72,100 SF 100% III.Unit Mix One Bedroom 0 Units 0%- Two Bedroom 18 Units 40%1,400 SF Three Bedroom 27 Units 60%1,700 SF Four Bedroom 0 Units 0%- Total 45 Units 100%1,580 SF IV.Number of Stories 2 Stories V.Density 15.0 Units/Acre VI.Construction Type VII. Parking Parking Type Number of Spaces One Bedroom 1.50 Spaces/Unit - Two or More Bedrooms 2.00 Spaces/Unit 90 Spaces Visitor 0.25 Spaces/Unit 12 Spaces Total 2.27 Spaces/Unit 102 Spaces (1)Reflects common area for community amenities. # of Units Unit Size Type V (Wood) Attached Garages Townhomes Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 89 of 163 CITYWIDE - FOR-SALE TOWNHOMES TABLE C-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$653,000 $14,500 $5 Per SF Site On-Site Improvements/Landscaping (2)$1,307,000 $29,000 $10 Per SF Site Parking $0 $0 Included Below Shell Construction - Residential $12,618,000 $280,400 $175 Per SF GBA - Residential FF&E/Amenities $338,000 $7,500 Allowance Contingency $746,000 $16,600 5.0%of Directs Total Direct Costs $15,662,000 $348,000 $217 Per SF GBA II.Indirect Costs Architecture & Engineering $1,096,000 $24,400 7.0%of Directs Permits & Fees - Residential (3)$1,080,000 $24,000 $15 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$159,000 $3,500 $2 Per SF GBA Legal & Accounting $235,000 $5,200 1.5%of Directs Taxes & Insurance $996,000 $22,100 3.0%of Market Value Developer Fee $626,000 $13,900 4.0%of Directs Marketing/Sales $996,000 $22,100 3.0%of Market Value Contingency $259,000 $5,800 5.0%of Indirects Total Indirect Costs $5,447,000 $121,000 34.8%of Directs III.Financing Costs (5)$1,175,000 $26,100 7.5%of Directs IV.Total Development Costs (6)$22,284,000 $495,200 $309 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Includes loan fees, interest during construction, and interest during sales. (6)Excludes acquisition costs. Townhomes Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 90 of 163 CITYWIDE - FOR-SALE TOWNHOMES TABLE C-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate Two Bedroom 1,400 SF 18 $480 $672,000 $12,096,000 15 $480 $672,000 $10,080,000 Three Bedroom 1,700 SF 27 $460 $782,000 $21,114,000 23 $460 $782,000 $17,986,000 Subtotal/Average 1,580 SF 45 $467 $738,000 $33,210,000 38 $468 $739,000 $28,066,000 B.Affordable (1) Two Bedroom 1,400 SF 0 $0 $0 $0 3 $209 $293,000 $879,000 Three Bedroom 1,700 SF 0 $0 $0 $0 4 $210 $357,000 $1,428,000 Subtotal/Average 1,580 SF 0 $0 $0 $0 7 $209 $330,000 $2,307,000 C.Total/Average 1,580 SF 45 $467 $738,000 $33,210,000 45 $427 $675,000 $30,373,000 II.Total Gross Sales Proceeds $33,210,000 $30,373,000 (Less) Cost of Sale 3.0%of Value ($996,000)3.0%of Value ($911,000) (Less) Target Developer Profit 10.0%of Value ($3,321,000)10.0%of Value ($3,037,000) III.Total Net Sales Proceeds $28,893,000 $26,425,000 (Less) Development Costs ($22,284,000)($22,284,000) IV.Residual Land Value $6,609,000 $4,141,000 Per Unit $147,000 $92,000 Per SF Site $51 $32 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 4. Unit Size Townhomes 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 91 of 163I I I I I I CITYWIDE - RENTAL GARDEN APARTMENTS TABLE D-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 5.00 Acres II.Gross Building Area Residential Area 123,900 SF 99% Common Area 1,000 SF 1% Total Gross Building Area (GBA)124,900 SF 100% III.Unit Mix One Bedroom 31 Units 25%750 SF Two Bedroom 75 Units 60%1,000 SF Three Bedroom 19 Units 15%1,350 SF Four Bedroom 0 Units 0%-SF Total 125 Units 100%991 SF IV.Number of Stories 3 Stories V.Density 25.0 Units/Acre VI.Construction Type VII. Parking Parking Type Number of Spaces One Bedroom 1.50 Spaces/Unit 47 Spaces Two or More Bedrooms 2.00 Spaces/Unit 188 Spaces Visitor 0.25 Spaces/Unit 32 Spaces Total 2.13 Spaces/Unit 267 Spaces Surface/Carports/Private Garages Garden Apartments # of Units Unit Size Type V (Wood) Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 92 of 163 CITYWIDE - RENTAL GARDEN APARTMENTSTABLE D-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$1,089,000 $8,700 $5 Per SF Site On-Site Improvements/Landscaping (2)$2,178,000 $17,400 $10 Per SF Site Parking $0 $0 Included Above Shell Construction - Residential $21,233,000 $169,900 $170 Per SF GBA - Residential FF&E/Amenities $1,250,000 $10,000 Allowance Contingency $1,288,000 $10,300 5.0%of Directs Total Direct Costs $27,038,000 $216,300 $216 Per SF GBA II.Indirect Costs Architecture & Engineering $1,893,000 $15,100 7.0%of Directs Permits & Fees - Residential (3)$2,125,000 $17,000 $17 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$442,000 $3,500 $4 Per SF GBA Legal & Accounting $406,000 $3,200 1.5%of Directs Taxes & Insurance $406,000 $3,200 1.5%of Directs Developer Fee $1,082,000 $8,700 4.0%of Directs Marketing/Lease-Up $938,000 $7,500 3.5%of Directs Contingency $365,000 $2,900 5.0%of Indirects Total Indirect Costs $7,657,000 $61,300 28.3%of Directs III.Financing Costs (5)$2,028,000 $16,200 7.5%of Directs IV.Total Development Costs (6)$36,723,000 $293,800 $294 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Includes loan fees, interest during construction, and interest during sales. (6)Excludes acquisition costs. Garden Apartments Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 93 of 163 CITYWIDE - RENTAL GARDEN APARTMENTS TABLE D-3 NET OPERATING INCOME INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Scheduled Income (GSI) # Units $/SF $/Month Annual # Units $/SF $/Month (1)Annual A.Market-Rate One Bedroom 750 SF 31 $3.00 $2,250 $837,000 26 $3.00 $2,250 $702,000 Two Bedroom 1,000 SF 75 $2.75 $2,750 $2,475,000 64 $2.75 $2,750 $2,112,000 Three Bedroom 1,350 SF 19 $2.50 $3,380 $771,000 16 $2.50 $3,380 $649,000 Subtotal/Average 991 SF 125 $2.74 $2,720 $4,083,000 106 $2.74 $2,720 $3,463,000 B.Affordable One Bedroom 750 SF --------5 $2.11 $1,585 $95,000 Two Bedroom 1,000 SF --------11 $1.78 $1,776 $234,000 Three Bedroom 1,350 SF --------3 $1.58 $2,132 $77,000 Subtotal/Average 991 SF --------19 $1.80 $1,781 $406,000 C.Total/Average 991 SF 125 $2.74 $2,720 $4,083,000 125 $2.60 $2,580 $3,869,000 Add: Other Income $50 /Unit/Month $75,000 $25 /Unit/Month $38,000 D.Total Gross Scheduled Income (GSI)$4,158,000 $3,907,000 II.Effective Gross Income (Less) Vacancy 5.0%of GSI ($208,000)5.0%of GSI ($195,000) Effective Gross Income (EGI)$3,950,000 $3,712,000 III.Operating Expenses (Less) Operating Expenses $4,750 /Unit/Year ($593,800)$4,750 /Unit/Year ($593,800) (Less) Property Taxes/Assessments (2)$5,592 /Unit/Year ($699,000)$5,192 /Unit/Year ($648,000) (Less) Replacement Reserves $300 /Unit/Year ($37,500)$300 /Unit/Year ($37,500) Total Operating Expenses $10,642 /Unit/Year ($1,330,300)$10,242 /Unit/Year ($1,279,300) 33.7%of EGI 34.5%of EGI IV.Net Operating Income (NOI)$2,619,700 $2,432,700 (1)Source: City of Carlsbad 2020 household income limits. Reflects 30% monthly income at 70% Area Median Income (AMI); see Worksheet 5. (2)Based on capitalized income approach; assumes a 4.5% capitalization rate and a 1.20% tax rate. Unit Size Garden Apartments 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 94 of 163I I CITYWIDE - RENTAL GARDEN APARTMENTS TABLE D-4 RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Capitalized Value Upon Completion Stabilized Net Operating Income $2,619,700 $2,432,700 Capitalization Rate @ 4.50%4.50% Capitalized Value Upon Completion $466,000 /Unit $58,216,000 $432,000 /Unit $54,060,000 (Less) Cost of Sale 2.5%of Value ($1,455,000)2.5%of Value ($1,352,000) (Less) Target Developer Profit 10.0%of Value ($5,822,000)10.0%of Value ($5,406,000) II.Net Sales Proceeds $50,939,000 $47,302,000 (Less) Development Costs ($36,723,000)($36,723,000) III.Residual Land Value $14,216,000 $10,579,000 Per Unit $114,000 $85,000 Per SF Site $65 $49 Garden Apartments 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 95 of 163 CITYWIDE - RENTAL STACKED FLATS OVER TUCK-UNDER PARKING 100% AFFORDABLETABLE E-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 2.00 Acres II.Gross Building Area Residential Area 53,100 SF 87.5% Common Area 7,586 SF 12.5% Total Gross Building Area (GBA)60,686 SF 100% III.Unit Mix One Bedroom 24 Units 40%750 SF Two Bedroom 30 Units 50%950 SF Three Bedroom 6 Units 10%1,100 SF Four Bedroom 0 Units 0%-SF Total 60 Units 100%885 SF IV.Affordability Mix 50% of AMI 59 Units 98%(1) Manager 1 Unit 2% Total/Average 60 Units 100% Average Affordability (excl. Manager)50%AMI V.Number of Stories 3 Stories VI.Density 30 Units/Acre VII.Construction Type VIII. Parking Parking Type Number of Spaces One Bedroom 1.50 Spaces/Unit 36 Spaces Two or More Bedrooms 2.00 Spaces/Unit 72 Spaces Visitor 0.25 Spaces/Unit 15 Spaces Subtotal 2.05 Spaces/Unit 123 Spaces (Less) Affordable Housing Reduction @ 25.0%0.52 Spaces/Unit (31)Spaces Total 1.53 Spaces/Unit 92 Spaces (1)Assumes range of affordability from 30% AMI to 60% AMI, with average affordability at 50% AMI. Stacked Flats over Tuck-under Parking # of Units Unit Size Type V (Wood) Tuck-under Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 96 of 163 CITYWIDE - RENTAL STACKED FLATS OVER TUCK-UNDER PARKING 100% AFFORDABLE TABLE E-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$436,000 $7,000 $5 Per SF Site On-Site Improvements/Landscaping (2)$871,000 $15,000 $10 Per SF Site Parking $1,380,000 $23,000 $15,000 Per Space Shell Construction - Residential $10,317,000 $172,000 $170 Per SF GBA FF&E/Amenities $150,000 $2,500 Allowance Subtotal $13,154,000 $219,000 $217 Per SF GBA Add: Prevailing Wages $1,973,000 $33,000 15.0%of Directs Contingency $756,000 $13,000 5.0%of Directs Total Direct Costs $15,883,000 $265,000 $262 Per SF GBA II.Indirect Costs Architecture & Engineering $794,000 $13,000 5.0%of Directs Permits & Fees - Residential (3)$1,080,000 $18,000 $18 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$212,000 $4,000 $3 Per SF GBA Legal & Accounting $238,000 $4,000 1.5%of Directs Taxes & Insurance $238,000 $4,000 1.5%of Directs Developer Fee $2,907,000 $48,000 18.3%of Directs Marketing/Lease-Up $150,000 $2,500 0.9%of Directs Contingency $281,000 $5,000 5.0%of Indirects Total Indirect Costs $5,900,000 $98,000 37.1%of Directs III.Financing Costs Loan Fees $736,000 $12,000 4.6%of Directs Interest During Constructions $331,000 $6,000 2.1%of Directs Title/Recording/Escrow $50,000 $1,000 0.3%of Directs Interest During Lease-Up $276,000 $5,000 1.7%of Directs TCAC/Syndication Fees $138,000 $2,000 0.9%of Directs Operating Lease-Up/Reserves $227,000 $4,000 1.4%of Directs Total Financing Costs $1,758,000 $29,000 11.1%of Directs IV.Total Development Costs (5)$23,541,000 $392,000 $388 Per SF GBA (1)Includes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Excludes acquisition costs. Stacked Flats over Tuck-under Parking Comments Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 97 of 163 CITYWIDE - RENTAL STACKED FLATS OVER TUCK-UNDER PARKING 100% AFFORDABLETABLE E-3 NET OPERATING INCOME INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD # Units $/SF $/Month (1)Annual I.Gross Scheduled Income (GSI) One Bedroom @ 50% AMI 750 SF 24 $1.40 $1,050 $302,000 Two Bedroom @ 50% AMI 950 SF 29 $1.32 $1,256 $437,000 Two Bedroom Manager 950 SF 1 $0.00 $0 $0 Three Bedroom @ 50% AMI 1,100 SF 6 $1.32 $1,449 $104,000 Total/Average 885 SF 60 $1.32 $1,171 $843,000 Add: Other Income $10 /Unit/Month $7,000 Total Gross Scheduled Income (GSI)$850,000 II.Effective Gross Income (Less) Vacancy 5.0%of GSI ($43,000) Effective Gross Income (EGI)$807,000 III.Operating Expenses (Less) Operating Expenses $5,250 /Unit/Year ($315,000) (Less) Tenant Services $500 /Unit/Year ($30,000) (Less) Property Taxes (2)$167 /Unit/Year ($10,000) (Less) Replacement Reserves $500 /Unit/Year ($30,000) Total Operating Expenses $6,417 /Unit/Year ($385,000) 47.7%of EGI IV.Net Operating Income (NOI)$422,000 (1)See Worksheet 6 for calculation of affordable rents. (2)Assumes project will qualify for tax-exempt status. Stacked Flats over Tuck-Under Parking 4% Tax Credits w/MHP Unit Size Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 98 of 163 CITYWIDE - RENTAL STACKED FLATS OVER TUCK-UNDER PARKING 100% AFFORDABLE TABLE E-4 RESIDUAL LAND VALUE AND FINANCING DEFICIT INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Sources of Funds Total Per Unit Supportable Permanent Loan (1)$6,802,000 $113,000 Tax Credit Equity Investment (2)$8,058,000 $134,000 Multifamily Housing Program (MHP) (3)$3,000,000 $50,000 Affordable Housing Program (AHP)$600,000 $10,000 Deferred Developer Fee/General Partner Equity Contribution (4)$407,000 $7,000 Income During Lease-Up $60,000 $1,000 Total Sources of Funds $18,927,000 $315,000 II.(Less) Development Costs ($23,541,000)($392,000) III.Residual Land Value ($4,614,000)($77,000) IV.(Less) Acquisition Cost ($6,000,000)($100,000) V.Financing Deficit ($10,614,000)($177,000) Stacked Flats over Tuck-Under Parking 4% Tax Credits with MHP Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 99 of 163 CITYWIDE - RENTAL STACKED FLATS OVER TUCK-UNDER PARKING 100% AFFORDABLE TABLE E-4 (CONT'D.) RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD (1)Supportable Permanent Loan NOI $422,000 Interest Rate 4.50% Term (years)40 Debt Coverage Ratio 1.15 Annual Debt Service $366,957 Supportable Permanent Loan $6,802,000 (2)Low Income Housing Tax Credits (Federal) Estimate of Eligible Basis: Total Development Costs $23,541,000 (Less) Ineligible Costs 5.3%($1,251,000) Eligible Basis $22,290,000 Tax Credit Proceeds: Maximum Eligible Basis $22,290,000 (Less) Voluntary Credit Adjustment 0.0%$0 Total Requested Unadjusted Basis $22,290,000 Impacted Bonus Factor 130%$28,977,000 Tax Credit Qualified Units/Applicable Factor 100%$28,977,000 Tax Credit Rate 3.09%$895,389 Total Tax Credits @ 10 $8,953,893 Limited Partner Share 99.99%$8,952,998 Tax Credit Equity Investment @ 90.0%$8,058,000 (3)Multifamily Housing Program (MHP) Restricted Units 60 Units Total MHP Loan $50,000 /Unit $3,000,000 (4)Estimate of Deferred Developer Fee Eligible Basis $22,290,000 (Less) Developer Fee ($2,907,000) Unadjusted Eligible Basis $19,383,000 Total Developer Fee 15.0%$2,907,000 Developer Overhead Fee $2,907,000 (Less) Deferred Developer Fee 14.0%($407,000) Upfront Developer Fee $2,500,000 Stacked Flats over Tuck-Under Parking 4% Tax Credits with MHP Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 100 of 163 APPENDIX 4 In-Lieu Fee Financial Analysis Village and Barrio Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 101 of 163 VILLAGE GENERAL - FOR-SALE STACKED FLATS OVER TUCK-UNDER PARKINGTABLE F-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 0.50 Acres II.Gross Building Area Residential Area 13,300 SF 87.5% Common Area 1,900 SF 12.5% Total Gross Building Area (GBA)15,200 SF 100.0% III.Unit Mix Studio 0 Units 0%- One Bedroom 2 Units 18%950 SF Two Bedroom 7 Units 64%1,200 SF Three Bedroom 2 Units 18%1,500 SF Total 11 Units 82%1,209 SF IV.Number of Stories 3 Stories V.Density 23 Units/Acre VI.Construction Type VII. Parking Parking Type Number of Spaces One Bedroom 1.00 Spaces/Unit 2 Spaces Two or More Bedrooms 2.00 Spaces/Unit 18 Spaces Visitor 0.00 Spaces/Unit 0 Spaces Total 1.82 Spaces/Unit 20 Spaces # of Units Unit Size Type V (Wood) Tuck-under Stacked Flats over Tuck-under Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 102 of 163 VILLAGE GENERAL - FOR-SALE STACKED FLATS OVER TUCK-UNDER PARKINGTABLE F-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$0 $0 $0 Per SF Site On-Site Improvements/Landscaping (2)$327,000 $29,700 $15 Per SF Site Parking $300,000 $27,300 $15,000 Per Space Shell Construction - Residential $2,888,000 $262,500 $190 Per SF GBA - Residential FF&E/Amenities $83,000 $7,500 Allowance Contingency $180,000 $16,400 5.0%of Directs Total Direct Costs $3,778,000 $343,500 $249 Per SF GBA II.Indirect Costs Architecture & Engineering $189,000 $17,200 5.0%of Directs Permits & Fees - Residential (3)$198,000 $18,000 $13 Per SF GBA Community Facilities District No. 1 (Citywide) (4)$39,000 $3,500 $3 Per SF GBA Legal & Accounting $57,000 $5,200 1.5%of Directs Taxes & Insurance $308,000 $28,000 3.0%of Market Value Developer Fee $151,000 $13,700 4.0%of Directs Marketing/Sales $308,000 $28,000 3.0%of Market Value Contingency $63,000 $5,700 5.0%of Indirects Total Indirect Costs $1,313,000 $119,400 34.8%of Directs III.Financing Costs (5)$378,000 $34,400 10.0%of Directs IV.Total Development Costs (6)$5,469,000 $497,200 $360 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. (3) (4) (5)Includes loan fees, interest during construction, and interest during sales. (6)Excludes acquisition costs. Stacked Flats over Tuck-under Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 103 of 163 VILLAGE GENERAL - FOR-SALE STACKED FLATS OVER TUCK-UNDER PARKING TABLE F-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate One Bedroom 950 SF 2 $800 $760,000 $1,520,000 2 $800 $760,000 $1,520,000 Two Bedroom 1,200 SF 7 $775 $930,000 $6,510,000 6 $775 $930,000 $5,580,000 Three Bedroom 1,500 SF 2 $750 $1,125,000 $2,250,000 1 $750 $1,125,000 $1,125,000 Subtotal/Average 1,209 SF 11 $773 $935,000 $10,280,000 9 $756 $914,000 $8,225,000 B.Affordable (1) One Bedroom 950 SF 0 $0 $0 $0 0 $267 $254,000 $0 Two Bedroom 1,200 SF 0 $0 $0 $0 1 $237 $284,000 $284,000 Three Bedroom 1,500 SF 0 $0 $0 $0 1 $232 $348,000 $348,000 Subtotal/Average 1,209 SF 0 $0 $0 $0 2 $261 $316,000 $632,000 C.Total/Average 1,209 SF 11 $773 $935,000 $10,280,000 11 $666 $805,000 $8,857,000 II.Total Gross Sales Proceeds $10,280,000 $8,857,000 (Less) Cost of Sale 3.0%of Value ($308,000)3.0%of Value ($266,000) (Less) Target Developer Profit 12.0%of Value ($1,234,000)12.0%of Value ($1,063,000) III.Total Net Sales Proceeds $8,738,000 $7,528,000 (Less) Development Costs ($5,469,000)($5,469,000) IV.Residual Land Value $3,269,000 $2,059,000 Per Unit $297,000 $187,000 Per SF Site $150 $95 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 7. Unit Size Stacked Flats over Tuck-under 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 104 of 163 VILLAGE CENTER - FOR-SALE MIXED-USE STACKED FLATS OVER PODIUM PARKINGTABLE G-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 0.50 Acres II.Gross Building Area Residential Area 20,300 SF 85% Common Area 3,582 SF 15% Total Residential Area 23,882 SF 100% Retail 3,000 SF Total Gross Building Area (GBA)26,882 SF III.Unit Mix Studio 0 Units 0%- One Bedroom 4 Units 24%950 SF Two Bedroom 10 Units 59%1,200 SF Three Bedroom 3 Units 18%1,500 SF Total 17 Units 100%1,194 SF IV.Number of Stories 4 Stories V.Density 35 Units/Acre VI.Construction Type VII. Parking Parking Type Number of Spaces One Bedroom 1.00 Spaces/Unit 4 Spaces Two or More Bedrooms 2.00 Spaces/Unit 26 Spaces Visitor 0.00 Spaces/Unit 0 Spaces Subtotal 1.76 Spaces/Unit 30 Spaces Retail 1.00 Space/415 SF 8 Spaces Total 38 Spaces Mixed-Use Stacked Flats # of Units Unit Size Type V (Wood) Podium Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 105 of 163 VILLAGE CENTER - FOR-SALE MIXED-USE STACKED FLATS OVER PODIUM PARKINGTABLE G-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$0 $0 $0 Per SF Site On-Site Improvements/Landscaping (2)$327,000 $19,200 $15 Per SF Site Parking $1,140,000 $67,100 $30,000 Per Space Shell Construction - Residential $4,776,000 $280,900 $200 Per SF GBA - Residential Shell Construction - Retail $450,000 $26,500 $150 Per SF GBA - Retail FF&E/Amenities $128,000 $7,500 Allowance Tenant Improvements $150,000 $8,800 $50 Per SF Net - Retail Contingency $349,000 $20,500 5.0%of Directs Total Direct Costs $7,320,000 $430,600 $272 Per SF GBA II.Indirect Costs Architecture & Engineering $366,000 $21,500 5.0%of Directs Permits & Fees - Residential (2)$198,000 $18,000 $8 Per SF GBA - Residential Permits & Fees - Retail (2)$33,000 $1,900 $11 Per SF GBA - Retail Community Facilities District No. 1 (Citywide) (3)$60,000 $3,500 $2 Per SF GBA Legal & Accounting $110,000 $6,500 1.5%of Directs Taxes & Insurance $466,000 $27,400 3.0%of Market Value Developer Fee $293,000 $17,200 4.0%of Directs Marketing/Sales $466,000 $27,400 3.0%of Market Value Contingency $100,000 $5,900 5.0%of Indirects Total Indirect Costs $2,092,000 $123,100 28.6%of Directs III.Financing Costs (4)$732,000 $43,100 10.0%of Directs IV.Total Development Costs (5)$10,144,000 $596,700 $377 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. Includes, school, water/sewer, plan check, building permit, inspections, and other processing fees. (3) (4)Includes loan fees, interest during construction, and interest during sales. (5)Excludes acquisition costs. Mixed-Use Stacked Flats Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 106 of 163 VILLAGE CENTER - FOR-SALE MIXED-USE STACKED FLATS OVER PODIUM PARKING TABLE G-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate One Bedroom 950 SF 4 $785 $746,000 $2,984,000 3 $785 $746,000 $2,238,000 Two Bedroom 1,200 SF 10 $765 $918,000 $9,180,000 8 $765 $918,000 $7,344,000 Three Bedroom 1,500 SF 3 $750 $1,125,000 $3,375,000 3 $750 $1,125,000 $3,375,000 Subtotal/Average 1,194 SF 17 $765 $914,000 $15,539,000 14 $775 $926,000 $12,957,000 B.Affordable (1) One Bedroom 950 SF 0 $0 $0 $0 1 $258 $245,000 $245,000 Two Bedroom 1,200 SF 0 $0 $0 $0 2 $229 $275,000 $550,000 Three Bedroom 1,500 SF 0 $0 $0 $0 0 $226 $339,000 $0 Subtotal/Average 1,194 SF 0 $0 $0 $0 3 $222 $265,000 $795,000 C.Total/Average 1,194 SF 17 $765 $914,000 $15,539,000 17 $677 $809,000 $13,752,000 II.Total Gross Sales Proceeds $15,539,000 $13,752,000 Add: Value of Retail Component (2)$1,662,000 $1,662,000 (Less) Cost of Sale 3.0%of Value ($516,000)3.0%of Value ($462,000) (Less) Target Developer Profit 12.0%of Value ($2,064,000)12.0%of Value ($1,850,000) III.Total Net Sales Proceeds $14,621,000 $13,102,000 (Less) Development Costs ($10,144,000)($10,144,000) IV.Residual Land Value $4,477,000 $2,958,000 Per Unit $263,000 $174,000 Per SF Site $206 $136 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 8. (2)Value of retail component assumes $3.50/SF/Month/NNN rent, vacancy at 10.0% of GSI, unreimbursed expenses of 5.0% of EGI, and a capitalization rate of 6.5%. Unit Size Mixed-Use Stacked Flats 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 107 of 163 BARRIO CENTER - FOR-SALE ZERO LOT LINE ROWHOMES TABLE H-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 0.50 Acres II.Gross Building Area Residential Area 10,000 SF 100% Common Area 0 SF 0% Total Gross Building Area (GBA)10,000 SF 100% III.Unit Mix Studio 0 Units 0%- One Bedroom 0 Units 0%- SF Two Bedroom 2 Units 29%1,250 SF Three Bedroom 5 Units 71%1,500 SF Total 7 Units 100%1,429 SF IV.Number of Stories 3 Stories V.Density 14 Units/Acre VI.Construction Type VII. Parking Parking Type Residential 2.0 Spaces/Unit 14 Spaces Guest Parking 0.25 Spaces/Unit 2 Spaces Total Spaces 2.29 Spaces/Unit 16 Spaces # of Units Unit Size Type V (Wood) Attached Garages / Surface Zero Lot Line Rowhomes Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 108 of 163 BARRIO CENTER - FOR-SALE ZERO LOT LINE ROWHOMES TABLE H-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$0 $0 $0 Per SF Site On-Site Improvements/Landscaping (2)$218,000 $31,100 $10 Per SF Site Parking $0 $0 Included Below Shell Construction - Residential $1,950,000 $278,600 $195 Per SF GBA - Residential FF&E/Amenities $53,000 $7,500 Allowance Contingency $111,000 $15,900 5.0%of Directs Total Direct Costs $2,332,000 $333,100 $233 Per SF GBA II.Indirect Costs Architecture & Engineering $117,000 $16,700 5.0%of Directs Permits & Fees - Residential (2)$168,000 $24,000 $17 Per SF GBA Community Facilities District No. 1 (Citywide) (3)$25,000 $3,600 $3 Per SF GBA Legal & Accounting $35,000 $5,000 1.5%of Directs Taxes & Insurance $154,000 $22,000 3.0%of Market Value Developer Fee $93,000 $13,300 4.0%of Directs Marketing/Sales $154,000 $22,000 3.0%of Market Value Contingency $37,000 $5,300 5.0%of Indirects Total Indirect Costs $783,000 $111,900 33.6%of Directs III.Financing Costs (4)$175,000 $25,000 7.5%of Directs IV.Total Development Costs (5)$3,290,000 $470,000 $329 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. Includes, school, water/sewer, plan check, building permit, inspections, and other processing fees. (3) (4)Includes loan fees, interest during construction, and interest during sales. (5)Excludes acquisition costs. Zero Lot Line Rowhomes Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 109 of 163 BARRIO CENTER - FOR-SALE ZERO LOT LINE ROWHOMES TABLE H-3 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Sales Proceeds # Units $/SF Price/Unit Total # Units $/SF Price/Unit Total A.Market-Rate Two Bedroom 1,250 SF 2 $550 $688,000 $1,376,000 2 $550 $688,000 $1,376,000 Three Bedroom 1,500 SF 5 $500 $750,000 $3,750,000 4 $500 $750,000 $3,000,000 Subtotal/Average 1,429 SF 7 $512 $732,000 $5,126,000 6 $510 $729,000 $4,376,000 B.Affordable (1) Two Bedroom 1,250 SF 0 $0 $0 $0 0 $0 $0 $0 Three Bedroom 1,500 SF 0 $0 $0 $0 1 $256 $384,000 $384,000 Subtotal/Average 1,429 SF 0 $0 $0 $0 1 $269 $384,000 $384,000 C.Total/Average 1,429 SF 7 $512 $732,000 $5,126,000 7 $476 $680,000 $4,760,000 II.Total Gross Sales Proceeds $5,126,000 $4,760,000 (Less) Cost of Sale 3.0%of Value ($154,000)3.0%of Value ($143,000) (Less) Target Developer Profit 10.0%of Value ($513,000)10.0%of Value ($476,000) III.Total Net Sales Proceeds $4,459,000 $4,141,000 (Less) Development Costs ($3,290,000)($3,290,000) IV.Residual Land Value $1,169,000 $851,000 Per Unit $167,000 $122,000 Per SF Site $54 $39 (1)Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 9. Unit Size Zero Lot Line Rowhomes 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 110 of 163I I I I I I BARRIO PERIMETER - RENTAL STACKED FLATS OVER TUCK-UNDER PARKINGTABLE I-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 0.50 Acres II.Gross Building Area Residential Area 12,850 SF 87.5% Common Area 1,836 SF 12.5% Total Gross Building Area (GBA)14,686 SF 100.0% III.Unit Mix Studio 0 Units 0%- SF One Bedroom 7 Units 47%750 SF Two Bedroom 8 Units 53%950 SF Three Bedroom 0 Units 0%- SF Total 15 Units 100%857 SF IV.Number of Stories 3 Stories V.Density 30 Units/Acre VI.Construction Type VII. Parking Parking Type Number of Spaces One Bedroom 1.00 Spaces/Unit 7 Spaces Two or More Bedrooms 2.00 Spaces/Unit 16 Spaces Visitor 0.25 Spaces/Unit 4 Spaces Total 1.80 Spaces/Unit 27 Spaces # of Units Unit Size Type V (Wood) Tuck-under Stacked Flats over Tuck-under Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 111 of 163 BARRIO PERIMETER - RENTAL STACKED FLATS OVER TUCK-UNDER PARKINGTABLE I-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit I.Direct Costs (1) Off-Site Improvements (2)$0 $0 $0 Per SF Site On-Site Improvements/Landscaping (2)$218,000 $14,500 $10 Per SF Site Parking $405,000 $27,000 $15,000 Per Space Shell Construction - Residential $2,717,000 $181,100 $185 Per SF GBA - Residential FF&E/Amenities $75,000 $5,000 Allowance Contingency $171,000 $11,400 5.0%of Directs Total Direct Costs $3,586,000 $239,100 $244 Per SF GBA II.Indirect Costs Architecture & Engineering $179,000 $11,900 5.0%of Directs Permits & Fees - Residential (2)$270,000 $18,000 $18 Per SF GBA Community Facilities District No. 1 (Citywide) (3)$53,000 $3,500 $4 Per SF GBA Legal & Accounting $54,000 $3,600 1.5%of Directs Taxes & Insurance $54,000 $3,600 1.5%of Directs Developer Fee $143,000 $9,500 4.0%of Directs Marketing/Lease-Up $38,000 $2,500 1.1%of Directs Contingency $40,000 $2,700 5.0%of Indirects Total Indirect Costs $831,000 $55,400 23.2%of Directs III.Financing Costs (4)$359,000 $23,900 10.0%of Directs IV.Total Development Costs (5)$4,776,000 $318,400 $325 Per SF GBA (1)Excludes the payment of prevailing wages. (2)Estimated allowance; not verified by KMA or the City. Includes, school, water/sewer, plan check, building permit, inspections, and other processing fees. (3) (4)Includes loan fees, interest during construction, and interest during sales. (5)Excludes acquisition costs. Stacked Flats over Tuck-under Comments Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022 Item #3 Page 112 of 163 BARRIO PERIMETER - RENTAL STACKED FLATS OVER TUCK-UNDER PARKINGTABLE I-3 NET OPERATING INCOME INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Gross Scheduled Income (GSI) # Units $/SF $/Month Annual # Units $/SF $/Month (1)Annual A.Market-Rate One Bedroom 750 SF 7 $3.60 $2,700 $227,000 6 $3.60 $2,700 $194,000 Two Bedroom 950 SF 8 $3.30 $3,140 $301,000 7 $3.30 $3,140 $264,000 Subtotal/Average 857 SF 15 $3.42 $2,933 $528,000 13 $3.43 $2,940 $458,000 B.Affordable One Bedroom @ Low 750 SF --------1 $2.11 $1,585 $19,000 Two Bedroom @ Low 950 SF --------1 $1.87 $1,776 $21,000 Subtotal/Average 857 SF --------2 $1.95 $1,667 $40,000 C.Total/Average 857 SF 15 $3.39 $2,900 $528,000 15 $3.23 $2,767 $498,000 Add: Other Income $50 /Unit/Month $9,000 $25 /Unit/Month $5,000 D.Total Gross Scheduled Income (GSI)$537,000 $503,000 II.Effective Gross Income (Less) Vacancy 5.0%of GSI ($27,000)5.0%of GSI ($25,000) Effective Gross Income (EGI)$510,000 $478,000 III.Operating Expenses (Less) Operating Expenses $5,000 /Unit/Year ($75,000)$5,000 /Unit/Year ($75,000) (Less) Property Taxes/Assessments (2)$6,067 /Unit/Year ($91,000)$5,600 /Unit/Year ($84,000) (Less) Replacement Reserves $300 /Unit/Year ($4,500)$300 /Unit/Year ($4,500) Total Operating Expenses $11,367 /Unit/Year ($170,500)$10,900 /Unit/Year ($163,500) 33.4%of EGI 34.2%of EGI IV.Net Operating Income (NOI)$339,500 $314,500 (1)Source: City of Carlsbad 2020 household income limits. Reflects 30% monthly income at 70% Area Median Income (AMI); see Worksheet 5. (2)Based on capitalized income approach; assumes a 4.5% capitalization rate and a 1.20% tax rate. Stacked Flats over Tuck-under 100% @ Market-Rate 85% @ Market-Rate/15% @ Low Unit Size Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 113 of 163I I I I I I I I BARRIO PERIMETER - RENTAL STACKED FLATS OVER TUCK-UNDER PARKINGTABLE I-4 RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Capitalized Value Upon Completion Stabilized Net Operating Income $339,500 $314,500 Capitalization Rate @ 4.50%4.50% Capitalized Value Upon Completion $503,000 /Unit $7,544,000 $466,000 /Unit $6,989,000 (Less) Cost of Sale 3.0%of Value ($226,000)3.0%of Value ($210,000) (Less) Target Developer Profit 12.0%of Value ($905,000)12.0%of Value ($839,000) II.Net Sales Proceeds $6,413,000 $5,940,000 (Less) Development Costs ($4,776,000)($4,776,000) III.Residual Land Value $1,637,000 $1,164,000 Per Unit $109,000 $78,000 Per SF Site $75 $53 Stacked Flats over Tuck-under 100% @ Market-Rate 85% @ Market-Rate / 15% @ Low Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;emaFeb. 