HomeMy WebLinkAboutCT 98-17; Hadley Property; Tentative Map (CT) (34)04/15/1999 15:30 7604380981 HENTHORN PAGE 02
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Spectrum Communities
April 15, 1999
Ms. Deborah K. Fountain
Housing and Redevelopment Director
City of Carlsbad
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008-2389
Subject Hadley Property - Request to Purchase Off-site Affordable Housing Credits
Dear Ms. Fountain:
This letter serves as a formal request by Spectrum Communities to purchase off-site
affordable housing credits in the existing Villa Loma development to satisfy the inclusionary
housing obligations of the Hadley Property subdivision (CT 98-17). This request is in
compliance with actions previously taken by the City Council:
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 "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 at an alternative site or sites".
The two inclusionary housing options that are available to a developer are that the
developer shall either 1) enter into an agreement with the City to purchase affordable
credits from Villa toma; or 2) participate in an off-site combined inclusionary project
within the southwest quadrant and as appropriate, in accordance with the
requirements set forth in Chapter 21.85 of the Carlsbad Municipal Code and City
Council Policies 57 and 58 dated September 12,1985.
The Housing Commission has reviewed a report that projected the inclusionary housing
requirements of undeveloped property within the Southwest Quadrant of the City. The report
examined whether projected development of the Quadrant could result in a demand for off-
site credits exceeding the number of available credits in the Villa Loma project. The analysis
showed that there are sufficient excess units (Credits) to satisfy the potential demand of the
Quadrant
1
15375 Barranca Parkway, Suite B-211, Irvine CA 92618 - Tel: (949) 753-8400 Fax: (949) 753-8401
04/15/1999 15:30 7604380981 HENTHORN PAGE 03
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Spectrum Communities
In the case of the Hadley Property, there are particular circumstances that warrant the
provision of the incluslonary units off-site in combination with the existing Villa Loma
Apartment project, pursuant to Council Policy 57 criteria. Significant feasibility issues affect
the development of this project on-site. Contribution to the existing off-site project versus
providing a small (5 unit) low-income apartment complex on-site will result in increased public
benefit by returning funding currently tied up in the Villa Loma project, for use in other
affordable housing activities.
We understand that a staff Project Review Committee will evaluate this request to determine
compliance with the criteria defined in Policies 57 and 58. It is also understood that staff will
then take the Committee's recommendation to the Housing Commission and City Council.
Please call if you need additional information or if we may be of any other assistance.
Sincerely,
Mr. David Salene
Spectrum Communities, LLC
Enclosure
cc: Mr. Jack Henthorn, Jack Henthorn & Associates
Mr. Craig Ruiz, Housing and Redevelopment Department
2
15375 Barranca Parkway, Suite B-211, Irvine CA 92618 • Tel: (949) 753-8400 Fax: (949) 753-8401
04/15/1999 15:30 7S04380981 HENTHORN PAGE 04
HADLEY PROPERTY
OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT
ASSESSMENT WORKSHEET ~ BACKGROUND
The following background information is provided to assist you in your assessment.
1. Owner/Applicant Information:
Owner: Applicant: Applicant's Representative:
Paul & Peggy Hadley Family Spectrum Communities, LLC Jack Henthom & Associates
Trust, December 3,1941 Attn: Mr. David Salene Attn: Mr Jack Henthorn
Paul & Peggy Hadley, 15375 Barranca Parkway 5375 Avenida Encinas
Trustees Suite B-211 Suite D
Irvine, CA 92618 Carlsbad, CA 92008
949-753-8400 760-438-4090
2. Off-site/Combined Project Name:
VILLA LOMA APARTMENTS
3. Description of Project with Incluslonary Housing Obligation:
The Hadley Property, CT 98-17, is a proposed 39-lot, 38-unit, single-family development located
on a 14.7-acre parcel with a 5.7 unit affordable housing obligation.
4. On-site Affordable Housing Description:
The Hadley Property Affordable Housing project would be a 5-unit multi-family, apartment project
occupying two lots with 1, 2 and 3-bedroom units. The units would be offered in a maximum rent
range that is affordable to households earning incomes of 80% of the Area Median Income. To
achieve financial feasibility, the project would require a net subsidy of $256,000 (assuming the
developer provides a fully constructed pad, and unit revenues are based on a 95% occupancy
rate factor).
