HomeMy WebLinkAbout2022-03-22; City Council; ; Amendments to City Council Inclusionary Housing Policies and the City's Inclusionary Housing In-Lieu Fee (MCA2022-0002/PUB2022-0004)CITY COUNCIL
Staff Report
Meeting Date: March 22, 2022
To: Mayor and City Council
From: Scott Chadwick, City Manager
CA Review RK
Staff Contact: Jeff Murphy, Community Development Director
jeff.murphy@carlsbadca.gov, 442-339-2783
Subject: Amendments to City Council Inclusionary Housing Policies and the City's
Inclusionary Housing In-Lieu Fee (MCA2022-0002/PUB2022-0004)
District: All
Recommended Action
That the City Council:
1.Adopt a resolution amending the city's inclusionary housing in-lieu fee (Exhibit 1)
2.Adopt a resolution consolidating and amending Council Policy statements Nos. 57, 58, and 68
into a single policy document, No. 57, to help streamline permit application, clarify confusing
language, and memorialize longstanding processing practices relating to inclusionary housing
compliance (Exhibit 2).
Executive Summary
When housing prices spiked in the 1990s, many cities looked for ways to help make housing more
affordable. One such tool that Carlsbad and many other jurisdictions implemented was inclusionary
housing regulations. Under these laws, developers are required to set aside a certain number of units
within their residential development projects and make them affordable to lower income
households. Developers of projects with six or fewer units may pay a fee in lieu of constructing these
units. Proceeds from those fees are then used to financially support affordable housing units in other
projects throughout Carlsbad.
In response to City Council motions and direction, staff are presenting options to increase the city's
current inclusionary housing in-lieu fee for the City Council's consideration. Staff are also offering
options to amend and consolidate three existing Council policy statements that affect inclusionary
housing, statement nos. 57, 58, and 68, into a single policy document. This will streamline permit
application, clarify confusing language, and memorialize longstanding processing practices relating to
inclusionary housing compliance. This report also includes options that are recommended by the
Housing Commission, though not supported by staff.
Council Policy Statement No. 1 states that all City Council policies may be adopted, amended, or
rescinded only by a resolution receiving four affirmative votes from the City Council.
March 22, 2022 Item #4 Page 1 of 181
Discussion
Background
The City Council approved motions on Aug. 20 and Dec. 17, 2019, (Exhibits 3 and 4) directing staff to
return to the City Council for consideration of initiating an analysis of the city's inclusionary housing
program. On May 5, 2020, following a staff presentation on the topic, the City Council gave staff
direction and funding for a study that would provide recommendations on updating the inclusionary
housing in-lieu fee and the methodologies through which it is calculated, as well as related
inclusionary housing policy options for all of Carlsbad, both inside and outside the area covered by
the Village & Barrio Master Plan. This report provides an overview of the current inclusionary housing
program and possible options and changes to streamline and improve upon the program.
Current Inclusionary Housing Program
Carlsbad, like many coastal cities in California, struggles with both housing shortage and housing
affordability. To help overcome these challenges, the city's inclusionary housing ordinance, originally
adopted in 1993, established the legal basis for requiring inclusionary housing in new residential
development in the city. The law applies to all proposed development projects that include
residential units. It requires that a minimum of 15% of the units within a project be affordable to
lower-income households.
In-lieu fee
While the construction of affordable units is preferred, the city ordinance allows a developer
of projects with six or fewer dwelling units to satisfy the projects' inclusionary requirements
by paying a fee in-lieu of building the unit. When it was initially adopted, the in-lieu fee was
formulated using the affordability gap method, meaning that the fee was based on the
difference between the cost of constructing 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 City Council
recalculated the fee three years later, in 1996, reducing it to $4,515 per market rate unit. The
in-lieu fee amount has remained unchanged since then.
In April 1993, the city established the Housing Trust Fund. All revenue from the payment of
the in-lieu fee is deposited into the Housing Trust Fund. This fund also receives funding from
other sources, with housing credit purchases, impact fees, loan interest payments and federal
and state grants all contributing revenue toward the fund, with deposits totaling roughly
$39.5 million — including $1.7 million in in-lieu fee payments — over the past 20 years.
Alternative means of compliance policies
The city understands that various constraints may frustrate a developer's ability to meet the
strict letter of the city's inclusionary housing regulations. That's why the Inclusionary Housing
Ordinance allows for the City Council to authorize "alternative means of compliance" when it
is found that the proposed alternative meets the intent of the city's inclusionary housing
ordinance and the goals and policies of the city's Housing Element.1
To help identify acceptable alternative measures, three council policy statements were
adopted (Exhibits 5-7):
•Policy No. 57 provides allowances for building affordable units offsite
'The Housing Element is the part of the city's General Plan that sets policies and goals intended to meet the housing
needs of everyone in the community, as required by state law.
March 22, 2022 Item #4 Page 2 of 181
Possible rates outside VBMP Possible rates inside VBIVIP
Flat fee Fee per Fee per Flat fee Fee per Fee per
$4,515 $8,5291 per unit sq foot' sq foot2 per unit sq foot2 sq foot'
$31,240 $15 $25 $34,490 $25 $35
•Policy No. 58 sets forth the credit purchase program through which applicants can buy
credits instead of building the required inclusionary units
•Policy No. 68 allows for a reduction in the 15% inclusionary requirement when certain
standards are met
Program success
About 2,500 affordable units have been built in the past 25 years because of the city's
Inclusionary Housing Ordinance, the Housing Trust Fund, and alternative measures. Put
another way, from 1995 to 2020, the city produced more than 19,000 housing units, of which
roughly 13% were made affordable through the inclusionary housing program. In the past two
years alone, a total of 812 housing units were approved, of which 116 were made affordable
for lower income families.
Options for in-lieu fee amendment
In April 2021, Keyser Marston Associates Inc., or KMA, the consulting firm the city hired to conduct a
financial analysis of these fees, finalized its report, the Inclusionary Housing In-Lieu Fee Update
Report (Exhibit 7). The firm reviewed the city's existing inclusionary regulations and historical results
in terms of the production of housing units and revenue from the in-lieu fee, and then combined data
pertaining to the 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 financial models to estimate the residual land value
generated by each residential project type.
The KMA report identified a range of ways the city could charge an inclusionary in-lieu fee on future
residential projects, including a flat fee assessed for each unit and fees assessed by square footage,
offering one at the low end of the identified range and the other at the high end, as shown in Table I
below. (Note: The Village and Barrio Master Plan rates are different because the land values in that
area are generally higher than elsewhere in the city.)
TABLE I: SUMMARY OF DIFFERENT IN-LIEU FEE RATES
lAssumes an annual Consumer Price Index adjustment applied to the current city in-lieu fee as set in 1996.
2 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
housing in-lieu fee on future small residential projects, and how those rates could financially impact
new developments. The scenarios are for discussion purposes only, the development scenarios
identified assume that all unit sizes are the same, while the actual unit sizes found in new
development projects typically vary, resulting in varying in-lieu rates.
March 22, 2022 Item #4 Page 3 of 181
Possible VBMP rates Possible citywide rates
Flat fee $25/sf Flat fee $25/sf $35/sf
$55,000 $31,240 $34,940 $55,000
$37,500 $31,240
$34,940 $80,000 $31,240
$77,000
$52,500
$112,000
CPI-
adjusted
rate
2,200 sf
1,500 sf
$4,515
$4,515
3,200 sf $4,515
$8,529
$8,529
$8,529
$15/sf
$33,000
$22,500
$48,000
$37,500 $34,940
$80,000
Flat fee $15/sf $25/sf
500 sf $18,060
$18,060
1,500 sf $18,060
Proposed inside VBMP rates
Flat fee $25/sf $35/sf
$34,116 $124,960 $30,000 $50,000 $139,760 $50,000 $70,000
$34,116 $124,960 $57,000 $95,000 $139,760 $95,000 $133,000
$34,116 $124,960 $90,000 $150,000 $139,760 $150,000 $210,000
950 sf
CPI-
adjusted
rate
Proposed outside VBMP rates
TABLE 2: Potential fee revenue for a single-family home on a single residential lot
TABLE 3: Potential fee revenue for a four-unit apartment complex
TABLE 4: Potential fee revenue for a six-unit apartment complex
Current
flat fee
500 sf $27,090
950 sf $27,090
1,500 sf $27,090
Staff recommend that:
•For property owners building a single-family residence on a single lot, the in-lieu fee be
adjusted from a flat fee of $4,515 to $8,529, which is the result of the annual Consumer Price
Index adjustment being applied to the current rate, set in 1996.
•For all other qualifying projects, those with from two to six units, charging a rate of $15 per
net building area for each proposed market-rate unit, and applying this rate citywide, both
inside and outside the area covered by the Village & Barrio Master Plan.
There are a few reasons why staff are making this recommendation. By its design, applying a cost per
square foot approach for an in-lieu fee encourages the construction of smaller, ideally less expensive
units - the smaller the units, the smaller the fee. Also, applying the fee citywide ensures consistency
and ease of application, with one rate for all applicants instead of multiple rates. And while a $15 per
foot rate will result in a significant increase over the current in-lieu fee, it is at the lower end of the
fee scale and less likely to adversely impact housing development compared to the higher fee rates
identified in the KMA study. Put another way, given the success of the inclusionary program and
Housing Trust Fund, this recommendation is sensitive to the adverse financial impacts a fee increase
will have on future development. Refer to the "Housing Commission recommendation" section below
for discussion and recommendation on annual fee escalators.
CPI-
adjusted
rate
Possible outside VBMP rates Possible inside VBMP rates
Flat fee $25/sf $35/sf Flat fee $15/sf $2.5/sf
$51,174 $187,440 $45,000 $75,000 $209,640 $75,000 $105,000
$51,174 $187,440 $85,500 $142,500 $209,640 $142,500 $199,500
$51,174 $187,440 $135,000 $225,000 $209,640 $225,000 $315,000
March 22, 2022 Item #4 Page 4 of 181
Recommendations on amendments to inclusionary housing policies
The three council policy statements that provide applicants with alternative ways of complying with
the city's inclusionary housing program (nos. 57, 58, and 68) have been in place since 1995, and much
has changed since then in how inclusionary housing requirements can be achieved. Staff are
proposing to consolidate the policies into a single policy statement and expand upon the
implementing procedures for alternative means of compliance — consistent with the city's current
Inclusionary Housing Ordinance — to accommodate the unique challenges facing developers in
providing affordable housing in Carlsbad.
The sections below mirror the sections in the revised policy (Attachment A to Exhibit 1) and provide
an overview of the changes being proposed. Staff have also developed an informational bulletin in
simple-to-understand terms to help the public better understand the city's inclusionary housing
requirements (Exhibit 8).
Accessory dwelling unit instead of 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 Council Policy Statement 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 information bulletin provided as Exhibit 8 for
an example showing how the allowance can be applied to a theoretical development project).
One of the conditions under the current policy is that it applies only to development of
housing to be offered for sale. To encourage more housing development that offers lower
affordability levels, staff are proposing to expand upon the policy and allow both for sale and
rental developments 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 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 toward 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% of the area median income. This offers additional flexibility in
financing for developers and provides the city with affordable units of varying affordability
levels, which will help achieve the housing targets in its Housing Element.
March 22, 2022 Item #4 Page 5 of 181
Use of accessory dwelling units
The current inclusionary housing ordinance allows an applicant to construct up to 15 accessory
dwelling units within the project to satisfy their inclusionary requirements for the project.
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
these specific requirements for use of this alternative:
•The project is proposed to have 200 or more residential detached units
•The ADUs are attached or detached housing
•The ADUs shall be affordable for low-income residents for at least 30 years
The property owner shall be required to make sure the tenant's income qualifies 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 affordable inclusionary units to be constructed
on-site but recognizes that circumstances may arise in which the public interest would better
be served by building the units at an alternative site. Current Council Policy Statement No. 57
sets forth the criteria, in the form of questions, for when the City Council can authorize this
off-site compliance alternative.
Because 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 because it is more appropriate to have
those processing steps be part of a processing guide for the Community Development
Department.
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 is able to 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.
March 22, 2022 Item #4 Page 6 of 181
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. In keeping with
Council Policy Statement No. 58, the per unit credit purchase price was set at $28,000. This
fee was established by dividing the subsidy amount ($4.1 million in city funds plus a $900,000
developer contribution) by the 184 excess affordable housing units created in the project.
Those credits were then purchased by other developers to satisfy the inclusionary
requirements of other residential developments in the southwest and southeast quadrants, as
they are defined in the city's Growth Management Plan.
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 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 $8.6 million in deposits to the Housing Trust
Fund during the past 20-year period. The $8.6 million deposit total is in addition to the
revenue the city has received from payments made on the city loans for these four projects.
The revised policy being recommended 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.
Specifically:
•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 Housing
Ordinance and the policy. Only those affordable housing units in excess of inclusionary
ordinance requirements may be eligible for sale under this credit program.. In cases
when the city financially participates in the development of a housing project where
100% of the units are affordable to lower income households, all of the affordable
units are eligible for purchase under this credit program.
•Staff are not recommending any changes to the current policy on how the credit
purchase price is established. Under current policy, the purchase price for each
unit, or credit, shall be determined by dividing the "local financial contribution" —
that is, the city's 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 city's financial contribution is to consist of all city financial assistance
provided to the project, which includes loans, expenditures, hard, and soft costs,
land costs and accrued interest. The credit price shall be adjusted annually by the
Consumer Price Index and set by the City Council as part of its annual approval of
the city's Master Fee Schedule.
March 22, 2022 Item #4 Page 7 of 181
•The revised policy limits the types of projects that are eligible to request to buy
affordable housing credits as an alternative way of satisfying the inclusionary housing
requirement. Only developers proposing more than seven but no more than 50
residential units would be eligible to make a request to purchase affordable
housing credits to satisfy their inclusionary housing requirements.
•The revised policy also establishes the amount of credits that need to be
purchased for each required inclusionary unit based on project size:
o 7 to 20 units — 1 credit
o 21 to 35 units — 1.5 credits
o 36 to 50 units — 2 credits
•The revised policy includes specific 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 credit bank project.
•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" for less expensive housing credits from the city's credit banks
•The policy also clarifies how near the location of the affordable housing credit bank
must be to the proposed development project. Carlsbad Municipal Code Section
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). Therefore, a development project in the
southwest quadrant will be eligible to purchase credits from an affordable housing
credit bank that is in the northwest or southeast quadrant.
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 when the proposed alternative supports specific Housing Element policies and
goals and helps the city meet 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 or 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.
March 22, 2022 Item #4 Page 8 of 181
Approval authority
The revised policy simplifies the approval process by giving the decision-making authority
responsible for the approving underlying permit application(s) for a project the authority to
consider and approve alternative methods to satisfy the project's inclusionary housing
requirement if the methods are found to be consistent with the policy.
All projects will have conditions placed upon them requiring that an affordable housing
agreement be reviewed, approved and recorded before the final map for the project is
recorded or building permits are issued, whichever comes first. Affordable housing
agreements that are consistent with the policy and that do not include a request for financial
assistance from the city would be considered for approval by the Housing & Homeless
Services Director after review and recommendation of the Affordable Housing Policy Team,
which is comprised of relevant city staff, and the City Attorney's office. Agreements that
deviate from the policy or that include requests for financial assistance from the city would be
considered by the City Council, after review and recommendation of the Affordable Housing
Policy Team and the Housing Commission.
Housing Commission recommendations
On Feb. 10, 2022, the information contained in this staff report was presented at a public meeting
before the Housing Commission. The commission considered the information and public input and
passed a resolution (Exhibit 10) supporting staff's recommendations with the following exceptions:
Annual adjustment to the in-lieu fee
Like many cities, Carlsbad applies an automatic annual escalator for many of its fees. While there are
many different types of escalators that can be used, the city historically uses the Consumer Price
Index, or CPI.2 As such, staff initially recommended that the in-lieu fee be adjusted annually using the
CPI rate. The Housing Commission, however, recommended that the fee be adjusted annually based
on a price index that most closely responds to housing construction inflation rather than price of
goods and services.
In consultation with KMA, there are a few options to consider for a price index that fits the
recommendation (Exhibit 11); however, staff recommend that the city apply the Construction Cost
Index. The Construction Cost Index, known as CCI, is widely used in the construction industry to
assess inflationary effects on construction materials and labor costs and the city has used the CCI to
annually adjust similar fees such as planned local drainage area fees and Sewer and Water
Connection Fees. For comparison, the table below shows the CPI and CCI indexes for the past five
years.
Increase in-lieu fee for projects proposing two to six units
Staff recommended that the in-lieu fee for projects proposing two to six units be charged at a rate of
$15 per net building square foot. The Housing Commission recommended that the rate be increased
to $20 per net square foot, phased over a five-year period, and then adjust annually based on a price
2 The CPI is a standard used to track changes in the prices of goods and services purchased by households.
March 22, 2022 Item #4 Page 9 of 181
Staffl
Housing Commission $16.00 $17.00 $18.00 $19.00 $20.00
index. The commission found that the rate was slightly more than staff recommendation, but still at
the lower end of the fee range identified in the KMA report. Staff, however, continue to recommend
the $15 rate for the reasons previously discussed; particularly, the significant increase a $15 rate will
have on new development given the current high price of home sales in Carlsbad. Additionally, by
applying an annual CCI adjustment to the $15 rate, staff's recommended rate is roughly 17% lower
than the rate recommended by the Housing Commission as reflected in the chart below.
Year 1 Year 2 Year 3 Year 4 Year 5
' Assumes static annual CCI rate of 2.7%, as reflected in Table 2 of Exhibit 11.
Amend the Inclusionary Housing Ordinance
The Housing Commission also recommended 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 by KMA, which is $177,000. The commission found that a
flat rate that is applied to all credit purchases ensures consistency in its application and the higher
rate was consistent with the affordability gap. However, city staff do not support this
recommendation for the following reasons:
•A contributing factor in having 13% of the city's housing stock over the past 25 years as
affordable to lower income families is due to the longstanding requirement that inclusionary
housing units be built concurrent with the construction of the market-rate units. Six units was
specifically identified under the code as the cut off because 15% of six units results in a less
than one fractional unit requirement, compared to 15% of 7 or more units which results in a
requirement of at least one unit or greater. By expanding the in-lieu fee option from six to 20
units, the number of affordable units built — and the city's 13% overall affordability rate — will
decrease significantly because developers, if given the option, will opt to pay a fee instead of
building an affordable unit.
•The housing credit purchase price was never intended to represent or act as an in-lieu fee
that attempts to capture the gap in construction costs between a market-rate and
affordable unit As discussed earlier in this report, the city's financial contribution in a
combined inclusionary housing project is in the form of a loan that the developer repays
with interest --- credit payments are considered an additional funding source derived
from the same combined inclusionary housing project. Another way to look at this, under
the current program design, the city gets paid twice for its financial contribution to the
same affordable housing development project, with all of the proceeds being deposited
into the Housing Trust Fund. The Housing Trust Funds are then available to assist
additional affordable housing projects and are used to leverage additional state and
federal dollars, usually at a minimum of a 1:9 ratio, such that the city is generally never
financially contributing more than 10% of the overall project costs.
•Increasing the cost of a credit to $177,000 may actually result in a reduction in potential
revenues to the Housing Trust Fund. If developers of medium-sized projects choose to build
the required affordable units, rather than purchase credits, the result would be a reduction in
March 22, 2022 Item #4 Page 10 of 181
the opportunity to leverage Housing Trust Fund dollars at a minimum 1:9 ratio, thereby
reducing the resultant number of additional affordable housing units that are able to be
provided through the leveraging of Housing Trust Fund dollars.
Options
Staff offer the following options for the City Council's consideration. Because of the nature of this
item, the City Council may choose one or more of these options or an option not specifically listed.
Option 1: Adjusting the inclusionary housing fee
Staff recommend adjusting the inclusionary housing in-lieu fee for property owners building a single-
family residence on a single lot from $4,515 per unit to a new flat fee of $8,529, an amount based on
the current Consumer Price Index. For all other qualifying projects, those with two to six units, staff
recommend changing the flat fee to a rate of $15 per net building area for each proposed market-
rate unit, and applying this rate citywide, both inside and outside the area covered by the Village &
Barrio Master Plan.
Benefits
•The proposed single-family rate, while a 100% increase over the current rate, does not place a
unreasonable burden on families wishing to build their home in Carlsbad, and reflects what
the rate would be if a CPI had been adopted back in 1996 and applied to the in-lieu fee rate
•The proposed per square foot fee better reflects the current construction cost gap between
market-rate and affordable housing
•Creates citywide consistency, rather than two sets of rates for different areas of the city
•Would increase revenue to the Housing Trust fund, supporting the development of additional
affordable housing in Carlsbad
•In keeping with City Council direction
Drawbacks
•Although the recommendation is at the low end of the recommended range, and can be
supported via the gap analysis, this increase would still increase costs for developers which
will likely be passed on to the purchase price of the new units.
Option 2: Consolidating related council policy statements
Staff and the Housing Commission recommend consolidating and revising the three Council Policy
Statements detailed (nos. 57, 58, and 68) into a single policy statement (No. 57).
Benefits
•Expanding the implementing procedures for alternative means of compliance with the
inclusionary housing requirements would give developers more options in providing
affordable housing in Carlsbad
•Clarifies confusing wording in the current policies and helps streamline permit applicant
process
•Better reflects the city's longstanding processing practices relating to inclusionary housing
Drawbacks
•None identified by staff
March 22, 2022 Item #4 Page 11 of 181
Option 3: Adjusting the inclusionary housing fee to a higher rate per square foot
The Housing Commission favored a slightly different option, recommending that the rate be
increased to $20 per net square foot, phased in over a five-year period atwitch time the fee would be
adjusted annually based on the Engineering News-Record (ENR) — Construction Cost Index (CCI) 20
City Average.
Benefits
•The commissioners felt this higher rate was justified, and noted it was less than the highest
rate identified in the KMA report
•The higher rate may generate additional Housing Trust Fund revenues that can be applied
towards other affordable housing projects.
Drawbacks
•This higher rate could adversely impact the financial feasibility of new development in today's
costly real estate market and/or significantly increase the sales price of new housing.
Option 4: Annual inclusionary fee adjustments
The Housing Commission also recommended that the fee be adjusted annually based on a price index
that most closely responds to housing construction inflation, such as the ENR-CCI index, rather than
the price of goods and services. (City staff support this recommendation)
Benefits
•The Housing Commission felt that adjusting the rate based on housing construction inflation,
instead of inflation of goods and services better reflects changes in the cost of developing
residential projects.
•The CPI and ENR-CCI rates do not differ significantly.
Drawbacks
•None identified by staff
Option 5: Amending the Inclusionary Housing Ordinance to increase the in-lieu fee threshold
The Housing Commission recommended the city amend the inclusionary housing ordinance to allow
projects with as many as 20 units the ability to choose to pay the in-lieu fee, instead of limiting the in-
lieu fee payment option to projects of six or fewer units. (City staff do not support this
recommendation)
Benefits
•The increased unit count more closely aligns with the threshold used by other cities in their
inclusionary regulations.
•Provides developers with an alternative to constructing the inclusionary units, which may
increase housing production.
Drawbacks
•Deviates from the initial intent of the inclusionary housing regulations, which is to have the
inclusionary units constructed concurrent with construction of the market-rate units.
