HomeMy WebLinkAbout2020-07-21; City Council; ; Acquisition of 7018 Forsters Tern Drive, an Affordable Housing Resale Unit, and Expenditure of Community Development Block Grant Funds in the amount of $340,000 for the PCA Review __BK_
CI TY COUNCIL
Staff Report
Meeting Date:
To:
From:
Staff Contact:
Subject:
July 21, 2020
Mayor and City Council
Scott Chadwick, City Manager
David de Cordova, Housing Servi'ces Manager
david.decordova@carlsbadca.gov, 760-434-2935
Acquisition of 7018 Forsters Tern Drive, an Affordable Housing Resale
Unit, and Expenditure of Community Development Block Grant Funds in
the amount of $340,000 for the Purchase
Recommended Action
Adopt a resolution authorizing the city manager to execute all required documents to complete
the acquisition of 7018 Forsters Tern Drive, an affordable housing resale unit and to expend
$340,000 in Community Development Block Grant funds to buy the unit.
Executive Summary
The city has been informed that an affordable housing unit at 7018 Forsters Tern Drive, in the
24-unit Rose Bay condominium project, is available for the city to purchase to provide
affordable housing in Carlsbad as part of its inclusionary housing efforts.
Staff is recommending the city purchase the home using some of the Community Development
Block grant funding approved by the City Council in January 2020 for the purchase of such
housing.
The Carlsbad Municipal Code does not provide authority to the city manager to proceed with
such an acquisition of property, or accept the grant deed for transfer of property ownership,
without the prior approval by the City Council. Approving this resolution would allow the city to
complete the acquisition process for this affordable housing property. The city will own the
property at the end of this transaction with the intent to resell it to an eligible lower-income
buyer.
Discussion
Program overview
In 1993, the city adopted an inclusionary housing ordinance that requires all residential
developments greater than six units to restrict 15% of the total number of homes in a project as
affordable to low-income households. Residential developers have the option to produce rental
or ownership properties to satisfy the inclusionary requirements. Various conditions are
imposed on the inclusionary units to ensure that they remain affordable to low-income
households, including a provision giving the city the first option to buy the home at a price
restricted to the maximum of the low-income category in the county's median income at the
time the city received notice the property was for sale.
July 21, 2020 Item #2 Page 1 of 10
The City Council approved an amendment to the 2019-2020 Community Develo'pment Block
Grant Program Action Plan on Jan. 28, 2020, that allocated $500,000 in CDBG funding to allow
the city to exercise its option to buy additional affordable housing resale properties at a
restricted price and authorized the use of CDBG funds to buy these resale units ·as they became
available. Under the Community Development Block Grant Program Action Plan approved in
2019, city staff is authorized to respond to applicable property owners with the city's intent to
exercise its option to purchase affordable, restricted price homes as they become available for
resale and to use CDBG funds to purchase the units.
Approving this resolution would allow the city to purchase.an affordable home and then resell
it to an eligible lower-income buyer. As the owner, the city could place additional restrictions
on the property and could resell it at a lower price to create more affordable housing
opportunities.
The property and the purchase
The 24-unit Rose Bay condominium project was approved by the City Council on Feb. 12, 2002,
as a 100 percent affordable housing development within the Thompson/Tabata subdivision
(Exhibit 2). The four-bedroom unit at 7018 Foresters Tern Drive is one of those affordable units,
and would be the city's first purchase in this neighborhood.
As a condition of the City of Carlsbad's inclusionary housing program, owners of restricted
affordable homes are required to notify the city when they intend to sell their properties and
allow the city the option to purchase them at restricted prices. On April 22, 2020, the owner of
this affordable housing unit gave the city such a notification, and the city subsequently notified
the owner of its intent to exercise its option to purchase the property at a restricted price
calculated to be $327,005. The city and owner then entered into a purchase agreement, and
escrow has been opened with the intent of completing the property acquisition by July 29,
2020, but no later than Sept. 3, 2020.
Staff is recommending that the City Council authorize the city manager to execute all required
documents to complete the purchase of this property, which includes acceptance of the grant
deed, and to expend up to $340,000 in CDBG funds to cover the purchase price and all related
escrow and other processing fees necessary to complete the acquisition.
If the council approves this purchase, this would become the seventh affordable housing resale
unit the city has acquired.
