HomeMy WebLinkAbout2021-11-18; Housing Commission; ; Approval of Affordable Housing credits to satisfy the affordable housing requirement for La Costa Villas North (CT 2019-001)Meeting Date: Nov. 18, 2021
To: Housing Commissioners
From: Mandy Mills, Director of Housing & Homeless Services
mandy.mills@carlsbadca.gov, 760-434-2907
Subject: Approval of Affordable Housing credits to satisfy the affordable housing
requirement for La Costa Villas North (CT 2019-001)
Recommended Action
Adopt a resolution recommending that the City Council approve a request to purchase
Affordable Housing credits to satisfy the inclusionary housing requirement for La Costa Villas
North.
Executive Summary
400 Gibraltar, LLC is under contract to purchase a nine-unit condominium project. The
development, known as La Costa Villas North, was approved by the Planning Commission on
October 20, 2021, and is conditioned to provide two units affordable units affordable to low
income households.
The home builder is seeking to satisfy the inclusionary housing requirement through the
purchase of two affordable housing credits as opposed to building on site. The City Council
approves the Affordable Housing Agreement in accordance with requirements and process set
forth in 21.85 of the Carlsbad Municipal Code.
Discussion
Background
On May 24, 2011, the City Council agreed to designate the Cassia Heights Apartments as a
Combined Affordable Housing Project under the city's Inclusionary Housing Program. It
provided 56 units of housing affordable to lower income households in "excess" of an
inclusionary housing obligation for a market-rate housing developer, and therefore,
represent "housing credits" that may be purchased by future housing developers in the
southeast and southwest quadrants of the city to satisfy an Inclusionary Housing obligation. At
the discretion of the City Council, the credits may be sold at a price set by the City Council. The
current credit price for the subject units is $66,300.
On October 20, 2021, the Planning Commission approved of a Tentative Tract Map (CT 2019-
0001) and Planned Development Permit to develop a nine unit condominium project on an
approximate 0.40-acre property on the south side of Gibraltar Street, at the intersection of
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Gibraltar Street and Jerez Court (Location Map provided as Exhibit 2). The project is eligible to
purchase credits in the Cassia Heights combined affordable housing development. Because of
the small size of the project, it would be difficult to financially integrate the required affordable
housing units on site. The applicant has elected to pursue the purchase of affordable housing
credits rather than constructing units on the site of the market rate development.
The City Council has adopted Policies 57 and 58 (Exhibits 3 & 4) that govern the sale of
affordable housing credits. The policies require the examination of the feasibility of an on-site
proposal, the advantages and disadvantages of an off-site proposal, and whether the off-site
project advances the city's housing goals and strategies. The Affordable Housing Policy Team
(staff) has reviewed the above request and utilized the criteria contained in the policies in
making its recommendation to approve the purchase of the credits for the project. Below is a
summary of the analysis considered.
Policy 57 Criteria Analysis
Feasibility issues on site The following issues impact the on-site feasibility:
Size-the project allows for 9 units, making it difficult to absorb
the loss of two market rate homes.
Design and product type-The site is only 0.40 acres, which limits
product size and type after parking and setbacks.
Difficult to integrate Design and product type-With only the ability to build 9 units,
absorbing two low-income units on site is not financially feasible.
Feasibility/cost
effectiveness
The small size of the project make on-site affordable units
infeasible. The funds received by the city for the purchase of an
affordable housing credit will allow the city to invest in more
meaningful affordable housing opportunities.
Location advantages The location is not in close proximity to services that support low
income households. The funds received by the city for the
purchase of an affordable housing credit will allow the city to
invest in more appropriately located affordable housing
opportunities.
Capacity to deliver On site units would not have services provided. The funds
received by the city for the purchase of an affordable housing
credit will allow the city to invest in affordable housing
opportunities that provide on-site services for residents.
Advance housing goals The funds received by the city for the purchase of an affordable
housing credit will allow the city to repay the city for existing
units and re-invest in affordable housing opportunities that
provide on-site services for residents.
City Council Policy 57 directs the cost to a purchaser, and the use of an Affordable Housing
Agreement to commit a developer’s purchase of credits. If eventually approved by the City
Council, the funds received for the purchase of the two credits will be deposited to the city’s
Housing Trust Fund to assist in the development of future affordable housing projects as well as
programs to provide housing assistance to low income households.
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Fiscal Analysis
The Affordable Housing Credit price for the Cassia Heights Apartments is currently $66,300 per
credit. The developer of La Costa Villas North is required to purchase a total of two credits.
