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HomeMy WebLinkAbout1993-10-26; Housing & Redevelopment Commission; 240; Affordable Housing Project, HOUSING AND- , * I’ -’ DEVELOPMENT COMMISSI :I - AGENDA BILL \* dB#d2YD TITLE: AUTHORIZATION TO PURCHASE PROPERTY WITH MT& 10/26/W REDEVELOPMENT LOW AND MODERATE INCOME HOUSING FUNDS FOR THE VILLAS AT EL CAMIh’O DEPT. RED* REAL AFFORDABLE HOUSING PROJECT. I / RECOMMENDED ACTION: ADOPT Housing and Redevelopment Commission Resolution No. 2 3 3 APPROVING the appropriation of $2,000,000 from the Redevelopment Low and Moderate Income Housing Set-Aside Fund for the acquisition of real property and related improvements for the purpose of developing an affordable rental housing project, the Villas at El Camino Real, outside the Village Redevelopment Area. ITEM EXPLANATION: The Villas at El Camino Real is an affordable housing project proposed for construction on a 21 acre parcel located adjacent to and west of El Camino Real, between Camino Vida Roble and Alga Road. The proposed project includes a total of 344 apartment units to be affordable to low (60% of County Median) and very low (50% of County Median) households. The project is being developed by Aviara Land Associates in concert with Bridge Housing Corporation, a non-profit housing developer, and Patrick/Picerne, a partnership of two San Diego-based builder/developers. The project is targeted in part to satisfy the affordable housing requirements (160 units) of the Aviara Master Plan as stipulated in the Aviara Housing Agreement adopted by the City Council on July 20, 1993. On September 1, 1993, the Planning Commission conducted a public hearing and recommended approval with modification (6-O) of the Villas at El Camino Real project. The Housing Commission also reviewed the project and made related financial assistance recommendations at two (2) separate meetings. At their meeting of August 12, 1993, the Housing Commission approved a recommendation to participate in the Villas at El Camino Real by acquiring the property for the project with CDBG funds. The Commission recommended that the City use $880,000 in CDBG funds previously allocated by the Council for affordable housing and also apply for additional CDBG funding ($1.2 million) through the Section 108 Loan Program to purchase the property. Due to the fact that the process for applying for the Section 108 CDBG Loan may be fairly time consuming, the Housing Commission took additional action on October 14, 1993 to recommend that Redevelopment Low and Moderate Income Housing Set-Aside Funds be used as an interim financing source for the property acquisition. If the City’s Section 108 CDBG Loan application is approved, the Housing Set-Aside Fund will be reimbursed by the amount of the appr&ed loan. The Housing Commission also recommended that $500,000 in Redevelopment Low and Moderate Income Housing Set- Aside Funds remain in the project as a cash contribution regardless of the City’s success in obtaining the Section 108 Loan. At the October 14, 1993, there was no public testimony which indicated opposition to the expenditure of Redevelopment Set-Aside funds’on the subject project. However, Catherine Rodman, of the Legal Aid Society, did forward a letter to the Housing Commissioners outlining her comments on the project and the proposed expenditure of funds. Ms. Rodman’s letter was discussed during the Commission meeting. The Commission considered Ms. Rodman’s comments but did not recommend any changes lo the project. Ms. Rodman’s letter is attached for review by the Housing and Redevelopment Commission. At this time, Staff is recommending that the Housing and Redevelopment Commission accept the recommendation of the Housing Commission and take the following actions related to the subject project: #’ 3 ’ AGENDABILL# 2%‘~ . (I PAGE 2 1. Authorize the acquisition of property for the Villas at El Camino Real Affordable Housing Project on an interim basis using up to $2 million in Redevelopment Low and Moderate Income Housing Set-Aside Funds and on a permanent basis using $880,000 in previously approved CDBG Funds and $1.2 million in CDBG Section 108 Loan Funds, if approved by HUD. 2. Approve the use of Redevelopment Low and Moderate Income Housing Set-Aside Funds in the amount of $500,000 for project construction related costs, including on-site and/or off-site public improvements directly