Fiscal Analysis
The homeowner purchased the home at Rose Bay in 2016 at the restricted, subsidized price of
$259,322. The restricted price for the city to purchase the affordable residential property from
the homeowner at 7018 Forsters Tern Drive is based on the change in the area median income
levels during the seller's period of ownership. Over the past four years, the area median income
increased by 26.1%, resulting in a restricted purchase price of $327,005. It is anticipated that
there will be additional acquisition costs, including escrow fees.
Staff is requesting that the City Council approve the expenditure of CDBG funds in the amount
of $340,000 to cover all acquisition costs for the subject property. As a condition of the city's
option to purchase, a six percent transaction fee, amounting to $19,620, is to be paid to the
City of Carlsbad at the close of escrow because the city is acting as the real estate agent for this
July 21, 2020 Item #2 Page 2 of 10
sales transaction. Funds paid at the close of escrow will be returned to the CDBG fund as
program income to be used for additional purchases of resale homes in the future.
Next Steps
With the council's approval, all acquisition documents will be executed by the city manager and
the city will complete the purchase of the home and subsequently record the grant deed to
transfer ownership of the home to the City of Carlsbad no later than Sept. 3, 2020, and as early
as July 29, 2020. The home will then be resold to a lower-income household at a later date. City
staff will be returning to the City Council in the third quarter of 2020 for approval of the
program details for the resale of the affordable housing resale units the city has purchased.
Environmental Evaluation (CEQA)
This action does not constitute a "project" within the meaning of the California Environmental.
Quality Act under Public Resources Code section 21065 in that it has no potential to cause
either a direct physical change in the environment or a reasonably foreseeable indirect physical
change in the environment and therefore does not require environmental review.
Public Notification
Public notice of this item was posted in accordance with the Ralph M. Brown Act and it was
available for public viewing and review at least 72 hours prior to the scheduled meeting date.
Exhibits
1.Resolution
2.Location map
July 21, 2020 Item #2 Page 3 of 10
July 21, 2020 Item #2 Page 4 of 10
RESOLUTION NO. 2020-148
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, AUTHORIZING THE CITY MANAGER TO EXECUTE ALL REQUIRED
DOCUMENTS TO COMPLETE THE ACQUISITION OF 7018 FORSTERS TERN
DRIVE, CARLSBAD, CALIFORNIA, AN AFFORDABLE HOUSING RESALE UNIT,
EXPENDING COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS IN THE
AMOUNT OF $340,000.
EXHIBIT 1
WHEREAS, the property owner of 7018 Forsters Tern Drive provided notice to the city on April
22, 2020, indicating the owner's intent to sell or transfer ownership of the restricted affordable housing
unit at the noted location; and
WHEREAS, the city responded to the property owner of the restricted affordable housing unit
on June 1, 2020, indicating its intent to exercise its option to purchase the property at 7018 Forsters
Tern Drive; and
WHEREAS, on Jan. 28, 2020, the City Council approved an amendment to the 2019-2020
Community Development Block Grant (CDBG) Program Action Plan allocating $500,000 in CDBG
funding to allow the city to exercise its option to purchase additional affordable housing resales at a
restricted price and authorize the use of CDBG funds to purchase these resale units; and
WHEREAS, the purchase approval by the City Council allows for the city to recapture an
affordable home and extend its affordability for an indefinite period of time, if so desired, and to resell
it to an eligible buyer at a lower price, if necessary, to implement the city's affordable housing goals
and policies.
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 City Council of the City of Carlsbad, California has determined that it desires to
exercise its option to purchase an affordable housing resale unit located at 7018 Forsters
Tern Drive, Carlsbad, California, and hereby authorizes the city manager to execute all
required documents, including the Acceptance of the Grant Deed (Attachment A), for
the purchase of said property, and to expend CDBG funds up to $340,000 to cover the
purchase price and all related escrow and other processing fees to complete the
acquisition.
July 21, 2020 Item #2 Page 5 of 10
EXHIBIT 1
PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council of the City of
Ca rlsbad on the 21st day of July, 2020, by the following vote, to wit:
AYES:
NAYS:
ABSENT:
Hall, Blackburn, Bhat-Patel, Schumacher.
None.
None.
MA TT HALL, Mayor
Vv1,~raf>W
BARBARA ENGLESON, City Clerk
{SEAL)
RECORDING REQUESTED BY:
Chicago Title Company
When Recorded Mail Document
and Tax Statement To:
Geoff Patnoe
The City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attachment A
Escrow Order No.: 73720008431
APN/Parcel ID(s): 214-620-14-22
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Exempt from fee per GC 27388.1 (a) (2); recorded in connection with a concurrent
transfer subject to the imposition of documentary transfer tax.