This action would result in a payment of a minimum of $132,600 to the city's Housing Trust
Fund. These funds will be used to assist in the development of future affordable housing
projects as well as programs to provide housing assistance to low income households, as
appropriate. It should be noted that the developer/builder will pay the credit price in effect at
the time that building permits are approved for the subject development. The housing credit
price for Cassia Heights Apartments has an annual escalator based on the Consumer Price Index
(CPI). Therefore, it is anticipated that the developer may pay more than the above noted credit
price depending upon any increases in CPI prior to building permit approval.
Next Steps
The Housing Commission recommendation and staff analysis of the credit purchase request will
be forwarded to the City Council for their consideration.
Environmental Evaluation
The City Planner is categorically exempt from the requirement for the preparation of
environmental documents pursuant to Section 15332 (In-Fill Development Projects) Class 32
Categorical Exemption of the State CEQA Guidelines. A Notice of Exemption will be filed by the
City Planner upon final project approval. No further environmental review is required.
Public Notification and Outreach
This item was noticed in keeping with the state's Ralph M. Brown Act and it was available for
public viewing and review at least 72 hours before the scheduled meeting date.
Exhibits
1.Housing Commission Resolution
2.Location map
3.City Council Policy 57
4.City Council Policy 58
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Exhibit 1
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EXHIBIT 2
LA COSTA VILLAS NORTH
LOCATION MAP
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r CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Off-site and Combined Inclusionary Housing Projects Policy No. --"'-57'------Date Issued August 8, 1995 Effective Date August 8. 19 9 5 Cancellation Date ------Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. BACKGROUND The City's Inclusionary Housing Ordinance (CMC Chapter 21.85) establishes certain requirements under which residential developers must provide housing that is affordable to lower-income households as a condition of project approval and permit issuance. The Ordinance provides that inclusionary units "should be built on-site and, wherever reasonably possible, be distributed throughout the project site." The Ordinance also provides that "circumstances may arise ... in which the public interest would be served by allowing some or all of the inclusionary units associated with one project site to be produced and operated at an alternative site or sites." This alternative is described as a "Combined Inclusionary Housing Project" or "Combined Project". The Ordinance, in addressing Combined Projects, states that "it is the exclusive prerogative of the final decision making authority of the City to determine whether or not it is in the public interest to authorize the residential sites to form a Combined Inclusionary Housing Project. " PURPOSE It is the purpose of this policy to establish the criteria which will be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. POLICY The following criteria will be applied in order to make the necessary public interest finding. Each criteria is defined in terms of specific questions which, when affirmatively answered, would support an off-site option: Pagel of 4
EXHIBIT 3Nov. 18, 2021 Item #2 Page 8 of 19
CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Off-site and Combined Inclusionary Housing Projects Policy No. --=57�----Date Issued August 8, 1995 Effective Date August 8. 1995 Cancellation Date ------Supersedes No. ______ _ Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. 1.Feasibility of the On-site Proposal.► Are there significant feasibility issues due to factors such as project size, site constraints, andcompetition from multiple projects that make an on-site option impractical?► Will an affordable housing product be difficult to integrate into the proposed marketdevelopment because of significant price and product type disparity?► Does the on-site development entity lack the capacity to deliver the proposed affordablehousing 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-sitealternative, particularly regarding potential local public assistance and when applying theCity's Affordable Housing Financial Assistance Policy.► Does the off-site proposal have location advantages over the on-site alternative, such asproximity to jobs, schools, transportation, services; less impact on other existingdevelopments, etc.?► Does the off-site option offer a development entity with the capacity to deliver the proposedproject?► Does the off-site option satisfy multiple developer obligations that would be difficult to satisfywith multiple projects?Page 2 of 4 Nov. 18, 2021 Item #2 Page 9 of 19
CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. __ 5�7�----Date Issued August 8. 1995 Effective Date August 8. 1995 Cancellation Date _____ _ Supersedes No. ______ _ General Subject: AFFORDABLE HOUSING Specific Subject: Off-site and Combined Inclusionary Housing Projects Copies to: City Council, City Manager, City Attorney, Departmlnt and Division Heads, Employee Bulletin Boards, Press, File. 3.Advancing Housing Goals► Does the off-site proposal advance and/or support City housing goals and policies asexpressed 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 ofthe Inclusionary Housing Ordinance.2.Project approvals must be conditioned with the option to propose an off-site method (i.e., CombinedProject) of satisfying the inclusionary obligation. A project proposing an off-site option may or maynot also propose an on-site option.3.Prior to final map or issuance of building permits, applicants must submit an Affordable HousingAgreement as described in the Inclusionary Housing Ordinance which specifically describes any offsite proposal.4.Off-site proposals in the form of a draft Affordable Housing Agreement will be reviewed by theCombined Project Review Committee and it will be determined if the necessary findings can be madeby staff.Page 3 of 4 Nov. 18, 2021 Item #2 Page 10 of 19
CITY OF CARLSBAD COUNCIL POLICY STATEMENT Policy No. -�5�7�----Date Issued August 8, 1995 Effective Date August 8, 1995Cancellation Date _____ _ Supersedes No. ______ _ General Subject: AFFORDABLE HOUSING Specific Subject: Off-site and Combined Inclusionary Housing Projects Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File. 5.Staff's findings and recommendation, including the Combined/Off-site Project AssessmentWorksheet, will accompany the Affordable Housing Agreement to the Housing Commission foraction.6.Prior to final map or issuance of building permits, the proposed Affordable Housing Agreementwill be considered by City Council along with the recommendation of staff and HousingCommission.7.City Council will be the final decision making authority in determining whether an off-siteproposal is in the public interest and permitting this option.Page 4 of 4 Nov. 18, 2021 Item #2 Page 11 of 19
1.