10, 2022Item #3 Page 114 of 163 VILLAGE / BARRIO - RENTAL STACKED FLATS OVER PODIUM PARKING 100% AFFORDABLETABLE J-1 PROJECT DESCRIPTION INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Site Area 0.50 Acres II.Gross Building Area Residential Area 12,090 SF 85% Common Area 2,134 SF 15% Total Gross Building Area (GBA)14,224 SF 100% III.Unit Mix Studio 6 Units 30%450 SF One Bedroom 8 Units 40%550 SF Two Bedroom 4 Units 20%750 SF Three Bedroom 2 Units 10%995 SF Total 20 Units 100%605 SF IV.Affordability Mix 50% of AMI 19 Units 95%(1) Manager 1 Unit 5% Total/Average 20 Units 100% Average Affordability (excl. Manager)50%AMI V.Number of Stories 3 Stories VI.Density Base Density 30 Units/Acre Density Bonus @ 35.0%10 Units/Acre Total Density 40 Units/Acre VII.Construction Type VIII. Parking Parking Type Number of Spaces (1) Studio and One Bedroom 1.00 Spaces/Unit 14 Spaces Two or More Bedrooms 2.00 Spaces/Unit 12 Spaces Visitor 0.25 Spaces/Unit 5 Spaces Subtotal 1.55 Spaces/Unit 31 Spaces (Less) Affordable Housing Reduction @ 25.0%0.40 Spaces/Unit (8)Spaces Total 1.15 Spaces/Unit 23 Spaces (1)Assumes range of affordability from 30% AMI to 60% AMI, with average affordability at 50% AMI. Stacked Flats over Podium Parking # of Units Unit Size Type V (Wood) Podium Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 115 of 163 VILLAGE / BARRIO - RENTAL STACKED FLATS OVER PODIUM PARKING 100% AFFORDABLE TABLE J-2 DEVELOPMENT COSTS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Total Per Unit Total Per Unit I.Direct Costs Off-Site Improvements (1)$0 $0 $0 Per SF Site $0 $0 $0 Per SF Site On-Site Improvements/Landscaping (1)$327,000 $16,400 $15 Per SF Site $327,000 $16,400 $15 Per SF Site Parking $690,000 $34,500 $30,000 Per Space $690,000 $34,500 $30,000 Per Space Shell Construction - Residential $2,560,000 $128,000 $180 Per SF GBA $2,560,000 $128,000 $180 Per SF GBA FF&E/Amenities $70,000 $3,500 Allowance $70,000 $3,500 Allowance Subtotal $3,647,000 $182,400 $256 Per SF GBA $3,647,000 $182,400 $256 Per SF GBA Add: Prevailing Wages $547,000 $27,400 15.0%of Directs $0 $0 0.0%of Directs Contingency $210,000 $10,500 5.0%of Directs $182,000 $9,100 5.0%of Directs Total Direct Costs $4,404,000 $220,200 $310 Per SF GBA $3,829,000 $191,500 $269 Per SF GBA II.Indirect Costs Architecture & Engineering $220,000 $11,000 5.0%of Directs $191,000 $9,600 5.0%of Directs Permits & Fees - Residential (2)$360,000 $18,000 $25 Per SF GBA $360,000 $18,000 $25 Per SF GBA Community Facilities District No. 1 (Citywide) (3)$71,000 $3,600 $5 Per SF GBA $71,000 $3,600 $5 Per SF GBA Legal & Accounting $66,000 $3,300 1.5%of Directs $57,000 $2,900 1.5%of Directs Taxes & Insurance $66,000 $3,300 1.5%of Directs $57,000 $2,900 1.5%of Directs Developer Fee $831,000 $41,600 18.9%of Directs $757,000 $37,900 19.8%of Directs Marketing/Lease-Up $50,000 $2,500 1.1%of Directs $50,000 $2,500 1.3%of Directs Contingency $83,000 $4,200 5.0%of Indirects $77,000 $3,900 5.0%of Indirects Total Indirect Costs $1,747,000 $87,400 39.7%of Directs $1,620,000 $81,000 42.3%of Directs III.Financing Costs Loan Fees $210,000 $10,500 4.8%of Directs $125,000 $6,300 3.3%of Directs Interest During Constructions $142,000 $7,100 3.2%of Directs $228,000 $11,400 6.0%of Directs Title/Recording/Escrow $50,000 $2,500 1.1%of Directs $50,000 $2,500 1.3%of Directs Interest During Lease-Up $79,000 $4,000 1.8%of Directs $127,000 $6,400 3.3%of Directs TCAC/Syndication Fees $95,000 $4,800 2.2%of Directs $103,000 $5,200 2.7%of Directs Operating Lease-Up/Reserves $71,000 $3,600 1.6%of Directs $74,000 $3,700 1.9%of Directs Total Financing Costs $647,000 $32,400 14.7%of Directs $707,000 $35,400 18.5%of Directs IV.Total Development Costs (4)$6,798,000 $339,900 $478 Per SF GBA $6,156,000 $307,800 $433 Per SF GBA (1)Estimated allowance; not verified by KMA or the City.(3) (2) (4)Excludes acquisition costs. Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed Property if annexed into the CFD in FY 2020-21. Stacked Flats over Podium Parking 4% Tax Credits w/MHP 9% Tax Credits Comments Comments Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities and traffic development impact fees, plan check, building permit, inspections, and other processing fees. Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 116 of 163I I I I I VILLAGE / BARRIO - RENTAL STACKED FLATS OVER PODIUM PARKING 100% AFFORDABLE TABLE J-3 NET OPERATING INCOME INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD # Units $/SF $/Month Annual # Units $/SF $/Month Annual I.Gross Scheduled Income (GSI) Studio @ 50% AMI 450 SF 6 $2.19 $985 $71,000 6 $2.19 $985 $71,000 One Bedroom @ 50% AMI 550 SF 8 $1.91 $1,050 $101,000 8 $1.91 $1,050 $101,000 Two Bedroom @ 50% AMI 750 SF 3 $1.67 $1,256 $45,000 3 $1.67 $1,256 $45,000 Two Bedroom Manager 750 SF 1 $0.00 $0 $0 1 $0.00 $0 $0 Three Bedroom @ 50% AMI 995 SF 2 $1.46 $1,449 $35,000 2 $1.46 $1,449 $35,000 Total/Average 885 SF 20 $1.19 $1,050 $252,000 20 $1.19 $1,050 $252,000 Add: Other Income $10 /Unit/Month $2,000 $10 /Unit/Month $2,000 Total Gross Scheduled Income (GSI)$254,000 $254,000 II.Effective Gross Income (Less) Vacancy 5.0%of GSI ($13,000)5.0%of GSI ($13,000) Effective Gross Income (EGI)$241,000 $241,000 III.Operating Expenses (Less) Operating Expenses $5,250 /Unit/Year ($105,000)$5,250 /Unit/Year ($105,000) (Less) Tenant Services $500 /Unit/Year ($10,000)$0 /Unit/Year $0 (Less) Property Taxes (3)$500 /Unit/Year ($10,000)$500 /Unit/Year ($10,000) (Less) Replacement Reserves $500 /Unit/Year ($10,000)$250 /Unit/Year ($5,000) Total Operating Expenses $6,750 /Unit/Year ($135,000)$6,000 /Unit/Year ($120,000) 56.0%of EGI 49.8%of EGI IV.Net Operating Income (NOI)$106,000 $121,000 (1)See Worksheet 6 for calculation of affordable rents. (2)Assumes project will qualify for tax-exempt status. Stacked Flats over Podium Parking 4% Tax Credits w/MHP 9% Tax Credits Unit Size Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 117 of 163 VILLAGE / BARRIO - RENTAL STACKED FLATS OVER PODIUM PARKING 100% AFFORDABLE TABLE J-4 RESIDUAL LAND VALUE AND FINANCING DEFICIT INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Sources of Funds Total Per Unit Total Per Unit Supportable Permanent Loan (1)$1,709,000 $85,500 $1,633,000 $81,700 Tax Credit Equity Investment (2)$2,303,000 $115,200 $3,973,000 $198,700 Multifamily Housing Program (MHP) (3)$1,000,000 $50,000 $0 $0 Affordable Housing Program (AHP)$200,000 $10,000 $200,000 $10,000 Deferred Developer Fee/General Partner Equity Contribution (4)$0 $0 $0 $0 Income During Lease-Up $20,000 $1,000 $20,000 $1,000 Total Sources of Funds $5,232,000 $261,600 $5,826,000 $291,300 II.(Less) Development Costs ($6,798,000)($340,000)($6,156,000)($308,000) III.Residual Land Value ($1,566,000)($78,000)($330,000)($17,000) IV.(Less) Acquisition Cost ($3,000,000)($150,000)($3,000,000)($150,000) V.Financing Deficit ($4,566,000)($228,300)($3,330,000)($166,500) Stacked Flats over Podium Parking 4% Tax Credits with MHP 9% Tax Credits Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022Item #3 Page 118 of 163 VILLAGE / BARRIO - RENTAL STACKED FLATS OVER PODIUM PARKING 100% AFFORDABLE TABLE J-4 (CONT'D.) RESIDUAL LAND VALUE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD (1)Supportable Permanent Loan NOI $106,000 $121,000 Interest Rate 4.50%5.50% Term (years)40 35 Debt Coverage Ratio 1.15 1.15 Annual Debt Service $92,174 $105,217 Supportable Permanent Loan $1,709,000 $1,633,000 (2)Low Income Housing Tax Credits (Federal) Estimate of Eligible Basis: Total Development Costs $6,798,000 $6,156,000 (Less) Ineligible Costs 6.3%($426,000)5.7%($352,000) Eligible Basis $6,372,000 $5,804,000 Tax Credit Proceeds: Maximum Eligible Basis $6,372,000 $5,804,000 (Less) Voluntary Credit Adjustment 0.0%$0 35.0%($2,031,000) Total Requested Unadjusted Basis $6,372,000 $3,773,000 Impacted Bonus Factor 130%$8,283,600 130%$4,904,900 Tax Credit Qualified Units/Applicable Factor 100%$8,283,600 100%$4,904,900 Tax Credit Rate 3.09%$255,963 9.00%$441,441 Total Tax Credits @ 10 $2,559,632 10 $4,414,410 Limited Partner Share 99.99%$2,559,376 99.99%$4,413,969 Tax Credit Equity Investment @ 90.0%$2,303,000 90.0%$3,973,000 (3)Multifamily Housing Program (MHP) Restricted Units 20 Units Total MHP Loan $50,000 /Unit $1,000,000 $0 (4)Estimate of Deferred Developer Fee Eligible Basis $6,372,000 $5,804,000 (Less) Developer Fee ($831,000)($757,000) Unadjusted Eligible Basis $5,541,000 $5,047,000 Total Developer Fee 15.0%$831,000 15.0%$757,000 Developer Overhead Fee $831,000 $757,000 (Less) Deferred Developer Fee 0.0%$0 0.0%$0 Upfront Developer Fee $831,000 $757,000 Stacked Flats over Podium Parking 4% Tax Credits with MHP 9% Tax Credits Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 119 of 163 APPENDIX 5 Viability of 20% Low Income Inclusionary Requirement Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 120 of 163 APPENDIX 5 – VIABILITY OF 20% INCLUSIONARY SET-ASIDE REQUIREMENT A. Overview KMA also evaluated the viability of a potential 5% increase to the City’s inclusionary set-aside requirement. This Appendix evaluates the feasibility of increasing the inclusionary requirement to 20% Low Income, as well as the corresponding potential in-lieu fee levels, using the same framework and assumptions described in Sections III and IV of this report. It should be noted that under Assembly Bill 1505, signed into law September 29, 2017, inclusionary ordinances that require more than 15% of total units to be rented by Low Income households are subject to State of California Department of Housing and Community Development (HCD) review. Under AB 1505, HCD may then request that a city provide an economic feasibility study as evidence that a 20% rental inclusionary requirement does not unduly constrain the production of housing. The brief evaluation of the viability of a 20% inclusionary set-aside requirement presented in this Appendix is not intended to meet the criteria established by HCD for an economic feasibility study and therefore should not be treated as such. B. Viability of 20% Low Income Inclusionary Requirement KMA evaluated the viability of a 20% inclusionary set-aside requirement by comparing: (a) the residual land value generated when assuming the City’s existing 15% inclusionary requirement as previously described in Sections III (Citywide) and IV (Village/Barrio), against (b) the residual land value generated when assuming a 20% inclusionary requirement. The methodology used to determine residual land value for the residential development prototypes assuming a 20% inclusionary requirement is described in detail in Sections C and D below. The results of the 20% Low Income inclusionary analysis for the Citywide residential development prototypes are summarized in Table 1. Feb. 10, 2022 Item #3 Page 121 of 163 Table 1: Economic Impact of Increasing to 20% Inclusionary Housing Requirement - Citywide FOR-SALE RENTAL Average Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments 15% @ Low Income Optimal Approach (1) Off-Site Off-Site Off-Site On-Site Residual Land Value Per Unit (2) $253,760 $205,760 $115,760 $86,000 $165,320 20% @ Low Income Optimal Approach (1) Off-Site Off-Site Off-Site On-Site Residual Land Value Per Unit (2) $240,750 $192,750 $102,750 $76,000 $153,060 Impact of Increasing to 20% Inclusionary Set-Aside Requirement Per Market-Rate Unit ($13,010) ($13,010) ($13,010) ($10,000) ($12,260) % Change -5.1% -6.3% -11.2% -11.6% -7.4% (1) Reflects the optimal approach to fulfilling inclusionary obligation (i.e., on-site vs. off-site production). (2) Reflects residual land value using the optimal approach to fulfilling inclusionary obligation. KMA used the same approach to analyze the viability of a 20% inclusionary requirement in the Village/Barrio. The results of the 20% Low Income inclusionary analysis for the Village/Barrio residential prototypes are summarized in Table 2. Table 2: Economic Impact of Increasing to 20% Inclusionary Housing Requirement – Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck- under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Turk-under 15% @ Low Income Optimal Approach (1) Off-Site Off-Site Off-Site On-Site Residual Land Value Per Unit (2) $262,060 $228,060 $132,060 $78,000 $175,045 20% @ Low Income Optimal Approach (1) Off-Site Off-Site On-Site On-Site Residual Land Value Per Unit (2) $247,500 $213,500 $117,500 $59,500 $159,500 Impact of Increasing to 20% Inclusionary Requirement Per Market-Rate Unit ($14,560) ($14,560) ($14,560) ($18,500) ($15,545) % Change -5.6% -6.4% -11.0% -23.7% -8.9% (1) Reflects the optimal approach to fulfilling inclusionary obligation (i.e., on-site vs. off-site production). (2) Reflects residual land value using the optimal approach to fulfilling inclusionary obligation. As shown in Tables 1 and 2 above, the impact of increasing to a 20% inclusionary requirement was estimated to reduce residual land value for residential projects by an average of -7.4% Citywide and - 8.9% in the Village/Barrio. KMA surveyed land sales that occurred Citywide, in the Village/Barrio, and areas adjacent to the Village/Barrio since 2015. Over time, land values in San Diego County have increased 4% to 5% per year. On this basis, then, it is reasonable to assume that an impact of -7.4% to - Feb. 10, 2022 Item #3 Page 122 of 163 8.9% could be absorbed in a period of two to three years. Based on the magnitude of this economic impact, it is the KMA preliminary conclusion that a 20% inclusionary set-aside requirement is potentially viable. C. In-Lieu Fee Financial Analysis – 20% Inclusionary Requirement KMA prepared estimates of potential in-lieu fee levels for a 20% Low Income inclusionary requirement using the same methodology as described in Sections III and IV above. Approach 1: Economic Impact of Incorporating 20% Affordable Housing On-Site To estimate the economic impact of incorporating a 20% inclusionary housing requirement on-site, KMA prepared financial pro forma models for each Citywide and Village/Barrio residential development prototype assuming: (1) a base case consisting of a 100% market-rate development; and (2) a development that assumes 20% of the units at Low Income. The base case residual land value outcome was then measured against the residual land value that is generated when the 20% Low Income requirement is imposed. Citywide The economic impact of incorporating a 20% Low Income inclusionary requirement on-site for the Citywide residential development prototypes is summarized in Table 3. Table 3: Economic Impact of Incorporating 20% Affordable Housing On-Site - Citywide FOR-SALE RENTAL Average Residual Land Value Per Unit Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments 100% Market-Rate $285,000 $237,000 $147,000 $114,000 $196,000 80% Market-Rate / 20% Low Income $122,000 $127,000 $76,000 $76,000 $100,000 Economic Impact of Incorporating Affordable Housing On-Site Per Market-Rate Unit $163,000 $110,000 $71,000 $38,000 $96,000 Per Market-Rate Net SF $50.89 $50.00 $44.94 $38.34 $46.04 As shown in Table 3, the economic impact of including 20% Low Income units on-site is estimated to range from $38,000 to $163,000 per unit, or $38 to $51 per SF, of market-rate residential living area for the Citywide prototypes. Feb. 10, 2022 Item #3 Page 123 of 163 Village/Barrio KMA used the same methodology to estimate the economic impact of incorporating a 20% Low Income inclusionary requirement on-site in the Village/Barrio. As shown in Table 4, the economic impact of including 20% Low-Income units on-site is estimated to range from $45,000 to $110,000 per unit, or $32 to $91 per SF of market-rate residential living area, in the Village/Barrio. Table 4: Economic Impact of Incorporating 20% Affordable Housing On-Site – Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Residual Land Value Per Unit Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under 100% Market-Rate $297,000 $263,000 $167,000 $109,000 $209,000 80% Market-Rate / 20% Low Income $187,000 $167,000 $122,000 $62,000 $135,000 Economic Impact of Incorporating Affordable Housing On-Site Per Market-Rate Unit $110,000 $96,000 $45,000 $47,000 $74,500 Per Market-Rate Net SF $90.98 $80.39 $31.50 $54.86 $64.43 Approach 2: Funding Level Required to Implement 20% Inclusionary Housing Production in an Off-Site Location KMA also prepared estimates of the affordability gaps associated with developing 20% affordable housing in an off-site