GRANT DEED
The undersigned grantor(s) declare(s)
0 This transfer is exempt from the documentary transfer tax.
The grantee is the United States or an agency or instrumentality thereof, a state or territory, or
political subdivision thereof, R & T 11922.
□ The documentary transfer tax is $ ______ and is computed on:
□ the full value of the interest or property conveyed.
□ the full value less the liens or encumbrances remaining thereon at the time of sale.
The property is located in 0 the City of Carlsbad.
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Jean K. Savalas, Trustee of the
Savalas 2019 Trust Dated March 5,2019
hereby GRANT(S) to The City of Carlsbad
the following described real property in the City of Carlsbad, County of San Diego, State of California:
For APN/Parcel ID(s): 214-620-14-22
A CONDOMINIUM COMPRISED OF:
PARCEL 1: AN UNDIVIDED INTEREST IN THE COMMON AREA:
A ONE-TWENTY-FOURTH (1124TH) UNDIVIDED FRACTIONAL FEE INTEREST IN AND TO ALL OF
THE PROPERTY LOCATED IN THE CITY OF CARLSBAD, COUNTY OF SAN DIEGO, STATE OF
CALIFORNIA, DESCRIBED AS MODULE A OF THAT CERTAIN CONDOMINIUM PLAN RECORDED
ON APRIL 25, 2005 AS FILE NO. 05-0342075,
AND RE-RECORDED MAY 5, 2005 AS FILE NO. 2005-0380844 BOTH OF OFFICIAL RECORDS OF
SAN DIEGO COUNTY, CALIFORNIA, AS SAME MAY BE AMENDED, MODIFIED, AND/OR
RE-RECORDED FROM TIME TO TIME ("CONDOMINIUM PLAN").
Grant Deed
SCA0000129.doc / Updated: 04.08.20
July 21, 2020
MAIL TAX STATEMENTS AS DIRECTED ABOVE
Printed: 06.29.20 @01:49 PM
CA-CT-FWDO-02180.055824-73720008431
Item #2 Page 6 of 10
APN/Parcel ID(s): 214-620-14-22
GRANT DEED
(continued}
UNIT 22 ON THAT CERTAIN PORTION OF LOT 14 OF CITY OF CARLSBAD TRACT NO. CT 98-14-01
ACCORDING TO MAP THEREOF NO. 14682 FILED ON SEPTEMBER 19, 2003, IN THE RECORDS OF
SAN DIEGO COUNTY, CALIFORNIA, AS DESCRIBED AND DEPICTED ON THE CONDOMINIUM PLAN
AND AS DESCRIBED IN THE "DECLARATION OF COVENANTS, CONDITIONS AND RESTRICTIONS,
AND RESERVATION OF EASEMENTS FOR
THE BAY COLLECTION" RECORDED ON NOVEMBER 10, 2004 AS FILE NO. 04-070454, AND THE
"NOTICE OF ANNEXATION FOR PHASE 2 OF THE BAY COLLECTION", RECORDED ON APRIL 25,
2005, AS FILE NO. 05-0342076, BOTH OF OFFICIAL RECORDS OF SAN DIEGO COUNTY,
CALIFORNIA, AS SAME MAY BE AMENDED, MODIFIED, AND/OR RE-RECORDED FROM TIME TO
TIME (COLLECTIVELY REFERRED TO AS THE "DECLARATION").
PARCEL 3: NONEXCLUSIVE EASEMENTS OVER ASSOCIATION PROPERTY:
A NONEXCLUSIVE EASEMENT APPURTENANT TO THE AFORE-DESCRIBED CONDOMINIUM UNIT
FOR INGRESS, EGRESS, USE, AND ENJOYMENT IN, ON, OVER, ACROSS AND THROUGH ALL
PORTIONS OF THE ASSOCIATION PROPERTY OF THE PROJECT, EXCEPTING THEREFROM
THOSE PORTIONS DESCRIBED AS EXCLUSIVE USE ASSOCIATION PROPERTY, IF ANY, AND
ACROSS ALL PORTIONS OF ANY ASSOCIATION PROPERTY SUBSEQUENTLY ANNEXED INTO·
THE PROJECT, IF ANY, WHICH ARE NOT DESCRIBED AS EXCLUSIVE USE ASSOCIATION
PROPERTY.