•If given the option, applicants will pay the lower in-lieu fee rather than pay the inclusionary
housing credit or build the inclusionary unit, which will result in an overall reduction in
March 22, 2022 Item #4 Page 12 of 181
revenues to the Housing Trust Fund and therefore a reduction in the opportunity to leverage
Housing Trust Fund dollars against additional state and federal dollars.
•Will result in a reduction in the production of affordable housing units since it will take time to
collect sufficient in-lieu fees to assist in the development of new affordable housing units.
•Would require an amendment to the city's municipal code, including review and approval by
the California Coastal Commission.
Option 6: Amending the ordinance to revise how the affordable housing credit purchase price is
calculated
The Housing Commission also recommended the city change the housing credit purchase price to a
flat rate based on the affordability gap per affordable unit rate as determined by KMA, which would
be $177,000. (City staff do not support this recommendation)
Benefits
•The increased rate reflects the actual gap between the construction cost to build a market-
rate unit and an affordable unit.
•The current credit fee varies between affordable housing credit banks. A flat rate ensures
consistency and predictability for staff and developers.
Drawbacks
•The housing credit purchase price was never intended to represent or act as an in-lieu fee
that attempts to capture the gap in construction costs between a market-rate and
affordable unit.
•The city's financial contribution in a combined inclusionary housing project is in the form
of a loan that the developer repays with interest --- credit payments are considered an
additional funding source derived from the same combined inclusionary housing project.
Therefore, the city gets paid twice for its financial contribution to the same affordable
housing development project. Increasing the cost of a credit to $177,000 may actually result
in a reduction in potential revenues to the Housing Trust Fund. If developers of medium-sized
projects choose to build the required affordable units, rather than purchase credits, the result
would be a reduction in the opportunity to leverage Housing Trust Fund dollars against
additional state and federal dollars, usually at a minimum of a 1:9 ratio.
•The $177,000 affordability gap must be reviewed and adjusted over time, as opposed
Staff's overall recommendation
Staff recommend options 1 and 2.
Fiscal Analysis
The following estimated financial impacts are based on assumptions derived from analyzing
development projects that paid the city's in-lieu fee in 2017 through 2021. Refer to Exhibit 12 for
additional detail and assumptions.
•For single-family homes where the in-lieu fee will be increased from $4,515 to $8,529, staff
estimate an increase of $12,900 in annual in-lieu fee revenues over current levels (an
estimated 16 total homes per year).
March 22, 2022 Item #4 Page 13 of 181
•For development projects that propose two to six units, where the in-lieu fee is increased
from $4,515 per unit to $15 per square foot, staff estimate an increase of $264,000 in annual
in-lieu fee revenues over current levels (an estimated 47 total units per year).
•For development projects that propose two to six units, where the in-lieu fee is increased
from $4,515 per unit to $20 per square foot, staff estimate an increase of $366,000 in annual
in-lieu fee revenues over current levels (an estimated 47 total units per year).
Next Steps
The changes to the fee and policy go into effect immediately following City Council approval. Staff will
update the appropriate tracking systems and websites and inform the industry of the changes. Should
the City Council direct staff to pursue the Housing Commission recommendations, the change to
increase the in-lieu fee eligibility from six to 20 units would require an amendment to Chapter 21.85
and to the city's Local Coastal Program, which requires approval from the California Coastal
Commission. Staff anticipate that the code amendment will take 12 to 18 months to be brought back
to the City Council for its consideration. Following City Council action, staff anticipate it will take an
additional 12 months to process the Local Coastal Program amendment with the Coastal Commission.
Environmental Evaluation
The proposed action is covered by the general rule under California Environmental Quality Act
Guidelines 15061(b)(3), in that the activity is covered by the common sense exemption that CEQA
applies only to projects that 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 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
This item was noticed in keeping with the Ralph M. Brown Act and it was available for public viewing
and review at least 72 hours before the scheduled meeting date.
Exhibits
1. City Council resolution
2. City Council resolution
3. Aug. 20, 2019, City Council motion
4. Dec. 17, 2019, City Council motion
5. Council Policy Statement No. 57
March 22, 2022 Item #4 Page 14 of 181
6.Council Policy Statement No. 58
7.Council Policy Statement No. 68
8.Keyser Marston Associates' Inclusionary Housing In-Lieu Fee Update Report
9.Informational Bulletin — Inclusionary housing program
10.Housing Commission resolution
11.Price index options
12.Estimated In-Lieu Fee Amounts
March 22, 2022 Item #4 Page 15 of 181
Exhibit 1
RESOLUTION NO. 2022-077
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AMENDING THE CITY'S INCLUSIONARY HOUSING IN-LIEU FEE
(MCA2022-0002/PUB2022-0004)
WHEREAS, it is in the best interest of the public to establish reasonable standards relating to
the provision of affordable housing for all income levels; and
WHEREAS, the city's Inclusionary Housing Ordinance (Section 21.85) was established in April
1993 and requires that all residential developments greater than six units restrict 15 percent of the
total number of homes in a project as affordable to 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 units may satisfy their inclusionary housing
obligation through payment of an inclusionary housing in-lieu fee; 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, Objective "a" of Program 2.1 in the city's 2021-2029 Housing Element states that 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.
WHEREAS, Objective "b" of Program 2.1 in the city's 2021-2029 Housing Element directs the
city to amend its inclusionary housing program to reflect the updated in-lieu fee and revise the program
as necessary to maximize production of affordable units without adversely affecting market-rate
development.
WHEREAS, Keyser Marston Associates, Inc. (KMA), a real estate economics advisory consulting
firm who was selected by the city via a competitive bidding process, prepared a report dated April 2021
entitled the Inclusionary Housing In-Lieu Fee Update for the City of Carlsbad, which provided options
for an in-lieu fee based on an updated Gap Analysis of the Carlsbad housing market; and
WHEREAS, in a staff report dated Feb. 10, 2022, staff recommended that the Housing
Commission approve the consolidation of Council Policy Statement Nos. 57, 58, and 68 into a single,
amended Council Policy Statement and recommended adjustments to the inclusionary in-lieu fee as
follows:
1.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 the Consumer Price Index (CPI); and,
2.For all other qualifying residential development projects, change the in-lieu fee
methodology from $4,515 per market-rate unit to $15 per square foot of net building area
for each market-rate unit.
WHEREAS, at their publicly noticed Feb. 10, 2022 meeting, the Housing Commission considered
the KMA report, public comment, and testimony of staff and a representative from KMA and
recommended the following inclusionary housing in-lieu fee adjustments:
1.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
construction inflation; and,
2.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, adjusted annually based on a price index that most closely
responds to housing construction inflation.
WHEREAS, the city distributed a notice of intended decision to adopt the "Common Sense"
exemption, covered by the general rule under State CEQA Guidelines 15061(b)(3). The notice was
circulated for a 10-day period, which began on Feb. 15, 2022 and ended on Feb. 25, 2022. The city did
not receive any comment letters on the CEQA findings and determination. The effective date and order
of the city planner CEQA determination was Feb. 28, 2022; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1. That the above recitations are true and correct.
2.That the inclusionary housing in-lieu fee for a new single-family dwelling on a single-family
lot changes from $4,515 to $8,529, adjusted annually based on the Engineering News-
Record — Construction Cost Index; and,
3.That the inclusionary housing in-lieu fee for residential development projects proposingtwo
to six units change from $4,515 per market-rate unit to $15 per square foot of net building
area for each market-rate unit, adjusted annually based on the Engineering News-Record —
Construction Cost Index.
4.That the above fee adjustments become effective April 1, 2022. Discretionary permit
applications deemed complete prior to that date or building permit applications submitted
where the associated discretionary permit application was approved prior to that date, are
not subject to the new higher in-lieu fee rate.
5.That the inclusionary housing in-lieu fee be reassessed within ten years.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 22nd day of March 2022, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Acosta, Norby.
NAYS: None.
ABSENT: None.
MATT HALL, Mayor
FAVIOLA MEDINA, City Clerk Services Manager
(SEAL)
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Exhibit 2
RESOLUTION NO. 2022-078
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, CONSOLIDATING AND AMENDING COUNCIL POLICY
STATEMENTS NOS. 57, 58 AND 68 INTO A SINGLE POLICY DOCUMENT, NO.
57, TO HELP STREAMLINE PERMIT APPLICATIONS, CLARIFY CONFUSING
LANGUAGE, AND MEMORIALIZE LONGSTANDING PROCESSING PRACTICES
RELATING TO INCLUSIONARY HOUSING COMPLIANCE (MCA2022-
0002/PUB2022-0004)
WHEREAS, it is in the best interest of the public to establish reasonable standards relating to
the provision of affordable housing for all income levels; and
WHEREAS, the city's Inclusionary Housing Ordinance (Carlsbad Municipal Code Section 21.85)
was established in April 1993 and requires that all residential developments greater than six units
restrict 15 percent of the total number of homes in a project as affordable to low-income households,
and that residential developments less than seven units may satisfy their inclusionary housing
obligation through payment of inclusionary housing in-lieu fees; 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, Objective "b" of Program 2.1 in the city's 2021-2029 Housing Element states that
the city shall update and amend its inclusionary housing program as necessary to maximize production
of affordable units without adversely affecting market-rate development; and
WHEREAS, consistent with Carlsbad Municipal Code Section 21.85.070.A, the City Council
adopted Council Policy Statement Nos. 57 (Aug. 8, 1995), 58 (Sept. 12, 1995), and 68 (Oct. 19, 2004) as
acceptable alternatives to the construction of new inclusionary housing units; and
WHEREAS, the city desires to update these policies in a manner consistent with state housing
law and Objective "b" to Program 2.1 of the city's 2021-2029 Housing Element in order to streamline
application, clarify confusing language, and memorialize longstanding processing practices relative to
inclusionary housing compliance; and
WHEREAS, at their publicly noticed Feb. 10, 2022 meeting, the Housing Commission considered
and recommended the approval of a consolidated and updated inclusionary housing policy addressing
alternative means of compliance on as shown in Attachment A to this resolution; and
WHEREAS, the city distributed a notice of intended decision to adopt the "Common Sense"
exemption, covered by the general rule under State CEQA Guidelines 15061(b)(3). The notice was
circulated for a 10-day period, which began on Feb. 15, 2022 and ended on Feb. 25, 2022. The city did
not receive any comment letters on the CHIA findings and determination. The effective date and order
of the city planner CEQA determination was Feb. 28, 2022; and
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as
follows:
1.That the above recitations are true and correct.
2.That Council Policy Statement Nos. 57, 58, and 68 are hereby rescinded.
3.That the City Council hereby approves revised Council Policy Statement No. 57, attached
hereto as Attachment A.
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Carlsbad on the 22nd day of March, 2022, by the following vote, to wit:
AYES: Hall, Blackburn, Bhat-Patel, Acosta, Norby.
NAYS: None.
ABSENT: None.
•01 ) 1.-
-c--°'( FAVIOLA MEDINA, City Clerk Services Manager -.. -. .• - .. .. :,..•
Attachment A
(_lity of
Carlsbad
Council Policy Statement
Policy No. 57
Date Issued: DRAFT
Effective Date:
Resolution No.
Cancellation Date: N/A
Supersedes No. 57, 58 and 68
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.
March 22, 2022 Item #4 Page 21 of 181
Page 1 of 7
Policy No. 57
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.
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%.
March 22, 2022 Item #4 Page 22 of 181
Page 2 of 7
Policy No. 57
Refer to Section 3. 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, lf 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
4- 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%).
March 22, 2022 Item #4 Page 23 of 181
Page 3 of 7
Policy No. 57
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
March 22, 2022 Item #4 Page 24 of 181
Page 4 of 7
Policy No. 57
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 SO 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).
March 22, 2022 Item #4 Page 25 of 181
Page 5 of 7
Policy No. 57
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:
March 22, 2022 Item #4 Page 26 of 181
Page 6 of 7
Policy No. 57
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
March 22, 2022 Item #4 Page 27 of 181
Page 7 of 7
EXHIBIT 3
CITY COUNCIL
Minutes
August 20, 2019 5 p.m.
Council Chamber
1200 Carlsbad Village Drive
Carlsbad, CA 92008
CALL TO ORDER: 5:00 p.m.
ROLL CALL: Blackburn, Bhat-Patel, Schumacher, Hamilton.
Absent: Hall.
ANNOUNCEMENT OF CONCURRENT MEETINGS: None.
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)
March 22, 2022 Item #4 Page 28 of 181
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; nd 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 Undo 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)
March 22, 2022 Item #4 Page 29 of 181
EXHIBIT 4
CITY COUNCIL
Minutes
Dec. 17, 2019 6 p.m.
Council Chamber
1200 Carlsbad Village Drive
Carlsbad, CA 92008
CALL TO ORDER: 6:00 p.m.
ROLL CALL: Hall, Blackburn, Bhat-Patel, Schumacher.
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 Sundquist, President of the Batiquitos Lagoon Foundation spoke about the draft Local
Coastal Program update that was presented to the Planning Commission.
David Hill, 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 Village Barrio Master
Plan not including input from the homeowners in the area.
PUBLIC REPORT OF ACTION TAKEN IN CLOSED SESSION: None.
March 22, 2022 Item #4 Page 30 of 181
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 2018-0021, 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
March 22, 2022 Item #4 Page 31 of 181
Exhibit 5
Policy No. 57
CITY OF CARLSBAD Date Issued August 8. 1995
Effective Date August 8, 1995
COUNCIL POLICY STATEMENT 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.
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:
March 22, 2022 Item #4 Page 32 of 181
Page 1 of 4
Policy No. 57
CITY OF CARLSBAD Date Issued August 8, 1995
Effective Date August 8. 1995
COUNCIL POLICY STATEMENT 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.
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?
March 22, 2022 Item #4 Page 33 of 181
Page 2 of 4
March 22, 2022 Item #4 Page 34 of 1.81
Page 3 of 4
Policy No. 57
CITY OF CARLSBAD Date Issued August 8. 1995
Effective Date August 8, 1995
COUNCIL POLICY STATEMENT 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.
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.
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.
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.
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.
March 22, 2022 Item #4 Page 35 of 181
Page 4 of 4
Policy No. 57
CITY OF CARLSBAD Date Issued August 8. L995
Effective Date August 8, 1995
COUNCIL POLICY STATEMENT 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.
Staffs findings and recommendation, including the Combined/Off-site Project Assessment
Worksheet, will accompany the Affordable Housing Agreement to the Housing Commission for
action.
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.
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.
OFF-S1TE AND COMBINED INCLUSIONARY HOUSING PROJECT
ASSESSMENT WORKSHEET
---......,
BACKGROUND: . .
1.Applicant Name and Address:
2.Off-site or Combined Project Name:
3.Description of Project with Inclusionary Housing Obligation:
4.Proposed On-site Project Description (if any):
5.Proposed Off-site Project Description:
6.Description of On-site Project Constraints:
March 22, 2022 _Rem #4_ Riage 36 of 181 Attachment "1" to Council FoliCy taternent rvo. b7
. . •. WORKSHFET
. ..
AsS8SSMENTC0A.itLusION
. (Chet* appropriate box) • .• . . .... .
.
AS$,ESSMENT OR/MR/A .
DOES NOT SUpPORT
•CfPE-strE•PROPOSAI, _. . i.N.coNatiSivE
&OPitikts OFF-SRE 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?
March 22, 2022 2
Item #4 Page 37 of 181
WORKSHEET.
•ASSESSMENT CONCLUSION
(Check appropriate box)
•DOES NOT SUPPORT SUPPORTS or-FrE
OFF-&1l PROPOSAL INCONCLUSIVE• PROPOSAL ASSESSMENFCRITERIA
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 Strategy
a. Does the off-site proposal advance and/or
support City housing goals and policies
expressed in the Housing Element, CHAS
and Inclusionary Housing Ordinance?
Brief Narrative:
- . .
SUMMARY
DOES NOT SUPPORT
OFF-SITE PROPOSAL
•
INCONCLUSIVE
SUPPORTS OFF-SRE
PROPOSAL
March 22, 2022
3 Item #4 Page 38 of 181
Date Considered by Review Committee:
Review Committee Action:
Action:
ar
March 22, 2022 4 Item #4 Page 39 of 181
EXHIBIT 6
Page 1 of 4
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject: AFFORDABLE HOUSING
Specific Subject: Sale of Affordable Housing
Credits
Policy No. 58
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 Loma 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 Loma 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:
March 22, 2022 Item #4 Page 40 of 181
Page 2 of 4
Policy No. 58
CITY OF CARLSBAD Date Issued Sept. 12, 1995
Effective Date Sept. 12, 1995
COUNCIL POLICY STATEMENT
General Subject: AFFORDABLE HOUSING
Specific Subject: Sale of Affordable Housing
Credits
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
= Unit Price of Affordable
+ Number of Affordable Housing Credits (Rounded
Local Financial Contribution Housing Credits Available to nearest $1,000)*
City Contribution $4.2 Million*
Developer Contribution 184 $28,000*
(Aviara Land Associates) .9
TOTAL $5.1 Million
* To be adjusted with the addition of interest.
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).
March 22,2022 Item 114 rage 41 of 181
Page 3 of 4
Policy No. 58
CITY OF CARLSBAD Date Issued Sept. 12. 1995
Effective Date Sept. 12, 1995
COUNCIL POLICY STATEMENT 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.
March 22, 2022 Item #4 Page 42 of 181
Page 4 of 4
Policy No. 58
CITY OF CARLSBAD Date Issued Sept . 12, 1995
COUNCIL POLICY STATEMENT
Effective Date se_p t 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.
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.
March 22, 2022 Item #4 Page 43 of 181
Exhibit 7
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
Page 1
Policy No. 68
Date Issued 10/19/04
Effective Date 10/19/04
Cancellation Date N/A
Supersedes No. N/A
General Subject: Affordable Housing
Specific Subject: Inclusionary 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 Inclusionary 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.
March 22, 2022 Item #4 Page 44 of 181
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject: Affordable Housing
Page 2
Policy No. 68
Date Issued 10/19/04
Effective Date 10/19/04
Cancellation Date N/A
Supersedes No. N/A
Specific Subject: Inclusionary 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
Incentive
Credit
Minimum Inclusionary Housing
Requirement
Product:
Newly Constructed For-Sale 1.2 per unit 12.5%
Town Home, Condominium, or
(of total housing units)
Single Family Home
Development Conditions:
1.The unit must be
affordable to very low
(50% or below AM) 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 City.
March 22, 2022 Item #4 Page 45 of 181 (,,
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject: Affordable Housing
Page 3
Policy No, 68
Date Issued 10/19/04
Effective Date 10/19/04
Cancellation Date N/A
Supersedes No. N/A
Specific Subject: Inclusionary 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 Indusionary 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
L--- 10 very low income units
(Developer could provide 10 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 10 units rather than 12 units (2 fewer units), and would satisfy the City's inclusionary
housing requirements.
Exampje 2 — Large Size Project:
Developer proposes to build a total of 1078 for-sale town homes within a development. Per current
Inclusionary 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:
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CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject: Affordable Housing
Page 4
Policy No. 68
Date Issued 10/19/04
Effective Date 10/19/04
Cancellation Date N/A
Supersedes No. N/A
Specific Subject: Inclusionary 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 arrow 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.
March 22, 2022 Item #4 Page 47 of 181
Exhibit 8
INCLUSIONARY HOUSING 1N-LIEU FEE UPDATE
Prepared for:
City of Carlsbad
Prepared by:
Keyser Marston Associates, Inc.
April 2021
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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
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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.'
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.
' 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.
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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.
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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 11-1, 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 11-1: 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 11-2.
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Table 11-2: 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
(CC1)
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 11-3, 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.
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Table 11-3: Estimated Fee Level Adjustment — Existing In-Lieu Fee
•- • '
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.
Table 11-4 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.
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Table 11-4: 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 $15/5F i $25/SF $25/SF I $35/SF
Impact on Residual Land Value I 7.8% I -4.5% 3.3% i -3.1%
Impact on Developer Profit -3.2% I -5.3% -3.8% I -5 4°/ i . 0
As shown in Table 11-4, 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 11-5 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.
Table 11-5: Comparison of Affordable Housing Fees, Carlsbad vs. San Diego County Jurisdictions
City of Carlsbad
San lego _ ',-7„.,
, -
'•kangealtrid
,
Inclusionary Housing
Required Threshold
7 units 1 unit - 50 units
% of Affordable Units
Required 15% 10% - 20%
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Table 11-5: 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 Available to all
rental or
- project of all
fractional sizes units only
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 $7,000/Unit
- $8.82151 $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.
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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 Ill-1: Project Descriptions for Development Prototypes - Citywide
FOR-SALE RENTAL
Single-Family
Large Lot
Single-Family
Medium Lot
5.0 Acres
Townhomes Garden
Apartments
5.0 Acres Site Area 10.0 Acres 3.0 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 111-2: Projected Market Sales Prices and Rents - Citywide
Average $/SF
Single-Family
Large Lot
FOR-SALE RENTAL
Garden
Apartments
Single-Family
Medium Lot
$477/SF
Townhomes
$467/SF $439/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
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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 (AM I) 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.
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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 111-3: Affordable Sales Prices and Rents
FOR-SALE RENTAL
$415,000 $415,000
Townhomes
$1,781
Average Affordable Sales Price
and Monthly Rent @ Low
Income
$330,000
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
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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
Residual Land Value Per Unit
Single-Family
Large Lot
FOR-SALE RENTAL
Garden
A . artments
$114,000
Average Single-Family
Medium Lot
$237,000
Townhomes
$147,000 100% Market-Rate $285,000 $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 lnclusionary 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:
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•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.
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$31,240
Per Market-Rate Unit
@ 15% Inclusionary Set-Aside
Affordability Gap per Off-Site Low-Income Unit $177,000
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
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
Garden
Apartments
$31,240
Average Single-Family
Large Lot
$31,240
Single-Family
Medium Lot
$31,240
Townhomes
Per Market-Rate Unit $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.
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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 $25 per SF of market-rate residential living
area. The difference in residual land value reflects the economic impact of the potential fee levels. The
KMA findings are summarized in Table III-11, below.
Table Ill-11: Economic Impact of Potential In-Lieu Fee on Project Feasibility - Residual Land Value - Citywide
Single-Family
Large Lot
FOR-SALE RENTAL
Garden Average
Apartments
Single-Family
Medium Lot Townhomes
Residual Land Value ($/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
Off-Site
$28
Off-Site
$40
Off-Site
$48
On-Site
$34
---
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%
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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
Garden Average
Apartments
Single-Family
Large Lot
Single-Family
Medium Lot Townhomes
Optimal Approach (On-Site vs. Off-Site Production) ,
Developer Profit (% of Value) 10.0%
Off-Site
10.0%
Off-Site
10.0%
Off-Site
10.0%
On-Site
10.0%
---
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.
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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
Barrio Perimeter
Stacked Flats
over Tuck-under
Village General Village Center
Mixed-Use
Stacked Flats
Barrio Center
Stacked Flats
over Tuck-under
0.50 Acres
Zero Lot Line
Rowhomes
Site Area 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.