location. The purpose of this financial analysis was to estimate the funding gap that would be required for either a market-rate residential developer or the City to create the targeted 20% inclusionary housing production in a separate off-site location. As noted previously, a Low Income rental unit developed Citywide has an estimated financing gap of $177,000, and a Low-Income unit developed in the Village/Barrio has an estimated average financing gap of $198,000. In the event that the City were to increase its inclusionary requirement to 20%, the affordability gap per market-rate unit would increase to $44,250 ($177,000 ÷ 80% x 20%) for Low Income units developed Citywide or $49,500 ($198,000 ÷ 80% x 20%) for Low Income units developed in the Village/Barrio, as summarized in Table 5. Feb. 10, 2022 Item #3 Page 124 of 163 Table 5: Estimate of Funding Gap for 20% Off-Site Low Income Units Citywide Village and Barrio Affordability Gap per Affordable Unit $177,000 $198,000 Per Market-Rate Unit @ 20% Inclusionary Set-Aside $44,250 $49,500 Citywide This funding gap outcome can be expressed on both a per-unit basis and per-SF basis relative to the market-rate residential development. As shown in Table 6, KMA estimates that the City would need to receive a fee of $44,250 per market-rate unit, or a per-SF fee ranging between $14 and $45, depending on the market-rate prototype, or an average of $27 per SF living area. Table 6: Funding Level Required to Create 20% Affordable Housing Off-Site - Citywide FOR-SALE RENTAL Average Single-Family Large Lot Single-Family Medium Lot Townhomes Garden Apartments Per Market-Rate Unit $44,250 $44,250 $44,250 $44,250 $44,250 Per Market-Rate Net SF $13.81 $20.11 $28.01 $44.64 $26.64 Village/Barrio Likewise, to fund the creation of 20% Low Income units in an off-site location in the Village/Barrio, the City would need to receive $49,500 per market-rate unit, or between $35 to $58 per SF, depending on the market-rate prototype, or an average of $44 per SF living area, as shown in Table 7. Table 7: Funding Level Required to Create 20% Affordable Housing Off-Site – Village/Barrio FOR-SALE RENTAL Average Village General Village Center Barrio Center Barrio Perimeter Stacked Flats over Tuck-under Mixed-Use Stacked Flats Zero Lot Line Rowhomes Stacked Flats over Tuck-under Per Market-Rate Unit $49,500 $49,500 $49,500 $49,500 $49,500 Per Market-Rate Net SF $40.94 $41.45 $34.65 $57.78 $43.71 Feb. 10, 2022 Item #3 Page 125 of 163 D. Potential Fee Levels Citywide In view of Approaches 1 and 2, if the City seeks to increase the inclusionary requirement to 20%, it may wish to consider a potential in-lieu fee Citywide of $44,250 per market-rate unit, or between $20 and $30 per SF of market-rate residential living area, as summarized in Table 8. Table 8: Potential Fee Level – 20% Low Income - Citywide Approach to Setting Fee Levels Potential Fee Levels Approach 1: On-Site Production Approach 2: Off-Site Production Per Market-Rate Unit $38,000 - $163,000 Average: $96,000 $44,250 $44,250 Per Net SF Market-Rate Residential $38 - $51 Average: $46 $14 - $45 Average: $27 $20 - $30 Village/Barrio Likewise, in view of Approaches 1 and 2, if the City seeks to increase the inclusionary requirement to 20%, it may wish to consider a potential in-lieu fee in the Village/Barrio of $49,500 per market-rate unit, or between $30 and $40 per SF of market-rate residential living area, as summarized in Table 9. Table 9: Potential Fee Level – 20% Low Income – Village/Barrio Approach 1: On-Site Production Approach 2: Off-Site Production Potential Fee Levels Per Market-Rate Unit $45,000 - $117,000 Average: $75,500 $49,500 $49,500 Per Net SF Market-Rate Residential $32 - $91 Average: $64 $35 - $58 Average: $44 $30 - $40 E. Conclusions Table 10 provides a summary of the economic impact of a potential 5% increase to the City’s inclusionary set-aside requirement. Feb. 10, 2022 Item #3 Page 126 of 163 Table 10: Economic Impact of Increasing Inclusionary Requirement from 15% to 20% Citywide Village/Barrio Impact on Residual Land Value -7.4% -8.9% As shown above, the impact of increasing the inclusionary requirement from 15% to 20% was estimated to reduce residual land value for residential projects by an average of -7.4% Citywide and -8.9% in the Village/Barrio. KMA surveyed land sales that occurred Citywide, in the Village/Barrio, and areas adjacent to the Village/Barrio since 2015. Over time, land values in San Diego County have increased 4% to 5% per year. On this basis, then, it is reasonable to assume that an impact of -7.4% to -8.9% could be absorbed in a period of two to three years. KMA also prepared estimates of potential in-lieu fee levels in the event that the City increases the inclusionary requirement to 20%. These estimated ranges were based on the two approaches to setting fee levels (on-site vs. off-site production) described in detail in Sections III and IV of this report. Based on these in-lieu fee financial analyses, should the City establish a 20% Low Income inclusionary requirement, it may wish to consider a potential in-lieu fee between $20 and $30 per SF of market-rate residential living area Citywide and a potential fee level between $30 and $40 per SF of market-rate residential living area in the Village/Barrio. These findings are summarized in Table 11 below. Table 11: Potential Fee Levels – 20% Low Income Citywide Village/Barrio Per Market-Rate Unit $44,250 $49,500 Per Net SF Market-Rate Unit $20 - $30 $30 - $40 Feb. 10, 2022 Item #3 Page 127 of 163 CITYWIDE 80% MARKET-RATE / 20% @ LOW TABLE 1 KEY ASSUMPTIONS - CITYWIDE PROTOTYPES INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.PROJECT DESCRIPTION Site Area 10.00 Acres 5.00 Acres 3.00 Acres 5.00 Acres 2.00 Acre Density - Residential 3.2 Units/Acre 6.0 Units/Acre 15.0 Units/Acre 25.0 Units/Acre 30.0 Units/Acre Number of Units 32 Units 30 Units 45 Units 125 Units 60 Units Average Unit Size 3,203 SF 2,200 SF 1,580 SF 991 SF 885 SF Retail SF --------------- Parking Ratio 2.00 Spaces/Unit 2.00 Spaces/Unit 2.27 Spaces/Unit 2.13 Spaces/Unit 1.53 Spaces/Unit II.DEVELOPMENT COSTS Off-Site Improvements $3 /SF Site $3 /SF Site $5 /SF Site $5 /SF Site $5 /SF Site On-Site Improvements $8 /SF Site $8 /SF Site $10 /SF Site $10 /SF Site $10 /SF Site Parking ------------$15,000 /Space Shell Construction - Residential $150 /SF GBA $160 /SF GBA $175 /SF GBA $170 /SF GBA $170 /SF GBA Shell Construction - Retail --------------- FF&E/Amenities $15,000 /Unit $10,000 /Unit $7,500 /Unit $10,000 /Unit $2,500 /Unit Architecture & Engineering 7.0%of Directs 7.0%of Directs 7.0%of Directs 7.0%of Directs 5.0%of Directs Permits and Fees - Residential $45,000 /Unit $45,000 /Unit $24,000 /Unit $17,000 /Unit $18,000 /Unit Permits and Fees - Retail --------------- Total Development Costs - Excl. Land $293 /SF GBA $308 /SF GBA $309 /SF GBA $294 /SF GBA $388 /SF GBA III.MARKET-RATE SALES PRICES / RENTS Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Mo. Rent Unit SF $/SF Mo. Rent Studio --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- One Bedroom --- --- --- --- --- --- --- --- --- 750 $3.00 $2,250 750 $1.40 $1,050 Two Bedroom --- --- --- --- --- --- 1,400 $480 $672,000 1,000 $2.75 $2,750 950 $1.32 $1,256 Three Bedroom 3,000 $450 $1,350,000 2,000 $500 $1,000,000 1,700 $460 $782,000 1,350 $2.50 $3,380 1,100 $1.32 $1,449 Four Bedroom 3,500 $425 $1,488,000 2,500 $450 $1,125,000 --- --- --- --- --- --- --- --- --- IV.RETAIL SPACE Retail --- --- --- --- --- Retail Cap Rate --- --- --- --- --- V.RESIDUAL LAND VALUE Cost of Sale 3.0%of Value 3.0%of Value 3.0%of Value ------ Target Developer Profit 10.0%of Value 10.0%of Value 10.0%of Value ------ Residual Land Value --- Per Unit --- Per SF Site Area $21 $33 $51 $65 --- V.FINANCING GAP Financing Gap ------------(1) Per Unit ------------ (1) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. $6,609,000 $285,000 $237,000 $147,000 A B C Single-Family Detached - Large Lot Single-Family Detached - Medium Lot Townhomes 100% MARKET-RATE D Garden Apartments $14,216,000 $114,000 $9,117,000 CITYWIDE 100% AFFORDABLE E Stacked Flats over Tuck-Under ($10,620,000) ($177,000) $7,103,000 Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 128 of 163 VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOW TABLE 2 KEY ASSUMPTIONS - VILLAGE AND BARRIO PROTOTYPES INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.PROJECT DESCRIPTION Site Area 0.50 Acres 0.50 Acre 0.50 Acre 0.50 Acre 0.50 Acre Density - Residential 23.0 Units/Acre 35.0 Units/Acre 14.0 Units/Acre 30.0 Units/Acre 40.0 Units/Acre Number of Units 11 Units 17 Units 7 Units 15 Units 20 Units Average Unit Size 1,209 SF 1,194 SF 1,429 SF 857 SF 605 SF Retail SF ---3,000 SF --------- Parking Ratio 1.82 Spaces/Unit 1.76 Spaces/Unit 2.29 Spaces/Unit 1.80 Spaces/Unit 1.15 Spaces/Unit II.DEVELOPMENT COSTS Off-Site Improvements $0 /SF Site $0 /SF Site $0 /SF Site $0 /SF Site $0 /SF Site On-Site Improvements $15 /SF Site $15 /SF Site $10 /SF Site $10 /SF Site $15 /SF Site Parking $15,000 /Space $30,000 /Space ---$15,000 /Space $30,000 /Space Shell Construction - Residential $190 /SF GBA $200 /SF GBA $195 /SF GBA $185 /SF GBA $180 /SF GBA Shell Construction - Retail ---$150 /SF GBA-Retail --------- FF&E/Amenities $7,500 /Unit $7,500 /Unit $7,500 /Unit $5,000 /Unit $3,500 /Unit Architecture & Engineering 5.0%of Directs 5.0%of Directs 5.0%of Directs 5.0%of Directs 5.0%of Directs Permits and Fees - Residential $18,000 /Unit $18,000 /Unit $24,000 /Unit $18,000 /Unit $18,000 /Unit Permits and Fees - Retail ---$11 /SF GBA-Retail --------- Total Development Costs - Excl. Land $360 /SF GBA $377 /SF GBA $329 /SF GBA $325 /SF GBA $478 /SF GBA III.MARKET-RATE SALES PRICES / RENTS Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Sales Price Unit SF $/SF Mo. Rent Unit SF $/SF Mo. Rent Studio --- --- --- --- --- --- --- --- --- --- --- --- 450 $2.19 $985 One Bedroom 950 $800 $760,000 950 $785 $746,000 --- --- --- 750 $3.60 $2,700 550 $1.91 $1,050 Two Bedroom 1,200 $775 $930,000 1,200 $765 $918,000 1,250 $550 $688,000 950 $3.30 $3,140 750 $1.67 $1,256 Three Bedroom 1,500 $750 $1,125,000 1,500 $750 $1,125,000 1,500 $500 $750,000 --- --- --- 995 $1.46 $1,449 Four Bedroom --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- IV.RETAIL SPACE Retail Rent --- $3.50 --- --- --- Retail Cap Rate --- 6.5%--- --- --- V.RESIDUAL LAND VALUE Cost of Sale 3.0%of Value 3.0%of Value 3.0%of Value ------ Target Developer Profit 12.0%of Value 12.0%of Value 10.0%of Value ------ Residual Land Value --- Per Unit --- Per SF Site Area $150 $206 $54 $75 --- VI.FINANCING GAP Financing Gap ------------(1) Per Unit ------------ (1) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. $297,000 $263,000 $167,000 $109,000 ($198,000) Village - Stacked Flats over Tuck-under Village - Mixed-Use over Podium Barrio - Rowhomes Barrio - Stacked Flats over Tuck-under Stacked Flats over Podium $3,269,000 $4,477,000 $1,169,000 $1,637,000 ($3,960,000) 100% MARKET-RATE 100% AFFORDABLE VILLAGE AND BARRIO F G H I J Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 129 of 163 CITYWIDE 80% MARKET-RATE / 20% @ LOWTABLE 3 SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD $285,000/Unit $21/SF $237,000/Unit $33/SF $147,000/Unit $51/SF $114,000/Unit $65/SF ($177,000)/Unit ($122)/SF $122,000/Unit $9/SF $127,000/Unit $17/SF $76,000/Unit $26/SF $76,000/Unit $44/SF (1) Affordability not to exceed 80% Area Median Income (AMI). (2) Assumes maximum ownership payment at 30% of 80% AMI, adjusted for family size. (3) Assumes maximum rental payment at 30% of 70% AMI, adjusted for family size. (4) Reflects affordability gap per affordable unit, inclusive of land acquisition costs. 100% @ Market-Rate 100% @ Market-Rate 100% Market-Rate and Mixed-Income 3.2 Units/Acre 32 Units 2 Stories 25.0 Units/Acre 125 Units 3 Stories 100% @ Market-Rate 100% Affordable CITYWIDE Garden Apartments FOR-SALE A B C D RENTAL Stacked Flats over Tuck-under Parking Single-Family Detached Large Lot E 2.00 Acres 30.0 Units/Acre 60 Units 3 Stories Single-Family Detached Medium Lot Townhomes 5.00 Acres 5.00 Acres 80% @ Market-Rate 20% @ Affordable (1)(2) 30 Units 2 Stories 3.00 Acres 15.0 Units/Acre 45 Units 2 Stories 6.0 Units/Acre 10.00 Acres 100% Affordable w/4% Tax Credits (4) 80% @ Market-Rate 20% @ Affordable (1)(2) 80% @ Market-Rate 20% @ Affordable (1)(2) 80% @ Market-Rate 20% @ Affordable (1)(3) 100% @ Market-Rate Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 130 of 163 VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOW TABLE 4 SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD $297,000/Unit $150/SF $263,000/Unit $206/SF $167,000/Unit $54/SF $109,000/Unit $75/SF ($198,000)/Unit ($182)/SF $187,000/Unit $95/SF $167,000/Unit $130/SF $122,000/Unit $39/SF $62,000/Unit $43/SF (1) Assumes development will qualify for an affordable housing density bonus. (2) Affordability not to exceed 80% Area Median Income (AMI). (3) Assumes maximum ownership payment at 30% of 80% AMI, adjusted for family size. (4) Assumes maximum rental payment at 30% of 70% AMI, adjusted for family size. (5) Reflects average affordability gap per affordable unit for two alternative financing approaches (4% Tax Credits and 9% Tax Credits). G FOR - SALE VILLAGE AND BARRIO 3 Stories 100% Market-Rate / Mixed-Income F H I RENTAL 100% Affordable Village General Village Center Barrio Center Barrio Perimeter 0.50 Acres0.50 Acres 80% @ Market-Rate 20% @ Affordable (2)(3) 80% @ Market-Rate 20% @ Affordable (2)(3) 80% @ Market-Rate 20% @ Affordable (2)(3) 80% @ Market-Rate 20% @ Affordable (2)(4) 100% @ Market-Rate 100% @ Market-Rate 100% @ Market-Rate 100% @ Market-Rate 100% Affordable w/ Tax Credits (5) J Stacked Flats over Podium Parking (1) 0.50 Acres Village / Barrio 40.0 Units/Acre 20 Units 3 Stories 0.50 Acres 0.50 Acres Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Stacked Flats over Tuck-under Parking Zero Lot Line Rowhomes 30.0 Units/Acre 15 Units 3 Stories 23.0 Units/Acre 11 Units 35.0 Units/Acre 17 Units 4 Stories 15.0 Units/Acre 7 Units 3 Stories Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 131 of 163,___ VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOW VS. 85% MARKET-RATE / 15% @ LOWTABLE 6 ECONOMIC IMPACT OF INCREASING TO 20% INCLUSIONARY HOUSING REQUIREMENT - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Residual Land Value - Optimal Approach: On-Site vs. Off-Site Production A.85% Market-Rate / 15% Low Per Unit $262,060 $228,060 $132,060 $78,000 $175,045 Off-Site Off-Site Off-Site On-Site B.80% Market-Rate / 20% Low Per Unit $247,000 $213,000 $117,000 $59,000 $159,000 Off-Site Off-Site On-Site On-Site II.Impact of Increasing to 20% Inclusionary Requirement % Change % Change % Change % Change % Change Per Market-Rate Unit ($15,060)-5.7%($15,060)-6.6%($15,060)-11.4%($19,000)-24.4%($16,045)-9.2% Per Market-Rate Net SF ($12.46)($12.61)($10.54)($22.18)($14.45) Per SF Site Area ($7.61)($11.75)($4.84)($13.09)($9.32) VILLAGE AND BARRIO F G H I J FOR-SALE RENTAL Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking Average Village General Village Center Barrio Center Barrio Perimeter Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 132 of 163 CITYWIDE 80% MARKET-RATE / 20% @ LOW TABLE 7 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Residual Land Value A.100% Market-Rate Per Unit $285,000 $237,000 $147,000 $114,000 $196,000 B.80% Market-Rate / 20% Low Per Unit $122,000 $127,000 $76,000 $76,000 $100,000 II.Economic Impact of Incorporating Affordable Housing On-Site % Change % Change % Change % Change % Change Per Market-Rate Unit ($163,000)-57.2%($110,000)-46.4%($71,000)-48.3%($38,000)-33.3%($96,000)-49.0% Per Market-Rate Net SF ($50.89)($50.00)($44.94)($38.34)($46.04) Per SF Site Area ($11.97)($15.15)($24.45)($21.81)($18.35) A B C D E CITYWIDE FOR-SALE RENTAL Single-Family Detached Large Lot Single-Family Detached Medium Lot Townhomes Garden Apartments Average Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 133 of 163 CITYWIDE 80% MARKET-RATE / 20% @ LOW TABLE 8 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Affordability Gap A.Residual Land Value per Affordable Unit (1)($77,000)($77,000)($77,000)($77,000)($77,000) B.Acquisition Costs (2)($100,000)($100,000)($100,000)($100,000)($100,000) C.Affordability Gap per Affordable Unit ($177,000)($177,000)($177,000)($177,000)($177,000) II.Funding Level Required for Inclusionary Housing Production Off-Site Affordability Gap per Market-Rate Unit @ 20%Low (3)($44,000)($44,000)($44,000)($44,000)($44,000) III. Economic Impact of Inclusionary Housing Production Off-Site % Change % Change % Change % Change % Change A.Residual Land Value - 100% Market-Rate $285,000 $237,000 $147,000 $114,000 $195,750 B.Residual Land Value less Affordability Gap $241,000 $193,000 $103,000 $70,000 $151,750 Per SF Site Area $17.70 $26.58 $35.47 $40.17 $35.14 C.Economic Impact of Off-Site Inclusionary Housing Per Market-Rate Unit ($44,000)-15.4%($44,000)-18.6%($44,000)-29.9%($44,000)-38.6%($44,000)-22.5% Per Market-Rate Net SF ($13.74)($20.00)($27.85)($44.39)($26.49) Per SF Site Area ($3.23)($6.06)($15.15)($25.25)($12.42) (1) Residual land value for 100% affordable stacked flats over tuck-under parking; see Attachment E. (2) KMA estimate based on recent experience in North County coastal areas. (3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 80%) x 20%]. A B C D E CITYWIDE FOR-SALE RENTAL Single-Family Detached Large Lot Single-Family Detached Medium Lot Townhomes Garden Apartments Average Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 134 of 163 CITYWIDE 80% MARKET-RATE / 20% @ LOWTABLE 9 IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - CITYWIDE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Potential In-Lieu Fee: $20 - $30/Net SF Approach 1: Economic Impact of Incorporating Affordable Housing On-Site Residual Land Value Per Unit $122,000 $127,000 $76,000 $76,000 $100,000 Per SF Site Area $9 $17 $26 $44 $24 Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site Residual Land Value Per Unit $241,000 $193,000 $103,000 $70,000 $152,000 Per SF Site Area $18 $27 $35 $40 $30 I.Mixed Income - Optimal Approach On-Site vs. Off-Site A.Residual Land Value - Per SF Site Area $18 $27 $35 $44 $30 Off-Site Off-Site Off-Site On-Site B.Developer Profit (% of Value)10.0%10.0%10.0%10.0%10.0% C.Total Development Costs - Per Net SF (1)$382 $415 $406 $411 $404 II.In-Lieu Fee @ $20/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Site Area $16 -7.0%$27 -0.1%$40 11.9%$54 23.2%$34 13.9% B.Developer Profit (% of Value)5.7%-4.3%5.8%-4.2%5.7%-4.3%5.7%-4.3%5.7%-4.3% C.In-Lieu Fee as % of Development Costs 5.2%4.8%4.9%4.9%5.0% III.In-Lieu Fee @ $30/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Site Area $14 -20.3%$24 -11.5%$34 -3.4%$48 10.2%$30 0.1% B.Developer Profit (% of Value)3.4%-6.6%3.7%-6.3%3.6%-6.4%3.6%-6.4%3.6%-6.4% C.In-Lieu Fee as % of Development Costs 7.9%7.2%7.4%7.3%7.4% (1) Reflects total developments costs inclusive of residual land value. CITYWIDE FOR-SALE RENTAL Single-Family Detached Large Lot Single-Family Detached Medium Lot Townhomes Garden Apartments Average 20% LOW A B C D E Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 135 of 163I I I I I I I I I I VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOW TABLE 10 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I.Residual Land Value A.100% Market-Rate Per Unit $297,000 $263,000 $167,000 $109,000 $209,000 B.80% Market-Rate / 20% Low Per Unit $187,000 $167,000 $122,000 $62,000 $135,000 II.Economic Impact of Incorporating Affordable Housing On-Site % Change % Change % Change % Change % Change Per Market-Rate Unit ($110,000)-37.0%($96,000)-36.5%($45,000)-26.9%($47,000)-43.1%($74,500)-35.6% Per Market-Rate Net SF ($90.98)($80.39)($31.50)($54.86)($64.43) Per SF Site Area ($55.56)($74.93)($14.46)($32.37)($44.33) VILLAGE AND BARRIO Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking FOR-SALE Average RENTAL Village General Village Center Barrio Center Barrio Perimeter F G H I J Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 136 of 163 VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOW TABLE 11 ESTIMATE OF POTENTIAL IN-LIEU FEE - APPROACH 2: FUNDING LEVEL REQUIRED FOR INCLUSIONARY HOUSING PRODUCTION OFF-SITE - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Village Center Barrio Perimeter I.Affordability Gap A.Residual Land Value per Affordable Unit (1)($48,000)($48,000)($48,000)($48,000)($48,000) B.Acquisition Costs (2)($150,000)($150,000)($150,000)($150,000)($150,000) C.Affordability Gap per Affordable Unit ($198,000)($198,000)($198,000)($198,000)($198,000) II.Funding Level Required for Inclusionary Housing Production Off-Site Affordability Gap per Market-Rate Unit @ 20%Low ($50,000)($50,000)($50,000)($50,000)($50,000) III. Economic Impact of Inclusionary Housing Production Off-Site % Change % Change % Change % Change % Change A.Residual Land Value - 100% Market-Rate $297,000 $263,000 $167,000 $109,000 $209,000 B.Residual Land Value less Affordability Gap $247,000 $213,000 $117,000 $59,000 $159,000 Per SF Site Area $124.75 $166.25 $37.60 $40.63 $92 C.Economic Impact of Off-Site Inclusionary Housing Per Market-Rate Unit ($50,000)-16.8%($50,000)-19.0%($50,000)-29.9%($50,000)-45.9%($50,000)-23.9% Per Market-Rate Net SF ($41.35)($41.87)($35.00)($58.37)($44.15) Per SF Site Area ($25.25)($39.03)($16.07)($34.44)($28.70) (1) Reflects average residual land value for two alternative financing approaches (4% Tax Credits and 9% Tax Credits). Assumes development of 100% affordable stacked flats over podium parking; see Attachment J. (2) KMA estimate based on recent experience in North County coastal areas. (3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 80%) x 20%]. VILLAGE AND BARRIO FOR-SALE Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking RENTAL Village General Barrio Center Average F G H I J Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 137 of 163 VILLAGE AND BARRIO 80% MARKET-RATE / 20% @ LOWTABLE 12 IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - VILLAGE AND BARRIO INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Potential In-Lieu Fee: $30 - $40/Net SF Approach 1: Economic Impact of Incorporating Affordable Housing On-Site Residual Land Value Per Unit $187,000 $167,000 $122,000 $62,000 $135,000 Per SF Site Area $95 $130 $39 $43 $77 Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site Residual Land Value Per Unit $247,000 $213,000 $117,000 $59,000 $159,000 Per SF Site Area $125 $166 $38 $41 $92 I.Optimal Approach: On-Site vs. Off-Site Production A.Residual Land Value - Per SF Land $125 $166 $39 $43 $93 Off-Site Off-Site On-Site On-Site B.Developer Profit (% of Value)12.0%12.0%10.0%12.0%11.5% C.Total Development Costs - Per Net SF (1)$657 $720 $446 $499 $581 II.In-Lieu Fee @ $30/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Land $132 5.6%$178 6.8%$40 2.1%$57 33.5%$102 9.0% B.Developer Profit (% of Value)8.1%-3.9%8.5%-3.5%4.2%-5.9%6.9%-5.1%6.9%-4.6% C.In-Lieu Fee as % of Development Costs 4.6%4.2%6.7%6.0%4.9% III.In-Lieu Fee @ $40/Net SF % Change % Change % Change % Change % Change A.Residual Land Value - Per SF Land $126 0.7%$168 1.2%$35 -9.6%$52 19.9%$95 2.1% B.Developer Profit (% of Value)6.8%-5.2%7.3%-4.7%2.2%-7.8%5.2%-6.8%5.4%-6.1% C.In-Lieu Fee as % of Development Costs 6.1%5.6%9.0%8.0%6.6% (1) Reflects total developments costs inclusive of residual land value. VILLAGE AND BARRIO FOR-SALE RENTAL Stacked Flats over Tuck-under Parking Mixed-Use Stacked Flats over Podium Parking Zero Lot Line Rowhomes Stacked Flats over Tuck-under Parking Average 20% LOW F G H I J Prepared by: Keyser Marston Associates, Inc. Filename:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lagFeb. 10, 2022Item #3 Page 138 of 163I I I I I I I I I I APPENDIX 6 Estimate of Affordable Sales Prices and Rents Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 139 of 163 WORKSHEET 1 ESTIMATE OF AFFORDABLE SALES PRICES - SINGLE-FAMILY DETACHED-LARGE LOT (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80% Assumed Family Size 5.0 7.0 Household Income $99,800 $114,600 Income Allocation to Housing 30%30% Amount Available for Housing $29,940 $34,380 Annual HOA (3)$200 /Mo.$2,400 $250 /Mo.$3,000 Annual Utilities (4)$1,332 $1,560 Tax Rate 1.20%1.20% Annual Taxes (5)$4,716 $5,364 Available for Mortgage $21,492 $24,456 Interest Rate (6)4.50%4.50% Down Payment 10.00%10.00% Supportable Mortgage $353,474 $402,222 Add: Down Payment $39,300 $44,700 II.Maximum Unit Price $393,000 $447,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:Three Four Gas Heat $14 $18 Gas Cooking $10 $13 Other Electric $14 $18 Gas Water Heater $14 $18 Water $24 $28 Sewer $16 $16 Trash $19 $19 Total Utility Allowance $111 $130 Total Annual Utilities $1,332 $1,560 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: A Three Bedroom Four Bedroom Single Family Detached - Large Lot Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 140 of 163 WORKSHEET 2 ESTIMATE OF AFFORDABLE SALES PRICES - SINGLE-FAMILY DETACHED-MEDIUM LOT (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80% Assumed Family Size 5.0 7.0 Household Income $99,800 $114,600 Income Allocation to Housing 30%30% Amount Available for Housing $29,940 $34,380 Annual HOA (3)$200 /Mo.$2,400 $250 /Mo.$3,000 Annual Utilities (4)$1,332 $1,560 Tax Rate 1.20%1.20% Annual Taxes (5)$4,716 $5,364 Available for Mortgage $21,492 $24,456 Interest Rate (6)4.50%4.50% Down Payment 10.00%10.00% Supportable Mortgage $353,474 $402,222 Add: Down Payment $39,300 $44,700 II.Maximum Unit Price $393,000 $447,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:Three Four Gas Heat $14 $18 Gas Cooking $10 $13 Other Electric $14 $18 Gas Water Heater $14 $18 Water $24 $28 Sewer $16 $16 Trash $19 $19 Total Utility Allowance $111 $130 Total Annual Utilities $1,332 $1,560 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: B Three Bedroom Four Bedroom Single Family Detached - Medium Lot Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 141 of 163 WORKSHEET 3 ESTIMATE OF AFFORDABLE SALES PRICES - TOWNHOMES (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80% Assumed Family Size 3.0 5.0 Household Income $83,200 $99,800 Income Allocation to Housing 30%30% Amount Available for Housing $24,960 $29,940 Annual HOA (3)$350 /Mo.$4,200 $400 /Mo.$4,800 Annual Utilities (4)$1,212 $1,332 Tax Rate 1.20%1.20% Annual Taxes (5)$3,516 $4,284 Available for Mortgage $16,032 $19,524 Interest Rate (6)4.50%4.50% Down Payment 10.00%10.00% Supportable Mortgage $263,675 $321,107 Add: Down Payment $29,300 $35,700 II.Maximum Unit Price $293,000 $357,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:Two Three Gas Heat $12 $14 Gas Cooking $8 $10 Other Electric $12 $14 Gas Water Heater $12 $14 Water $22 $24 Sewer $16 $16 Trash $19 $19 Total Utility Allowance $101 $111 Total Annual Utilities $1,212 $1,332 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: C Two Bedroom Three Bedroom Townhomes Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 142 of 163 WORKSHEET 4 ESTIMATE OF AFFORDABLE RENTS - GARDEN APARTMENTS / STACKED FLATS OVER TUCK-UNDER PARKING INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Number of Bedrooms 0 1 2 3 A.City of Carlsbad Percent of AMI 70%70%70%70% Assumed Family Size 1.0 2.0 3.0 5.0 Household Income $56,650 $64,700 $72,800 $87,350 Income Allocation to Housing 30%30%30%30% Monthly Housing Cost $1,416 $1,618 $1,820 $2,184 (Less) Utility Allowance (1)($26)($33)($44)($52) Maximum Monthly Rent $1,390 $1,585 $1,776 $2,132 (1)Reflects City of Carlsbad utility allowances, as of February 1, 2020. Monthly Utility Studio One Two Three Gas Heating $7 $9 $12 $14 Gas Cooking $5 $6 $8 $10 Other Electric $7 $9 $12 $14 Gas Water Heating $7 $9 $12 $14 Total $26 $33 $44 $52 Garden Apartments Stacked Flats over Tuck-Under Parking D / I Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 143 of 163 WORKSHEET 5 ESTIMATE OF AFFORDABLE RENTS - 100% AFFORDABLE INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Number of Bedrooms 0 1 2 3 A.City of Carlsbad Percent of AMI 50%50%50%50% Assumed Family Size 1.0 2.0 3.0 5.0 Household Income $40,450 $46,200 $52,000 $62,400 Income Allocation to Housing 30%30%30%30% Monthly Housing Cost $1,011 $1,155 $1,300 $1,560 (Less) Utility Allowance (1)($26)($33)($44)($52) Maximum Monthly Rent $985 $1,122 $1,256 $1,508 B.Low Income Housing Tax Credit (LIHTC) Program Percent of AMI 50%50%50%50% Assumed Family Size 1.0 1.5 3.0 4.5 Household Income $40,450 $43,325 $52,000 $60,075 Income Allocation to Housing 30%30%30%30% Monthly Housing Cost $1,011 $1,083 $1,300 $1,501 (Less) Utility Allowance (1)($26)($33)($44)($52) Maximum Monthly Rent $985 $1,050 $1,256 $1,449 C.Maximum Monthly Rent $985 $1,050 $1,256 $1,449 (1)Reflects City of Carlsbad utility allowances, as of February 1, 2020. Monthly Utility Studio One Two Three Gas Heating $7 $9 $12 $14 Gas Cooking $5 $6 $8 $10 Other Electric $7 $9 $12 $14 Gas Water Heating $7 $9 $12 $14 Total $26 $33 $44 $52 E / J Stacked Flats over Tuck-Under Parking Stacked Flats over Podium Parking Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lagFeb. 10, 2022 Item #3 Page 144 of 163 WORKSHEET 6 ESTIMATE OF AFFORDABLE SALES PRICES - STACKED FLATS OVER TUCK-UNDER PARKING - VILLAGE (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80%80% Assumed Family Size 2.0 3.0 5.0 Household Income $73,950 $83,200 $99,800 Income Allocation to Housing 30%30%30% Amount Available for Housing $22,185 $24,960 $29,940 Annual HOA (3)/Mo.$4,200 $400 /Mo.$4,800 $450 /Mo.$5,400 Annual Utilities (4)$1,056 $1,212 $1,332 Tax Rate 1.20%1.20%1.20% Annual Taxes (5)$3,048 $3,408 $4,176 Available for Mortgage $13,881 $15,540 $19,032 Interest Rate (6)4.50%4.50%4.50% Down Payment 10.00%10.00%10.00% Supportable Mortgage $228,298 $255,583 $313,015 Add: Down Payment $25,400 $28,400 $34,800 II.Maximum Unit Price $254,000 $284,000 $348,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:One Two Three Gas Heat $9 $12 $14 Gas Cooking $6 $8 $10 Other Electric $9 $12 $14 Gas Water Heater $9 $12 $14 Water $20 $22 $24 Sewer $16 $16 $16 Trash $19 $19 $19 Total Utility Allowance $88 $101 $111 Total Annual Utilities $1,056 $1,212 $1,332 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). F Three Bedroom Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: Stacked Flats over Podium Tuck-Under Parking $350 One Bedroom Two Bedroom Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 145 of 163 WORKSHEET 7 ESTIMATE OF AFFORDABLE SALES PRICES - MIXED-USE STACKED FLATS - VILLAGE (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80%80% Assumed Family Size 2.0 3.0 5.0 Household Income $73,950 $83,200 $99,800 Income Allocation to Housing 30%30%30% Amount Available for Housing $22,185 $24,960 $29,940 Annual HOA (3)$400 /Mo.$4,800 $450 /Mo.$5,400 $500 /Mo.