related to the project. The above recommendations were based on staff’s financial analysis of the project and overall assessment of project and the development team. More detailed information regarding the analysis is provided in the attached staff report to the Housing Commission dated October 14, 1993. Updated “Uses and Sources of Funds” and “Subsidy Analysis” charts are provided in Exhibit 5 and reflect primarily a revised estimate of the project’s share of the Poinsettia Lane improvements. Also, additional information regarding the property acquisition is provided in the attached staff report to the Housing Commission dated August 12, 1993 FISCAL IMPACT: The City’s Redevelopment Housing Set-Aside Funds have accumulated to a balance of approximately $2,319,000. These funds must be devoted to the provision of affordable housing opportunities in the redevelopment project area, or given certain benefit findings, outside the redevelopment project area. It is proposed that a maximum of $2 million of these funds be appropriated to provide financial assistance to the Villas at El Camino Real Affordable Housing Project. As necessary, a portion of these appropriate funds will be used to acquire property for the subject project as an interim financing mechanism. A minimum of $500,000 of the Set-Aside Funds will remain in the project to assist with development costs. The appropriation of Redevelopment Housing Set-Aside Funds for the acquisition of property for the subject project will have no impact on the General Fund. All acquisition related costs will be financed with either CDBG or Redevelopment Housing Set-Aside funds. EXHIBITS 1. Housing and Redevelopment Resolution No. 2 3 3 appropriating a maximum of $2,000,000 from the Redevelopment Low and Moderate Income Housing Set-Aside Fund for the acquisition of real property and related improvements for the purpose of developing affordable housing rental units 2. Housing Commission Resolution No.002, 003, 93-009 and 93-010 (on file in the City Clerk’s Office). 3. Housing Commission Staff Report dated October 14, 1993 (on file in the City Clerk’s Office). 4. Housing Commission Staff Report dated August 12, 1993 (on file in the City Clerk’s Office). 5. Updated “Sources and Uses of Funds” and “Subsidy Analysis” charts (on file in the City Clerk’s Office). 6. Letter from C. Rodman, Legal Aid Society, dated October 14, 1993 (on file in the City Clerk’s Office). t * . 1 2 3 4 5 6 7 0 9 10 11 12 12 14 1: 1E 17 1E 19 2c 21 22 2: 24 25 26 27 28 HOUSING COMMISSIONNO. EXHIBIT 2 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING THAT THE CITY COUNCIL AUTHORIZE THE PURCHASE OF APPROXIMATELY TWENTY (20) ACRES OF REAL PROPERTY WITH COMMUNITY DEVELOPMENT BLOCK GRANT (CDBG) FUNDS IN AN AMOUNT NOT TO EXCEED $2.1 MILLION FOR THE PURPOSES OF DEVELOPING AFFORDABLE HOUSING IN CARLSBAD. CASE NAME: LITTLE BRESSI AI’N: 215-020-1s & 215-020-01 WHEREAS, the City of Carlsbad has identified a need to purchase property for the purposes of the development of affordable housing; and WHEREAS, property located generally on the west side of El Camino Real between Palomar Airport Business Park and Sunfresh Rose Greenhouses, APN: 21 S-020-1 5 & 21 S-020-01, iS available for purchase for the purpose of causing the development of affordable housing; and WHEREAS, the Housing Commission supports the purchase of property for the purposes of providing affordable housing within the City of Carlsbad; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission as follows: A) That the foregoing recitations are true and correct. B) That the Housing Commission recommends that the City Council of the City of Carl&ad APPROVE purchase of property identified by APN: 215-020-15 and 215-020-01 subject to the following terms and conditions: . . . . . . . . L. . 1 2 3 4 5 6 1 E 5 1c 13 12 1: 14 l! 1t 1: 1E ld 2( 21 21 21 21 2! 2t 2: 2t Terms and Conditiorq: 1. 2. 3. 4. 