PARCEL 4: EASEMENTS FOR EXCLUSIVE USE ASSOCIATION PROPERTY:
THE APPLICABLE EXCLUSIVE USE ASSOCIATION PROPERTY EASEMENTS APPURTENANT TO
THE AFORE-DESCRIBED CONDOMINIUM UNIT (E.G. PORCH, DECK, YARD, PARKING SPACE,
ETC.), AS MORE PARTICULARLY DESCRIBED AND/OR DEPICTED IN THE DECLARATION, NOTICE
OF ANNEXATION, AND/OR THE CONDOMINIUM PLAN ("EXCLUSIVE USE ASSOCIATION
PROPERTY").
PROPERTY COMMONLY KNOWN AS: 7018 Forsters Tern Drive, Carlsbad, CA 92011
Dated: June 19, 2020
IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below.
Jean K. Savalas, Trustee of th~ avalas 2019 Trust Dated March 5,2019
Grant Deed
SCA0000129.doc / Updated: 04.08.20
July 21, 2020
Printed: 06.19.20@04:32 PM
CA-CT-FW D0-02180.055824-73720008431
Item #2 Page 7 of 10
GRANT DEED
(continued)
APN/Parcel ID(s): 214-620-14-22
A notary public or other officer completing this certificate
verifies only the identity of the individual who signed the
document to which this certificate is attached, and not the
truthfulness, accuracy, or validity of that document.
State of i!.A-1-1FO;:;/,Ul.f7=
County of ;;:[A:IV D l~t'oD
Orr~Ne-:;l(pl 2}..()8-0 before me, ~EF.?.4 -k )Jr &-)1-J.,le'I 'Notary Public,
_ . (here insert name and title of the officer)
personally appeared '> )C A-N K , .? A-V /1-L#~ ,
who proved to me on the basis of satisfactory evidence to be t7person(s) whose name(s) is/are subscribed to the
within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies),
and that by his/her/their signa_ture(s) on the instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and
correct.
WITNESS my hand and official seal. ~~~-Signature
Grant Deed
SCA0000129.doc / Updated: 04.08.20
July 21, 2020
5 •• , • TERESA R. MCELANEY ,·,z'<1"A:CC t a o e a e a o o o o a •1
~@· .,_,_ . Notary Public -Callforni~ j . ·a San Diego County ~
z ,. · Commission # 2175682 ? J. o ~ ·,· • ,Ml t0T"1· [•girts d12 t2·}~21l
Printed: 06.19.20@ 04:32 PM
CA-CT-FWDQ-02180.055824-73720008431
Item #2 Page 8 of 10
CERTIFICATE OF ACCEPTANCE
(Pursuant to Government Code 27281)
This is to certify that the interest in real property conveyed by the Grant Deed from JEAN
SA V ALAS, TRUSTEE OF THE SA V ALAS 2019 TRUST, to the City of Carlsbad, a municipal
corporation (the "City"), is hereby accepted on July 22, 2020, by the undersigned officer or agent
on behalf of the City pursuant to authority conferred by City Council Resolution No. 2020-__
adopted on July 21, 2020, and the City Council consents to the recordation of said document in
the Office of the Recorder of San Diego County, State of California.
July 21, 2020
CITY OF CARLSBAD, a municipal corporation
By:----------------
Name: Geoff Patnoe
Its: Assistant City Manager
Item #2 Page 9 of 10
Exhibit 2
Street Map Plus Report
For Property Located At • ti► Real Quest
Core logic•
7018 FORSTERS TERN DR, CARLSBAD, CA 92011-3969
Rirn O
1001 ·y
CD ::..,
§_.
f~
u
2
~ I l~Wtlt;Jrnc ,\Ye
$ "' •:> "'
Go gle;;,.,,
July 21, 2020
c:,1111-11~ IJ< L;,,·; llll'1~'
~ :;;-
~ ~
0 5.
'tti ~ ... ....
:, j
100m
North Co.:ist O
Cal01ary Chapel Y
., , ,
' ' I
I ' ' I -' ., " ' ; .' <:::' , I :,, , ~~-, I l ,,;.
t -..-' , 1?1tM ,..,.,S'
& ·~c,
"' ' l': l ·• ' 1--
' ~ -g ' '" ii 'i' ~ ,, :, y1 " -\ ~
.. .:-,
i:l r, "' -:;-. ~: ._,;,· . R~ep eata~lliW
Item #2 Page 10 of 10