5. Proposed Off-site Project Description:
The Villa Loma project is a 344-unit apartment development in which all units are restricted and
affordable to households with incomes not exceeding 60% of the San Diego County Median. Villa
Loma was developed by La Terraza Associates, with Bn'dge Housing Corporation as the
Managing General Partner. The complex contains 1, 2, 3 & 4 bedroom units.
Villa Loma was financed with assistance from the City of Carlsbad and the Carlsbad
Redevelopment Agency. The assistance was structured in such a way as to create affordable
units which would be marketed exclusively by the City to "other developers" in order to satisfy an
affordable housing obligation. The Villa Loma Apartment complex is a Combined Project
according to the Inclusionary Housing Ordinance, and developers may participate in this as an
"off-site" method of satisfying their affordable housing obligation. (This is also an approved site
for the Greystone Cove, Ocean Bluff and Lohf projects.)
04/15/1999 15:30 7604380981 HENTHORN PAGE 05
Participation in Villa Loma Apartments by the applicant would be in the form of a purchase of
Affordable Housing Credits (Credits) under terms established by City Council Policies Numbered
57 and 58. If the applicant is afforded the opportunity to purchase Credits, the Hadley Property
tentative map would require the purchase of 5.7 Credits to satisfy its inclusionary housing
requirement.
6. Description of On-site Project Constraints:
Specific constraints exist which would affect an on-site affordable project's feasibility. These
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04/15/1999 15:30 7604380981 HENTHORN PAGE 06
HADLEY PROPERTY
OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT
ASSESSMENT WORKSHEET -- WORKSHEET
1. Feasibility of the Pa-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?
• The on-site affordable project is not of sufficient size to be a viable apartment project. Given the small
size of the project and its restricted rental structure, on-site management and maintenance will be
difficult.
• The small scale of the affordable housing project also makes it unlikely that the project will generate
Interest from funding sources.
• The market units in this project would be required to absorb over $6,700 per unit so that land value could
be contributed by the developer. This figure would rise to almost $11,500 per unit if the applicant were
required to build the units on site and close the post land development gap of over $256,000.
• Based on the estimated restricted rental prices of the affordable units the applicant will be facing an
average subsidy requirement of approximately $51,200 per unit, beyond land contributions. This would
result in each unit being subsidized with approximately $87,200.
b. Will an affordable housing product be difficult to Integrate Into the proposed market development
because of significant price and product type disparity?
• Price disparities will be substantial between the low-income rental apartment units restricted at $695-
$1,062 rent and the approved higher-end single-family detached homes which have an estimated base
price range of $400,000 to $700.000.
• The integration of 5 affordable apartment units, sized at 725 to 1,100 sq. ft., into the single-family
subdivision with homes of 2,500 to 4,500 square feet on approximately 7,500 to 15,800 sq. ft. tots will
result in major product type disparity on-site. The surrounding area will also be built-out with low density,
single-family detached products consistent with the existing RLM land use designation and market
demand. The on-site project would, therefore, also result in substantial product disparity with the
surrounding region.
c. Does the on-site development entity have the capacity to deliver the proposed affordable housing
on-site?
• The applicant is not experienced in the development of affordable housing.
• Affordable housing developers have advised the applicant that it is unlikely that this size of project will
generate interest from funding sources.
2. Relative Advantages/Disadvantages of the Off-site Proposal.
a. Does the off-site option offer greater feasibility apd cost effectiveness than the on-site alternative,
particularly regarding potentiaf local public assistance?
• Villa Loma is built and has proven its feasibility; no additional assistance is required,
• The applicant's participation in Villa Loma would permit the intended recovery of City investment
provided to the project through utilizing "excess units". These funds could then be used to provide
additional affordable housing. Conversely, the developer's on-site project would create the demand for
additional new subsidy.
04/15/1999 15:30 7604380981 HENTHORN PAGE 07
• The small size of the on-site project could result in additional future subsidy requests related to operating
costs.