5. . . . . . . . . . . . . . . . . . . . . The City Council shall authorize expenditure of up to $2.1 million for the purchase and attendant costs of appraisals and closing. Funds shall be drawn from the City’s Community Development Block Grant (CDBG) Housing Fund and other CDBG funds which are approved for the transaction by the U.S. Department of Housing and Urban Development. The purchase shall be subject to all applicable HUD terms and conditions governing the federal CDBG program, including but not limited to: t: contract with HUD for repayment of any loans for the purchases; pledge of grants made or for which the City may become eligible to repay any loans for the purchase; c. at discretion of HUD, provide other security which may be required for any loans made to the City for the purchase; d. repay any loans made to the City by HUD within a period not to exceed twenty (20) years; and, e. use the property for a purpose which provides direct benefit to low/moderate income persons, such as affordable housing. The value of the site in relation to the option purchase shall be supported with at least one MA1 appraisal. The purchase shall be subject to an agreement with Aviara Land Associates Limited Partnership (ALA), holder of the option on the subject property, whereby the land shall be held for a period of at least eighteen (18) months exclusively for the development of affordable housing as proposed by ALA and their partners and as approved by the City of Carlsbad. If the ALA project does not commence within eighteen (18) months, ALA shall have, for a period of six (6) months, the option of purchasing the subject property from the City for its full purchase cost. In any event, the subject property shall remain devoted exclusively to affordable housing development . HC RESO NO. 002 k . \ 1 2 3 4 5 6 7 8 9 10 11 .12 33 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 12th day of August, 1993 by the following vote, to wit: AYES: Edward Scarpelli, Chairperson; Doug Avis; Jerry Rombotis; Nancy Calverly; Bailey Noble; Cheri Sato; Kathleen Wellman; Ofelia Escobedo; and Marvin Peterson, Commissioners NOES: None ABSENT: ABSTAIN: ATTEST: EVAN BECKER HOUSING AND REDEVELOPMENT’ DIRECTOR HC RESO NO. 002 1 2 3 4 5 6 7 8 9 10 HOUSING COMMISSION NO. 003 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING APPROVAL OF SUBMISSION OF APPLICATION FOR SECTION 108 .LOAN THROUGH THE FEDERAL C0MMUNlT.Y DEVELOPMENT BLOCK GRANT PROGRAM IN THE IMAXMUM AMOUNT OF $1.2 MILLION FOR THE PURPOSE OF PURCHASING PROPERTY FOR THE DEVELOPMENT OF AFFORDABLE HOUSING. CASE NAME: LJXTLE BRESSI &iPN: 215-020-15 & 215420-01 WHEREAS, the City of Car&ad has identified a need to purchase property fbr 11 12 13 14 the purposes of the development of affordable housing; and WHEREAS, property located generally on the west side of El C&nino Real 15 16 17 18 19 20 between Palomar Airport Business Park and Sunfiesh Rose Greenhouses, APN: 215-020-15 & 21 215-020-01, is available for purchase for the purpose of cat&g the development of affordable housing; and WHEREAS, the Housing Commission supports the purchase of property for the purposes of providing affordable housing within the City of Carlsbad; WHEREAS, the City of Carlsbad currently has allocated $880,372.30 in federal Community Development Block Grant (CDBG) Entitlement funds for the purpose of purchasing property for the development of affordable housing for low/moderate income persons; and 22 23 WHEREAS, the City of Carlsbad has the need to raise an additional $1.2 million 24 to purchase subject property through the federal Section 108 Loan program. 25 NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing 26 Commission as follows: 27 28 \. . * 1 2 3 4 5 6 9 e S 1c 13 1: 1: 14 l! 1t 1: U l! 2( 2: 2: 2: 2r 2! 24 2’: 24 A) That the foregoing recitations are true and correct. W That the Housing Commission recommends that the City Council of the City of Carlsbad APPROVE submission of an application to the U.S. Department of Housing and Urban Development for a Section 108 Loan in the maximum amount of $1.2 million for the purposes of purchasing property for the development of affordable housing for low/moderate income persons subject to the following terms and conditions: Terms and Conditions: 1. 2. 