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RENTAL FOR-SALE
$2,933 $935,000 $914,000 $732,000 Average Market Price/
Monthly Rent
Table IV-2: Projected Market Sales Prices and Rents — Village/Barrio
Village General Village Center
Mixed-Use
Stacked Flats
$765/SF
Barrio Center Barrio Perimeter
Stacked Flats
over Tuck-under
Stacked Flats
Over Tuck-under
$773/SF
Zero Lot Line
Rowhonnes
Average $/SF $512/SF $3.42/SF
Average Unit Size 1,209 SF 1494 SF 1,429 SF 857 SF
Table IV-3: Affordable Sales Prices and Rents - Village/Barrio
FOR-SALE RENTAL
Village General Village Center Barrio Center Barrio Perimeter
Stacked Flats Mixed-Use Zero Lot Line Stacked Flats
over Tuck-under Stacked Flats Rowhomes over Tuck-under
Average Affordable Sales Price
and Monthly Rent @ Low
Income
$316,000 $265,000 $384,000 $1,667
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.
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.
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Village General
Stacked Flats
over Tuck-under
Village Center
Mixed-Use
Stacked Flats
Barrio Center
Zero Lot Line
Rowhomes
Barrio Perimeter
Stacked Flats
over Tuck-under
Average
FOR-SALE RENTAL
Residual Land Value Per Unit
Table IV-4: Economic Impact of Incorporating Affordable Housing On-Site — Village/Barrio
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 1, 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.
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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
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
Table IV-7: Funding Level Required to Create Affordable Housing Off-Site — Village/Barrio
FOR-SALE RENTAL
Village General Village Center
Mixed-Use
Stacked Flats
$34,940
Barrio Center Barrio Perimeter
Stacked Flats
over Tuck-under
Average Stacked Flats
over Tuck-under
$34,940
Zero Lot Line
Rowhomes
$34,940 Per Market-Rate Unit $34,940 $34,940
Per Market-Rate Net SF $28.90 $29.26 $24.46 $40.79 $30.85
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%).
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.
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.
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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 $35 per SF of market-rate residential living
area. The difference in residual land value reflects the economic impact of the potential fee levels. The
KMA findings are summarized in Table IV-9, below.
Table IV-9: Economic Impact of Potential In-Lieu Fee on Project Feasibility - Residual Land Value — 15%
Income - Village/Barrio
Low
Village
General
-- - ' Stacked Flats
1 over Tuck- ,‘ under
FOR-SALE
Village Center Barrio Center
RENTAL
Barrio
Perimeter
Stacked
Flats over
Tuck-under
Average
Mixed-Use
Stacked Flats
Zero Lot
Line
Rowhomes
Residual Land Value ($/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
Off-Site
$178
Off-Site
$42
Off-Site
$53
On-Site
$102
---
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%
1
-3.1%
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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%
Income - Village/Barrio
Low
FOR-SALE
Village Village Center General Barrio Center
RENTAL
Barrio
Perimeter Average Stacked Flats
i over Tuck- I 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%
Off-Site
12.0%
Off-Site
10.0%
Off-Site
12.0%
On-Site
11.5%
---
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.
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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 1.513 of the Exchange Act with respect to the services provided hereunder and any
information and material contained in KMA's work product.
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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.
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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 1— Stacked Flats over Podium Parking — 100% Affordable
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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
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•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
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APPENDIX 1
Exhibit 1 - Comparison of Affordable Housing Fees,
San Diego County
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 76 SW/
EXHIBIT 1
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY
AFFORDABLE HOUSING IN-LIEU FEE STUDY
CRY
Inclusionary Production Requirement
Affordable Housing Fee
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 available to
projects up to 6 units
In-Lieu Fee $4,515/Unit
Chula Vista (1) Yes Yes 50 units 10%
(5% Low Income
5% Moderate Income)
Yes available to
projects of all sizes;
< 50 units exempt
In-Lieu Fee varies by project
Coronado Yes Yes 2 units Rental Yes
Yes
available to
projects of all sizes
available to
projects of all sizes
In-Lieu Fee
In-Lieu Fee
$7,000/Unit
$7,000/Unit
20% @ Low Income
For-Sale
20% @ Moderate Income
Del Mar Yes Yes 2 - 5 units
6 - 9 units
10 -19 units
20 -29 units
30i- units
.
1 rental unit @ Low Income
1 rental unit @ Low Income
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)
20% rental units @ Low
Income (at least 2 units @
Very Low Income and 2 units
at Extremely Low Income)
Yes
None
None
None
None
available to
projects up to 5 units
None
None
None
None
In-Lieu Fee
None
None
None
None
$31.02/SF
.
None
None
None
None
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Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag Page 28
f2.,) CITY OF CARLSBAD
N.) NJ
NJ
NJ CD
NJ 181 JO LL aSed
EXHIBIT 1.
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY E AFFORDABLE HOUSING IN-LIEU FEE STUDY
94 CITY OF CARLSBAD
..
City
'
Inclusiona y Production Requirement
% Affordable
Units Required
Affordable Housing Fee
Rental For-Sale Project Size
Threshold Fee Option Project Size Threshold Fee Type
Amount Per
Market-Rate Unit or
Market-Rate SF
Encinitas Yes Yes 7 units 10% @ Very Low Income
or 15% Low Income
Yes available to
projects up to 6 units and
fractional units
In-Lieu Fee varies by project
Escondido No
Requirement
No
Requirement
None None None None None None
Oceanside Yes Yes 3 units Rental Yes available to
projects of all sizes
.
In-Lieu Fee $8.82/SF
.
10% @ Low Income
For-Sale Yes available to
projects of all sizes
In-Lieu Fee $8.82/SF
10% @ Low or
Moderate Income
Poway Yes Yes 1 unit Rental Yes available to projects
of all sizes
available to projects
of all sizes
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)
Outside FUA
Yes Yes 10 units Rental Yes available to projects of all sizes;
<10 units exempt
In-Lieu Fee $25/SF
10% @ 60% AMI
For-Sale Yes available to projects of all sizes;
<10 units exempt
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
Prepared by: Keyser Marston Associates, Inc. Page 29
Filename Marlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag 'MT 40 8L aed
EXHIBIT 1
COMPARISON OF AFFORDABLE HOUSING FEES, SAN DIEGO COUNTY
AFFORDABLE HOUSING 1N-LIEU FEE STUDY
f.EL4 CITY OF CARLSBAD
Inclusionarl Production Requirement Affordable Housing Fee
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
San Marcos No Yes, as
alternative to
paying fee
1 unit
Pay in-lieu fee unless opting
to produce inclusionary units
of 15% @ Target Households
(determined by City)
Yes available to projects of all sizes In-Lieu Fee $9,300/unit
Solana Beach Yes Yes 5 units 15% @ Very Low or
Low Income
Yes available to all projects where
calculation of required
affordable units results in a
fractional unit less than 0.5
Impact Fee $25.28/SF
Vista No
Requirement
No
Requirement
None None None None None None
rD
4:t
-o
rp
"11) Excludes area of City west of 1-805 identified as "Area of Low/Moderate Income Concentration".
oo(2) 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.
(3) The base fee varies by zoning, with a maximum total of $500 per unit for all projects.
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Page 30
r;
NJ .!`"
APPENDIX 2
Key Assumptions and Findings - 15% Low Income
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 80 &left
CITYWIDE TABLE 1 85% MARKET-RATE / 15% @ LOW
KEY ASSUMPTIONS - CITYWIDE PROTOTYPES
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
0.)
A
CITYWIDE
100% MARKET-RATE 100% AFFORDABLE
I. PROJECT DESCRIPTION
Site Area
Density - Residential
Number of UnitS
Average Unit Size
Retail SF
Parking Ratio
10.00 Acres
3.2 Units/Acre
32 Units
3,203 SF
---
2.00 Spaces/Unit
5.00 Acres
6.0 Units/Acre
30 Units
2,200 SF
-
2.00 Spaces/Unit
3.00 Acres
15.0 Units/Acre
45 Units
1,580 SF
--
2.27 Spaces/Unit
5.00 Acres
25.0 Units/Acre
125 Units
991 SF
-
2.13 Spaces/Unit
2.00 Acres
30.0 Units/Acre
60 Units
885 SF
-
1.53 Spaces/Unit
IL DEVELOPMENT COSTS
Off-Site Improvements
On-Site Improvements
Parking
Shell Construction - Residential
Shell Construction - Retail
FF&E/Amenities
Architecture & Engineering
Permits and Fees - Residential
Permits and Fees - Retail
Total Development Costs - Excl. Land
$3 /5F Site
$8 /SF Site
---
$150 /SF GBA
-
$15,000 /Unit
7.0% of Directs
$45,000 /Unit
---
$293 /SF GSA
$3 /SF Site
$8 /SF Site
---
$160 /SF GSA
---
$10,000 /Unit
7.0% of Directs
$45,000 /Unit
---
S308 /SF GSA
$5 /SF Site
$10 /SF Site
---
$175 /SF GSA
--
$7,500 /Unit
7.0% of Directs
$24,000 /Unit
.._
$309 /SF GSA
$5 /SF Site
$10 /SF Site
-
$170 /SF GSA
---
$10,000 /Unit
7.0% of Directs
$17,000 /Unit
---
$294 /SF GSA
S5 /SF Site
$10 /SF Site
$15,000 /Space
$170 /SF GSA
•-
$2,500 /Unit
5.0% of Directs
$18,000 /Unit
---
$388 /SF GBA
III.MARKET-RATE SALES PRICES / RENTS
Studio
One Bedroom
Two Bedroom
Three Bedroom
Four Bedroom
Unit SF $/SF Sales Price Unit SF S/sF Sales Price Unit SF 1/2 Sales Price Unit SF S/ Mo. Rent Unit SF $/SF Mo. Rent
--- - ---
- - ---
--- --- -
3,000 $450 $1,350,000
3,500 $425 $1,488,000
--- - ---
- --- -
--- --- ---
2,000 $500 $1,000,000
2,500 $450 $1,125,000
--- - -
- -- ---
1,400 $480 $672,000
1,700 $460 $782,000
- --- ---
--- - -
750 $3.00 $2,250
1,000 $2.75 $2,750
1,350 52.50 $3,380
- --- ---
- --- ---
750 $1.40 $1,050
950 $1.32 $1,256
1,100 $1.32 $1,449
--- --- ---
IV.RETAIL SPACE
Retail
Retail Cap Rate
--
- _.
-
---
-
-
-
---
-
•
V.RESIDUAL LAND VALUE
Cost of Sale
Target Developer Profit
1 Residual Land Value
1 Per Unit > ,. Per SF Site Area l'
3.0% of Value
10.0% of Value -...- _ $9,117,000
$285,000
$21
3.0% of Value
10.0% _ of Value .-
$7,103,000
$237,000
$33
3.0% of Value
10.0% of Value
$6,609,000
$147,000
$51
---
$14,216,000
$124,000
$65
-
---
---
-
--
i VI. FINANCING GAP
_ Financing Gap
c Per Unit
---
- -
-
-
--
-
($10,620,000) 01
077,000
(1) Refiects affordabilitY gap per affordable unit, inclusive of land acquIsitIOn costs.
Prepared by: Keyser Marston Assnciates, Page 32
FlIelame ACarlsbaC_Prototypes Analyslky5_15%;4/12/7021;lag
VILLAGE AND BARRIO TABLE 2 85% MARKET-RATE / 15% @ LOW
KEY ASSUMPTIONS - VILLAGE AND BARRIO PROTOTYPES
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
VILLAGE AND BARRIO
..)VHlegeStpdcefla n
Thck.ii OF Villa MIX Us vet urn Barrio Rowhomes rn St cke Fl ts v r Tuck us r Stacked Fiats over Podium
I.PROJECT DESCRIPTION
Site Area
Density - Residential
Number of Unit5
Average Unit Size
Retail SF
Parking Ratio
0.50 Acres
23.0 Units/Acre
11 Units
1 ,209 SF
---
1.82 Spaces/Unit
0.50 Acres
35.0 Units/Acre
17 Units
1,194 SF
3,000 SF
1.76 Spaces/Unit
0.50 Acres
14.0 Units/Acre
7 Units
1,429 SF
-
2.29 Spaces/Unit
0.50 Acres
30.0 Units/Acre
15 Units
857 SF
-
LBO Spaces/Unit
0.50 Acres
40.0 Units/Acre
20 Units
605 SF
-
1.15 Spaces/Unit
II.DEVELOPMENT COSTS
Off-Site Improvements
On-Site Improvements
Parking
Shell Construction - Residential
Shell Construction - Retail
FF&E/Amenities
Architecture & Engineering
Permits and Fees - Residential
Permits and Fees - Retail
Total Development Costs - Excl. Land
$0 /SF Site
$15 /SF Site
$15,000 /Space
$190 /SF GSA
---
$7,500 /Unit
5.0% of Directs
$18,000 /Unit
---
5360 /SF GSA
$0 /SF Site
$15 /SF Site
$30,000 /Space
$200 /SF GSA
$150 /SF GBA-Retail
$7,500 /Unit
5.0% of Directs
$18,000 /Unit
$11 /SF GSA-Retail
$377 /SF GSA
$0 /SF Site
$ 10 /SF Site
-
$195 /SF GSA
---
$7,500 /Unit
5.0% of Directs
$24,000 /Unit
--
$329 /SF GSA
$0 /SF Site
$10 /SF Site
$15,000 /Space
$185 /SF GBA
-
$5,000 /Unit
5.0% of Directs
$3.8,000 /Unit
-
$325 /SF GSA
50 /SF Site
$15 /SF Site
$30,000 /Space
$180 /SF GSA
---
$3,500 /Unit
5.0% of Directs
$18,000 /Unit
-
$478 /SF GBA
III.MARKET-RATE SALES PRICES / RENTS
Studio
One Bedroom
Two Bedroom
Three Bedroom
Four Bedroom
Unit SF $/SF Sales Price Unit SF $/SF Sales Price UnR SF 5/SF Sales Price Unit SF Mo. Rent Unit SF S/SF Mo. Rent
-
950
1,200
1,500
---
- -
$800 $760,000
$775 $930,000
$750 $1,125,000
--- ---
-
950
1,200
1,500
---
-"-
$785 $746,000
5765 $918,000
$750 $1,125,000
-- ---
-
---
1,250
1,500
---
--- ---
-•--
$550 $688,000
$500 $750,000
- -
---
750
950
---
---
--- ---
$3.60 52,700
$3.30 $3,140
--- -•-995
- -
450 $2.19 $985
550 $1.91 $1,050
750 $1.67 $1,256
$1.46 $1,449
- -- ---
,-* IV. RETAIL SPACE
CD 3 Retail Rent
4* Retail Cap Rate
--- -
---
$3.50
6.5%
--
- -
V. RESIDUAL LAND VALUE
Cost of Sale
Target Developer Profit
-C Residual Land Value oi ro Per Unit ro
oc Per SF Site Area
3.0% of Value
12,0% of Value
$3,269,000
$297,000
$150
3.0% of Value
12.0% of Value
$4,477,000
$263,000
$206
3.0% of Value
10.0% of Value
$167,000
$54
..........
-
--. ......
$109,000
Ps
---
- -----
--
---
is-
o VI. FINANCING GAP
1- Financing Gap
Cc Per Unit 1--.
---
-
---
---
--
--
-
---
($3,860,000) (a
($198,000)
(I) ReLects affnrciability gap per affordable unit, inclusive of land acquisition costs.
Prepared by: Keyser Marston Associates, Inc. Page 33
Flenarne liWarlsbad2rototypes Analysis_v6_15%;4/12/2021;/ag
100% Market-Rate and Mixed-Income 100% Affordable
RENTAL FOR-SALE
10.00 Acres
3.2 Units/Acre
32 Units
2 Stories
5.00 Acres
6.0 Units/Acre
30 Units
2 Stories
Townhomes
3.00 Acres
15.0 Units/Acre
45 Units
2 Stories
100% @ Market-Rate
$147,000/Unit $51/SF
85% @ Market-Rate
15% @ Affordable 11)12)
$92,000/Unit $32/SF
5.00 Acres
25.0 Units/Acre
125 Units
3 Stories
Garden
Apartments
100% @ Ma ket-Rate
$114,000/Unit $65/SF
Single-Family Detached
Large Lot
Single-Family Detached
Medium Lot
85% @ Market-Rate
15% @ Affordable (1)(2)
$145,000/Unit $20/SF
85% @ Market-Rate
15% @ Affordable cnr3)
$84,000/Unit $48/SF
100% @ Market-Rate
5285,000/Unit 521/SF
85% @ Market-Rate
15% @ Affordable (n12)
$150,000/Unit $11/SF
100% @ Market-Rate
$237,000/Unit $33/SF
Stacked Flats over
Tuck-under Parking
2.00 Acres
30.0 Units/Acre
60 Units
3 Stories
100% Affordable
w/4% Tax Credits (.0
($177,000)/Unit ($122)/SF
CITYWIDE
TABLE 3 85% MARKET-RATE / 15% @ LOW
SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - CITYWIDE
KINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
o.) CITY OF CARLSBAD
CITYWIDE
-c3 cu tra CD
CO
—h
CO
I-1(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.
Prepared by: Keyser Marston Associates, Inc.
Filename: \ Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;lag
Page 34
—5 r-)
NJ
.t.sj
NJ
NJ
NJ
Village General
0.50 Acres
23.0 Units/Acre
11 Units
3 Stories
100% @ Market-Rate
5297,000/Unit $150/5F
85% @ Market-Rate
15% @ Affordable (2)13)
5187,000/Unit $95/5F
Village Center
Mixed-Use
Stacked Flats over
Podium Parking
0.50 Acres
35.0 Units/Acre
17 Units
4 Stories
100% @ Market-Rate
$283,000/Unit 5206/SF
85% @ Market-Rate
15% @ Affordable (7)(3)
$174,000/Unit $136/5F
Barrio Perimeter
Stacked Flats over
Tuck-under Parking
0.50 Acres
30.0 Units/Acre
15 Units
3 Stories
100% 0 Market-Rate
5108,000/Unit $75/5F
85% @ Market-Rate
15% @ Affordable (7)(4)
578,000/Ora $53/SF
Village / Barrio
Stacked Flats over
Podium Parking (1)
0.50 Acres
40.0 Units/Acre
20 Units
3 Stories
100% Affordable
w/ Tax Credits (s)
($198,000)/Unit ($182)/SF
VILLAGE AND BARRIO
85% MARKET-RATE / 15% 0 LOW
TABLE 4
SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - VILLAGE AND BARRIO
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE (-)
=-CITY OF CARLSBAD
VILLAGE AND BARRIO
RENTAL
FOR-SALE
100% Market-Rate / Mixed-Income 100% Affordable
Barrio Center
Zero Lot Line
Rowhomes
0.50 Acres
15.0 Units/Acre
7 Units
3 Stories
100% @ Market-Rate
5187,000/Unit $5:i/SF
85% @ Market-Rate
15% @ Affordable (2)(31
$122,000/Unit $39/5F
CD
00
Assumes development will qualify for an affordable housing density bonus.
00(2) Affordability not to exceed 80% Area Median Income (AMI).
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).
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag
Page 35
% Change
($78,000) -39.8%
($37.26)
($14.69)
CITYWIDE
85% MARKET-RATE / 15% @ LOW
TABLE 5
0.) 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
A rs..) CITYWIDE
FOR-SALE RENTAL
30,000
$285,000
Single-Family Detached
Medium Lot Townhotnes Garden Apartments
I. Residual Land Value
A.100% Market-Rate
Per Unit $237,000 $147,000 $114,000
B.85% Market-Rate / 15% Low
Per Unit $150,000 $145,000 $92,000 $84,000
II. Economic Impact of Incorporating
Affordable Housing On-Site
Per Market-Rate Unit
Per Market-Rate Net SF
Per SF Site Area
% Change % Change % Change % Change
($135,000) -47.4%
($42.15)
($9.92)
($92,000) -38.8%
($41.82)
($12.67)
($55,000) -37.4%
($34.81)
($18.94)
($30,000) -26.3%
($30.27)
($17.22)
CD
3
4t
Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;lag I8I lo S8 aed Page 36
III. Economic Impact of Inclusionary Housing
Production Off-Site 3.4 Change % Change % Chuna.2 % Change
A.Residual Land Value - 100% Market-Rate $285,000
$237,000
$147,000
$114,000
B.Residual Land Value less Affordability Gap $253,760
$205,760
$115,760
$82,760
Per 5F Site Area $18.64
$28.34
$39.86
$47.50
...... .
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%
Per Market-Rate Net SF ($9.75)
($14.20)
($19.77)
($31.52)
Per SF Site Area ($2.29)
($4.30)
($10.76)
($17.93)
CD 3
FOR-SALE RENTAL
Single-Family Detached
Large Lot
Single-Family Detached
Medium Lot Townhomes Garden Apartments
I. Affordability Gap
A.Residual Land Value per Affordable Unit (1) ($77,000) ($77,000) ($77,000) ($77,000)
B.Acquisition Costs (2) ($100,000) ($100,000) ($100,000) ($100,000)
C.Affordability Gap per Affordable Unit ($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 131 ($31,240) ($31,240) ($31,240) ($31,240)
Average
($77,000)
($100,000)
($177,000)
($31,240)
% Change
$196,000
$165,000
$38.21
($31,240) -15.9%
($18.81)
($8.82)
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 a) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
n -CITY OF CARLSBAD
NJ
NJ
NJ NJ
o (1) Residual land value for 100% affordable stacked flats over tuck-under parking; see Attachment E.
"N2) KMA estimate based on recent experience in North County coastal areas.
I"(3) Assumes inclusionary requirement applied to total number of market-rate units approved (he., (gap ÷ 85%) x 15%1 00
Prepared by: Keyser Marston Associates, Inc. Page 37
Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag
a) cro (I)
oo cn
rj
D.)
Potential In-Lieu Fee: $15 - $25/Net SF
TYWIDE Cl
FOR-SALE RENTAL
A
15% LOW
Average
$118,000
$28
$165,000
$34
$34
10.0%
$404
% Change
$36 7.8%
6.8% -3.2%
3.7%
%_SLIpig_te
$32 -4.5%
4.7% -5.3%
6.2%
I. Optimal Approach: On-Site vs. Off-Site
Production
A.Residual Land Value ($/SF Site Area)
B.Developer Profit (% of Value)
C.Total Development Costs - Per Net SF 0.)
$19
Off-Site
10.0%
$382
$28
Off-Site
10.0%
$415
$40
Off-Site
10.0%
$406
$48
On-Site
10.0%
$411
II. In-Lieu Fee @ $15/Net SF
A. Residual Land Value - Per SF Site Area $18
% Change
$28
%Change '
$42
% Ch6oi-e
$57
% Change
-1.0% 6,1% 17,0%.
•B. Developer Profit (% of Value) 6.8% -3.2% 6.9% -3,1%. 6.8% -4.2% 6.8% -3:2%
C. In-Lieu Fee as % of Development Costs 3.9%
3.6%
3.7%
3.6%
III. In-Lieu Fee @ $25/Net SF
% Change
% Change
% Chma:
%Change
A.Residual Land Value - Per SF Site Area $15 -18.0% $25 -11.7% $37 -7.3% $51 5.3%
B.Developer Profit W. of Value) 4.5% -SS% 4.8% -5.2% 4.6% -5.4% 4.7% -5.3%
C.In-Lieu Fee as % of Development Costs 6.5%
6.0%
6.2%
6.1%
CD
3
Large Lot Townhomes Garden Apartments Single-Family Detached Single-Family Detached
Medium Lot
Approach 1: Economic Impact of Incorporating Affordable Housing On-Site
Residual Land Value
Per Unit $150,000 $145,000 $92,000 $84,000
Per SF Site Area $11 $20 $32 $48
Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site
$205,760 $115,760 $82,760
Residual Land Value
Per Unit $253,760
Per SF Site Area $19 $28 $40 $47
CITYWIDE
TABLE 7 85% MARKET-RATE / 15% @ LOW
IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - CITYWIDE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
cu CITY OF CARLSBAD
(1) Reflects total developments costs inclusive of residual land value.