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.?
• The Villa Loma development is located within close vicinity of jobs (in the nearby business parks and
shopping centers), public transportation, schools, public library, shopping, parks, as well as, other
amenities and services due to being located along the major thoroughfare, El Camino Real.
• Villa Loma Is a self-contained affordable development in an area designated for higher density
residential development such as condominiums and townhomes.
• The on-site proposal could be a source of land use conflicts that typically occur when higher density
development is permitted adjacent to larger lot single family development.
c. Does the off-site option offer a development entity with the capacity to deliver the proposed project?
« The Villa Loma project is an existing project, developed and managed by a highly experienced and
specialized affordable housing developer.
d. Does the off-site option satisfy multiple developer obligations that would be difficult to satisfy with
multiple projects?
• Villa Loma project was originally established as a Combined Project, specifically to address this purpose.
• The proposed on-site project would be one of several projects in the southwest quadrant competing for
scarce financial assistance. Villa Loma has already been financed and built and thus, would not be
competing for subsidy financing.
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 Incluslonary Housing Ordinance?
General Plan Housing Element and CHAS Goals:
• Villa Loma Apartment affordable project is targeted to the highest priority need identified, larger rental
units for low income households.
• The recovery of the City's investment in the Villa Loma Project through the applicant's participation will
provide for additional resources that are needed to further affordable housing development.
• Villa Loma provides a large quantity and diversity of affordable housing stock with its 344 units, including
a generous supply of different size units to meet various housing needs of the community.
Inclusionary Housing Ordinance Policies:
• Consistent with the City and public interests to use existing "excess" affordable units before supporting
additional new construction.
• In conjunction with the combined Villa Loma project, the Hadley Property will provide for 15% of the total
units for affordable (lower income) residential units. The project also complies with the Inclusionary
requirements as contained in the General Plan Housing Element.
Growth Management Zone, Ord. No. NS-257 Guidelines:
• Villa Loma is coordinated with surrounding properties by providing direct access to a major Circulation
Element Roadway, El Camino Real, as well as circulation and pedestrian access to public facilities.
04/15/1999 15:30 7604380981 HENTHORN
HADLEY PROPERTY
ONSITE AFFORDABLE HOUSING
COMPARATIVE
PRO FORMA
PAGE 08
4^15/99
REVENUE ANALYSIS
1 BEDROOM
2 BEDROOM
3 BEDROOM
95% OCCUPANCY
OPERATING COSTS @ 30%
NET OPERATING INCOME
DEBT SERVICE INCOME (1.2)
* Note. The remainder unit obligation of .7 will
INCOME SUPPORTED DEBT
LAND DEVELOPMENT COSTS
LAND
ONSITE IMPS
PUBLIC FEES
DESIGN/CONSULTANTS
IMPROVED SITE COST
LAND CARRY 18MO
LAND DEVELOPMENT COST
UNIT CONSTRUCTION COSTS
UNIT SIZE
SQUARE FEET (project)
STRUCTURE COST $45.00
ON SITE INDIRECTS 10% STRUCT.
OVERHEAD .04
MARKETING .02
CONSTRUCTION COSTS
LOAN FEES .02
CONST FINANCING
SUBTOTAL FINANCING
PROJECT cosy
GAP
Developer land contribution
NET GAP
PER UNIT NFT«AP
PER UMiTfi^gg SUBSIDY
RENT UNITS REVENUE
$695 1 $695
$888 3 $2,664
$1,062 1 $1,062
5 $4,421
$4,200
($1,260)
$2,940
$2,450
be met by purchase of offstte credits In the Villa Loma
$279,040
# lots 2 $180,000
$120,000
$97,500
$35,000
$432,500
$27,000
$459,500
1 BR 2 BR 3BR
725 2550 1100
$32,625 $114,750 $49,5QQ
$238,138
$5,581
$11,907
$17,488
SZ1&125
$431085
$180,000
$256.085
$51,217
$87,217
project.
4,375
$196,875
$15,313
$17,300
$8,650
$238,138
Page 1 JACK HENTHORN ASSOCIATES
MKA/Hadley Aff Bsg Profcma2