3. . . . . . . . . . . . . . . . . The purchase of property with Community Development Block Grant (CDBG) funds shall be subject to all applicable HUD terms and conditions governing the federal CDBG program, including but not limited to: t c. d. e. contract with HUD for repayment of any loans for the purchase; pledge of grants made or for which the City may become eligible for to repay any loans for the purchase; at discretion of HUD, provide other security which may be required for any loans made to the City for the purchase; repay any loans made to the City by HUD within a period not to exceed twenty (20) years; and, nse the property for a purpose which provides direct benefit to low/moderate income persons, such as affordable housing. The value of the site ln relation to the option purchase shall be supported with at least one MA1 appraisal. The City shall reimburse owner for all reasonable expenses he/she incurred for: recording fees, transfer taxes, documentary stamps, evidence of title, boundary survey and legal description of the real property; penalty costs and any other prepayment charges; pro-rata portion of any prepaid real property taxes which are allocable to the period after the City obtains title to the property. Whenever feasible,these expenses shall be paid directly by the City so that the property owner does not need to seek reimbursement. HC RESO NO. 003 l 1 2 3 4 5 6 .9 e 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 12th day of August, 1993 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATIZST: Edward Scarpelli, Chairperson; Doug Avis; Jerry Rombotis; Nancy Calverly; Bailey Noble; Cheri Sato; Kathleen Wellman; Ofelia Escobedo; and Marvin Peterson, Commissioners None EVAN BECKER HOUSING AND REDEVELOPMENT DIRECTOR HC RESO NO. 003 3 HOUSING COMMISSION RESOLUTION NO. 93-009 2 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA TO APPROVE THE 3 APPROPRIATION OF $2,000,000 FROM THE REDEVELOPMENT LOW AND MODERATE INCOME 4 HOUSING SET-ASIDE FUND FOR THE ACQUISITION OF REAL PROPERTY AND RELATED IMPROVEMENTS FORTHE 5 PURPOSE OF DEVELOPING AFFORDABLE HOUSING 6 RENTAL UNITS OUTSIDE THE VILLAGE REDEVELOPMENT 7 I WHEREAS, the Redevelopment Agency of the City of Carlsbad, 8 9 1 hereinafter referred to as “Agency”, is a Community Redevelopment Agency organized 10 and existing under the Community Redevelopment Law, Health and Safetv Code 11 Section 33000, etseq., hereinafter referred to as the “Act”; and 1 WHEREAS, the Agency is authorized to implement the Redevelopment 12 13 14 15 16 17 18 housing; and 19 I WHEREAS, pursuant to Section 33334.2 of the Act, the Legislature 1 Plan for the Carlsbad Village Redevelopment Project Area; and WHEREAS, Section 33334.2 of the Act requires that not less than ~ twenty percent (20%) of all taxes which are allocated to the Agency for purposes of ~ increasing and improving the community’s supply of low and moderate income 20 21 22 23 24 25 Act states that the Agency may exercise any or all of its powers, including without I declares its intent that the Low and Moderate Income Housing Set-aside Fund shall be used to improve and increase housing in the community; and WHEREAS, to carry out the purposes of increasing and improving the community’s supply of low and moderate income housing, Section 33334.2 (e) of the 26 limitations, acquiring land or building sites, improving land or building sites with onsite 27 28 or offsite improvements, donating land to private or public persons or entities, constructing buildings or structures, acquiring buildings or structures, providing subsidies to, or for the benefit of, very low income households, lower income households, or persons or families of low and moderate income, or other powers to carry out the purposes of the Act; and WHEREAS, the Housing Commission recommends APPROVAL of the expenditure of $2,000,000 from the Low and Moderate Income Housing Set-aside Fund outside the Redevelopment Project Area for the purposes of providing property and related improvements for the construction of 344 units of rental housing for persons/families within low and very low income households; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. The above recitations are true and correct. 2. That the expenditures of monies from the Low and Moderate Income Housing Fund for the purposes of acquiring property and constructing related improvements for an affordable housing project containing 344 rental units outside the Redevelopment Project Area, in which such funds are generated, are and will be of benefit to the respective Project Area based on the following findings: a. The Village Redevelopment Area currently consists of a number of restaurants, hotels, time-share projects and small retail operations which depend on and which offer employment at low to moderate income wages. The proposed housing project offers affordable housing opportunities to these employees which are currently not available to them in the Village Redevelopment Area. b. The proposed project is located on bus routes and connects to major transportation corridors which will allow direct access to the Village Redevelopment Area. The households residing within the -2- t . 