Prepared by: Keyser Marston Associates, Inc.
Filename: \ Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag Page 38
%Change
($68,750) -32.9%
($58.30)
($40.21)
Village General Village Center
Stacked Flats over
Tuck-under Parking
Mixed-Use Stacked Flats
over Podium Parking
$297,000 $263,000 $109,000
$78,000
%Change
($31,000) -28.4%
($36.19)
($21.35)
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
7-CITY OF CARLSBAD
NJ
N-> 0 NJ NJ
FOR-SALE RENTAL
I. Residual Land Value
A. 100% Market-Rate
Per Unit
B. 85% Market-Rate / 15% Low
Per Unit
Economic Impact of Incorporating
Affordable Housing On-Site
Per Market-Rate Unit
Per Market-Rate Net SF
Per SF Site Area
$187,000
%Change
($110,000) -37.0%
($90.98)
($55.56)
$174,000
%Change
($89,000) -33.8%
($74.53)
($69.47)
Barrio Center
Zero Lot Line
Rowhomes
$167,000
$122,000
%Change
($45,000) -26.9%
($31.50)
($14.46)
Barrio Perimeter
Stacked Flats over •
Tuck-under Parking 4 T2T /0 22 D2ed Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Prototypes Ana lysis_v6_15%;4/12/2021;lag Page 39
III. Economic Impact of Inclusionary. Housing
Production Off-Site % Change %Ci_m_Ag_le
% Change %.._ Change
A. Residual Land Value - 100% Market-Rate $297,000
$263,000 $167,000
$109,000
B. Residual Land Value less Affordability Gap $262,060
$228,060
$132,060
$74,060
Per SF Site Area $132.35
$178.01
$42.44
$51.01
_ .......... _____ ....... ___. __ ......... ______
........ _.
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%
Per Market-Rate Net SF ($28.90)
($29.26)
($24.46)
($40.79)
Per SF Site Area ($17.65)
($27.27)
($11.23)
($24.06)
3
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
a
NJ VILLAGE AND BARRIO
FOR-SALE RENTAL
Village General Village Center Barrio Center Barrio Perimeter
Stacked Flats over
Tuck-under Parking
Average Stackedliats ovet;
Tuck-under Parking
Mixed-Use Stacked Flats
over Podium Parking
Zero Lot Line
Rowhomes
I. Affordability Gap
A.Residual Land Value per Affordable Unit qi ($48,000) ($48,000) ($48,000) ($48,000) ($48,000)
B.Acquisition Costs12) ($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% Low131 ($34,940) ($34,940) ($34,940) ($34,940) ($34,940)
% Change
$209,000
$174,000
$101
......... ...... —
($34,940) -16.7%
($30.85)
($20.05)
-o 0,) Crci CD
co
O
tC#
(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 Attachment1.
—4(2) KMA estimate based on recent experience in North County coastal areas.
00(3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap ÷ 85%) x 15%).
Prepared by: Keyser Marston Associates, Inc.
Filename i:Warlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag
Page 40
Potential In-Lieu Fee: $25 - $35/Net SF
VILLAGE AND BARRIO
15% LOW
FOR-SALE
RENTAL
': • 'StAciced flatteker
.ilickAmtley;.P5Olng
N.)
NI
0 N.J ts-)
Average
$140,000
$81
$174,000
$101
$102
11.5%
$581
% Change
$105 3.3%
7.7% -3.8%
4.1%
% Change
$98 -3.1%
6.1% -5.4%
5.8%
Approach 1: Economic Impact of Incorporating Affordable Housing On-Site
Residual Land Value
Per Unit $187,000 $174,000 $122,000 $78,000
Per SF Site Area $95 $136 $39 $53
Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site
$228,060 $132,060 $74,060
Residual Land Value
Per Unit $262,060
Per SF Site Area $132 $178 $42 $51
VILLAGE AND BARRIO
TABLE 10 85% MARKET-RATE / 15% @ LOW
IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - VILLAGE AND BARRIO EINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
a) CITY OF CARLSBAD
I. Optimal Approach: On-Site vs. Off-Site
Production
A.Residual Land Value - Per SF Land
B.Developer Profit (% of Value)
C.Total Development Costs - Per Net SF (3.)
$132
Off-Site
12.0%
$657
$178
Off-Site
12.0%
$720
$42
Off-Site
10.0%
$446
$53
On-Site
12.0%
$499
II. In-Lieu Fee @ $25/Net SF % Change % Change % Change %Ct_cg_le
A.Residual Land Value - Per SF Land $135 1.9% $182 2.4% $42 -0.6% $60 13.1%
B.Developer Profit (% of Value) 8.8% -3.2% 9.0% -3.0% 5.1% -4.9% 7.7% -4.3%
C.In-Lieu Fee as % of Development Costs 3.8% 3.5% 5.6% 5.0%
III. In-Lieu Fee @ $35/Net SF % Change %CtqI n e % Change % Change
, A. Residual Land Value - Per SF Land $129 -2.8% $173 -2.9% $38 -11.4% $54 2.0%
B.Developer Profit (% of Value) 7.5% -4.5% 7.9% -4.1% 3.2% -6.8% 6.0% -6.0%
C.In-Lieu Fee as % of Development Costs 5.3% 4.9% 7.8% 7.0%
(1) Reflects total developments costs inclusive of residual land value.
Prepared by: Keyser Marston Associates, Inc.
Filename: \ Ca rlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag Page 41
APPENDIX 3
In-Lieu Fee Financial Analysis
Citywide
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 91 &feel
CITYWIDE - FOR-SALE
SINGLE-FAMILY DETACHED - LARGE LOT
TABLE A-1
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single-Family - Large Lot
I.
II.
Site Area
Gross Building Area
10.00 Acres
Residential Area 102,500 SF 100%
Common Area 0 SF 0%
Total Gross Building Area (GBA) 102,500 SF 100%
III. Unit Mix # of Units Unit Size
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 Type V (Wood)
VIII. Parking
Parking Type Attached Garages
Number of Spaces 2.0 Spaces/Unit 64 Spaces
Prepared by: Keyser Marston Associates, Inc.
Filen hia riNtia22b2c0Nototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 92 8f0811
CITYWIDE - FOR-SALE
SINGLE-FAMILY DETACHED - LARGE LOT
TABLE A-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single-Family - Large Lot
Direct Costs{')
Total Per Unit Comments
Off-Site Improvements 121 $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 lndirects
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 (') $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)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.
(4)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.
(5)Includes loan fees, interest during construction, and interest during sales.
(6)Excludes acquisition costs.
Prepared by: Keyser Marston Associates, Inc.
Filenrs,l2c2pes Analysis_v6_15%;4/12/2021;ema Item #4 Page 93 SO
CITYWIDE - FOR-SALE
SINGLE-FAMILY DETACHED - LARGE LOT
TABLE A-3 ZZOZ 'ZZ LIDJetAl GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single-Family - Large Lot
100% @ Market-Rate
I. Gross Sales Proceeds
85% @ Market-Rate I 15% @ Low
A.Market-Rate
Unit Size # Units 5/SF
Three Bedroom 3,000 SF 19 $450 $1,350,000
Four Bedroom 3 500 SF 13 $42$ $1,488,000
Subtotal/Average 3,203 SF 32 $439 $1,406,000
B.Affordable w
Three Bedroom 3,000 SF 0 $0 $0
Four Bedroom 3 500 SF 0 $i)
Subtotal/Average 3,203 SF 0 $0 $0
C.Total/Average 3,203 SF 32 $439 $1,406,000
# Units S/SF Price/Unit
16 $450 $1,350,000 $21,600,000
11 $425 $1,488,000 $16,368,000
27 $439 $1,406,000 $37,968,000
3 $131 $393,000 $1,179,000
2 $128 $447,000 $894,000
5 $130 $415,000 $2,073,000
32 $391 $1,251,000 $40,041,000
Total Total
$25,650,000
$19,344,000
$44,994,000
$0
$0
$44,994,000
II.Total Gross Sales Proceeds
(Less) Cost of Sale
(Less) Target Developer Profit
III.Total Net Sales Proceeds
42t (Less) Development Costs
3.0% of Value
10.0% of Value
$44,994,000
($1,350,000)
($4,499,000)
$39,145,000
($30,028,000)
3.0% of Value
10.0% of Value
$40,041,000
($1,201,000)
($4,004,000)
$34,836,000
($30,028,000)
$4,808,000
$150,000
$11
IV. Residual Land Value $9,117,000
Per Unit $285,000
Per SF Site $21 181 JO t76 aged (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.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;ema Page 45
CITYWIDE - FOR-SALE
S1NGLE-FAMILY DETACHED - MEDIUM LOT
TABLE B-1
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single Family - Medium Lot
I.
II.
Site Area
Gross Building Area
5.00 Acres
Residential Area 66,000 SF 100%
Common Area 0 SF 0%
Total Gross Building Area (GBA) 66,000 SF 100%
III. Unit Mix # of Units Unit Size
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 Type V (Wood)
VIII. Parking
Parking Type Attached Garages
Number of Spaces 2.0 Spaces/Unit 60 Spaces
Prepared by: Keyser Marston Associates, Inc.
FilendlinarAklaNac02aototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 95 Sfg1281
CITYWIDE - FOR-SALE
SINGLE-FAMILY DETACHED - MEDIUM LOT
TABLE B-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single Family - Medium Lot
Direct Costs (1)
Total Per Unit Comments
Off-Site Improvements (2) $653,000 $21,800 $3 Per SF Site
On-Site Improvements/Landscaping 121 $1,742,000 $58,100 $8 Per SF Site
Parking $o $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 131 $1,350,000 $45,000 $20 Per SF GBA
Community Facilities District No. 1 (Citywide) 141 $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 (5) $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)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.
(4)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.
(5)Includes loan fees, interest during construction, and interest during sales.
(6)Excludes acquisition costs.
Prepared by: Keyser Marston Associates, Inc.
FilenJ}Molypes Analysis_v6_15%;4/12/2021;ema Item #4 Page 96 efe81
ZZOZ `ZZ LI3JelAl TABLE B-3
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single Family - Medium Lot
CITYWIDE - FOR-SALE
SINGLE-FAMILY DETACHED - MEDIUM LOT
100% @ Market-Rate
I. Gross Sales Proceeds
85% @ Market-Rate / 15% @ Low
A.Market-Rate
Three Bedroom
Four Bedroom
Subtotal/Average
B.Affordable w
Three Bedroom
Four Bedroom
Subtotal/Average
C.Total/Average
2,000 SF 18 $500 $1,000,000
2 500 SF 12 $450 $1,125,000
2,200 SF 30 $477 $1,050,000
2,000 SF 0 $0 $0
2 500 SF 0 IQ 12
2,200 SF 0 $0 $0
$18,000,000
$13,500,000
$31,500,000
$o
$o
2,200 SF 30 $477 $1,050,000 $31,500,000
II. Total Gross Sales Proceeds
(Less) Cost of Sale
(Less) Target Developer Profit
III. Total Net Sales Proceeds
(Less) Development Costs
3.0% of Value
10.0% of Value
$31,500,000
($945,000)
($3,150,000)
$27,405,000
($20,302,000)
3.0% of Value
10.0% of Value
$28,323,000
($850,000)
($2,832,000)
$24,641,000
($20,302,000)
IV. Residual Land Value
Per Unit
Per SF Site
(1) Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AM!); see Worksheet 3.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;ema In 40 L6 aed Page 48
# Units $/sF Price/Unit Unit Size # Units 2H
15 $500 $1,000,000 $15,000,000
10 $450 $1,125,000 $11,250,000
25 $477 $1,050,000 $26,250,000
3 $197 $393,000 $1,179,000
2 $179 $447,000 $894,000
5 $189 $415,000 $2,073,000
30 $429 $944,000 $28,323,000
Total Total
CITYWIDE - FOR-SALE
TOWNHOMES
TABLE C-1
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I.
II.
Site Area
Gross Building Area
3.00 Acres
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
# of Units
0%
Unit Size
0 Units
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.
V.
VI.
VII.
Number of Stories
Density
Construction Type
Parking
Parking Type
2 Stories
15.0 Units/Acre
Type V (Wood)
Attached Garages
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.
Prepared by: Keyser Marston Associates, Inc.
FilenhaariAllaMPRONototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 98 dO€1281
CITYWIDE - FOR-SALE
TOWNHOMES
TABLE C-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Townhomes
Direct Costs (1)
Total Per Unit Comments
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 lndirects
Total Indirect Costs $5,447,000 $121,000 34.8% of Directs
III.Financing Costs (51 $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)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.
(4)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.
(5)Includes loan fees, interest during construction, and interest during sales.
(6)Excludes acquisition costs.
Prepared by: Keyser Marston Associates, Inc.
FilenMardi122d 4232ypes Analysis_v6_15%;4/12/2021;ema Item #4 Page 99 MOM
CITYWIDE - FOR-SALE
TOWNHOIVIES
TABLE C-3 ZZOZ 1ZZ 1-PieW GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Townhomes
100% @ Market-Rate
I. Gross Sales Proceeds
Unit Size # Units S/SF Price/Unit
85% @ Market-Rate / 15% ® Low
# Units $/SF Price/Unit Total Total
A.Market-Rate
Two Bedroom
Three Bedroom
Subtotal/Average
B.Affordable 0.)
Two Bedroom
Three Bedroom
Subtotal/Average
C.Total/Average
1,400 SF 18 $480 $672,000 $12,096,000
2,2P0 SF 27 $460 $782,000 $21,114,000
1,580 SF 45 $467 $738,000 $33,210,000
1,400 SF 0 $0 $0 $0
1 700 SF o $12
1,580 SF 0 $0 $0 o
1,580 SF 45 $467 $738,000 $33,210,000
15 $480 $672,000 $10,080,000
23 $460 $782,000 $17,986,000
38 $468 $739,000 $28,066,000
3 $209 $293,000 $879,000
4 $210 $357,000 $1,428,000
7 $209 $330,000 $2,307,000
45 $427 $675,000 $30,373,000
II.Total Gross Sales Proceeds
(Less) Cost of Sale
(Less) Target Developer Profit
III.Total Net Sales Proceeds
(Less) Development Costs
3.0% of Value
10.0% of Value
$33,210,000
($996,000)
($3,321,000)
$28,893,000
($22,284,000)
3.0% of Value
10.0% of Value
$30,373,000
($911,000)
($3,037,000)
$26,425,000
($22,284,000)
$4,141,000
$92,000
$32
IV. Residual Land Value $6,609,000
Per Unit $147,000
Per SF Site $51 18T 40 OM aed (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.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;ema Page 51
Garden Apartments
CITYWIDE - RENTAL
GARDEN APARTMENTS
TABLE D-1
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I.
II.
Site Area
Gross Building Area
5.00 Acres
Residential Area 123,900 SF 99%
Common Area 1 000 SF 1%
Total Gross Building Area (GBA) 124,900 SF 100%
III. Unit Mix # of Units Unit Size
One Bedroom 31 Units 25% 750 SF
Two Bedroom 75 Units 60% 1,000 SF
Three Bedroom 19 Units 15% 1,350 SF
Fou r 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 Type V (Wood)
VII. Parking
Parking Type Surface/Carports/Private Garages
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
Prepared by: Keyser Marston Associates, Inc.
FilenMaliAllaNbaDNototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 101 afg11§1
TABLE D-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Garden Apartments
Direct Costs")
Total Per Unit Comments
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 Costs151 $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)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.
(4)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.
(5)Includes loan fees, interest during construction, and interest during sales.
(6)Excludes acquisition costs.
Prepared by: Ke,mr Marston Associates, Inc.
FilenaR4r4s4A, ace4pes Analysis_v6_15%;4/12/2021;ema Item #4 Page 102 (Rtglen
$4,750 /Unit/Year
$5,592 /Unit/Year
$30(2 /Unit/Year
$10,642 /Unit/Year
33.7% of EGI
III. Operating Expenses
(Less) Operating Expenses
(Less) Property Taxes/Assessments12)
(Less) Replacement Reserves
Total Operating Expenses
Annual # Units 5/SF $/Month111
Page 54
(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.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad Prototypes Analysis_v6_15%;4/12/2021;ema
TABLE D-3
NET OPERATING INCOME
INCLUSIONARY HOUSING 1N-LIEU FEE UPDATE
CITY OF CARLSBAD
I. Gross Scheduled Income (GSI)
100% ® Market-Rate ZZOZ ‘ZZ tipielAl Annual
$837,000
$2,475,000
$771,000
$4,083,000
$4,083,000
$75,000.
$4,158,000
($208,000)
$3,950,000
($593,800)
($699,000)
($37,500)
($1,330,300)
$2,619,700
A.Market-Rate
Unit Size # Units $/SF $/Month
One Bedroom 750 SF 31 $3.00 $2,250
Two Bedroom 1,000 SF 75 $2.75 $2,750
Three Bedroom 1 350 SF 19 $2.50 $3,380
Subtotal/Average 991 SF 125 $2.74 $2,720
B.Affordable
One Bedroom 750 SF
Two Bedroom 1,000 SF
Three Bedroom 1 350 SF
Subtotal/Average 991 SF
C.Total/Average 991 SF 125 $2.74 $2,720
Add: Other Income
$50 /Unit/Month
D.Total Gross Scheduled Income (GS')
II. Effective Gross Income
e ro (Less) Vacancy
5.0% of GSI
3 Effective Gross Income (EGI)
IV. Net Operating Income (Not)
26 $3.00 $2,250 $702,000
64 $2.75 $2,750 $2,112,000
16 $2.50 $3,380 $649,000
106 $2.74 $2,720 $3,463,000
5 $2.11 $1,585 $95,000
11 $1.78 $1,776 $234,000
3 $1.58 $2,132 $77,000
19 $1.80 $1,781 $406,000
125 $2.60 $2,580 $3,869,000
$25 /Unit/Month $38,000
$3,907,000
5.0% of GS] ($195,000)
$3,712,000
$4,750 /Unit/Year ($593,800)
$5,192 /Unit/Year ($648,000)
$300 /Unit/Year ($37,500)
$10,242 /Unit/Year ($1,279,300)
34.5% of EGI
$2,432,700 -MT 40 EN aged 85% @ Market-Rate / 15% @ Low
Garden Apartments
CITYWIDE - RENTAL
GARDEN APARTMENTS zzaz 'zz t-plevg TABLE D-4
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Garden Apartments
100% @ Market-Rate 85% @ Market-Rate / 15% @ Low
I. Capitalized Value Upon Completion
Stabilized Net Operating Income
Capitalization Rate @
Capitalized Value Upon Completion
(Less) Cost of Sale
(Less) Target Developer Profit
$2,432,700
4.50%
$432,000 /Unit $54,060,000
2.5% of Value ($1,352,000)
10.0% of Value ($5,406,000)
$2,619,700
4.50%
$466,000 /Unit $58,216,000
2.5% of Value ($1,455,000)
10.0% of Value ($5,822,000)
II. Net Sales Proceeds $50,939,000
$47,302,000
(Less) Development Costs ($36,723,000) ($36,723,000)
Residual Land Value $14,216,000
Per Unit $114,000
Per SF Site $65
$10,579,000
$85,000
$49 T8T JO VOT aed Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad Prototypes Analysis_y6_15%;4/12/2021;ema Page 55
CITYWIDE - RENTAL
STACKED FLATS OVER
TUCK-UNDER PARKING TABLE E-1 100% AFFORDABLE
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Tuck-under Parking
I.
II.
Site Area
Gross Building Area
2.00 Acres
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
# of Units Unit Size
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
Type V (Wood)
VIII. Parking
Parking Type
Tuck-under
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% AK.
Prepared by: Keyser Marston Associates, Inc.
FilenatMaKalad Q2c1.2ypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 105 &WU
TABLE E-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
CITYWIDE - RENTAL
STACKED FLATS OVER
TUCK-UNDER PARKING
100% AFFORDABLE
Stacked Flats over Tuck-under Parking
Direct Costs (1)
Total Per Unit Comments
Off-Site Improvements (2) $436,000 $7,000 $5 Per SF Site
On-Site Improvements/Landscaping (21 $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) (41 $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
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 $388 Per SF GBA
(1)Includes the payment of prevailing wages.
(2)Estimated allowance; not verified by KMA or the City.
(3)Based on Building Industry Association (BIA) of San Diego County 2020 Fee Survey. Includes, school, water/sewer, public facilities
and traffic development impact fees, plan check, building permit, inspections, and other processing fees.
(4)Source: City of Carlsbad, CFD No. 1 Information Packet 2020-2021. Reflects average maximum special tax rate for Developed
Property if annexed into the CFD in FY 2020-21.
PWag5iHjil:TeltelPAigaM$,sstssdciates, Inc.
Fi le narfla al-cQhsaa, aa2t;pes Ana lysis_v6_15%;4/12/2021;lag Item #4 Page 106 8fglIP1
CITYWIDE - RENTAL
STACKED FLATS OVER
TUCK-UNDER PARKING
100% AFFORDABLE
TABLE E-3
NET OPERATING INCOME
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Rats over Tuck-Under Parking
4% Tax Credits w/MHP
I.Gross Scheduled Income (GS!)
Unit Size # Units $/SF 5/Month (1) Annual
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 GS!
($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 121
$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 (N01)
$422,000
(1)See Worksheet 6 for calculation of affordable rents.
(2)Assumes project will qualify for tax-exempt status.
Prepared by: Keyser Marston Associates, Inc.
FilenAU\didad 202olypes An a lysis_y6_15%;4/12/2021;lag Item #4 Page 107 MOM
CITYWIDE - RENTAL
STACKED FLATS OVER
TABLE E-4 TUCK-UNDER PARKING
100% AFFORDABLE
RESIDUAL LAND VALUE AND FINANCING DEFICIT
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Tuck-Under Parking
4% Tax Credits with IVIHP
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 14) $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) i
Prepared by: Keyser Marston Associates, Inc.
FilenaA4KCI)12)41 Ifl?o,7ypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 108 MOM
CITYWIDE - RENTAL
STACKED FLATS OVER
TABLE E-4 (CONT'D.) TUCK-UNDER PARKING
100% AFFORDABLE
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over
Tuck-Under Parking
(1) Supportable Permanent Loan
4% Tax Credits with MHP
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%
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
Prepared by: Keyser Marston Associates, Inc.
FilenaMainhsRat PlaZdes Analysis_v6_15%;4/12/2021;lag Item #4 Page 109 MEM
APPENDIX 4
In-Lieu Fee Financial Analysis
Village and Barrio
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 110 8nrin
Stacked Flats over Tuck-under
VILLAGE GENERAL - FOR-SALE
STACKED FLATS OVER
TABLE F-1 TUCK-UNDER PARKING
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I.
II.
Site Area
Gross Building Area
0.50 Acres
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
# of Units
0%
Unit Size
0 Units
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.
V.
VI.
VII.
Number of Stories
Density
Construction Type
Parking
Parking Type
3 Stories
23 Units/Acre
Type V (Wood)
Tuck-under
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
Prepared by: Keyser Marston Associates, Inc.
FilenNialiAklaNaMototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 111 efe-n
TABLE F-2
VILLAGE GENERAL - FOR-SALE
STACKED FLATS OVER
TUCK-UNDER PARKING
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Tuck-under
Total Per Unit Comments
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) 14} $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 $5,70(11 5.0% of Indirects
Total Indirect Costs $1,313,000 $119,400 34.8% of Directs
III.Financing Costs (51 $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)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.
(4)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.
(5)Includes loan fees, interest during construction, and interest during sales.
(6)Excludes acquisition costs.
Prepared by: Keyser Marston Associates, Inc.
FilenMardls22d WRaypes Analysis_v6_15%;4/12/2021;ema Item #4 Page 112 8fe-Efl
100% @ Market-Rate
I. Gross Sales Proceeds
85% @ Market-Rate / 15% @ Low
Unit Size # Units S/SF
A.Market-Rate
One Bedroom 950 SF 2 $800 $760,000
Two Bedroom 1,200 SF 7 $775 $930,000
Three Bedroom 1 500 SF 2 $750 $1,125,000
Subtotal/Average 1,209 SF 11 $773 $935,000
B.Affordable (1)
One Bedroom 950 SF o $o $o
Two Bedroom 1,200 SF 0 $o $0
Three Bedroom 1 500 SF
o
Subtotal/Average 1,209 SF 0 $0 $0
C.Total/Average 1,209 SF 11 $773 $935,000
Total
$1,520,000
$6,510,000
$2,250,000
$10,280,000
$0
$0
$0
$10,280,000
II. Total Gross Sales Proceeds
(Less) Cost of Sale
(Less) Target Developer Profit
III. Total Net Sales Proceeds
(Less) Development Costs
$10,280,000
3.0% of Value ($308,000)
12.0% of Value ($1,234,000)
$8,738,000
($5,469,000)
I.
3
IV. Residual Land Value $3,269,000
Per Unit $297,000
Per SF Site $150
$2,059,000
$187,000
$95 in lo Eir aSed # Units $/SF Price/Unit Total
2 $800 $760,000 $1,520,000
6 $775 $930,000 $5,580,000
1 $750 $1,125,000 $1,125,000
9 $756 $914,000 $8,225,000
0 $267 $254,000 $0
1 $237 $284,000 $284,000
1 $232 $348,000 $348,000
2 $261 $316,000 $632,000
11 $666 $805,000 $8,857,000
$8,857,000
3.0% of Value ($266,000)
12.0% of Value ($1,063,000)
$7,528,000
($5,469,000)
TABLE F-3
VILLAGE GENERAL - FOR-SALE
STACKED FLATS OVER
TUCK-UNDER PARKING zzoz 'zz Liiiew GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Tuck-under
(11 Source: City of Carlsbad 2020 household income limits. Assumes maximum ownership housing payment at 30% of 80% Area Median Income (AMI); see Worksheet 7.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;ema Page 64
VILLAGE CENTER - FOR-SALE
MIXED-USE STACKED FLATS OVER
TABLE G-1 PODIUM PARKING
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Mixed-Use Stacked Flats
I.
II.
Site Area
Gross Building Area
0.50 Acres
Residential Area 20,300 SF 85%
Common Area 3 582 SF 15%
Total Residential Area 23,882 SF 100%
III.
Retail
Total Gross Building Area (GBA)
Unit Mix
Studio
3 000 SF
0%
Unit Size
26,882 SF
# of Units
0 Units
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.
V.
VI.
VII.
Number of Stories
Density
Construction Type
Parking
Parking Type
4 Stories
35 Units/Acre
Type V (Wood)
Podium
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
Prepared by: Keyser Marston Associates, Inc.
Filenaklardir2gad202Ztypes Analysis_y6_15%;4/12/2021;lag Item #4 Page 114 Sten
VILLAGE CENTER - FOR-SALE
MIXED-USE STACKED FLATS OVER
PODIUM PARKING
TABLE G-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Mixed-Use Stacked Flats
Direct Costs (1)
Total Per Unit Comments
Off-Site Improvements (2) $0 $0 $0 Per SF Site
On-Site Improvements/Landscaping 12} $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 12) $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)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.
(4)Includes loan fees, interest during construction, and interest during sales.
(5)Excludes acquisition costs.
Prepared by: Kexs..?r Marston Associates, Inc.
In124pes Analysis_v6_15%;4/12/2021;ema Item #4 Page 115 8012£ff
VILLAGE CENTER - FOR-SALE
MIXED-USE STACKED FLATS OVER
PODIUM PARKING
TABLE G-3 ZZOZ ‘ZZ 1-13-1e1A1 GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Mixed-Use Stacked Flats
100% @ Market-Rate
I. Gross Sales Proceeds
85% @ Market-Rate / 15% @ Low
Unit Size # Units $/$F Price/Unit
A.Market-Rate
One Bedroom 950 SF 4 $785 $746,000
Two Bedroom 1,200 SF 10 $765 $918,000
Three Bedroom 1 500 SF 3 $750 $1,125,000
Subtotal/Average 1,194 SF 17 $765 $914,000
B.Affordable (i)
One Bedroom 950 SF 0 $0 $0
Two Bedroom 1,200 SF 0 $0 $0
Three Bedroom 1 500 SF 0 .$2 LI
Subtotal/Average 1,194 SF 0 $0 $0
C.Total/Average 1,194 SF 17 $765 $914,000
# Units $/SF Price/Unit Total
$2,984,000 3 $785 $746,000 $2,238,000
$9,180,000 8 $765 $918,000 $7,344,000
$3,375,000 3 $750 $1,125,000 $3,375,000
$15,539,000 14 $775 $926,000 $12,957,000
$0 1 $258 $245,000 $245,000
$0 2 $229 $275,000 $550,000
12 0 $226 $339,000 $1
$0 3 $222 $265,000 $795,000
$15,539,000 17 $677 $809,000 $13,752,000
Total
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)
Ill. 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%.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;ema Page 67 IST 40 TR aed
Zero Lot Line Rowhomes
BARRIO CENTER - FOR-SALE
ZERO LOT LINE ROWHOMES
TABLE H-1
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I.
II.
Site Area
Gross Building Area
0.50 Acres
Residential Area 10,000 SF 100%
Common Area 0 SF 0%
Total Gross Building Area (GBA) 10,000 SF 100%
III. Unit Mix # of Units Unit Size
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 Type V (Wood)
VII. Parking
Parking Type Attached Garages / Surface
Residential 2.0 Spaces/Unit 14 Spaces
Guest Parking 0.25 Spaces/Unit 2 Spaces
Total Spaces 2.29 Spaces/Unit 16 Spaces
Prepared by: Keyser Marston Associates, Inc.
Filendbfiarigtaba0232ototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 117 d'Oeff
BARRIO CENTER - FOR-SALE
ZERO LOT LINE ROWHOMES
TABLE H-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Zero Lot Line Rowhomes
Direct Costs (1)
Total Per Unit Comments
Off-Site Improvements (2) $0 $0 $0 Per SF Site
On-Site Improvements/Landscaping (21 $218,000 $31,100 $10 Per SF Site
Parking $o $o 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
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) 131 $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 (41 $175,000 $25,000 7.5% of Directs
IV.Total Development Costs (51 $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)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.
(4)Includes loan fees, interest during construction, and interest during sales.
(5)Excludes acquisition costs.
Prepared by: Keyser Marston Associates, Inc.
FilenMAndlis141 42olypes Analysis_y6_15%;4/12/2021;ema Item 1#4 Page 118 di0e£§1
BARRIO CENTER - FOR-SALE
ZERO LOT LINE ROWHOIViES ZZOZ `ZZ LIDJE1/11 TABLE H-3
GROSS SALES PROCEEDS AND RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Zero Lot Line Rowhomes
100% @ Market-Rate
I. Gross Sales Proceeds
85% @ Market-Rate / 15% @ Low
A.Market-Rate
Unit Size # Units $/SF Price/Unit
Two Bedroom 1,250 SF 2 $550 $688,000
Three Bedroom 1 500 SF 5 $500 $750,000
Subtotal/Average 1,429 SF 7 $512 $732,000
B.Affordable Ill
Two Bedroom 1,250 SF 0 $0 $0
Three Bedroom 1 500 SF
Subtotal/Average 1,429 SF 0 $0 $0
C.Total/Average 1,429 SF 7 $512 $732,000
# Units S/SF Price/Unit Total
2 $550 $688,000 $1,376,000
4 $500 $750,000 $3,000,000
6 $510 $729,000 $4,376,000
o $0 $0 $0
1 $256 $384,000 $384,000
1 $269 $384,000 $384,000
7 $476 $680,000 $4,760,000
Total
$1,376,000
$3,750,000
$5,126,000
$0
$13'
$0
$5,126,000
Total Gross Sales Proceeds
(Less) Cost of Sale
(Less) Target Developer Profit
7-; III. Total Net Sales Proceeds
ftl
3 (Less) Development Costs
$5,126,000
($154,000)
($513,000)
$4,459,000
($3,290,000)
$4,760,000
3.0% of Value ($143,000)
10.0% of Value ($476,000)
$4,141,000
($3,290,000)
3.0% of Value
10.0% of Value
$851,000
$122,000
$39
IV. Residual Land Value $1,169,000
Per Unit $167,000
Per SF Site $54 i8T 40 611 aSed (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.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_y6_15%;4/12/2021;ema Page 70
BARRIO PERIMETER - RENTAL
STACKED FLATS OVER
TABLE 1-1 TUCK-UNDER PARKING
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I.
II.
Site Area
Gross Building Area
0.50 Acres
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
# of Units
0%
Unit Size
0 Units - 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.
V.
VI.
VII.
Number of Stories
Density
Construction Type
Parking
Parking Type
3 Stories
30 Units/Acre
Type V (Wood)
Tuck-under
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
Prepared by: Keyser Marston Associates, Inc.
Filenhid lif4ffaUbid)2'2ototypes Analysis_v6_15%;4/12/2021;lag Item #4 Page 120 (WM
BARRIO PERIMETER - RENTAL
TABLE 1-2 STACKED FLATS OVER
TUCK-UNDER PARKING
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Tuck-under
I. Direct Costs (1)
Total Per Unit Comments
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 12) $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 (MA or the City. Includes, school, water/sewer, plan check, building permit,
inspections, and other processing fees.
(3)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.
(4)Includes loan fees, interest during construction, and interest during sales.
(5)Excludes acquisition costs.
Prepared by: reyser Marston Associates, Inc.
Filenakkatgliac2PralePes Ana lysis_v6_15%;4/12/2021;ema Item #4 Page 121 MOST
TABLE 1-3
NET OPERATING INCOME
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
(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 43% capitalization rate and a 1.20% tax rate.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;ema
BARRIO PERIMETER - RENTAL
STACKED FLATS OVER
TUCK-UNDER PARKING
Page 73 ZZOZ 1-13-1e1A1 T81 40 ZZT aed Stacked Flats over Tuck-under
($25,000)
$478,000
5.0% of GS!
IV. Net Operating Income (N01) $314,500 $339,500
85% @ Market-Rate/15% @ Low
# Units $/SF S/Month (1)
6 $3.60 $2,700
7 $3.30 $3,140
13 $3.43 $2,940
1 $2.11 $1,585 $19,000
1 $1.87 $1,776 $21,000
2 $1.95 $1,667 $40,000
15 $3.23 $2,767 $498,000
$25 /Unit/Month $5,000
$503,000
$5,000 /Unit/Year ($75,000)
$5,600 /Unit/Year ($84,000)
$300 /Unit/Year ($4,500)
$10,900 /Unit/Year ($163,500)
34.2% of EGI
Annual
$194,000
$264,000
$458,000
100% @ Market-Rate
I. Gross Scheduled Income (GSI)
Unit Size # Units S/SF 5/Month
A. Market-Rate
One Bedroom 750 SF 7 $3.60 $2,700
Two Bedroom 950 SF 8 $3.30 $3,140
Subtotal/Average 857 SF 15 $3.42 $2,933
B. Affordable
One Bedroom @ Low 750 SF
Two Bedroom @ Low 950 SF
Subtotal/Average 857 SF
C. Total/Average 857 SF 15 $3.39 $2,900
Add: Other Income
$50 /Unit/Month
D. Total Gross Scheduled Income (GSI)
II. Effective Gross Income
(Less) Vacancy
5.0% of GSI
Effective Gross Income (EGI)
Annual
$227,000
$301,000
$528,000
$528,000
$9,000
$537,000
($27,000)
$510,000
III. Operating Expenses
(Less) Operating Expenses
(Less) Property Taxes/Assessments121
(Less) Replacement Reserves
Total Operating Expenses
$5,000 /Unit/Year ($75,000)
$6,067 /Unit/Year ($91,000)
$300 /Unit/Year ($4,500)
$11,367 /Unit/Year ($170,500)
33.4% of EGI
ZZOZ `ZZ q3JelAl TABLE 1-4
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
BARRIO PERIMETER - RENTAL
STACKED FLATS OVER
TUCK-UNDER PARKING
Stacked Flats over Tuck-under
100% @ Market-Rate 85% @ Market-Rate / 15% @ Low
I. Capitalized Value Upon Completion
Stabilized Net Operating Income
Capitalization Rate @
Capitalized Value Upon Completion
(Less) Cost of Sale
(Less) Target Developer Profit
$314,500
4.50%
$466,000 /Unit $6,989,000
3.0% of Value ($210,000)
12.0% of Value ($839,000)
$339,500
4.50%
$503,000 /Unit $7,544,000
3.0% of Value ($226,000)
12.0% of Value ($905,000)
$5,940,000 Net Sales Proceeds $6,413,000
(Less) Development Costs ($4,776,000) ($4,776,000)
III. Residual Land Value $1,637,000
Per Unit $109,000
Per SF Site $75
$1,164,000
$78,000
$53 181 40 EZT 2ed Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;ema Page 74
VILLAGE / BARRIO - RENTAL
STACKED FLATS OVER
PODIUM PARKING
TABLE 1-1 100% AFFORDABLE
PROJECT DESCRIPTION
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Podium Parking
I.
II.
Site Area
Gross Building Area
0.50 Acres
Residential Area
12,090 SF 85%
Common Area
2 134 SF 15%
Total Gross Building Area (GBA)
14,224 SF 100%
III. Unit Mix
# of Units Unit Size
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
Type V (Wood)
VIII. Parking
Parking Type
Podium
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 f_81 Spaces
Total
1.15 Spaces/Unit 23 Spaces
(1) Assumes range of affordability from SO% AMI to 60% AMI, with average affordability at 50% AMI.
Prepared by: Keyser Marston Associates, Inc.
Filenarl1/24KAhsRal, Fain4pes Analysis_v6_15%;4/12/2021;lag Item #4 Page 124 efglIft
4% Tax Credits w/MHP 9% Tax Credits
Total Per Unit Comments Total Per Unit Comments
TABLE J-2
DEVELOPMENT COSTS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Podium Parking
I. Direct Costs
Off-Site Improvements (I) $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
Acid: Prevailing Wages $547,000 $27,400 15.0% of Directs $o $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
IL Indirect Costs
Architecture & Engineering $220,000 $11,000 5.0% of Directs $191,000 $9,600 5.0% of Directs
Permits & Fees - Residentialt2) $360,000 $18,000 $25 Per SF GBA $360,000 $18,000 $25 Per SF GBA
Community Facilities District No. 1 (Citywide)°I $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 I ndirects $77,000 $3,900 5.0% of lndirects
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 574,000 $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° $6,798,000 $339,900 $478 Per SF GBA $6,156,000 $307,800 $433 Per SF GBA
VILLAGE / BARRIO - RENTAL
STACKED FLATS OVER
PODIUM PARKING
100% AFFORDABLE ZZOZ ‘ZZ LipielAl T8T Jo SZT aSed (1)Estimated allowance; not verified by KMA or the City.
(2)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;lag
(3)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.
(4)Excludes acquisition costs.
Page 76
9% Tax Credits
# Units S/SF S/Month Annual
6 $2.19 $985 $71,000
8 $1.91 $1,050 $101,000
3 $1.67 $1,256 $45,000
1 $0.00 $0 $0
2 $1.46 $1,449 $35,000
$5,250 /Unit/Year ($105,000)
$0 /Unit/Year $0
$500 /Unit/Year ($10,000)
$250 /Unit/Year ($5,000)
$6,000 /Unit/Year ($120,000)
49.8% of EGI
$121,000
TABLE I-3
NET OPERATING INCOME
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
I. Gross Scheduled Income (GS!)
Unit Size # Units $/SF $/Month
Studio @ 50% AMI 450 SF 6 $2.19 $985
One Bedroom @ 50% AMI 550 SF 8 $1.91 $1,050
Two Bedroom @ 50% AMI 750 SF 3 $1.67 $1,256
Two Bedroom Manager 750 SF 1 $0.00 $0
Three Bedroom @ 50% AMI 995 SF 2 $1.46 $1,449
Total/Average
885 SF 20 $1.19 $1,050
Add: Other Income
Total Gross Scheduled Income (GSI)
VILLAGE / BARRIO - RENTAL
STACKED FLATS OVER
PODIUM PARKING
100% AFFORDABLE ZZOZ `ZZ LI3JetAl Stacked Flats over Podium Parking
4% Tax Credits w/MHP
Annual
$71,000
$101,000
$45,000
$0
$35,000
$252,000
$10 /Unit/Month $2,000
$254,000
20 $1.19 $1,050 $252,000
$10 /Unit/Month $2,000
$254,000
II. Effective Gross Income
(Less) Vacancy
Effective Gross Income (EGI)
($13,000)
$241,000
($13,000)
$241,000
5.0% of GS! 5.0% of GS!
A." HI. Operating Expenses cr)
3 (Less) Operating Expenses $5,250 /Unit/Year ($105,000)
4ct ..0. (Less) Tenant Services $500 /Unit/Year ($10,000)
(Less) Property Taxes 131 $500 /Unit/Year ($10,000)
(Less) Replacement Reserves $500 /Unit/Year ($10,000)
Total Operating Expenses $6,750 /Unit/Year ($135,000)
56.0% of EGI
IV. Net Operating Income {N01) $106,000
(1)See Worksheet 6 for calculation of affordable rents.
(2)Assumes project will qualify for tax-exempt status.
Prepared by: Keyser Marston Associates, Inc.
Filename iACarlsbad_Prototypes Analysis_y6_15%;4/12/2021;lag 181 Jo 9ZT aed Page 77
Total
$1,633,000
$3,973,000
$0
$200,000
$0
$20,000
$5,826,000
Per Unit
$81,700
$198,700
$0
$10,000
$0
$1,000
$291,300
,77 IV. (Less) Acquisition Cost ($3,000,000) ($150,000)
CD 3
I* 41.
($3,000,000) ($150,000)
($3,330,000) ($166,500) g V. Financin Deficit ($4,566,000) ($228,300)
TABLE J-4
RESIDUAL LAND VALUE AND FINANCING DEFICIT
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
4% Tax Credits with MHP
VILLAGE / BARRIO - RENTAL
STACKED FLATS OVER
PODIUM PARKING
100% AFFORDABLE
9% Tax Credits ZZOZ `ZZ 113-1e1A1 Stacked Flats over Podium Parking
I. Sources of Funds Total
Supportable Permanent Loan (I) $1,709,000
Tax Credit Equity Investment (2) $2,303,000
Multifamily Housing Program (MHP)13) $1,000,000
Affordable Housing Program (AHP) $200,000
Deferred Developer Fee/General Partner Equity Contribution (41 $0
Income During Lease-Up $20,000
Total Sources of Funds $5,232,000
Per Unit
$85,500
$115,200
$50,000
$10,000
$0
$1,000
$261,600
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) 07,000) in JO LZI aed Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Prototypes Analysis_v6_15%;4/12/2021;lag Page 78
$0
$5,804,000
($757,000)
$5,047,000
$757,000
$757,000 a
$757,000
VILLAGE / BARRIO - RENTAL
STACKED FLATS OVER
TABLE J-4 (CONT'D.) PODIUM PARKING
100% AFFORDABLE
RESIDUAL LAND VALUE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over
Podium Parking
4% Tax Credits with MHP 9% Tax Credits
(1) Supportable Permanent Loan
NOI
Interest Rate
Term (years)
Debt Coverage Ratio
Annual Debt Service
Supportable Permanent Loan
$106,000
4.50%
40
1.15
$92,174
$1,709,000
(2)Low Income Housing Tax Credits (Federal)
Estimate of Eligible Basis:
Total Development Costs
$6,798,000
(Less) Ineligible Costs 6.3% ($426,000) 5.7%
Eligible Basis
$6,372,000
Tax Credit Proceeds:
Maximum Eligible Basis
$6,372,000
(Less) Voluntary Credit Adjustment
0.0% 35.0%
Total Requested Unadjusted Basis
$6,372,000
Impacted Bonus Factor 130% $8,283,600 130%
Tax Credit Qualified Units/Applicable Factor 100% $8,283,600 100%
Tax Credit Rate 3.09% $255,963 9.00%
Total Tax Credits @ 10 $2,559,632 10
Limited Partner Share 99.99% $2,559,376 99.99%
Tax Credit Equity Investment @ 90.0% $2,303,000 90.0%
(3)Multifamily Housing Program (MHP)
Restricted Units 20 Units
Total MHP Loan $50,000 /Unit $1,000,000
(4)Estimate of Deferred Developer Fee
Eligible Basis
$6,372,000
(Less) Developer Fee
($831,000)
Unadjusted Eligible Basis
$5,541,000
Total Developer Fee 15.0% $831,000 15.0%
Developer Overhead Fee
$831,000
(Less) Deferred Developer Fee 0.0% $L) 0.0%
Upfront Developer Fee
$831,000
$121,000
5.50%
35
1.15
$105,217
$1,633,000
$6,156,000
($352,000)
$5,804,000
$5,804,000
($2,031,000)
$3,773,000
$4,904,900
$4,904,900
$441,441
$4,414,410
$4,413,969
$3,973,000
Prepared by: Keyser Marston Associates, Inc.
FilenarigMhsRal, 13303t;pes Ana lysis_y6_15%;4/12/2021;lag Item #4 Page 128 MEM
APPENDIX 5
Viability of 20% Low Income
Inclusionary Requirement
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 129 difeffif
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.
'Keyser Marston Associates, Inc. Page 81
April 12,2020
21017kal
11060.012.007
March 22, 2022 Item #4 Page 130 of 181
Table 1: Economic Impact of Increasing to 20% Inclusionary Housing Requirement - Citywide
FOR-SALE RENTAL
Garden
Apartments
Average Single-Family Single-Family
Large Lot Medium Lot Townhomes
15% g 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)
Residual Land Value Per Unit (2)
Off-Site
$240,750
Off-Site
$192,750
Off-Site
$102,750
On-Site
$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
Barrio
Perimeter
Stacked
Flats over
Turk-under
Average
Village General Village Center Barrio Center
• Stacked Flatt- r over Tuck-
under _
Mixed-Use
Stacked Flats
Zero Lot
Line
Rowhomes
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
$247,500
Off-Site
$213,500
On-Site
$117,500
On-Site _
Residual Land Value Per Unit (2) $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 -
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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
Residual Land Value Per Unit
FOR-SALE RENTAL
Garden Average
Apartments
Single-Family
Large Lot
Single-Family
Medium Lot
$237,000
T ownhomes
100% Market-Rate $285,000 $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.