2.
3.
4.
5.
6.
OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT
ASSESSMENT WORKSHEET
BACK�ROUND
Applicant Name and Address:
Off-site or Combined Project Name:
Description of Project with lnclusionary Housing Obligation:
Proposed On-site Project Description (if any):
Proposed Off-site Project Description:
Description of On-site Project Constraints:
Attachment "1" to Council Policy Statement No. 57 Nov. 18, 2021 Item #2 Page 12 of 19
1.
-cc
ASSESSMENT CRITERIA
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 thatmake an on-site option impractical?
Brief Narrative:
b.Will an affordable housing product be difficult
to integrate into the proposed marketdevelopment because of significant price
and product type disparity?
Brief Narrative:
C.Does the on-site development entity havethe capacity to deliver the proposedaffordable 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-sitealternative, particularly regarding potential
local public assistance?
WORKSHEET .
. .
ASSESSMENT·CONCLUSION
. (Check appropriate box) .
DOES NOT SUPPORT SUPPORTsOff.SfTE ·. Off..SITE PROPOSAL
2
wr;;oNCLUSIVE PROPOSAL
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''''.
ASSESSMENT CRfTERIA
Brief Narrative:
b.Does the off-site proposal have location
C.
d.
advantages over the on-site alternative, suchas proximity to jobs, schools, transportation,services; less impact on other existingdevelopments, etc.?
Brief Narrative:
Does the off-site option offer a development
entity with the capacity to deliver the proposed project?
Brief Narrative:
Does the off-site option satisfy multiple developer obligations that would be difficult to satisfy with multiple projects?
Brief Narrative:
3.Advancing Housing Goals and Strategv
a.Does the off-site proposal advance and/orsupport City housing goals and policiesexpressed in the Housing Element, CHASand lnclusionary Housing Ordinance?
Brief Narrative:
SUMMARY
WORKSHEET ..
ASSESSMENT CONCLUSION
(Check appropriate box)
'· DOES NOT SUPPORT ..SUPPORTS Off'SITE <JFF..SITE PROPOSAL INCONCLUSIVE PROPOSAL
DOES NOT SUPPORT SUPPO«TS.OFF-SFTE Off',SITE-PROPOSAL INCONCLUSIVE. PROPOSAL .
. ·•·.··.
3 Nov. 18, 2021 Item #2 Page 14 of 19
Date Considered by Review Committee:
Review Committee Action:
Action:
ar
Nov. 18, 2021 Item #2 Page 15 of 19
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject:
Specific Subject:
AFFORDABLE HOUSING
Sale of Affordable Housing Credits
Page 1 of 4
Policy No. -�5=8 _____ _ Date Issued September 12, 1995
Effective Date Sept. 12. 1995Cancellation Date _____ _ Supersedes No. ______ _
Copies to: City Council, City Manager, City Attorney, Department and Division Heads,
Employee Bulletin Boards, Press, File.
PURPOSE
To establish a policy to be followed by City Council and City staff in selling Affordable Housing Credits, controlled by the City, to developers who will use the Credits to satisfy obligations to provide affordable housing pursuant to the City's Inclusionary Housing Ordinance (CMC Chapter 21.85).
BACKGROUND
In the development of the 344-unit affordable housing project known as Villa Lorna in the Southwest Quadrant of the City, the developers and the City created a project which may be treated as a Combined
Project as defined in the City's Inclusionary Housing Ordinance. With City Council approval, Combined
Projects allow "some or all of the inclusionary units associated with one residential project site to be produced and operated at an alternative site". The "alternative site" becomes a Combined Project. Villa Loma was conceived and developed with City participation based on the creation of 184 excess affordable housing units which would be available to satisfy other developers' inclusionary housing obligations thus making it a potential Combined Project. City financial participation in the project was also based on the concept of recovering costs through the sale of the excess units. Furthermore, Villa Lorna was structured to give the City control of these units (Affordable Housing Credits or "Credits") and their sale to potential Combined Project participants. Therefore, it is necessary to establish a policy to guide the City in the effective implementation of these Affordable Housing Credit sales transactions.