1 2 3 4 5 6 7 6 9 1C 11 12 12 14 15 16 17 16 19 20 21 22 23 24 25 26 27 28 proposed project will be able to take advantage of the public transportation systems which will allow them to work and shop in the Village Redevelopment Project Area. This will have a significant impact on the Redevelopment Agency’s efforts to revitalize the Village Project Area. 3. That the Low and Moderate Income Housing Set-Aside Funds will promote the City of Carlsbad’s housing goals and satisfies specific requirements of the Community Redevelopment Law to expend a portion of its tax increment to produce affordable housing opportunities for low and moderate income persons. 4. The Housing Commission recommends that the Housing and Redevelopment Director be authorized to execute documents required for the appropriation of $2,000,000 in funds from the Redevelopment Low and Moderate Income Housing Set-aside Funds in order to provide property and related improvements for construction of a 344 rental unit project for low and very low income persons within the City of Carlsbad. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 14th day of October, 1993, by the following vote, to wit: AYES: AVIS, ROMBOTIS, CALVERLY, NOBLE, SATO, WELLMAN, ESCOBEDO NOES: NONE ABSENT: SCARPELCI, PETERSON ABSTAIN: NONE DOUG AVIS, Vice Chairperson Housing Commission ATTEST: EVAN BECKER, Housing and Redevelopment Director -3- 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HOUSING COMMISSION RESOLUTION NO. 93-010 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING APPROVAL OF CITY FINANCIAL ASSISTANCE TO AN AFFORDABLE HOUSING PROJECT WHICH WILL PROVIDE A TOTAL OF 344 RENTAL UNITS FOR LOW AND VERY LOW INCOME HOUSEHOLDS TO BE LOCATED WITHIN THE SOUTHWEST QUADRANT OF THE CITY. CASE NAME: “THE VILLAS” AT EL CAMINO REAL APN: 215-020-15 WHEREAS, the City of Carlsbad has identified a need to provide at least 1400 housing units affordable to households of low and very low income by 1996; and WHEREAS, a project, known as the Villas at El Camino Real, has been proposed for construction which will provide 344 residential apartments on a 21 acre parcel located adjacent to and west of El Camino Real, between Camino Vida Roble and Alga Road, on parcel number 2 15020- 15 which will be affordable to low and very low income households; and WHEREAS, the City of Carlsbad’s financial analysis of the project concludes that city financial participation in the project is necessary and appropriate due to the public benefit received by the City; and . . . . . . . . 1 ‘. 1 2 3 4 5 6 7 8 9 1c 11 12 1: 14 1: lf 17 lf 19 2c 21 2i 2: 24 21 2E 21 2E ,- . . . . . . . . WHEREAS, the affordability level and the unit mix of the proposed project are consistent with the City of Carlsbad’s Housing Element objectives, Comprehensive Housing Affordability Strategy, Inclusionary Housing Ordinance, and Density Bonus Ordinance; and WHEREAS, the project has been found to be consistent with the requirements of the General Plan, the Carlsbad Zoning Ordinance, the Local Coastal Plan and the Growth Management Ordinance. . . . . a... . . . . NOW,THEREFORE,BEITHEREBYRESOLVED bytheHousing Commission as follows: 1. That the foregoing recitations are true and correct. 2. That the Housing Commission recommends to the City Council of the City of Carlsbad approval of financial assistance to the proposed affordable housing project known as the Villas at El Camino Real in the following form: a. Exemption from payment of the Public Facilities Fee for entire project based on City Council Policy 17. b. Guarantee of the project Grading Deposit from Redevelopment Low and Moderate Income Housing Set-Aside Funds thereby waiving the deposit requirement for the developer. C. Deferral of a portion of the Community Facilities District (CFD) fees. The CFD fees will be paid in full for the first 108 units within the project. The remaining fees for the additional 236 affordable units, resulting from the project’s proposed increase in density, will be deferred but recaptured by the City upon the sale of affordable housing credits, provided by the subject project, to eligible developers to meet their inclusionary housing requirements. d. Deferral of all costs to