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RENTAL FOR-SALE
$74,500
$64.43 $80.39
$96,000 $45,000
$31.50
$110,000
$90.98
$47,000
$54.86
Per Market-Rate Unit
Per Market-Rate Net SF
Table 4: Economic Impact of Incorporating 20% Affordable Housing On-Site — Village/Barrio
Residual Land Value Per Unit
100% Market-Rate
80% Market-Rate / 20%
Low Income
Village General
Stacked Flats
over Tuck-under
$297,000
$187,000
Village Center
Mixed-Use
Stacked Flats
$263,000
$167,000
Barrio Center
Zero Lot Line
Rowhomes
$167,000
$122,000
Barrio Perimeter
Stacked Flats
over Tuck-under
$109,000
$62,000
Average
$209,000
$135,000
Economic Impact of Incorporating Affordable Housing On-Site
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.
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.
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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
$44,250 $49,500 @ 20% Inclusionary Set-Aside
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
Garden
Apartments
Average Single-Family
Large Lot
Single-Family
Medium Lot
$44,250
Townhomes
$44,250 Per Market-Rate Unit $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
$49,500
Mixed-Use
Stacked Flats
Zero Lot Line
Rowhomes
$49,500
Stacked Flats
over Tuck-under
Per Market-Rate Unit $49,500 $49,500 $49,500
Per Market-Rate Net SF. $40.94 $41.45 $34.65 $57.78 $43.71
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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
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.
E.Conclusions
Table 10 provides a summary of the economic impact of a potential 5% increase to the City's
inclusionary set-aside requirement.
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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. Overtime, 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
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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 G8A $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
ts. rs.
III.MARKET-RATE SALES PRICES / RENTS
Unit SF $/SF Sales Price Unit SF 1/2. Sales Price Unit SF ILEE. Mo. Rent Unit SF LE Mo.jRent Unit SF $/SF Sales Price
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 3,509 $425 $1,488,000 2,500 $450 $1,125,000
IV.RETAIL SPACE
Retail
Retail Cap Rate
V.RESIDUAL LAND VALUE
Cost of Sale
Target Developer Profit ------ ------------------- - Residual Land Value
3.0% of Value
10.0% of Value -----------
$9,117,000
3.0% of Value
10.0% of Value --------
$7,103,000
3.0% of Value
----10.0% of Value-----
$6,609,000 $14,216,000
Per Unit $285,000 $237,000 $147,00
5
0
$1
Per SF Site Area $21 $33
$65
($10,620,C00)
($177,000)
0
Cc
Financing Gap
Per unit
V. FINANCING GAP
CITYWIDE TABLE 1 80% MARKET-RATE / 20% @ LOW
KEY ASSUMPTIONS - CITYWIDE PROTOTYPES
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
A
CITYWIDE
111 Reflects affordability gap per affordable snit, inclusive of land acquisition costs.
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VILLAGE AND BARRIO
TABLE 2 80% MARKET-RATE I 20% @ LOW
KEY ASSUMPTIONS - VILLAGE AND BARRIO PROTOTYPES
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
7CITY OF CARLSBAD
VILLAGE AND BARRIO
100% MARKET-RATE 100% AFFORDABLE
iIIjge *tack ti v rlkKkon r VIII e Mixe Us a r turn Barrio Rowbomes arri St ck Ft ts v r Tuck un or Stacked FIats over PodIum
I.PROJECT DESCRIPTION
Site Area
Density - Residential
Number of Units
Average Unit Size
Retail SF
Parking Ratio
0.50 Acres
23.0 Units/Acre
11 Units
1,209 SF
-
1.82 Spaces/Unit
0.50 Acre
35.0 Units/Acre
17 Units
1,194 SF
3,000 SF
1.76 Spaces/Unit
0.50 Acre
14.0 Units/Acre
7 Units
1,429 SF
---
2.29 Spaces/Unit
0.50 Acre
30.0 Units/Acre
1$ Units
857 SF
---
1.80 Spaces/Unit
0.50 Acre
40.0 Units/Acre
20 Units
60$ SF
-
1.15 Spaces/Unit
II.DEVELOPMENT COSTS
Off-Site Improvements
On-Site improvements
Parking
Shell Construction - Residential
Shell Construction - Retail
FF&E/Amenities
Architecture & Engineering
Permits and Fees - Residential
Permits and Fees - Retail
Total Development Costs - Excl. Land
$0 /SF Site
$15 /SF Site
S15,000 /Space
$190 /SF GBA
-
$7,500 /Unit
5.0% of Directs
$18,000 /Unit
.._
$360 /SF GSA
$0 /SF Site
$15 /SF Site
$30,000 /Space
$200 /SF GBA
$150 /SF GBA-Retail
$7,500 /Unit
5.0% of Directs
$18,000 /Unit
$11 /SF GBA-Retail
$377 /SF GBA
$0 /SF Site
$10 /SF Site
-
$195 /SF GBA
---
$7,500 /Unit
5.0% of Directs
$24,000 /Unit
---
$329 /SF GBA
$0 /SF Site
$10 /SF site
$15,000 /Space
$185 /SF GBA
---
$5,000 /Unit
5.0% of Directs
$18,000 /Unit
-
$325 /SF GBA
$0 /51 Site
$15 /SF Site
$30,000 /Space
$180 /SF GSA
---
$3,500 /Unit
5.0% of Directs
$18,000 /Unit
---
$478 /SF GBA
III.MARKET-RATE SALES PRICES/ RENTS
Studio
One Bedroom
Two Bedroom
Three Bedroom
Four Bedroom
Unit SF $/$F Sales Price Unit SF $/$F Sales Price Unit SF $/SF Sales Price Unit SF S/SF Mo. Rent Unit SF 5/SF Mo. Rent
--- --- ---
950 $800 $760,000
1,200 $775 $930,000
1,500 $750 $1,125,000
- - -
--- -- ---
950 $785 $746,000
1,200 $765 $918,000
1,500 $750 $1,125,000
- --- -
-- - -
- --- ---
1,250 $550 $688,000
1,500 $500 $750,000
- --- ---
- - --
750 $3.60 $2,700
950 $3.30 $3,140
--- - -
- ---
450 $2.19 $955
550 $1.91 $1,050
750 $1.87 $1,256
995 $1.46 $1,449
--- --- ---
IV.RETAIL SPACE
Retail Rent
Retail Cap Rate
--
-
5a.so
6.5%
-
---
-
---
V.RESIDUAL LAND VALUE
Cost of Sale
Target Developer Profit
Residual Land Value
Per Unit
Per SF Site Area
3.0% of Value
12.0% of Value
$3,269,000
$297,000
$150
3.0% of Value
12.0% of Value
$4,477,000
$263,000
$206
3.0% of Value
10.0% of Value
$1,169,000
$167,000
$54
-
---
$1,637,000
$109,000
$75
-
- ---
---
--
---
VI.FINANCING GAP
Financing Gap
. Per Unit
-
- --
--
--
--
-
($3,960,000) 111
0198,000
ill Reece affoiciability gap per affordable unit, inclusive of land acquisition costs.
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Filena-ne it\ Carisbrid_Prototypes Analysis...4_208'4:4/12/2021;in
as ft
a
a
100% Market-Rate and Mixed-Income 100% Affordable
Single-Family Detached
Large Lot
10.00 Acres
3.2 Units/Acre
32 Units
2 Stories
RENTAL FOR-SALE
100% @ Market-Rate
$285,000/Unit $21/SF
80% @ Market-Rate
20% @ Affordable 02)
$122,000/Unit $9/SF
rD 3
Garden
Apartments
5.00 Acres
25.0 Units/Acre
125 Units
3 Stories
Stacked Flats over
Tuck-under Parking
2.00 Acres
30.0 Units/Acre
60 Units
3 Stories
100% @ Market-Rate
$114,000/Unit $65/SF
80% @ Market-Rate
20% @ Affordable (1)(3)
$76,000/U nit $44/SF
100% Affordable
w/4% Tax Credits (4)
($177,000)/Unit ($122)/SF
Single-Family Detached
Medium Lot
5.00 Acres
6.0 Units/Acre
30 Units
2 Stories
100% @ Market-Rate
$237,000/Unit $33/SF
80% @ Market-Rate
20% @ Affordable 15)121
$127,000/Unit $17/SF
Townhomes
3.00 Acres
15.0 Units/Acre
45 Units
2 Stories
100% @ Market-Rate
$147,000/Unit $51/SF
80% @ Market-Rate
20% @ Affordable tip
$76,000/Unit $26/SF
CITYWIDE
TABLE 3 80% MARKET-RATE / 20% @ LOW
SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - CITYWIDE
EINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
cu CITY OF CARLSBAD
CITYWIDE
0 —h
CO
(1)Affordability not to exceed 80% Area Median Income (AM!).
(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.
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Page 90
100% Affordable
Village / Barrio
Stacked Flats over
Podium Parking 0)
0.50 Acres
40.0 Units/Acre
20 Units
3 Stories
100% Affordable
W/ Tax Credits (5)
($198,000)/Unit ($182)/SF
0.50 Acres
15.0 Units/Acre
7 Units
3 Stories
100% @ Market-Rate
$167,000/Unit $54/SF
0.50 Acres
23.0 Units/Acre
11 Units
3 Stories
100% @ Market-Rate
$297,000/Unit $150/SF
0.50 Acres
35.0 Units/Acre
17 Units
4 Stories
100% @ Market-Rate
$263,000/Unit $206/SF
100% @ Market-Rate ......... V-- ........ ________ ...... ^
$109,000/Unit $75/SF
VILLAGE AND BARRIO
80% MARKET-RATE / 20% @ LOW
TABLE 4
SUMMARY OF DEVELOPMENT SCENARIOS AND RESIDUAL LAND VALUE - VILLAGE AND BARRIO a)
—s INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
=CITY OF CARLSBAD
NJ
NJ VILLAGE AND BARRIO
NJ 1•.)
FOR-SALE RENTAL
100% Market-Rate I Mixed-Income
Village Center Barrio Center Barrio Perimeter
Tuck under Parking
Stacked.FlatS Over Stacked Flats over Rowhomes Podium Parking
Mixed-Use Zero Lot Line
Village General
Stacked Flats over
Tuck-under Parking
0.50 Acres
30.0 Units/Acre
15 Units
3 Stories
rD
80% @ Market-Rate 80% @ Market-Rate 80% @ Market-Rate 80% @ Market-Rate
20% @ Affordable (2)(3)
--------------------------
20% @ Affordable (2)(3) 20% @ Affordable (2)(3)
20% ® Affordable (21(4) ....... _ ..................
$187,000/Unit $95/SF $167,000/Unit $130/SF $122,000/Un it $39/SF
$62,000/Unit $43/SF
41.
0 —h (1) Assumes development will qualify for an affordable housing density bonus.
00(2) Affordability not to exceed 80% Area Median Income (AMI).
1—a(3) Assumes maximum ownership payment at 30% of 80% AMI, adjusted for family size.
(4)Assumes maximum rental payment at 30% of 70% AM I, adjusted for family size.
(5)Reflects average affordability gap per affordable unit for two alternative financing approaches (4% Tax Credits and 9% Tax Credits).
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Page 91
VILLAGE AND BARRIO
80% MARKET-RATE / 20% @ LOW
VS. 85% MARKET-RATE / 15% @ LOW
TABLE 6
ECONOMIC IMPACT OF INCREASING TO 20% INCLUSIONARY HOUSING REQUIREMENT- VILLAGE AND BARRIO
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE =CITY OF CARLSBAD
FOR-SALE RENTAL
Village General Village Center Barrio Center Barrio Perimeter
— Stacked Flats over
Tuck-under Parking _
Mixed-Use Stacked Flats
over Podium Parking
Zero Lot Line
Rowhomes
Stacked Flats over
Tuck-under Parking
1. Residual Land Value - Optimal Approach:
On-Site vs. Off-Site Production
A.85% Market-Rate / 15% Low
Per Unit $262,060
Off-Site
$228,060
Off-Site
$132,060
Off-Site
$78,000
On-Site
B.80% Market-Rate / 20% Low
Per Unit $247,000
Off-Site
$213,000
Off-Site
$117,000
On-Site
$59,000
On-Site
II. Impact of Increasing to 20% Inclusionary
Requirement
Per Market-Rate Unit
Per Market-Rate Net SF
.-7 Per SF Site Area ro 2
% Chow: % Change % Change %Change
($15,060) -5.7%
($12.46)
($7.61)
($15,060) -6.6%
($12.61)
($11.75)
($15,060) -11.4%
($10.54)
($4.84)
($19,000) -24.4%
($22.18)
($13.09) I8T Jo 'DI aed Prepared by: Keyser Marston Associates, Inc.
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% Change
($96,000) -49.0%
($46.04)
($18.35)
CITYWIDE
80% MARKET-RATE / 20% @ LOW
TABLE 7
a) ESTIMATE OF POTENTIAL 1N-LIEU FEE - APPROACH 1: ECONOMIC IMPACT OF INCORPORATING AFFORDABLE HOUSING ON-SITE - CITYWIDE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
A 13
CITYWIDE
FOR-SALE RENTAL
Single-Family Detached
Large Lot
Single-Family Detached
Medium Lot Townhomes Garden Apartments
I. Residual Land Value
A.100% Market-Rate
Per Unit $285,000 $237,000 $147,000 $114,000
B.80% Market-Rate / 20% Low
Per Unit $122,000 $127,000 $76,000 $76,000
II. Economic Impact of Incorporating
Affordable Housing On-Site
Per Market-Rate Unit
Per Market-Rate Net SF
Per SF Site Area
% Change % Change % Change % Chanae
($163,000) -57.2%
($50.89)
($11.97)
($110,000) -46.4%
($50.00)
($15,15)
($71,000) -48.3%
($44.94)
($24.45)
($38,000) -33.3%
($38.34)
($21.81)
Co
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($77,000)
f$100,0001
($177,000)
Average
($44,000)
Single-Family Detached
Large Lot
Single-Family Detached
Medium Lot Townhomes Garden Apartments
I. Affordability Gap
A.Residual Land Value per Affordable Unit Ill ($77,000) ($77,000) ($77,000) ($77,000)
B.Acquisition Costs (2) ($100,000) ($100,000) ($100,000) ($100,000)
C.Affordability Gap per Affordable Unit ($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 131 ($44,000) ($44,000) ($44,000) ($44,000)
III. Economic Impact of Inclusionary Housing
Production Off-Site % Change % Change 'I.,:Chancre % Change
A.Residual Land Value - 100% Market-Rate $285,000
$237,000
$147,000
$114,000
B.Residual Land Value less Affordability Gap $241,000
$193,000
$103,000
$70,000
Per SF Site Area $17.70
$26.58
$35.47
$40.17
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%
Per Market-Rate Net SF ($13.74)
($20.00)
($27.85)
($44.39)
Per SF Site Area ($3.23)
($6.06)
($15.15)
($25.25)
ft) 3
% Change
$195,750
$151,750
$35.14
($44,000) -22.5%
($26.49)
($12.42)
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 a) INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
=CITY OF CARLSBAD
NJ ..1>)
NJ
CD NJ NJ
A
CITYWIDE
FOR-SALE RENTAL
w (1) Residual land value for 100% affordable stacked flats over tuck-under parking; see Attachment E.
0 (2) KMA estimate based on recent experience in North County coastal areas.
—'s(3) Assumes inclusionary requirement applied to total number of market-rate units approved [i.e., (gap 80%) x 20%1.
00
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Filename i:Wansbad_Prototypes Analysls_y6_20%;4/12/2021;lag Page 94
NJ NJ
NJ 0
NJ NJ
Potential In-Lieu Fee: $20 - $30/Net SF
FOR-SALE RENTAL
Single-Family Detached
Large Lot Garden Apartments Single-Family Detached
Medium Lot Townhomes
A
CITYWIDE
Average
I. Mixed Income - Optimal Approach
On-Site vs. Off-Site
A.Residual Land Value - Per SF Site Area
B.Developer Profit (% of Value)
C.Total Development Costs - Per Net SF ill
$18
Off-Site
10.0%
$382
$27
Off-Site
10.0%
$415
$35
Off-Site
10.0%
$406
$44
On-Site
10.0%
$411
II. In-Lieu Fee @ $20/Net SF
A.Residual Land Value-Per SF Site Area $16
% Change,
$27
94p_ag_7 e
-0.1% $40
% Chanzie
$54
% Chan( e
-7.0% 11.9% 23.2%
B.Developer Profit (% of Value) 5.7% -4.3% 5.8% -4.2% 5.7% -.4.3').5 5.7% -4.3%
C.In-Lieu Fee as % of Development Costs 5.2%.
4.8%
4.9%
4.9%
III. In-Lieu Fee @ $30/Net SF
%Oaie
% Change
% Change
% Change.
A. Residual Land Value - Per SF Site Area $14 -20.3% $24 -1/.5% $34 -3.4% $48 10.2%
B. Developer Profit (% of Value) 3.4% -6.6% 3.7% -6.3% 3.6% -6.4% 3.6% -6.4%
C. In-Lieu Fee as % of Development Costs 7.9%
7.2%
7.4%
7.3%
rD
3
Approach 1: Economic Impact of Incorporating Affordable Housing On-Site
Residual Land Value
Per Unit $122,000 $127,000 $76,000 $76,000
Per SF Site Area $9 $17 $26 $44
Approach 2: Funding Level Required for Inclusionary Housing Production Off-Site
$193,000 $103,000 $70,000
Residual Land Value
Per Unit $241,000
Per SF Site Area $18 $27 $35 $40
20% LOW
$100,000
$24
$152,000
$30
$30
10.0%
$404
Change
$34 13.9%
5.7% -4.3%
5.0%
%Change
$30 0.1%
3.6% -6.4%
7.4%
CITYWIDE
TABLE 9 80% MARKET-RATE / 20% @ LOW
IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - CITYWIDE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
tu CITY OF CARLSBAD
(1) Reflects total developments costs inclusive of residual land value.
Prepared by: Keyser Marston Associates, Inc.
Filename: \ Ca risbad_Prototypes Analysis_v6_20%;4/12/2021;iag
Page 95
VILLAGE AND BARRIO
80% MARKET-RATE / 20% @ LOW
TABLE 10
0, 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
N.)
NJ I-1 1 NJ
FOR-SALE RENTAL
Village General Village Center Barrio Center Barrio Perimeter
Stacked Flats over
Tuck-under Parking
Mixed Use Stacked Flats
over Podium Parking
Zero Lot Line
Rowhomes
Stacked Flats over
Tuck-under Parking
I. Residual Land Value
A.100% Market-Rate
Per Unit $297,000 $263,000 $167,000 $109,000
B.80% Market-Rate / 20% Low
Per Unit $187,000 $167,000 $122,000 $62,000
II. Economic Impact of Incorporating
Affordable Housing On-Site
Per Market-Rate Unit
Per Market-Rate Net SF
Per SF Site Area
% Change %Change %Change %Change
($110,000) -37.0%
($90.98)
($55.56)
($96,000) -36.5%
($80.39)
($74.93)
($45,000) -26.9%
($31.50)
($14.46)
($47,000) -43.1%
($54.86)
($32.37) In 10 SVC aed Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Prototypes Analysis_v6_20%;4/12/2021;lag Page 96
RENTAL FOR-SALE
($50,000) ($50,000) ($50,000) ($50,000)
II. Funding Level Required for Inclusionary Housing
Production Off-Site
Affordability Gap per Market-Rate Unit @ 20% Low
Village General
Stacked Flats over
Tuck-under Parking
Barrio Perimeter
Stacked Flats over
Tuck-under Parking
Barrio Center
Zero Lot Line
Rowhomes
Village Center
Mixed-Use Stacked Flats
over Podium Parking
($48,000)
($150,000)
($198,000)
($48,000)
($150,000)
($198,000)
($48,000)
(5150,000)
($198,000)
($48,000)
($150,000)
($198,000)
I. Affordability Gap
A.Residual Land Value per Affordable Unit Ill
B.Acquisition Costs (7)
C.Affordability Gap per Affordable Unit
Average
($48,000)
($150,000)
($198,000)
($50,000)
III. Economic Impact of Inclusionary Housing
Production Off-Site % Change 96 Change
% Change
% Change
A. Residual Land Value - 100% Market-Rate $297,000
$263,000
$167,000
$109,000
B. Residual Land Value less Affordability Gap $247,000
$213,000
$117,000
$59,000
Per SF Site Area $124.75
$166.25
$37.60
$40.63
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%
Per Market-Rate Net SF ($41.35)
($41.87)
($35.00)
($58.37)
Per SF Site Area ($25.25)
($39.03)
($16.07)
($34.44)
co
3
% Change
$209,000
$159,000
$92 ________ .........
(550,000) -23.9%
($44.15)
($28.70)
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 C1.>
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
D.-CITY OF CARLSBAD
NJ
a)
CD
0')
01 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%].
Prepared by: Keyser Marston Associates, Inc.
Filename iACarlsbad_Prototypes Analysis_v6_20%;4/12/2021;lag Page 97
FOR-SALE RENTAL
I. Optimal Approach: On-Site vs. Off-Site
Production
A.Residual Land Value - Per SF Land
B.Developer Profit (% of Value)
C.Total Development Costs - Per Net SF 0.)
$125
Off-Site
12.0%
$657
$166
Off-Site
12.0%
$720
$39
On-Site
10.0%
$446
$43
On-Site
12.0%
$499
II. In-Lieu Fee @ $30/Net SF % Change %Orme % Change .',.haige
A. Residual Land Value - Per SF Land $132 5.6% $178 6.8% $40 2.1% $57 33.5%
B. Developer Profit (% of Value) 8.1% -3.9% 8;5% -3.5% 4.2% -5.9% 6.9% -5.1%
C. In-Lieu Fee as % of Development Costs 4.6% 4.2% 6.7% 6.0%
III. In-Lieu Fee @ $40/Net SF % Change 96 Change % Change % Change
A. Residual Land Value - Per SF Land $126 0.7% $168 1.2% $35 -9.6% $52 19.9%
,
B.Developer Profit (% of Value) 6.8% -5.2% 7.3% -4.7% 2.2% -7.8% 5.2% -6.8%
C.In-Lieu Fee as % of Development Costs 6.1% 5.6% 9.0% 8.0%
Potential In-Lieu Fee: $30 - $40/Net SF Ft
VILLAGE AND BARRIO
NJ
N.)
NJ
NJ N.)
Stacked Flat over:
"Tack--attd,er Peeking
$93
11.5%
$581
% Change
$102 9.0%
6.9% -4.6%
4.9%
% change
$95 2.1%
5.4% -6.1%
6.6%
20% LOW
Approach 1: Economic Impact of Incorporating Affordable Housing On-Site
Residual Land Value
Per Unit $187,000 $167,000 $122,000
$62,000
Per SF Site Area $95 $130 $39
$43 ....... ..... ...... ........... ...... ..... ........ ........
..... -^ .........
Approach 2: Funding Level Required for inclusionary Housing Production Off-Site
Residual Land Value
Per Unit $247,000 $213,000 $117,000
$59,000
Per SF Site Area $125 $166 $38
$41
............
Average
$135,000
$77
_ ........ ....