POLICY
Two basic factors will be considered in a Credit sale transaction --the financial aspect, which is the Credit pricing --this determines cost to a purchaser and revenue to the City; and the affordable housing aspect, which is the use of this mechanism to satisfy a developer's obligation under the Inclusionary Housing Ordinance. Based on these considerations, the following will guide Credit sales:
EXHIBIT 4
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CITY OF CARLSBAD COUNCIL POLICY STATEMENT General Subject: Specific Subject: AFFORDABLE HOUSING Sale of Affordable Housing Credits Page 2 of 4 Policy No. -�5=8 _____ _ Date Issued __ S=e=p�t�-�1=2_, �1�9�9=5-Effective Date Sept. 12, 1995Cancellation 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 localfinancial 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 ( eitheras loans or expenditures for land including accrued interest on such amounts for the period of timethey are outstanding); and the local developer contribution to the project provided in order to satisfyan affordable housing obligation):Affordable Housing Credit Pricing Formula
+ Number of AffordableLocal Financial Contribution Housing Credits AvailableCity Contribution $4.2 Million* Developer Contribution (Aviara Land Associates) .9 TOT AL $5.1 Million
*To be adjusted with the addition of interest.184 = Unit Price of Affordable Housing Credits (Rounded to nearest $1,000)* $28,000* ► Terms of Purchase and Sale. The commitment to purchase and sell Credits will be accomplishedthrough an Affordable Housing Agreement as required by the Inclusionary Housing Ordinance. ThisAgreement will contain the terms of the Credit sale and will acknowledge the satisfaction of anaffordable housing obligation through participation in a Combined Project (Villa Loma).Nov. 18, 2021 Item #2 Page 17 of 19
t CITY OF CARLSBAD COUNCIL POLICY STATEMENT Page 3 of 4 Policy No. ------"'5-"-8 _____ _ Date Issued Sept. 12. 1995Effective Date Sept. 12. 1995Cancellation 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 andallocation of Credits: 1.Project Review. Staff, through the Combined Project Review Committee (see Council PolicyNo. 57) will review all applications and approved projects with inclusionary requirements anddetermine which projects will be recommended to satisfy their obligations through thepurchase of Credits. If the number of acceptable projects have affordable housingrequirements which exceed the available number of Credits, projects will be ranked andallocated Credits accordingly. Projects will be reviewed and ranked using the followingcriteria:a)The immediacy of the need to satisfy an affordable housing obligation with respect tothe market rate project that is generating the obligation.b)The readiness and capacity of the developer to enter into an Affordable HousingAgreement and perform under its terms.c)The acceptability of the Combined Project as an off-site option in lieu of thesatisfaction of the affordable housing obligation on-site with respect to the project thatis generating the obligation (see Council Policy No. 57).2.Electing to Purchase Credits. Developers will be notified of staffs recommendation to permitthe 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 havetheir projects approved with conditions allowing this option. In addition to PlanningCommission approval, the recommendation of the Housing Commission will be required forthe Credit purchase option of satisfying the Inclusionary Housing Obligation. When a projectis approved (e.g., tentative map) with the Credit purchase condition, a reservation of theCredits is made for the project.Nov. 18, 2021 Item #2 Page 18 of 19
CITY OF CARLSBAD
COUNCIL POLICY STATEMENT
General Subject:
Specific Subject:
AFFORDABLE HOUSING
Sale of Affordable Housing Credits
Page 4 of 4
Policy No. -�5"'8'--------Date Issued Sept. 12, 1995 Effective Date Sept. 12, 1995 Cancellation Date ------Supersedes No. ______ _
Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File.
4.Affordable Housing Agreement. Within sixty (60) days of the approval of the Credit purchasecondition, the developer must deliver to the Housing and Redevelopment Director a signedAffordable Housing Agreement in the form prescribed by the City with a non-refundabledeposit in an amount equal to 10% of the total Credit sale price. The Affordable HousingAgreement will be scheduled for City Council consideration and, if and when approved, willbe executed by the City. The Affordable Housing Agreement will require payment of thebalance of the purchase price upon execution and prior to final map or issuance of a buildingpermit.
5.Failure of Developer to Perform or Denial of Purchase Option. If the developer is unable toperform as required, or is denied the option of purchasing Credits, the Credits will be madeavailable to another project(s), subject to this process.
6.This policy is subject to all other requirements of the Inclusionary Housing Ordinance.
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