$6,000 Annual Utilities (4)$1,056 $1,212 $1,332 Tax Rate 1.20%1.20%1.20% Annual Taxes (5)$2,940 $3,300 $4,068 Available for Mortgage $13,389 $15,048 $18,540 Interest Rate (6)4.50%4.50%4.50% Down Payment 10.00%10.00%10.00% Supportable Mortgage $220,206 $247,491 $304,923 Add: Down Payment $24,500 $27,500 $33,900 II.Maximum Unit Price $245,000 $275,000 $339,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:One Two Three Gas Heat $9 $12 $14 Gas Cooking $6 $8 $10 Other Electric $9 $12 $14 Gas Water Heater $9 $12 $14 Water $20 $22 $24 Sewer $16 $16 $16 Trash $19 $19 $19 Total Utility Allowance $88 $101 $111 Total Annual Utilities $1,056 $1,212 $1,332 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: G One Bedroom Two Bedroom Three Bedroom Mixed-Use Stacked Flats Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 146 of 163 WORKSHEET 8 ESTIMATE OF AFFORDABLE SALES PRICES - ROWHOMES - BARRIO (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD I. Maximum Affordable Sales Price (2) Percent of AMI 80%80% Assumed Family Size 3.0 5.0 Household Income $83,200 $99,800 Income Allocation to Housing 30%30% Amount Available for Housing $24,960 $29,940 Annual HOA (3)$200 /Mo.$2,400 $250 /Mo.$3,000 Annual Utilities (4)$1,212 $1,332 Tax Rate 1.20%1.20% Annual Taxes (5)$3,840 $4,608 Available for Mortgage $17,508 $21,000 Interest Rate (6)4.50%4.50% Down Payment 10.00%10.00% Supportable Mortgage $287,950 $345,382 Add: Down Payment $32,000 $38,400 II.Maximum Unit Price $320,000 $384,000 (1)Based on 2020 income limits published by the State of California Department of Housing and Community and Development (HCD). (2)Based on affordable housing allowable housing expenses as defined in Section 21.85.020.A of the Carlsbad Municipal Code. (3)Allowance for structure insurance, maintenance, and reserves. (4) Number of Bedrooms:Two Three Gas Heat $12 $14 Gas Cooking $8 $10 Other Electric $12 $14 Gas Water Heater $12 $14 Water $22 $24 Sewer $16 $16 Trash $19 $19 Total Utility Allowance $101 $111 Total Annual Utilities $1,212 $1,332 (5)Based on affordable unit price. Property tax assessment may be based on market value of actual home. (6)KMA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PMI). Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows: H Two Bedroom Three Bedroom Zero Lot Line Rowhomes Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Prototypes Analysis_v6_15%; 4/12/2021; lagFeb. 10, 2022 Item #3 Page 147 of 163 APPENDIX 7 Supporting Worksheets - Market Data Inclusionary Housing In-Lieu Fee Update City of Carlsbad Feb. 10, 2022 Item #3 Page 148 of 163 RESIDENTIAL LAND SALES CITYWIDE WORKSHEET 9 SURVEY OF COMPARABLE LAND SALES - CITYWIDE (1)(2) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Units/ Sale Date Property Address Acre Sale Price Acres $/SF Units $/Unit Proposed Use Buyer (True) Company 01/02/19 438 Tamarack Ave $1,960,000 0.39 $117 N/A N/A Residential condominiums Michael Fulton 05/23/18 7550 Gibraltar St $1,540,000 0.41 $86 N/A N/A Multi-family residential units Foroozandeh Y Sahba 06/21/17 7540 Gibraltar St $895,000 0.39 $53 N/A N/A Multi-family residential units 10/27/16 3251 Marisol Pl 18.2 $34,500,000 15.25 $52 278 $124,101 Apartment units LMC 10/17/18 5592 El Camino Real $6,650,000 3.21 $48 N/A N/A Continuing care retirement community Steadfast Investment Properties, Inc. 08/26/15 3980 Highland Dr $1,675,000 1.07 $36 N/A N/A Single-family homes Charles & Barbara Speck 04/07/17 1833 Buena Vista Way 3.2 $4,000,000 3.09 $30 10 $400,000 Large lot single-family homes J.F. Shea Co., Inc. 07/17/17 2924 Highland Dr 2.3 $2,750,000 2.21 $29 5 $550,000 Large lot single-family homes Benjamin Glinsky 01/10/19 Faraday Ave $7,350,000 6.00 $28 N/A N/A Senior living community OSL Construction, Inc. 07/17/18 1835 Buena Vista Way 3.1 $4,275,000 3.84 $26 12 $356,250 Large lot single-family homes California West Communities 07/17/15 3758-3794 Highland Dr 3.0 $1,750,000 2.31 $17 7 $250,000 Large lot single-family homes Michael J Lockerman 01/30/15 Palomar Oaks Way 22.5 $4,150,000 8.87 $11 200 $20,750 Multi-family residential units Integral Communities 10/11/19 7203 Babilonia St $720,000 1.78 $9 N/A N/A Hold for Investment; potential single-family 10/20/17 Poinsettia Ln 2.4 $18,500,000 50.80 $8 123 $150,407 Single-family homes Lennar Homes of California, Inc. 02/04/15 Haymar Dr $48,000,000 156.00 $7 N/A N/A Portion of Quarry Creek (The Preserve)Cornerstone Communities 04/12/16 Aura Cir 0.6 $836,000 14.58 $1 9 $92,889 Single-family homes Minimum 0.6 $720,000 0.39 $1 $5 $20,750 Maximum 22.5 $48,000,000 156.00 $117 $278 $550,000 Median 3.1 $3,375,000 3.15 $28 $11 $200,203 Average 6.9 $8,721,938 16.89 $35 $81 $243,050 (1) Survey reflects Citywide land sales since January 1, 2015. (2) Excludes Carlsbad Village, Barrio, and adjacent areas (see Worksheet 10). Land Area Residential Units Source: CoStar Group, Inc. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Market Data v2_12-04-2020.02-1-2021\4/12/2021; emaFeb. 10, 2022Item #3 Page 149 of 163 RESIDENTIAL LAND SALES VILLAGE, BARRIO, AND ADJACENT AREAS WORKSHEET 10 SURVEY OF COMPARABLE LAND SALES - VILLAGE, BARRIO, AND ADJACENT AREAS INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Units/ Sale Date Property Address Acre Sale Price Acres $/SF Units $/Unit Proposed Use Buyer 02/25/19 2501 State St 42.5 $5,250,000 0.40 $301 17 $308,824 Residential condominiums Ronald Ramos 09/05/17 725 Grand Ave $3,400,000 0.33 $239 N/A N/A Mixed-use with apartments and ground-floor retail Rincon Real Estate Group 09/04/15 300 Christiansen Way $3,000,000 0.29 $237 N/A N/A Unknown mixed-use development Christopher Kevin Boyle 08/15/18 2646 State St $2,500,000 0.25 $230 N/A N/A Multi-family residential units Tao Yu 05/17/18 3068-3080 State St 65.2 $3,300,000 0.41 $183 27 $122,222 Multi-family residential units Del Mar Alliance 01/22/20 570-580 Laguna Dr 17.4 $5,000,000 0.75 $154 13 $384,615 Townhomes Brett Farrow 04/30/18 800 Grand $9,250,000 0.41 $152 38 $243,421 Condominium, Townhomes, Single-family detached 12/07/16 Madison St & Oak Ave 31.1 $950,000 0.19 $113 6 $158,333 Mixed-use development with multi-family units 04/19/18 2690 Roosevelt St 23.6 $1,975,000 0.42 $107 10 $197,500 Residential condominiums Kitchell Corporation 04/02/18 Roosevelt St 34.0 $3,000,000 0.47 $97 16 $187,500 Townhomes Scott Lissoy 09/12/18 1044 Carlsbad Village Dr $3,730,000 1.38 $62 N/A N/A Mixed-use with apartments and ground-floor retail Wermers Companies 09/12/18 1048 Carlsbad Village Dr $1,575,000 0.59 $61 N/A N/A Mixed-use with apartments and ground-floor retail R&V Management Minimum 17.4 $950,000 0.19 $61 6 $122,222 Maximum 65.2 $9,250,000 1.38 $301 38 $384,615 Median 32.6 $3,150,000 0.41 $153 16 $197,500 Average 35.7 $3,577,500 0.49 $161 18 $228,917 (1) Survey reflects land sales in the Village, Barrio, and adjacent areas since January 1, 2015. Land Area Residential Units Source: CoStar Group, Inc. Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Market Data v2_12-04-2020.02-1-2021\4/12/2021; emaFeb. 10, 2022Item #3 Page 150 of 163 SINGLE-FAMILY HOME SALES CITYWIDEWORKSHEET 11 SINGLE-FAMILY RESIDENTIAL HOME SALES - CITYWIDE (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Product Date City Zip Sales Price Lot Size Bed Bath SF $/SF HOA Built Type Community 10/13/20 6460 Goldenbush Carlsbad 92011 $985,000 3 2 1,771 SF $556 $104 2001 Single-Family 10/09/20 3820 Skyline Roade Carlsbad 92008 $1,775,000 19,583 SF 5 3 3,376 SF $526 $0 2000 Single-Family 08/07/20 7427 Calle Nerja Carlsbad 92009 $1,165,000 3,986 SF 4 3 2,253 SF $517 $241 2015 Single-Family Montecina 06/28/19 7024 Corintia Street Carlsbad 92009 $1,450,000 10,647 SF 3 4 2,844 SF $510 $0 2007 Single-Family 10/08/20 8058 Sitio Toledo Carlsbad 92009 $1,812,500 4 4 3,577 SF $507 $142 2003 Single-Family Tiburon 09/29/20 2558 Town Garden Road Carlsbad 92009 $1,285,000 6,992 SF 4 3 2,544 SF $505 $275 2005 Single-Family Bressi Ranch 10/08/20 6603 Daylily Drive Carlsbad 92011 $790,000 2,085 SF 4 3 1,645 SF $480 $280 2001 Single-Family Cherry Tree Walk 10/16/20 7872 Via Teca Carlsbad 92009 $1,380,000 4 4 2,915 SF $473 $125 2001 Single-Family La Costa Valley 06/28/20 2336 Summerwind Place Carlsbad 92008 $1,170,000 13,487 SF 4 3 2,520 SF $464 $147 2000 Single-Family Hidden Ridge 10/29/18 7943 Sitio Baniano Carlsbad 92009 $1,200,000 8,279 SF 4 3 2,602 SF $461 $120 2001 Single-Family La Costa Valley 10/07/20 7548 Sitio Conejo Carlsbad 92009 $1,785,000 4 5 3,905 SF $457 $233 2015 Single-Family La Costa 09/25/20 2976 Avenida Ciruela Carlsbad 92009 $1,180,000 4 3 2,602 SF $453 $125 2001 Single-Family La Costa Valley 10/14/20 6419 Calmeria Place Carlsbad 92011 $1,290,000 6,634 SF 4 4 2,891 SF $446 $105 2002 Single-Family Shorepointe 07/30/20 1383 Sapphire Drive Carlsbad 92011 $1,710,000 10,654 SF 5 5 3,833 SF $446 $282 2010 Single-Family 10/07/20 6694 Encelia Place Carlsbad 92011 $910,000 3 3 2,048 SF $444 $439 2020 Single-Family Treviso 03/24/20 7037 Crystalline Drive Carlsbad 92011 $1,260,000 6,304 SF 4 4 2,840 SF $444 $189 2005 Single-Family The Bay Collection 07/12/19 7050 Rose Drive Carlsbad 92011 $1,300,000 11,285 SF 4 4 3,010 SF $432 $189 2006 Single-Family The Bay Collection 10/05/20 6389 Paseo Descanso Carlsbad 92009 $1,330,000 14,576 SF 5 4 3,102 SF $429 $107 2002 Single-Family Rancho Carrillo 09/24/20 641 Sand Shell Avenue Carlsbad 92011 $1,275,000 4 3 3,000 SF $425 $210 2003 Single-Family Waters End 10/20/20 1611 Oak Avenue Carlsbad 92008 $1,849,000 6 4 4,356 SF $424 $0 2016 Single-Family 09/25/20 7120 Sitio Caliente Carlsbad 92009 $1,325,000 7,207 SF 5 4 3,139 SF $422 $241 2013 Single-Family La Costa Oaks 09/18/20 8049 Corte Sasafras Carlsbad 92009 $1,410,000 9,033 SF 4 4 3,344 SF $422 $120 2000 Single-Family La Costa Valley 10/13/20 7057 Marsh Wren Street Carlsbad 92011 $1,390,000 5 5 3,300 SF $421 $189 2005 Single-Family The Bay Collection 07/13/20 6921 Sitio Cordero Carlsbad 92009 $2,000,000 18,527 SF 6 5 4,757 SF $420 $237 2007 Single-Family La Costa Ridge 07/07/20 3526 Rock Ridge Road Carlsbad 92010 $850,000 5,377 SF 4 3 2,031 SF $419 $155 2005 Single-Family 07/18/19 6788 Estrella De Mar Road Carlsbad 92009 $1,145,000 7,204 SF 4 4 2,742 SF $418 $219 2008 Single-Family La Costa Greens 05/12/20 6949 Waters End Drive Carlsbad 92011 $1,261,000 4,127 SF 4 3 3,036 SF $415 $210 2005 Single-Family Waters End 09/15/20 7883 Sitio Abeto Carlsbad 92009 $1,385,000 11,326 SF 5 4 3,359 SF $412 $120 2002 Single-Family La Costa Valley 12/18/18 3577 Bluff Courty Carlsbad 92010 $805,000 5,427 SF 3 3 1,957 SF $411 $89 2002 Single-Family Calavera Hills 09/25/20 3746 Glen Avenue Carlsbad 92010 $1,120,000 5,372 SF 5 3 2,730 SF $410 $188 2012 Single-Family Foothills 08/27/20 7879 Sitio Olmo Carlsbad 92009 $1,440,000 10,395 SF 6 5 3,590 SF $401 $125 2002 Single-Family La Costa Valley 07/06/20 3515 Camino Cereza Carlsbad 92009 $1,248,000 6,231 SF 3 3 3,132 SF $398 $241 2005 Single-Family La Costa Oaks 09/24/20 7169 Sitio Corazon Carlsbad 92009 $1,410,000 8,879 SF 5 5 3,563 SF $396 $241 2011 Single-Family La Costa Oaks 10/09/20 7030 Heron Circle Carlsbad 92011 $1,580,000 12,683 SF 5 5 4,039 SF $391 $189 2006 Single-Family The Bay Collection 06/15/20 3449 Trailblazer Way Carlsbad 92010 $1,180,000 5,000 SF 4 5 3,051 SF $387 $267 2016 Single-Family Robertson Ranch 05/26/20 3533 Cay Drive Carlsbad 92010 $745,875 4,834 SF 4 3 1,957 SF $381 $89 2001 Single-Family Calavera Hills 10/16/20 1562 Maritime Drive Carlsbad 92011 $1,275,000 9,728 SF 4 3 3,347 SF $381 $100 2000 Single-Family Cantamar 06/18/20 7043 Heron Circle Carlsbad 92011 $1,600,000 15,486 SF 5 5 4,203 SF $381 $189 2005 Single-Family The Bay Collection 09/18/20 6197 Paseo Privade Carlsbad 92009 $1,000,000 9,127 SF 3 3 2,641 SF $379 $107 2002 Single-Family 03/23/20 3534 Harwich Drive Carlsbad 92010 $815,000 4,609 SF 4 3 2,160 SF $377 $95 2001 Single-Family Calavera Hills 04/23/20 3040 Marron Road Carlsbad 92010 $940,000 4,247 SF 3 4 2,511 SF $374 $235 2018 Single-Family The Preserves Unit Description Address Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 151 of 163 SINGLE-FAMILY HOME SALES CITYWIDEWORKSHEET 11 SINGLE-FAMILY RESIDENTIAL HOME SALES - CITYWIDE (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Product Date City Zip Sales Price Lot Size Bed Bath SF $/SF HOA Built Type Community Unit Description Address 09/25/20 6774 Obsidian Place Carlsbad 92009 $1,550,000 5 5 4,193 SF $370 $219 2005 Single-Family La Costa Greens 06/28/19 1379 Cynthia Lane Carlsbad 92008 $1,085,000 7,988 SF 5 3 2,956 SF $367 $0 2004 Single-Family 01/21/20 1850 Tule Court Carlsbad 92011 $1,295,000 9,000 SF 4 3 3,559 SF $364 $0 2008 Single-Family 05/23/19 6257 Arbor Rose Drive Carlsbad 92009 $1,235,000 6,240 SF 4 4 3,397 SF $364 $265 2006 Single-Family Bressi Ranch 09/24/20 7409 Circulo Sequoia Carlsbad 92009 $1,475,000 5 5 4,094 SF $360 $241 2004 Single-Family La Costa Oaks 10/02/20 7151 Latitude Lane Carlsbad 92011 $3,500,000 50,094 SF 8 10 9,728 SF $360 $128 2007 Single-Family 09/25/20 3825 Shale Court Carlsbad 92010 $975,000 7,187 SF 4 3 2,726 SF $358 $95 2001 Single-Family 10/02/20 5456 58 Reef Circle Carlsbad 92008 $1,490,000 9,390 SF 5 5 4,181 SF $356 $165 2015 Single-Family 04/30/19 3423 Corte Panorama Carlsbad 92009 $1,025,000 5,473 SF 5 4 2,889 SF $355 $233 2011 Single-Family La Costa Oaks 10/19/20 4658 Meadow Drive Carlsbad 92010 $990,000 5,830 SF 4 4 2,804 SF $353 $140 2005 Single-Family Calavera Hills 10/08/20 3471 Pleasant Vale Drive Carlsbad 92010 $951,500 6,913 SF 5 3 2,705 SF $352 $142 2006 Single-Family Calavera Hills 07/13/20 6862 Citrine Drive Carlsbad 92009 $1,725,000 15,155 SF 5 5 4,913 SF $351 $273 2005 Single-Family La Costa Greens 11/08/19 5138 Delaney Court Carlsbad 92008 $995,000 6,658 SF 4 3 2,856 SF $348 $130 2003 Single-Family Heron Bay 09/17/20 7195 Sitio Cabellero Carlsbad 92009 $1,425,000 8,806 SF 4 4 4,100 SF $348 $237 2008 Single-Family La Costa Ridge 09/30/20 2859 Rancho Diamonte Carlsbad 92009 $1,350,000 9,318 SF 5 5 3,891 SF $347 $177 2002 Single-Family Rancho Carrillo 09/18/20 3764 Cavern Place Carlsbad 92010 $1,105,000 8,006 SF 6 4 3,190 SF $346 $92 2001 Single-Family 09/21/20 2907 Platinum Place Carlsbad 92009 $820,000 5 3 2,371 SF $346 $195 2002 Single-Family The Regency La Costa 10/20/20 4982 Crestview Drive Carlsbad 92008 $969,000 5,705 SF 5 3 2,865 SF $338 $175 2000 Single-Family Hidden Ridge 06/25/20 4703 Crespi Court Carlsbad 92010 $1,500,000 6,102 SF 5 6 4,440 SF $338 $343 2017 Single-Family Robertson Ranch 06/10/19 6060 Paseo Carreta Carlsbad 92009 $707,000 3,651 SF 3 2 2,113 SF $335 $98 2001 Single-Family Rancho Carrillo 10/14/20 2377 Larimar Avenue Carlsbad 92009 $1,260,000 6,952 SF 5 5 3,779 SF $333 $219 2005 Single-Family La Costa Greens 09/24/20 2821 Rancho Rio Chico Carlsbad 92009 $990,000 9,975 SF 5 4 3,003 SF $330 $106 2001 Single-Family Rancho Carrillo 06/27/18 7344 Circulo Papayo Carlsbad 92009 $1,377,900 9,041 SF 5 5 4,225 SF $326 $225 2005 Single-Family La Costa Oaks 10/29/18 4390 Yuki Lane Carlsbad 92008 $1,140,000 15,663 SF 4 4 3,504 SF $325 $0 2018 Single-Family 08/20/19 5158 Steinbeck Court Carlsbad 92008 $1,126,000 7,006 SF 5 5 3,495 SF $322 $130 2004 Single-Family Heron Bay 10/20/20 6570 Petunia Place Carlsbad 92011 $1,240,000 11,484 SF 5 5 3,889 SF $319 $110 2000 Single-Family Seaside Estates 01/21/20 6257 Alverton Drive Carlsbad 92009 $1,430,000 8,843 SF 5 5 4,608 SF $310 $265 2005 Single-Family Bressi Ranch 10/02/20 3633 Strata Drive Carlsbad 92010 $899,000 5,651 SF 5 3 3,102 SF $290 $95 2001 Single-Family Calavera Hills 02/12/19 4394 Yuki Lane Carlsbad 92008 $1,000,000 15,663 SF 4 4 3,552 SF $282 $0 2018 Single-Family Minimum $707,000 2,085 SF 3 2 1,645 SF $282 $0 2000 Maximum $3,500,000 50,094 SF 8 10 9,728 SF $556 $439 2020 Median $1,260,000 7,997 SF 4 4 3,102 SF $384 $160 2005 Average $1,277,954 9,330 SF 4 4 3,276 SF $396 $164 2006 (1) Survey reflects Citywide single-family detached home sales since January 1, 2019, excludes Village, Barrio, and adjacent areas; see Worksheet 12. Source: Mulitple Listing Service (MLS), as of October 21, 2020. Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 152 of 163 SINGLE-FAMILY HOME SALES VILLAGE, BARRIO, AND ADJACENT AREAS WORKSHEET 12 SINGLE-FAMILY RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Date City Zip Sales Price Bed Bath SF $/SF HOA Built Product Type 08/05/20 434 Tamarack Ave Carlsbad 92008 $1,600,000 4 3 2,432 $658 $380 2020 Single Family Residential 11/19/20 438 Tamarack Ave Carlsbad 92008 $1,515,000 4 3 2,385 $635 $380 2020 Single Family Residential 07/21/20 446 Tamarack Ave Carlsbad 92008 $1,515,000 4 3 2,404 $630 $380 2020 Single Family Residential 08/28/20 442 Tamarack Ave Carlsbad 92008 $1,500,000 4 3 2,385 $629 $380 2020 Single Family Residential 08/11/20 430 Tamarack Ave Carlsbad 92008 $1,510,000 4 3 2,534 $596 $380 2020 Single Family Residential Minimum $1,500,000 4 3 2,385 $596 $380 2020 Maximum $1,600,000 4 3 2,534 $658 $380 2020 Median $1,515,000 4 3 2,404 $630 $380 2020 Average $1,528,000 4 3 2,428 $630 $380 2020 (1) Survey reflects detached home sales in the Village, Barrio, or adjacent areas since January 1, 2019. Source: Mulitple Listing Service (MLS) and Redfin, as of December 2, 2020. Unit Description Address Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 153 of 163 ATTACHED HOME SALES CITYWIDE WORKSHEET 13 ATTACHED RESIDENTIAL HOME SALES - CITYWIDE (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Product Date City Zip Sales Price Bed Bath SF $/SF HOA Built Type Complex Name 06/19/20 6042 Colt Place #303 Carlsbad 92009 $565,854 2 2 988 SF $573 $593 2019 Condominium Kennsington at the Square 03/02/20 1762 Fairlead Avenue Carlsbad 92011 $651,500 3 2 1,540 SF $423 $361 2013 Townhome Voscana 02/18/20 1758 Fairlead Avenue Carlsbad 92011 $595,000 3 2 1,410 SF $422 $361 2013 Townhome Voscana 07/31/20 1700 Fairlead Avenue Carlsbad 92011 $647,500 3 2 1,540 SF $420 $361 2014 Townhome Voscana 05/04/20 3106 Simba Way Carlsbad 92010 $665,000 3 2 1,610 SF $413 $404 2018 Townhome Blue Sage at the Reserve 03/06/20 3304 Campo Azul Court Carlsbad 92010 $585,000 3 2 1,420 SF $412 $362 2018 Townhome The Preserve 12/20/19 1845 Cliff Swallow Lane Carlsbad 92011 $655,000 3 2 1,669 SF $392 $354 2012 Condominium La Costa Collection 12/23/19 3127 Dilla Place Carlsbad 92010 $558,000 3 2 1,438 SF $388 $363 2017 Townhome Agave at the Preserve 03/16/20 3382 Campo Azul Court Carlsbad 92010 $648,000 3 2 1,681 SF $385 $379 2019 Townhome The Preserve 01/14/20 3278 Vestra Way Carlsbad 92010 $612,990 3 2 1,610 SF $381 $438 2019 Townhome Blue Sage at the Reserve 02/22/20 3378 Campo Azul Court Carlsbad 92010 $635,990 3 2 1,681 SF $378 $379 2019 Townhome The Preserve 10/23/19 3280 Vestra Way Carlsbad 92010 $577,886 3 2 1,533 SF $377 $416 2019 Townhome Blue Sage at the Reserve 06/15/20 3135 Dilla Place Carlsbad 92010 $633,000 3 2 1,681 SF $377 $387 2017 Townhome Agave at the Preserve 04/22/20 3266 Vestra Way Carlsbad 92010 $605,146 3 2 1,610 SF $376 $438 2020 Townhome Blue Sage at the Reserve 08/07/20 3138 Asto Place Carlsbad 92010 $540,000 3 2 1,452 SF $372 $387 2017 Townhome The Preserve 05/12/20 3265 Vestra Way Carlsbad 92010 $595,990 3 2 1,610 SF $370 $438 2020 Townhome Blue Sage at the Reserve 04/29/20 3263 Vestra Way Carlsbad 92010 $564,734 3 2 1,533 SF $368 $438 2020 Townhome Blue Sage 05/01/20 3273 Vestra Way Carlsbad 92010 $587,990 3 2 1,610 SF $365 $438 2019 Townhome Blue Sage at the Reserve 10/04/19 3114 Dilla Place Carlsbad 92010 $601,500 3 2 1,681 SF $358 $363 2017 Townhome Agave at the Preserve Minimum $540,000 2 2 988 SF $358 $354 2012 Maximum $665,000 3 2 1,681 SF $573 $593 2020 Median $601,500 3 2 1,610 SF $381 $387 2018 Average $606,636 3 2 1,542 SF $397 $403 2017 (1) Survey reflects Citywide attached home sales since January 1, 2019, excludes Village, Barrio, and adjacent areas; see Worksheet 14. Source: Mulitple Listing Service (MLS), as of September 28, 2020. Unit Description Address Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 154 of 163 ATTACHED HOME SALES VILLAGE, BARRIO, AND ADJACENT AREAS WORKSHEET 14 ATTACHED RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Product Date City Zip Sales Price Bed Bath SF $/SF HOA Built Type Complex Name 10/30/20 2317 Ocean St Carlsbad 92008 $2,900,000 3 3 2,533 SF $1,145 $891 2015 Townhouse Summer House 10/30/20 2677 State Street #302 Carlsbad 92008 $3,000,000 3 3 2,717 SF $1,104 $595 2020 Condominium 11/03/19 2335 Ocean Street Carlsbad 92008 $2,850,000 3 3 2,725 SF $1,046 $858 2016 Townhome 03/18/19 2323 Ocean Steet Carlsbad 92008 $2,585,000 3 3 2,533 SF $1,021 $857 2015 Condominium 04/06/20 2347 Ocean Street Carlsbad 92008 $2,125,000 3 2 2,100 SF $1,012 2016 Condominium 09/10/20 2387 Ocean Street Carlsbad 92008 $1,980,000 3 3 1,970 SF $1,005 2016 Condominium 03/05/20 2359 Ocean Street Carlsbad 92008 $1,966,000 3 3 1,966 SF $1,000 2016 Condominium 04/09/20 165 Pine Ave. Carlsbad 92008 $2,620,000 3 3 2,630 SF $996 $599 2017 Condominium 09/22/20 2393 Ocean St Carlsbad 92008 $2,150,000 4 2 2,296 SF $936 2016 Condominium 09/11/20 800 Grand Avenue Carlsbad 92008 $1,978,875 3 2 2,285 SF $866 $488 2020 Condominium Carlyle 06/17/20 2357 Ocean St Carlsbad 92008 $1,700,000 3 3 1,970 SF $863 2016 Condominium 09/24/19 2349 Ocean St Carlsbad 92008 $1,895,000 3 2 2,198 SF $862 2016 Condominium 09/03/20 727 Grand Ave Carlsbad 92008 $1,177,500 2 2 1,547 SF $761 $505 2019 Condominium 07/25/19 737 Grand Avenue Carlsbad 92008 $1,159,000 2 2 1,547 SF $749 $506 2019 Condominium 11/26/19 733 Grand Avenue Carlsbad 92008 $1,019,000 2 2 1,369 SF $744 $499 2019 Condominium Grand Madison 10/31/20 800 Grand Avenue Carlsbad 92008 $1,250,000 2 2 1,699 SF $736 $458 2020 Condominium Carlyle 11/25/19 727 Grand Avenue Carlsbad 92008 $1,133,360 2 2 1,547 SF $733 $506 2019 Condominium Grand Madison 10/16/20 346 Walnut Ave Carlsbad 92008 $1,359,000 3 3.5 1,901 SF $715 $350 2020 Townhouse Eleven West 10/31/20 800 Grand Avenue Carlsbad 92008 $1,224,000 2 2 1,750 SF $699 $458 2020 Condominium Carlyle 05/10/19 2685 State Street Carlsbad 92008 $1,400,000 2 2 2,022 SF $692 $410 2015 Condominium 10/20/20 356 Walnut Ave Carlsbad 92008 $1,303,250 3 3.5 1,901 SF $686 $334 2020 Townhouse Eleven West 10/16/20 350 Walnut Ave Carlsbad 92008 $1,284,000 3 3.5 1,901 SF $675 $334 2020 Townhouse Eleven West 07/10/20 3337 Lincoln St Carlsbad 92008 $1,150,000 2 2.5 1,705 SF $674 $373 2016 Townhouse 11/25/20 364 Walnut Ave Carlsbad 92008 $1,395,000 4 3.5 2,072 SF $673 $334 2020 Townhouse Eleven West 11/02/20 352 Walnut Ave Carlsbad 92008 $1,274,000 3 3.5 1,901 SF $670 $334 2020 Townhouse Eleven West 11/16/20 362 Walnut Ave Carlsbad 92008 $1,375,000 4 3.5 2,072 SF $664 $350 2020 Townhouse Eleven West 10/23/20 360 Walnut Ave Carlsbad 92008 $1,370,000 4 3.5 2,072 SF $661 $334 2020 Townhouse Eleven West 11/13/19 3114 Lincoln ST Carlsbad 92008 $2,150,000 4 2 3,281 SF $655 $515 2013 Condominium Villagio 10/18/19 735 Magnolia Avenue Carlsbad 92008 $665,000 2 2 1,120 SF $594 $230 2019 Townhome Magnolia Walk 11/27/19 767 Magnolia Avenue Carlsbad 92008 $629,000 2 2 1,092 SF $576 $230 2019 Townhome Magnolia Walk 01/31/20 751 Magnolia Avenue Carlsbad 92008 $629,000 2 2 1,092 SF $576 $230 2019 Townhome Magnolia Walk 10/14/19 2660 Madison St Carlsbad 92008 $925,000 3 3 1,607 SF $576 $427 2017 Condominium Unit Description Address Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 155 of 163 ATTACHED HOME SALES VILLAGE, BARRIO, AND ADJACENT AREAS WORKSHEET 14 ATTACHED RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS (1) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Year Product Date City Zip Sales Price Bed Bath SF $/SF HOA Built Type Complex Name Unit Description Address 02/27/20 763 Magnolia Avenue Carlsbad 92008 $599,000 2 2 1,092 SF $549 $230 2019 Townhome Magnolia Walk 10/29/19 755 Magnolia Avenue Carlsbad 92008 $599,000 2 2 1,092 SF $549 $230 2019 Townhome Magnolia Walk 06/21/19 2533 State St Carlsbad 92008 $1,135,000 3 2 2,099 SF $541 $282 2016 Condominium 01/13/20 759 Magnolia Avenue Carlsbad 92008 $589,000 2 2 1,092 SF $539 $230 2019 Townhome Magnolia Walk 12/14/19 2541 State St Carlsbad 92008 $1,072,000 3 2 2,099 SF $511 $282 2016 Condominium 09/26/19 731 Magnolia AVe Carlsbad 92008 $799,000 4 4 1,565 SF $511 $230 2019 Townhome Magnolia Walk 04/18/19 2585 State Street Carlsbad 92008 $1,100,000 2 2 2,167 SF $508 $274 2017 Condominium 11/21/19 2505 State St Carlsbad 92008 $1,075,000 3 2 2,147 SF $501 $287 2016 Condominium 01/03/20 707 Magnolia Ave Carlsbad 92008 $780,000 4 4 1,565 SF $498 $230 2019 Townhome Magnolia Walk 03/01/19 2523 State St Carlsbad 92008 $1,147,000 3 2 2,351 SF $488 $250 2016 Condominium 03/16/20 723 Magnolia Ave Carlsbad 92008 $759,000 4 4 1,565 SF $485 $230 2019 Townhome Magnolia Walk 06/09/20 715 Magnolia Ave Carlsbad 92008 $749,000 4 4 1,565 SF $479 $230 2019 Townhome Magnolia Walk 02/27/20 711 Magnolia Ave Carlsbad 92008 $749,000 4 4 1,565 SF $479 $230 2019 Townhome Magnolia Walk 07/22/20 727 Magnolia Ave Carlsbad 92008 $739,000 4 4 1,565 SF $472 $230 2019 Townhome Magnolia Walk Minimum $589,000 2 2 1,092 SF $472 $230 2013 Maximum $3,000,000 4 4 3,281 SF $1,145 $891 2020 Median $1,200,750 3 2 1,901 SF $674 $334 2019 Average $1,380,695 3 3 1,884 SF $706 $386 2018 (1) Survey reflects attached home sales in the Village, Barrio, or adjacent areas since January 1, 2019. Source: Mulitple Listing Service (MLS) and Redfin, as of December 2, 2020. Prepared by: Keyser Marston Associates, Inc. Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lagFeb. 10, 2022Item #3 Page 156 of 163 APARTMENT RENTS WORKSHEET 15 SURVEY OF COMPARABLE APARTMENT COMPLEXES INCLUSIONARY HOUSING IN-LIEU FEE UPDATE CITY OF CARLSBAD Property Name Property Address City SF Monthly Rent (1)Rent/SF SF Monthly Rent (1)Rent/SF SF Monthly Rent (1)Rent/SF SF Monthly Rent (1)Rent/SF Total SF Monthly Rent (1)Rent/SF Vacancy Rate Year Built Pierside South 115 N. Cleveland St Oceanside 7 570 $2,192 $3.85 840 $3,077 $3.66 1,201 $3,604 $3.00 ---------110 903 $2,990 $3.31 9.1%2018 Casa Aldea at Carlsbad 2615 Cannon Road Carlsbad 3 ---------773 $2,621 $3.39 1,034 $3,103 $3.00 ---------98 927 $2,906 $3.13 ---2020 Montecito Apartments 2510 W. Ranch Street Carlsbad 3 ---------677 $2,177 $3.22 1,097 $2,872 $2.62 1,379 $3,155 $2.29 264 988 $2,654 $2.69 6.1%2018 Breeze Hill 710 Breeze Hill Road Vista 3 563 $1,629 $2.89 701 $1,846 $2.63 886 $2,271 $2.56 ---------88 804 $2,092 $2.60 2.3%2019 Marisol Carlsbad (2)3251 Marisol Place Carlsbad 3 ---------775 $2,190 $2.83 1,137 $2,769 $2.44 1,483 $3,389 $2.29 278 1,017 $2,588 $2.54 11.9%2018 The Tradition 1901 Cassia Road Carlsbad 3 ------------------1,123 $2,720 $2.42 1,364 $3,303 $2.42 157 1,277 $3,091 $2.42 3.2%2005 Skye Apartments 501 W. Bobier Drive Vista 3 ---------815 $2,058 $2.53 1,108 $2,348 $2.12 1,244 $2,824 $2.27 290 944 $2,200 $2.33 4.1%2016 Elan Pacifico Encinitas 1100 Garden View Road Encinitas 3 ---------1,086 $2,306 $2.12 1,211 $2,333 $1.93 1,531 $3,169 $2.07 121 1,275 $2,523 $1.98 5.0%2002 BluWater Crossing (2)6800 Embarcadero Lane Carlsbad 3 ---------1,942 $3,777 $1.94 2,790 $4,581 $1.64 ---------66 2,340 $4,207 $1.80 15.2%2009 Pirineos Pointe 2610-2622 Pirineos Way Carlsbad 2 ---------------------------1,640 $2,876 $1.75 14 1,640 $2,876 $1.75 0.0%2003 Minimum 2 563 $1,629 $2.89 677 $1,846 $1.94 886 $2,271 $1.64 1,244 $2,824 $1.75 14 804 $2,092 $1.75 0.0%2002 Maximum 7 570 $2,192 $3.85 1,942 $3,777 $3.66 2,790 $4,581 $3.00 1,640 $3,389 $2.42 290 2,340 $4,207 $3.31 15.2%2020 Median 3 567 $1,911 $3.37 795 $2,248 $2.73 1,123 $2,769 $2.44 1,431 $3,162 $2.28 116 1,003 $2,765 $2.48 5.0%2017 Average 3 567 $1,911 $3.37 951 $2,507 $2.79 1,287 $2,956 $2.41 1,440 $3,119 $2.18 149 1,212 $2,813 $2.46 6.3%2013 (1) Reflects effective rent. (2) Subject property used in CoStar search for comparable properties built after 2000. Excludes senior apartments. Source: CoStar Group, Inc., as of September 21, 2020. All Units - Total/Averages Stories Studios One Bedrooms Two Bedrooms Three Bedrooms Prepared by: Keyser Marston Associates, Inc. Filename: Carlsbad_Market Data v2_12-04-2020.02-1-2021\4/12/2021; emaFeb. 10, 2022Item #3 Page 157 of 163 When housing prices spiked in the 1990s, many cities looked for ways to help make housing more affordable. One such tool that many jurisdictions implemented was INCLUSIONARY HOUSING REGULATIONS. Under these laws, developers are required to set aside a certain number of units within their residential development project and make them affordable to lower income households. As part of their inclusionary housing program, many cities also included provisions that allow developers to deviate from the strict adherence of the policy, so long as it is found that the alternative means of compliance meets the intent of the jurisdiction’s inclusionary housing policies, and is consistent with the housing affordability and fair housing choice goals specified in its long-range housing plan. This Info-Bulletin provides an overview of Carlsbad’s Inclusionary Housing Program and describes how it helps address affordable housing needs while advancing equitable development goals consistent with the city’s adopted Housing Element. NEED FOR INCLUSIONARY HOUSING The state faces a serious housing problem that not only threatens its economic security, the lack of access to affordable housing can have a direct impact upon the health, safety, diversity, and welfare of Carlsbad residents. To retain a healthy livable environment and meet state mandated housing goals, more needs to be done to accommodate locally available and affordable housing stock. Unfortunately, no single housing program will be enough to meet the housing demand. However, one of the many ways the city is combating the detrimental effects of the housing crisis is through its Inclusionary Housing Program; a powerful tool that meets economic development and workforce housing needs, without requiring a public subsidy. From 1995 to 2020, the city produced 19,026 housing units, of which roughly 13% were made affordable through the inclusionary housing program. Should the inclusionary program continue, it is anticipated that the city could generate over 500 affordable units over the next eight-year period. HOUSEHOLD INCOME & AFFORDABILITY We hear this a lot --- How do we make housing more affordable? The term “affordable housing” can be used to describe housing that receives some form of subsidy/restriction that forcibly keeps rents and mortgages low. It can also mean housing that’s naturally affordable simply because of market supply and demand. In order to make a meaningful difference in providing affordable housing, the solution should not be looked at as an “either-or” approach between privately produced housing and subsidized housing…it requires both. To help understand what qualifies as affordable, the U.S. Department of Housing and Urban Development (HUD) establishes income ranges for different household types, which they have grouped into five “income categories:” extremely low, very low, low, moderate and above- moderate household income. The household income for each of these categories is based on a percentage of the region’s Area Median Income or AMI. Carlsbad falls within the San Diego County region, which has an AMI of $95,100 per year for a four-person household. In comparison, the city’s actual median income is closer to $108,000, but under state law the city must use the county AMI. To help illustrate, the EXHIBIT 8 Feb. 10, 2022 Item #3 Page 158 of 163 following table shows the income levels for a family of four. Income Category % of AMI Household Income1,2 Extremely Low <30% <$28,500 Very Low 30 - 50% $28,500 - $47,600 Low 51 - 80% $47,600 - $76,000 Moderate 81 - 120% $77,000 - $114,100 Above Moderate >120% >114,100 1 AMI as of April 