$159,000
$92
VILLAGE AND BARRIO
TABLE 12 80% MARKET-RATE / 20% @ LOW
IMPACT OF POTENTIAL IN-LIEU FEE ON PROJECT FEASIBILITY - VILLAGE AND BARRIO EINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
co CITY OF CARLSBAD
(1) Reflects total developments costs inclusive of residual land value.
Prepared by: Keyser Marston Associates, Inc.
Filename:Warlsbad_Prototypes Analysis_v6_20%;4/12/2021;lag Page 98
APPENDIX 6
Estimate of Affordable Sales Prices and Rents
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 !tern #4 Page 148 efen
WORKSHEET 1
ESTIMATE OF AFFORDABLE SALES PRICES - SINGLE-FAMILY DETACHED-LARGE LOT (1)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
A
Single Family Detached - Large Lot
Three Bedroom
Four Bedroom
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
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 21.85.020.4 of the Carlsbad Municipal Code.
(3)Allowance for structure insurance, maintenance, and reserves.
(4)Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
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).
Prepared by: Keyser Marston Associates, Inc.
FilenarPIZIaNhsaa Pliat4pes Analysis_v6_15%; 4/12/2021; lag Item #4 Page 149Fisitelgl
WORKSHEET 2
ESTIMATE OF AFFORDABLE SALES PRICES - SINGLE-FAMILY DETACHED-MEDIUM LOT (1)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Single Family Detached - Medium Lot
Three Bedroom
I. Maximum Affordable Sales Price (2)
Percent of AMI 80%
Assumed Family Size 5.0
Household Income $99,800
Four Bedroom
80%
7.0
$114,600
30%
$34,380
Income Allocation to Housing 30%
Amount Available for Housing $29,940
Annual HOA 13) $200 /Mo. $2,400
Annual Utilities (4) $1,332
Tax Rate 1.20%
Annual Taxes (5) $4,716
Available for Mortgage $21,492
$250 /Mo. $3,000
$1,560
1.20%
$5,364
$24,456
4.50%
10.00%
$402,222
$44,700
Interest Rate (6) 4.50%
Down Payment 10.00%
Supportable Mortgage $353,474
Add: Down Payment $39,300
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)Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
Number of Bedrooms: Three Four
Gas Heat $14 $18
Gas Cooking $3.0 $13
Other Electric $14 $18
Gas Water Heater $14 $18
Water $24 $28
Sewer $16 $16
Trash
$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).
Prepared by: Keyser Marston Associates, Inc.
FilenarMaNbsa agat4es Analysis_v6_15%; 4/12/2021; lag Item #4 Page 150Ftite1W1
WORKSHEET 3
ESTIMATE OF AFFORDABLE SALES PRICES - TOWNHOMES (1)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Townhomes
Two Bedroom
Three Bedroom
I. Maximum Affordable Sales Price (2)
Percent of AM)
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 (s)
$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
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)Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
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 $_L.9 $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).
Prepared by: Keyser Marston Associates, Inc.
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WORKSHEET 4
ESTIMATE OF AFFORDABLE RENTS - GARDEN APARTMENTS / STACKED FLATS OVER TUCK-UNDER PARKING
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
D/1
Garden Apartments
Stacked Flats over Tuck-Under Parking
Number of Bedrooms 0 1 2 3
A. City of Carlsbad
70%
1.0
$56,650
30%
$1,416
($26)
70%
2.0
$64,700
30%
$1,618
($33)
70%
3.0
$72,800
30%
$1,820
($44)
70%
5.0
$87,350
30%
$2,184
($52)
Percent of AMI
Assumed Family Size
Household Income
Income Allocation to Housing
Monthly Housing Cost
(Less) Utility Allowance (2)
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 2 $9. g_.2 $14
Total $26 $33 $44 $52
Prepared by: Keyser Marston Associates, Inc.
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WORKSHEET 5
ESTIMATE OF AFFORDABLE RENTS - 100% AFFORDABLE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Eli
Stacked Flats over Tuck-Under Parking
Stacked Flats over Podium Parking
A.
Number of Bedrooms 0 1 2 3
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) f$52)
Maximum Monthly Rent $985 $1,122 $1,256 $1,508
B. Low Income Housing Tax Credit (LIHTC} Program
50% 50% 50% 50% Percent of AMI
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 Si $3 $12 .$..L.4
Total $26 $33 $44 $52
Prepared by: Keyser Marston Associates, Inc.
FilenarMO(Cths2a2t4pes Analysis_v6_15%;4/12/2021;lag Item #4 Page 153Pote1W1
WORKSHEET 6
ESTIMATE OF AFFORDABLE SALES PRICES - STACKED FLATS OVER TUCK-UNDER PARKING - VILLAGE VI
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Stacked Flats over Podium Tuck-Under Parking
One Bedroom
Two Bedroom
Three Bedroom
I. Maximum Affordable Sales Price (2)
Percent of AM)
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 (ay $350 /Mo. $4,200 $400 /Mo. $4,800 $450 /Mo. 55,400
Annual Utilities (4)
$1,056
$1,212
$1,332
Tax Rate
1.20%
1.20%
1.20%
Annual Taxes (s)
$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
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)Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
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 $19 „$,L.9 $19
Total Utility Allowance $ag $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)(MA assumption based on data provided by Bankrate.com, June 2020; includes Private Mortgage Insurance (PM!).
Prepare ny: Keyer 641a(st:4AsAgsiates, Inc.
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WORKSHEET 7
ESTIMATE OF AFFORDABLE SALES PRICES - MIXED-USE STACKED FLATS - VILLAGE 0.)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Mixed-Use Stacked Flats
One Bedroom
Two Bedroom
Three Bedroom
I. Maximum Affordable Sales Price 121
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 (31 $400 /Mo. $4,800 $450 /Mo. $5,400 $500 /Mo. $6,000
Annual Utilities (41
$1,056
$1,212
$1,332
Tax Rate
1.20%
1.20%
1.20%
Annual Taxes 151
$2,940
$3,300
$4,068
Available for Mortgage
$13,389
$15,048
$18,540
Interest Rate 16)
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
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.
(Al Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
Number of Bedrooms: .91..m Two Three
Gas Heat $9 $12 $14
Gas Cooking $6 $5 $10
Other Electric $9 $12 $14
Gas Water Heater 59 $12 $14
Water $20 $22 $24
Sewer $16 $16 $16
Trash
Total Utility Allowance $88 $101 $111
Total Annual Utilities $1,056 $1,212 $1,31,121
(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).
Prepared Keyxr DilefstgvAsvciates, Inc.
FilenamKkairWd(oto(444alysis_v6_15%; 4/12/2021; lag Item #4 Page 15.51190M
WORKSHEET 8
ESTIMATE OF AFFORDABLE SALES PRICES - ROWHOMES - BARRIO (3.)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Zero Lot Line Rowhomes
Three Bedroom Two Bedroom
I. Maximum Affordable Sales Price12)
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
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)Per the City of Carlsbad Utility Allowance Schedule, effective December 1, 2019, Rev. January 28, 2020. KMA assumed utility profile as follows:
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).
Prepared by: Keyser Marston Associates, Inc.
FilenanlaKhaa agt24pes Analysis_v6_15%; 4/12/2021; lag Item #4 Page 156RstelM
APPENDIX 7
Supporting Worksheets - Market Data
Inclusionary Housing In-Lieu Fee Update
City of Carlsbad
March 22, 2022 Item #4 Page 157FOre184
RESIDENTIAL LAND SALES
CITYWIDE
WORKSHEET 9
a) SURVEY OF COMPARABLE LAND SALES - CITYWIDE (1)(2) --s INCLUSIONARY HOUSING 1N-LIEU FEE UPDATE
Nj CITY OF CARLSBAD
NJ CD
Units/
Land Area Residential Units
N-)
N.) 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 PI 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 ).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 05L 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
(1) 3
Average 6.9 $8,721,938 16.89 $35 $81 $243,050
ro
CO
0
(1)Survey reflects Citywide land sales since January 1, 2015.
(2)Excludes Carlsbad Village, Barrio, and adjacent areas (see Worksheet 10).
Source: CoStar Group, Inc.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Market Data v2_12-04-2020.02-1-2021\4/12/2021; ema Page 109
a)
ri
WORKSHEET 10
SURVEY OF COMPARABLE LAND SALES - VILLAGE, BARRIO, AND ADJACENT AREAS
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
RESIDENTIAL LAND SALES
VILLAGE, BARRIO, AND ADJACENT AREAS
Units/
Land Area Residential Units
CD
Acres S/SF Units l$L1I_Iit N.) Sale Date Property Address Acre Sale Price Proposed Use Buyer
N)
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
ro 3
-0
CD
0 —h
00
(1) Survey reflects land sales in the Village, Barrio, and adjacent areas since January 1, 2015.
Source: costar Group, Inc.
Prepared by: Keyser Marston Associates, Inc.
Filename: Carlsbad_Market Data v2_12-04-2020.02-1-2021\4/12/2021; ems Page 110
-s
NJ NJ
NJ
NJ NJ
(7,
3
1* 18T Jo 09T aed SINGLE-FAMILY HOME SALES
WORKSHEET 11 CITYWIDE
SINGLE-FAMILY RESIDENTIAL HOME SALES - CITYWIDE Is)
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
a) CITY OF CARLSBAD
Date Address
gip Sales Price Lot Size
Unit Description
$/SF HOA
Year
Built
Product
Type Community Bed Bath SF
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
Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lag
Page 111
SINGLE-FAMILY HOME SALES
WORKSHEET 11 CITYWIDE
SINGLE-FAMILY RESIDENTIAL HOME SALES - CITYWIDE EINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
ai CITY OF CARLSBAD
NJ
.1•.)
Unit Description
Year Product
NJ Date Address City gp Sales Price Lot Size Bed Bath SF SiSF HOA Built Type Community
0
N.) 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 Dia monte 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
4:t 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
-0
Minimum
$707,000 2,085 SF 3 2 1,645 SF $282 $0 2000
0)
00
Maximum
$3,500,000 50,094 SF 8 10 9,728 SF $556 $439 2020
00
1-1
Median
$1,260,000 7,997 SF 4 4 3,102 SF $384 $160 2005
01
Average
$1,277,954 9,330 SF 4 4 3,276 SF $396 $164 2006
I-a
0
(1) Survey reflects Citywide single-family detached home sales since January 1, 2019, excludes Village, Barrio, and adjacent areas; see Worksheet 12.
1--1
Source: Mulitple Listing Service (MLS), as of October 21, 2020.
Prepared by: Keyser Marston Associates, Inc.
Filename ACarlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lag Page 112
SINGLE-FAMILY HOME SALES
VILLAGE, BARRIO, AND ADJACENT AREAS
WORKSHEET 12
SINGLE-FAMILY RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS (1)
9-INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
N.) N.) CITY OF CARLSBAD
CD NJ NJ
Date Address City
Sales Price
Unit Description
5/SF HOA
Year
Built Product Type Bed Bath SF
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
7
3
011
CD
01 NJ
0
iat(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.
Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carisbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lag Page 113
ATTACHED HOME SALES
CITYWIDE
WORKSHEET 13
cu ATTACHED RESIDENTIAL HOME SALES - CITYWIDE (1) •-%
(]-INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
N) CITY OF CARLSBAD
Unit Description
Year Product
Date Address City g_i_p Sales Price Bed Bath SF S/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
rr7 10/04/19 3114 Dilla Place Carlsbad 92010 $601,500 3 2 1,681 SF $358 $363 2017 Townhome Agave at the Preserve
B
u
Minimum
$540,000 2 2 988 SF $358 $354 2012
Maximum
$665,000 3 2 1,681 SF $573 $593 2020
-c, sv ma CD
Median
Average
$601,500
$606,636
3
3
2
2
1,610 SF
1,542 SF
$381
$397
$387
$403
2018
2017
I-, m cu
(1) Survey reflects Citywide attached home sales since January 1, 2019, excludes Village. Barrio, and adjacent areas; see Worksheet 14.
Co
1-"Source: Mulitple Listing Service (MIS), as of September 28, 2020.
Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lag Page 114
rTf Tg-r Jo 1791 aed ATTACHED HOME SALES
VILLAGE, BARRIO, AND ADJACENT AREAS
WORKSHEET 14
o.) ATTACHED RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS Ill
(") INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
r..)CITY OF CARLSBAD NJ
Date Address
Zip Sales Price
Unit Description
S/SF HOA
Year
Built
Product
Type Complex Name Bed Bath SF
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
Prepared by: Keyser Marston Associates, Inc.
Filename k\Carlsbad_Market Data v2_12-04-2020.02-1-2021;4/12/2021;lag Page 115
ATTACHED HOME SALES
VILLAGE, BARRIO, AND ADJACENT AREAS
WORKSHEET 14
es) ATTACHED RESIDENTIAL HOME SALES - VILLAGE, BARRIO, AND ADJACENT AREAS 11) —s INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
NCITY OF CARLSBAD
NJ
0 NJ
NJ
Unit Description
Year Product
Date Address c_i_. Zip Sales Price Bed Bath SF VSF HOA Built :Type Complex Name
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
co
3
73
Ora CD
Ln
9+,(1) Survey reflects attached home sales in the village, Barrio, or adjacent areas since January 1, 2019.
00Source: 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;lag Page 116
APARTMENT RENTS
KWORKSHEET 15 cu
=SURVEY OF COMPARABLE APARTMENT COMPLEXES
\JINCLUSIONARY HOUSING IN-LIEU FEE UPDATE
Is CITY OF CARLSBAD
Property Name Property Address
Stories
Studios
One Bedrooms Two Bedrooms Three Bedrooms
All Units - Total/Averages
SF
Monthly
Rent (1) Rent/SF SF
Monthly
Rent 12) Rent/SF
Monthly
Rent 11) Rent/SF SF
Monthly
Rent m Rent/SF Tota I SF
Monthly
Rent 11) Rent/58
Vacancy
Rate
Year
Built
Pie rside 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 Aides at Carlsbad 2615 Cannon Road Carlsbad 3
778 $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 12) 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 a
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 S1.98 5.0% 2002
81uWater Crossing'1> 6800 Embarcadero Lane Carlsbad 3
1,942 $3,777 $1.94 2,790 $4,581 $1.64
66 2,340 $4,207 $130 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
rp to
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
3
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
CO ,..A11.) Reflects effective rent.
121 Subject property used in CoStar search for comparable properties built after 2000. Excludes senior apartments.
Source: Costar Group, Inc., as of September 71, 2020.
Prepared by: Keyser Marston Associates, Inc.
Filename: Cerishad_Market Data 0_12-04.2020.02-1-2021 \ 4/12/2021; ema Page 117
DRAFT
Inclusionary Housing Program
Exhibit 9
(City of
Carlsbad
Informational Bulletin
IB-157
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
March 22 2022. Itena.#4 Paae 167 of 181 Lomrrfunny oevelopment Department l 1635 Faraday Ave. I Carlsbad, CA ZUlibi www.carisioaaca.goy
DRAFT
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
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 ³0.5 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
progra ms.
Page 2 Ngrch 22, 2022 Item.k4 Paee 168. of 181 Inclusionary nous, g Program 115-.1.5/ (Kevisea: DRAFT)
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.
DRAFT
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.
Inclusioniirrycitiouirfa?gram IB-157 (Revised: DRAFT)
nen] 144
Page 169 VaiPlof 6
DRAFT
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 ³200 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 .1.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
Page 4 NO 22, 2022 Itern.#4 .170ot 181 Inclusionary mousing Prograglgaw (Kevisea: DRAFT)
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 Credit.: Cost
### ### . 44.,'4•4 - $$$
### ### ### $$$
###
$$$
•### ### $$$
### ### ### $$$
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.
„; There are sufficient housing credits available to
purchase.
DRAFT
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 (ANA) 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,
InclusionigrWAYniWgram IB-157 (Revised: DRAFT)
Item 44
Page 171 $aen-of 6
DRAFT
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:
0 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.eov or the
Housing &Homeless Services Department at 760-434-
2810 or via email at Housing@carlsbadca.gov.
Page 6 Ngrch 22, 2022 Itern #4 Paee 172. of 181 Inclusionary Housing Program 115-1.5/ (Kevisea: DRAFT)
Exhibit 10
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 15 percent 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
March 22, 2022 Item #4 Page 173 of 181
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.
March 22, 2022 Item #4 Page 174 of 181
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:
,s2—
MANDY MILLS
Housing & Homeless Services Director
March 22, 2022 Item #4 Page 175 of 181
TABLE 1
POTENTIAL INDICES FOR FEE LEVEL ADJUSTMENT
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Index Concept / Description Advantages Disadvantages
A. Building Cost
Index (BC!)
•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).
•Based on the cost of specific construction trade
labor and materials.
•Fees go up or down based on construction costs.
•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.
B. Construction
Costs Index (CCI)
•Published by Engineering News Record (ENR)
•Similar to the Building Cost Index but with different
weighting of labor and material costs.
•Fees go up or down based on construction costs.
•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.
C. Consumer Price
Index (CPI) — All
Items
•Published by the U.S. Bureau of Labor Statistics
•Available for major metro areas including San
Diego.
•All Items — Measures the change in the prices of
goods and services including food and beverages,
housing, apparel, transportation, medical care,
recreation, education, communication, personal
services, etc.
•Fees go up or down based on the cost of a mix of
goods and services.
•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
with ability to mitigate impacts)
Prepared by: Keyser Marston Associates, Inc.
Filename L\Carlsbad_Indices;3/7/2022;lag ZZOZ 'ZZ 43-1eN ;LT CD 3 In Jo 9LI a0ed Page 1
TABLE 1
POTENTIAL INDICES FOR FEE LEVEL ADJUSTMENT
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Index Concept / Description Advantages Disadvantages
D. Consumer Price •Published by the U.S. Bureau of Labor Statistics. •Very well established •May not trend with:
Index (CPI) —
Shelter •Available for major metro areas including San
Diego.
•Generally tracks with inflation - Construction costs (consistent fee burden)
or
•Produced by neutral governmental - Cost to produce affordable units (consistent
•Shelter — Measures the change in the shelter cost
from consumers primary residence.
agency. with ability to mitigate impacts)
•Fees go up or down based on the cost to rent for
renter-occupied housing or the implicit rent owner
occupants would have to pay if renting their
homes.
E. S&P/Case-Shiller •Published by Standard & Poor's •Very well established •Only tracks single-family home sales.
Home Price Index
•Available at national average, a 20-city composite,
a 10-city composite, and for twenty individual
metro areas including San Diego.
•Tracks appreciation and depreciation
of single-family home values.
•Excludes new construction since homes have
not been sold previously.
•
•Excludes condominiums, apartments, and
multi-family dwelling units.
Measures the change in purchase prices and resale
value of existing single-family homes by comparing
the sales price of the same properties over time.
•Does not track improvements, deterioration,
or structural changes to property between
sales.
•Fees go up or down based on single-family home
prices.
•Volatile index (i.e., significant swings in
appreciation/depreciation.
Prepared by: Keyser Marston Associates, Inc.
Filename i:\Carlsbad_indices;3/7/2022;lag Mg `ZZ 1-13JelAl (E)
3 18140 LLI @Bed Page 2
TABLE 1
POTENTIAL INDICES FOR FEE LEVEL ADJUSTMENT
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
CITY OF CARLSBAD
Index Concept / Description Advantages
•Very well established
•Tracks appreciation and depreciation
of single-family home values,
Disadvantages
F. Federal Housing
Financing Agency
Home Price Index
•Published by Federal Housing Finance Agency
•Available at the national, census division, state,
metro, and county levels,
•Modified version of Case-Shiller repeat sales
method.
•Fees go up or down based on single-family home
prices,
•Only tracks single-family home sales.
•Excludes new construction since homes have
not been sold previously.
•Excludes condominiums, apartments, and
multi-family dwelling units.
•Does not track improvements, deterioration,
or structural changes to property between
sales.
•Volatile index (i.e., significant swings in
appreciation/depreciation.
G. California
Association of
Realtors
•Published by California Association of Realtors
•Available at the state and county levels.
•Fees go up or down based on single-family home
prices.
•Tracks appreciation and depreciation
of single-family home values.
•Only tracks single-family home sales.
•Data reflects existing home sales only, no new
construction.
•Excludes condominiums, apartments, and
multi-family dwelling units.
•Volatile index (i.e., significant swings in
appreciation/depreciation.
H. CoStar •Published by CoStar Group Inc.
•Available at the county level.
•Fees go up or down based on apartment rents.
•Tracks appreciation and depreciation
of apartment rents.
Only tracks apartment rents.
Excludes for-sale dwelling units.
Prepared by: Keyser Marston Associates, Inc.
Filename i: \Ca rlsbad_Indiccs;3/7/2022;lag ZZOZ 'Zz I-13-1201 T8T 40 8LT aSed Page 3
POTENTIAL INDICES FOR FEE LEVEL ADJUSTMENT
E INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
co CITY OF CARLSBAD
NJ
NJ
J
Building Cost Index (l3C1),.at Construction Cast Index (CCI) Consumer Price Index (CPI) -
All items 131
Consumer Price Indeg (CPI) -
Shelter /A
S&P/Case-Shiner
Home Price Index 151
San Diego
Federal Housing Finance Agency
House Price Index lxi
San Diego San Diego
CoStar Group - Rents .F,1
San Diego
Year
Average
Annual
% Growth
from Prior Year
Average
Annual
% Growth
from Prior Year
Average
Arn__A.p_i I
% Growth
from Prior Year
Average
Annual
% Growth
from Prior Year
Average
Annual
_
% Growth
from Prior Year
Average
Annual
9: Growth
from Prior Year
Average
Annual
% Growth
from Prior Year
Average
A I I I_ _ _ A _I at
% Growth
from Prior Year
1996 $3,427 --- $6,558 -- $161 --- $173 --- $72 - $101 -- $174,657 --- --- --
1997 $3,561 3.9% $6,664 1.6% S164 1.7% $178 2.9% $75 3.8% $103 2.6% $184,723 5.8% --- ---
1998 $3,617 1.6% $6,852 2.8% $167 2.0% $187 4.8% $84 13.1% $113 9.6% $206,509 11.8% --- --
1999 $3,591 -0.7% $6,826 -0.4% $173 3.5% $196 5.2% $95 12.4% $125 10.1% $230,498 21.6% -- ---
2000 $3,680 2.5% $7,068 3.5% $183 5.8% $209 6.5% $109 15.1% $143 24.9% $268,239 16.4% $1,647 --
2001 $3,694 0.4% $7,227 2.2% $191 4.6% $223 6.8% $125 14.5% $161 12.7% $299,161 115% $1,707 3.6%
2002 $3,788 2.5% $7,403 2.4% $1913 3.5% $238 6.6% $142 13.7% $185 14.9% $360,811 20.6% $1,730 1.3%
2003 $3,847 1.6% $7,532 1.7% $205 3.7% $253 6.2% $168 18.2% $213 15.1% $422,234 17.0% $1,736 0.3%
2004 $4,155 8.0% $8,192 8.8% $213 3.7% $266 5.3% $215 28.2% $267 25.1% $546,522 29.4% $1,773 2.1%
2005 $4,267 2. TX $8,347 1.9% $221 3.7% $276 3.9% $244 13.2% $313 17.1% $602,768 10.3% $1,873 5.6%
2006 $4,490 5.2% $8,640 3.5% $228 3.4% $287 3.7% $247 1.1% $322 3.0% $600,327 -0.4% $1,997 6.6%
2007 $4,744 5.7% $8,979 3.9% $233 2.3% $295 3.1% $226 -8.4% $301. -6.5% $579,326 -3.59: $2,039 2.1%
2008 $4,950 4.3% $9,411 4.8% $242 3.9% $306 3.7% $173 -233% $250 -17.2% $409,968 -29.2% $2,028 -0.5%
2019 $5,076 2.5% $9,779 39% $242 0.0% $309 0.9% $150 -13.3% $224 -10.2% $358,755 42.5% $1,962 -3.3%
2010 $5,183 2.2% $9,906 1.3% $245 1.3% $307 -0.7% $161 7.3% $223 -0.7% $384,926 7.3% $1,949 -0.7%
2011 $5,380 3.8% $10,057 1.5% $253 3.0% $309 0.8% $254 -4.4% $213 -4.1% $370,183 .3.8% $1,975 1.3%
2012 $5,482 1.9% $10,245 /9% $257 1.6% $315 1.9% $156 1.2% $215 0.7% $384,935 4.0% $2,038 3.2%
2013 $5,554 2.3% $10,455 2.0% $260 1.3% $321 2.0% $182 27.0% $241 12.1% S460,726 19.7% $2,114 3.7%
2014 $5,671 2.1% . 510,740 2.7% $265 1.9% $328 2.2% $202 10.5% $265 9.5% $500,035 9.5% $2,186 3.4%
2015 $5,762 1.6% 511,076 3.1% $269 1.6% $340 3.7% $212 5.4% $280 5.6% $530,076 6.0% $2,298 5.1%
2016 $5,907 2.5% $11,248 2.6% $275 2.0% S355 4.3% $225 6.0% $298 6.6% $556,593 5.0% $2,355 2.5%
2017 56,184 4.7% $11,746 4.4% $283 3.0% $370 4.4% $241 7.0% $319 7.1% 5594,967 6.9% $2,426 3.0%
2018 $6,304 1.9% $11,970 1.9% $293 3.4% $389 5.0% $255 5.6% $338 59% $631,283 6.2% $2,476 2.1%
2019 $6,384 1.3% $12,050 0.7% $299 2.4% $404 4.0% $260 2.1% $347 2.7% $643,796 2.0% 52,531 2.2%
2020 $6,377 -0.2% 512,064 0.2% $304 1.5% $413 2.2% $280 7.6% $364 4.9% $701,213 8.9% $2,559 1.1%
2021 $7,010 9.9% $12,713 5.4% $320 5.2% $425 2.8% $341 22.1% $420 15.3% $826,298 17.9% $2,9136 16.7%
Average
2.9% Annual
2.9%
2.7%
2.8%
3.7%
6.4%
5.9%
6.4%
Growth Rate
TABLE 2
0 -at ft) Source: Engineering News-Record. Building Cost Index History - Los Angeles, 1996 - 2021.