2021 was $95,100 for family of four; 2 Figures rounded. For housing costs to be considered affordable, a family’s monthly rent/mortgage payment should not exceed 30% of the gross annual household income of any given income category. So, a low-income family of four with a gross annual income of $55,000 should pay no more than $1,375 per month for housing. For a rental unit, total housing costs include the monthly rent payment as well as consideration for a utility allowance. With for-sale units, total housing costs include the mortgage payment, homeowner association dues, property taxes, mortgage insurance and any other related assessments. INCLUSIONARY HOUSING REQUIREMENTS The city’s Inclusionary Housing Ordinance (CMC §21.85) was passed by the City Council in 1993, and established the legal basis for requiring inclusionary housing in new residential development in the city. The following provides a summary of key standards required under the ordinance for new residential development in the city. Number of units required • When calculating, fractional units ≥0.5 must be rounded up to the next whole number. • Inclusionary unit requirements apply to all residential development projects (rental or for-sale product), including mixed-use projects. • Residential development projects proposing seven or more housing units are required to provide at least 15% of the total units to be restricted for low- income households. Refer to Alternative #1 for projects proposing six or fewer units. Example: An applicant proposes to satisfy its inclusionary requirements for a 112-unit residential development by reserving 15% of the units for low-income households, or 17 units (112 X 0.15 = 16.8, rounded up to 17). The remaining 95 units (112 units minus 17) may be sold at market rate. Duration units protected • Inclusionary rental units shall remain restricted and affordable to the designated income group for not less than 55 years. • Inclusionary for-sale units shall remain restricted and affordable to the designated income group for not less than 30 years. Development standards • Inclusionary units should be located throughout the development rather than clustered in one area. • The inclusionary units must be indistinguishable from the market-rate units in the development, at least outwardly. • The inclusionary units must be constructed prior to or concurrent with development of the market-rate units, and prior to final building permit approval of the market-rate unit. • Residents of the inclusionary units must have access to the same amenities – such as pool, fitness center and parking – as residents of the market-rate units. • The inclusionary units must include a similar mix and number of bedrooms as the market-rate units. • When ten or more inclusionary units are required, at least ten percent of those required units must provide at least three bedrooms. • To the extent possible, projects using for-sale units to satisfy inclusionary requirements shall be designed to be compatible with conventional mortgage financing programs. Feb. 10, 2022 Item #3 Page 159 of 163 ALTERNATIVE MEANS OF COMPLIANCE The city understands that various constraints may frustrate a developer’s ability to meet the strict letter of the city’s inclusionary housing regulations. As such, the ordinance allows for the City Council to authorize “alternative means of compliance” when it is found that the alternative meets the intent of the city’s inclusionary housing ordinance and the goals and policies of the city’s Housing Element. Council Policy Statement #57 provides those alternatives that have been found to meet the intent of the city inclusionary code and help address its affordable housing needs. These alternative means of compliance are summarized in the sections below, but please refer to policy #57 for the specific requirements. Alternative #1: Payment of in-lieu fee Rather than constructing the inclusionary unit as part of the development project, applicants proposing ≤six units may instead pay a fee. • $8,529 for a new single-family detached home • $15 per square foot of net building area for each proposed market-rate unit. “Net building area” means the aggregate gross floor area of all the unrestricted dwelling units within a development, excluding areas outside the dwelling unit’s habitable space such as garages, carports, parking areas, porches, patios, open space, and excluding common areas such as lobbies, common hallways, stairways, elevators and equipment spaces. Collected in-lieu fees are deposited into the city’s Housing Trust Fund, and applied towards the furthering of the city’s affordable housing needs pursuant to Council Policy No. 90. Alternative #2: Varying housing affordability levels In addition to providing more housing available for low income families, the city also recognizes a need to increase housing stock for other targeted and needed housing affordability levels such as moderate, very low- and extremely low-income households. As such, so long as the total average gross income restriction for the required inclusionary units does not exceed 80% of the AMI, the makeup of the inclusionary units can be comprised on any combination of income categories. Alternative #3: Increases in residential density Sometimes there is a request to increase a property’s residential density above what is authorized under the city’s current land use plans. Whenever this occurs, the following additional inclusionary housing requirements shall apply. • At least 20% of the total residential units are restricted for low-income households; or, • A least 15% of the total residential units are restricted for low-income households and an additional 10% are restricted for moderate-income households; or, • At least 15% of the total residential units are restricted for very low-income households. These requirements have been applied to properties that received an increase in residential density as part of the 2015 General Plan update and the 2021-29 Housing Element. Alternative #4: Reduction credit A residential development can reduce its inclusionary housing obligations from 15% to 12.5%, under the following conditions. Example: “A 78-unit residential development is proposed, which requires that 15% of the units be reserved for low-income (12 units). If the developer voluntarily agrees to make inclusionary units available to very low-income households, then the developer may receive an incentive reduction credit. Under this scenario, 10 units in a 78-unit development projects equates to 12.8%, which meets the minimum inclusionary housing requirement. Feb. 10, 2022 Item #3 Page 160 of 163 • All affordable units must be made available to very low- or extremely low-income households. • The units are located on the same site as the market- rate units. • No financial assistance from the city is required. Alternative #5: Use of accessory dwelling units Pursuant to CMC §21.85.070.B, construction of up to 15 accessory dwelling units (ADU) can be used to satisfy inclusionary housing requirements. Refer to the Department’s informational bulletin CD-11 for overview of ADUs. The standards below provide additional specifications for when this allowance can be used. • The project proposes ≥200 residential detached dwelling units. • The ADU may be an attached or detached product type (Junior ADU prohibited) . • The ADUs shall have an affordability term (low- income households) of at least 30 years. Notwithstanding the above, for projects proposing ≤six units the in-lieu fee may be waived if a detached or attached ADU or Junior ADU is constructed concurrent with construction of the market-rate unit, deed restricted for low-income households for 30-years, and occupied by income-qualified families. Alternative #6: Off-site construction Circumstances may arise in which the public interest would be better served by allowing some or all of the required inclusionary units to be developed at an alternative site. This is referred to as a “Combined Inclusionary Housing Project” or “Combined Project.” To qualify, the following requirements must be met. • The inclusionary calculation requirements shall be based on the total number of market-rate units to be provided, as opposed to the total number of residential units in the project. See example. Example: An applicant proposes to satisfy its inclusionary requirements for a 112-unit project by building 15% of the units for low-income households off-site. This leaves 85% of the units for market rate, for a total residential unit count of 132 units (112 ÷ 0.85 = 131.8, rounded to 132). Using the total residential unit count, the number of inclusionary units required is 20 (132 X 0.15 = 19.8, rounded to 20). • The decision-making authority of the permit application may approve a Combined Project subject to the following findings. o Site does not propose a density bonus/increase. o Site conditions make it physically infeasible to accommodate inclusionary units on site. o Significant price and product type disparities make it financially infeasible to accommodate the inclusionary units on site. o There is a documented lack of capacity to deliver affordable housing on-site. o Off-site option provides greater feasibility and cost effectiveness than on-site alternatives. o Off-site option provides better access to jobs, schools, and services than on-site alternative. o Off-site option supports the Housing Element affordable housing goals and policies. Notwithstanding, the City Council shall retain final permit approval authority, including approval of the Affordable Housing Agreement, on any Combined Project that requires financial assistance from the city. Alternative #7: Housing credit purchase program The city has and is willing to financially partner with developers who propose to construct inclusionary housing units in excess of the minimum inclusionary requirement. These excess units or “credits” could then be sold to other developers to satisfy their respective inclusionary housing requirements. The proceeds from the credit sales are deposited into the city’s Housing Trust Fund and redistributed pursuant to Policy #90. • Credit Purchase Eligibility. Projects proposing more than seven, but no more than 50 residential units Feb. 10, 2022 Item #3 Page 161 of 163 are eligible to purchase affordable housing credits under this program. • Credit Price. The price for each excess unit shall be determined by dividing the city’s financial contribution by the total number excess inclusionary units, subject to annual CPI adjustments. Applicants must pay the credit price of available credits from the oldest affordable housing project that is located within the same city quadrant in which the market-rate units are located, or if none available, sites which are contiguous to the quadrant in which the units are proposed. • Credit Purchase Ratio – For sale units. The amount of credits to be purchased for projects that are comprised of for-sale units shall be based on the following scale. o 7-20 units: 1.0 credit/inclusionary unit o 21-35 units: 1.5 credits/inclusionary unit o 36-50 units: 2.0 credits/inclusionary unit • Credit Purchase Ratio – For rent units. The amount of credits to be purchased for projects that are comprised of rental units shall be based on the following scale. o 7-20 units: 1.0 credit/inclusionary unit o 21-35 units: 1.25 credits/inclusionary unit o 36-50 units: 1.50 credits/inclusionary unit • Credits Available. As of January 2022, the following credits are available. Please contact the Housing & Homeless Services Department for most current information: Name Quadrant Credits Cost ### ### ### $$$ ### ### ### $$$ ### ### ### $$$ ### ### ### $$$ ### ### ### $$$ • Credit Purchase Findings. Authority to approve a credit purchase shall be given to the decision-making authority of the proposed development permit so long as the following findings are met. o The project site is located within the same Growth Management Plan Quadrant that the housing credit is located, or if none available, sites which are contiguous to the quadrant in which the units are proposed. o There are sufficient housing credits available to purchase. Other incentives not listed, but may be considered The City Council may approve other alternatives to meeting its inclusionary standards when a development project shows that is helps achieve specific Housing Element policies and goals, and assists the city in meeting its state housing requirements. Such allowance shall be based on findings that new construction would be infeasible or present unreasonable hardship in light of such factors as project size, site constraints, market competition, price and product type disparity, and financial subsidies available. Alternatives that may be considered include, but not limited to, the following. • Up to 50% of the required inclusionary units may be satisfied via acquisition and rehabilitation of existing, affordable units at the same required affordability level. • Construction of special needs housing projects or programs (shelters, transitional housing, etc.) that can accommodate the same number of tenants as the required inclusionary units. AFFORDABLE HOUSING AGREEMENTS An Affordable Housing Agreement (AHA) is a legally binding agreement between the developer and the city to ensure that the inclusionary requirements of a residential development are satisfied. CMC §21.85.140 provides the specific requirements of the AHA, but the more significant components are listed below. • A project condition shall be added to projects subject to the Inclusionary Ordinance and Policy No. 57 requiring that an AHA be reviewed, approved, Feb. 10, 2022 Item #3 Page 162 of 163 0 and recorded prior to Final Map or issuance of building permits, whichever is first. • Among other items, the AHA must include the number of required inclusionary units, the unit sizes, location, affordability tenure, required findings, terms and conditions of affordability and unit production schedule. • The AHA and all relevant terms and conditions shall be recorded against the entire development. • The AHA shall bind all future owners and successors in interest for the term of years specified therein. APPROVAL AUTHORITY The approval authority for the development project subject to these standards is as follows: • The decision-making authority for the underlying permit application(s) shall have the authority to consider and approve projects found consistent with Policy No. 57. • Development projects that propose an alternative means of compliance that is not specifically provided for in the CMC or Policy 57 shall be considered by the Housing Commission for a recommendation to the City Council. • Approval authority of the Affordable Housing Agreement is as follows: o Affordable Housing Agreements that are consistent with §21.85 and Policy No. 57 and do not request financial assistance from the city shall first be considered by the Affordable Housing Policy Team for a recommendation to the H&HS Director. o Affordable Housing Agreements that propose a deviation(s) to Policy No. 57 or request financial assistance shall first be considered by the Affordable Housing Policy Team and Housing Commission for a recommendation to the City Council, which has the authority to issue final approval of the alternative. YOUR OPTIONS FOR SERVICE To schedule an appointment or to learn more about this program, please contact the Planning Division at 760-602- 4610 or via email at Planning@carlsbadca.gov or the Housing &Homeless Services Department at 760-434- 2810 or via email at Housing@carlsbadca.gov. Feb. 10, 2022 Item #3 Page 163 of 163