IC12 (2) Source: Engineering News-Record. Construction Cost Index History- Los Angeles, 1996 - 2021.
(3', Source: U.S. Bureau of Labor Statistics, CFI for All Urban Consumers, All Items - San Diego-Carlsbad, 1996 - 2021.
(4) Source: U.S. Bureau of Labor Statistics, Cal fur All Urban Consumers, Shelter - San Diego-Carlsbad, 1999 - 2021.
(5)Source: S&P Corelogic Case-Shiner Home Price Index, single-family homes, San Diego, 1996 - November 2021.
(6)Source: Federal Housing Finance Agency, single-family homes, Son Diego, 1996 - October 2021.
[71 Source: Califomia Association of Realtors, median sales price single-family homes, San Diego, 1095 - 2021.
(8) Source: CoStar Group, apartment rents, San Diego, 1996 - 2021.
Preen,. by: Keyser want.. Associates, Inc.
Rename lACarished_indices3/7/2022deg
Page 4
-o a) (1) Source: Engineering News-Record. Building Cost Index History - Los Angeles, 1996 - 2021. On (V (2) Source: Engineering News-Record. Construction Cost Index History - Los Angeles, 1996 - 2021.
00 (3) Source: U.S. Bureau of Labor Statistics, CPI for All Urban Consumers, All Items - San Diego-Carlsbad, 1996 - 2021.
0 (4) Source: U.S. Bureau of Labor Statistics, CPI for All Urban Consumers, Shelter - San Dlego-Carlsbad, 1996 - 2021. 0 —NS} Source: 5&P Corelogic Case-Shiller Home Price Index, single-family homes, San Diego, 1996 - November 2021.
03(6) Source: Federal Housing Finance Agency, single-family homes, San Diego, 1996 - October 2021.
{7) Source: California Association of Realtors, median sales price single-family homes, San Diego, 1996 - 2021.
(8) Source: CoStar Group, apartment rents, San Diego, 1996 - 2021.
TABLE 3
cu ESTIMATED FEEL LEVEL ADJUSTMENT - EXISTING IN-LIEU FEE
INCLUSIONARY HOUSING IN-LIEU FEE UPDATE
ro CITY OF CARLSBAD
A
Building Cost
Index (BCI) '1:
$4,515
Construction Cost
Index (CC() p.;
$4,515
ConStUtufT Rite
IndextcP0-- At itenis 00 '
$4,515
Consumer Price
Index (CPI) - Shelter ii
$4,515
S&P/Case-Shiller
Home Price Index (5)
$4,515
. Federal Housing Finance
Agency - House Price Index fol
$4,515
CoStar Group s) i
I.Existing in-Lieu Fee
Per Market-Rate Dwelling Unit
$4,515 $4,515
II.Average Annual Growth Rate,
1996 - 2021 2.9% 2.7% 2.8% 3.7% 6.4% 5.9% 6.4% 2.9%
III.Estimated In-Lieu Fee, 2022
Per Market-Rate Dwelling Unit
$9,505 $8,986 $9,223 $11,496 $22,827 $19,928 $22,730 $9,431
3
rlt
Prepared by: Keyser Marston Associates, Inc. Page 5
Filename i:WarlsbadIndlces;3/7/2022;lag
UNIT SIZES
Date Property Address Trans Desc Amount Units Unit 1 Unit 2 Unit 3 Unit 4 Unit 5 Unit 6
2/23/2017 3450 Garfield Street DEV15075 3450 GARF $9,030 2 2,034 2,005
3/2712017 3325 Venado Street DEV2016-0010 SINGLE $4,515
2,710
6/6,2017 187 Cherry Avenue DEV15033 TH $4,515
3 372
6/22/2017 1655 Chestnut DEV16030 NO DESCRI $4,515
1,959
8/0/2017 6798 Paseo del Norte DEV13028 3-LOT SUB $22,575
3,283 2,313 2.431 2,431 2,313
8/22/2017 167 Cherry Avenue DEV16050 REMOVAL 0 $4,515
2,727
11/1/2017 4390 Adams DEV2017-0061 CONSTRU $4,515
3,308
2/15/2018 1284 Pine Avenue DEV13014 TENTATIVE $4.515
4,505
3/29/2018 3622 Garfield Street DEV07055 BUILD 3 U $9,030
1,823 1,827 1111.111r-
616/2018 849 Home Avenue DEV16055 THE CONST $22,575
2,439 2,373 2,373 2,407 2,464
8/2/2018 6717 Antilope Avenue DEV15042 SPLIT DUP $4,515
1,348
8f7/2018 2677 State Street DEV2016-0031 $13,545
884 2,160 2,717
9/10/2018 438 Tamarack DEV2017-0100 $13,545 3 2,404 2,385 2,385
9/20+2018 1095 Hoover DEV2017-0112 NEW SFD $4,515 1 4,901
3/8/2019 7331 Las Battens Court DEV08007 NO DESCRI $4,515 1 2,290
4/15+2019 4469 Adams Street DEV15005 NO DESCRI S4.515 1 4,085
5/31/2019 2812 Cazadero Drive DEV2017-0134 $9,030 2 2,785
12/23/2019 2736 Arland DEV2019-0137 CONSTRU $4,515 1 1,508
12/27/2019 3005 Madison Street DEV2017-0069 $27,090 6 2,216 2,217 2,111 2,117 1,879 2,101
325/2020 2630 Vistosa Place DEV2018-0166 NEW SIN $4,515 1 4,006
3+26/2020 7287 Almadeu Lane DEV2017-0085 SINGLE $4.515 1 6,294
5/14/2020 1391 Oak Avenue DEV2018-0048 54.515 1 2,468
10/21/2020 972 Grand Avenue DEV2017-0063 SUBDIVISION 0F6 $18,060 4 1,908 1,860 2,271 2,290
11/9/2020 5462 Carlsbad Blvd DEV2019-0162 $4,515 1 5,076
11/30/2020 725 Oak DEV2018-0180 $22,575
1,524 1,525 1,543 1,742 1,761
12/22/2020 3050 Madison Street DEV15068 69,030
2,663 2,018
2/8/2021 786 Grand Avenu DEV2018-0055 $22,575 5 2,147 2,122 2,395 2,141 2,112
8/18/2021 4269 Hillside Drive DEV2020-0254 $4,515 1 3,266
11/17/2021 320 Hemlock DEV2020-0023 S13,545 3
2,136 2,3441:§ell.11.11111111MI
Single-Family Dwellings
Total number of units 16
Average number of units/year 3.2
Average size of units 3,364
Average Annual In-lieu fee paid ($4,515) $14,448
Average Annual In-lieu fee paid ($8,529) $27,293
Average Annual Difference $12,845 /year
Multi-Family Dwellings
Total number of units 47
Average number of units/year 9.4
Average size of units 2,173
Average Annual in-lieu fee paid ($4,515) $42,441
Average Annual In-lieu fee paid (@$15) $306,375
Average Annual Difference $263,934 /year
Average Annual In-lieu fee paid ($4,515) $42,441
Average Annual In-lieu fee paid (g$20) $408,500
Average Annual Difference $366,059 /year
ZZOZ ZZ LiwelAl 181p WI aged
Tammy Cloud-McMinn
Subject:
Attachments:
Mayor and Councilmembers,
FW: Letter from BIA
Carlsbad lnclusionary.pdf All Receive -Agenda Item# j_
For the Information of the:
CITY COUNCIL
Data:Y:J:J.}22CA ✓ cc -::::_
CM ✓ ACM ..Jt:_DCM(3) v":
Attached please find a letter from the Building Industry Association of San Diego regarding proposed changes to the City
of Carlsbad's lnclusionary Housing Policy. Please do not hesitate to reach out if you have any questions.
Sincerely,
Kelly Batten
Kelly Batten
Senior Public Policy Advisor
Building Industry Association of San Diego
9201 Spectrum Center Blvd. #110
San Diego, CA 92123
858-514-7004 direct
858-472-1504 cell
kelly@biasandiego.org
www.biasandieqo.org
1
BUILDING INllU$TRY
ASSOCIATION OF
SAN DIEGO COUNTY
CHAIRMAN
John la Raia
H.G. Fenton Company
VICE CH.AIRMAN
Chris.Hall
Hallmark Communities
TR£A.SURER / SECRETARY
Rita Mahoney
ColRlch
PAST CHAIRMAN
Alex Phhner
Lennar
PRESIDENT 6I C.E.O.
Lori Holt Pfeiler
AFFILIATES
California Building
Industry Association
National Association
of Home Builders
March 21, 2022
Mayor Matt Hall
City of Oceanside
300 North Coast Hwy
Oceanside, CA 92054
re: lnclusionary Zoning policy
Dear Honorable Mayor and City Council Members,
As advocates for home ownership, especially for middle-income families, the Building
Industry Association of San Diego (BIA) would like to express our concerns with the City
of Carlsbad's lnclusionary Zoning policy changes. San Diego County is in the midst of a
housing crisis and adding additional regulations increases costs and makes home
ownership more difficult, especially for middle-income families.
The BIA has several concerns with the changes to Carlsbad's lnc!usionary Housing Policy.
Primarily, BIA would like to see an increase of the number of units to allow the
developments of twenty or fewer units, an increase from six, t o allow the option of
payment of the in-lieu fee. This allows home builders greater flexibility when building
smaller projects.
Secondly, t he proposed increase in the in-lieu fee from $4,515 per unit to $15 per
square foot is a significant change and should be phased-in over three years. Consider
that for an average unit of 1600 square feet, the fee increases from $4,515 per unit to
$24,000 per unit. Time should be allowed to adjust for this significant change. The first
year at $5 per square foot would increase the fee on a 1600 sq. ft unit to $8,000 per
unit, nearly twice as much as the current fee.
Finally, BIA has concerns regarding the housing calculation when using off·site
compliance. As drafted, the language disincentivizes off-site compliance by requiring a
higher percentage of overall affordable units when providing units off-site. There are a
variety of reasons that a developer may choose to utilize the off-site option including
t he ability to partner with an affordable developer, and requiring a higher amount of
affordable housing can create enough of a financial disincentive that it is not worth
pursuing that second project. The City should be encouraging the development of
affordable housing through this language, not creating additional barriers.
Res'p~ctfully,
'~
Lori Holt Pfeiler
CEO/Pres Building Industry Association of San Diego County
Building Industry Association of San Diego County
9201 Spectrum Center Blvd., Suite 110, San Diego, CA 921 23-1407
p 858-450-1221 F 858-552· 1445 www.biasandiego.org
Inclusionary Housing Program
Jeff Murphy, Director
Community Development Department
March 22, 2022
Cassia Heights Apts.
TODAY’S PRESENTATION
•Program Overview
•In-Lieu Fee
–Background
–Proposed adjustments
•Alternative Means of Compliance Policies
–Background
–Proposed amendments
ITEM 4: Inclusionary Program
CITY COUNCIL HEARING
Public
Comments
Staff
Presentation
Decision Point #2
Council Policy
Decision Point #1
In-Lieu Fee
Decision Point #3
Ordinance
PROGRAM
BACKGROUND
ITEM 4: Inclusionary Program
Villa Loma Apartments
OVERVIEW
1993 Inclusionary Housing Ordinance
Housing Trust Fund
25 years in service
$39.5M in total deposits
2,300 affordable homes built
13% of houses are affordable
ITEM 4: Inclusionary Program
ITEM 4: Inclusionary Program
Interest from Loans:
30%
Housing Credits:
22%
Interest: 15%
In-Lieu Fees: 4%
Impact Fees: 8%Transfers: 9%
Fed & State
Grants: 8%
Admin Fees: 3%
Other: 1%
HOUSING TRUST FUND REVENUES
ITEM 4: Inclusionary Program
Interest from Loans:
30%
Housing Credits:
22%
Interest: 15%
In-Lieu Fees: 4%
Impact Fees: 8%Transfers: 9%
Fed & State
Grants: 8%
Admin Fees: 3%
Other: 1%
HOUSING TRUST FUND REVENUES
INCLUSIONARY HOUSING
IN-LIEU FEE
ITEM 4: Inclusionary Program
Tavarua Senior Apartments
BACKGROUND
•Formulated using “gap method”
•Standard methodology used
•Initial fee set in 1993 at $11,485
•Adjusted in 1996 to $4,515
•Remained unchanged
ITEM 4: Inclusionary Program
CITY COUNCIL DIRECTION
•2019 –City Council, through Minute Motion,
directed a review of the current fee amount
•2020 –City Council provided funding to conduct
gap analysis
•2021 –KMA completed analysis
ITEM 4: Inclusionary Program
IN-LIEU RATES
ITEM 4: Inclusionary Program
IN-LIEU RATES
ITEM 4: Inclusionary Program
Assumes 1,200 square foot unit
Housing Commission
•Agreed with staff
Apply $8,529 rate for single-family homes
•Deviated from staff
Apply a different annual fee escalator
Apply $20/sf rate, 5-year phase
ITEM 4: Inclusionary Program
Housing Commission
•Staff agrees that an inflater should be applied
•City typically uses Consumer Price Index (CPI)
•HC recommended a housing cost inflator
•Several options (Exhibit 11)
•Construction Cost Index (CCI)
ITEM 4: Inclusionary Program
Housing Commission
•Staff continues to recommend $15 rate
•While the $15 rate is at the low end of scale,
still substantial increase over current fee
•Concerns additional increase will have on
market
ITEM 4: Inclusionary Program
IN-LIEU RATES
ITEM 4: Inclusionary Program
300%
Increase
IN-LIEU RATES
ITEM 4: Inclusionary Program
430%
Increase
ALTERNATIVE MEANS
OF COMPLIANCE
ITEM 4: Inclusionary Program
Roosevelt Gardens Condominiums
OVERVIEW
•Various constraints may frustrate a developer’s ability to meet
the strict letter of the inclusionary regulations.
ITEM 4: Inclusionary Program
OVERVIEW
•Various constraints may frustrate a developer’s ability to meet
the strict letter of the inclusionary regulations.
•Ordinance allows “alternative means of compliance” if it meets
code intent and Housing Element goals/policies.
ITEM 4: Inclusionary Program
OVERVIEW
•Various constraints may frustrate a developer’s ability to meet
the strict letter of the inclusionary regulations.
•Ordinance allows “alternative means of compliance” if it meets
code intent and Housing Element goals/policies.
•City Council has developed policies that allow certain
alternatives.
ITEM 4: Inclusionary Program
OVERVIEW
•Various constraints may frustrate a developer’s ability to meet
the strict letter of the inclusionary regulations.
•Ordinance allows “alternative means of compliance” if it meets
code intent and Housing Element goals/policies.
•City Council has developed policies that allow certain
alternatives.
•Alternatives are options, not requirements
ITEM 4: Inclusionary Program
“Alternative” Policy -Current
Off-Site & Combined Inclusionary
Housing Projects (1995)
Sale of Affordable Housing Credits
(1995)
Inclusionary Housing Incentive Credit
Schedule (2004)
ITEM 4: Inclusionary Program
“Alternative” Policy -Proposed
Inclusionary Housing Ordinance
Alternative Means of Compliance
ITEM 4: Inclusionary Program
Housing Credit Purchase Program
ITEM 4: Inclusionary Program
Housing Credit Purchase Program
ITEM 4: Inclusionary Program
•City financially participates in development project
•Excess inclusionary constructed
•Affordable housing credit bank created
•Developers purchase excess units as credits
•Not an in-lieu fee
Housing Credit Purchase Program
ITEM 4: Inclusionary Program
Findings to establish bank
•Units in excess of inclusionary requirements; or
•Units in a 100% affordable project; and
•City financially contributed
•Constructed/final inspection; and
Housing Credit Purchase Program
ITEM 4: Inclusionary Program
•Projects ≥7, but ≤50 are eligible
•Credit purchase ratio
7 to 20 units –1.0 credit per inclusionary unit
21 to 35 units –1.5 credits per inclusionary unit
36 to 50 units –2.0 credits per inclusionary unit
Housing Commission
•Agreed with staff
New Council Policy Statement No. 57
•Deviated from staff
Housing credit price be a flat rate ($177,000)
ITEM 4: Inclusionary Program
Housing Credit Purchase Price
ITEM 4: Inclusionary Program
Credit price determined by dividing the city’s
financial contribution with the total number of
excess affordable units.
Housing Credit Purchase Price
ITEM 5: Inclusionary Program
Credit price determined by dividing the city’s
financial contribution with the total number of
excess affordable units.
$1M towards a 150-unit project where 10
affordable units were built in excess of code…
$1M ÷ 10 = $100,000 credit price
Housing Credit Purchase Program
ITEM 4: Inclusionary Program
•Never intended to act as an in-lieu fee
•Not designed to capture the gap in costs
•Credit price is in addition to loan repayment
•May result in reduced revenues
ITEM 4: Inclusionary Program
Housing Credit Purchase Program
Project Size Credit Ratio Proposed Rate1 HC Rate
7 to 20 units 1.0 $98,123 $177,000
21 to 35 units 1.5 $142,185 $177,000
36 to 50 units 2.0 $196,246 $177,000
Credit Price per Unit
1 Based on current credit price for an affordable unit at Tavarua Apartments
ITEM 4: Inclusionary Program
Housing Credit Purchase Program
Project Size Credit Ratio Proposed Rate1 HC Rate
7 to 20 units 1.0 $98,123 $177,000
21 to 35 units 1.5 $142,185 $177,000
36 to 50 units 2.0 $196,246 $177,000
Credit Price per Unit
1 Based on current credit price for an affordable unit at Tavarua Apartments
Housing Commission
Consider increasing the number of units eligible to
participate in payment of the in-lieu fee from six
units to 20 units.
ITEM 4: Inclusionary Program
Increase Eligibility of In-Lieu
ITEM 4: Inclusionary Program
•~13% of housing stock is affordable to lower
income families due in part to the program
•If given option, developers will pay fee instead
of building affordable unit
•Will take time to collect enough in-lieu fees to
develop units
•Over time, affordable housing stock will decline
ITEM 4: Inclusionary Program
CONCLUSION
•Successful program
$40M in revenue collected in HTF
Leverage against other funds
~13% affordability
ITEM 4: Inclusionary Program
•Successful program
$40M in revenue collected in HTF
Leverage against other funds
~13% affordability
•Changes strike a balance between meeting
affordable housing needs and continued
program success
CONCLUSION
Revised In-Lieu Fee
$8,515 in-lieu fee (single homeowner)
$15 per square foot (projects 2 to 6 units)
Fees annually adjusted based on index
New Policy 57
Maintain current credit price methodology
Maintain current in-lieu eligibility (≤6 units)
ITEM 4: Inclusionary Program
RECOMMENDATIONS
Inclusionary Housing Program
Jeff Murphy, Director
Community Development Department
March 22, 2022
Cassia Heights Apts.
ITEM 4: Inclusionary Program
CITY COUNCIL DISCUSSION
In-lieu fee adjustmentSFDProjects 2 to 6 units
1.New fee amount
2.Annual adjustment
(CMI, CCI,…)
3.Phasing Period
(none, 3-year, 5 -year,…)
ITEM 4: Inclusionary Program
CITY COUNCIL DISCUSSION
Policy Amendments
•Staff & Housing Commission recommend
combined/updated Council Policy No. 57
•Exception –How the credit purchase price is established
Option 1: Maintain current calculation (staff)
Option 2: Apply affordability gap rate of $177,000,
adjusted annually (Commission)
ITEM 4: Inclusionary Program
CITY COUNCIL DISCUSSION
Ordinance Amendment
Housing Commission:
Expand the ability for developers to pay the in-lieu fee by
increasing the maximum project size from 6 units to 20 units
(requires code amendment and Coastal approval).
Staff:
Maintain the current code. Only projects ≤6 units in size are
eligible to pay in lieu fee, all other projects must build
inclusionary unit(s).
Inclusionary Housing Program
Jeff Murphy, Director
Community Development Department
March 22, 2022
Cassia Heights Apts.
ITEM 4: Inclusionary Program
Housing Credit Purchase Program
Bank Quadrant Unit Price Available Units
Villa Loma NE $49,000 0
Roosevelt Gardens NW $142,000 0
Cassia Heights SE $66,300 32
Tavarua NW $98,123 24
ITEM 4: Inclusionary Program
Inclusionary Housing Program
Quadrant Affordable Units1 % of Total
Northwest 724 28%
Northeast 359 14%
Southeast 804 31%
Southwest 676 26%
1 includes units built and units approved, but not built
AFFORDABLE HOUSING CREDIT BANKS
ITEM 4: Inclusionary Program
Tavarua Senior Apts.Cassia Heights Apts.Roosevelt Gardens.Villa Loma Apts.