the Villas at El Camino Real related to construction of Poinsettia Lane. 3. That the development team for the subject affordable housing project shall enter into appropriate agreements with the City of Carlsbad which outline the terms of city participation and the conditions to be met prior to commitment of city assistance as contained within the staff report to the Housing Commission dated October 14, 1993. PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 14th day of October, 1993 by the following vote, to wit: AYES: AVIS, ROMBOTIS, CALVERLY, NOBLE, SATO, WELLMAN, ESCOBEDO NOES: NONE ABSENT: SCARPELLI, PETERSON ABSTAIN: NONE DOUG AVIS, Vice Chairperson Housing Commission ATTEST: EVAN BECKER, Housing and Redevelopment Director HC RESO NO. 93-010 PAGE 3 . . ’ I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 J-lOUSING & REDFVELOPMENT COMMISSION RESeLUTlON NO. 237 A RESOLUTION OF THE HOUSING AND REDEVELOPMENT COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA TO APPROVE THE APPROPRIATION OF 82,000,OOO FROM THE REDEVELOPMENT LOW AND MODERATE INCOME HOUSING SET-ASIDE FUND FOR THE ACQUISITION OF REAL PROPERTY AND RELATED IMPROVEMENTS FOR THE PURPOSE OF DEVELOPING AFFORDABLE HOUSING RENTAL UNITS OUTSIDE THE VILLAGE REDEVELOPMENT EA WHEREAS, the Redevelopment Agency of the City of Carlsbad, hereinafter referred to as “Agency”, is a Community Redevelopment Agency organized and existing under the Community Redevelopment Law, Health and Safetv Co& Section 33000, et.seq., hereinafter referred to as the “Act”; and WHEREAS, the Agency is authorized to implement the Redevelopment Plan for the Carlsbad Village Redevelopment Project Area; and WHEREAS, Section 33334.2 of the Act requires that not less than twenty percent (20%) of all taxes which are allocated to the Agency for purposes of increasing and improving the community’s supply of low and moderate income housing; and WHEREAS, pursuant to Section 33334.2 of the Act, the Legislature declares its intent that the Low and Moderate Income Housing Set-aside Fund shall be used to improve and increase housing in the community; and WHEREAS, to carry out the purposes of increasing and improving the community’s supply of low and moderate income housing, Section 33334.2 (e) of the Act states that the Agency may exercise any or all of its powers, including without limitations, acquiring land or building sites, improving land or building sites with onsite or offsite improvements, donating land to private or public persons or entities, constructing buildings or structures, acquiring buildings or structures, providing subsidies to, or for the benefit of, very low income households, lower income households, or persons or families of low and moderate income, or other powers to carry out the purposes of the Act; and WHEREAS, the Housing and Redevelopment Commission APPROVESthe expenditure of 52,000,000 from the Low and Moderate income Housing Set-aside Fund outside the Redevelopment Project Area for the purposes of providing property and related improvements for the construction of 344 units of rental housing for persons/families within low and very low income households; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing and Redevelopment Commission of the City of Carlsbad, California, as follows: 1. .The above recitations are true and correct. . . . . . . . . -2- . . 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 . . . . . . . . . . . . . . . . 2. 3. 4. That the expenditures of monies from the Low and Moderate Income Housing Fund for the purposes of acquiring property and constructing related improvements for an affordable housing project containing 344 rental units outside the Redevelopment Project Area, in which such funds are generated, are and will be of benefit to the respective Project Area based on the following findings: a. The Village Redevelopment Area currently consists of a number of restaurants, hotels, time-share projects and small retail operations which depend on and offer employment at low to moderate income wages. The proposed housing project offers affordable housing opportunities with restricted rents affordable to low and very low income households. These type of restricted rent housing opportunities are currently not available to employees working within the Village Redevelopment Area. b. The proposed project is located on bus routes and connects to major transportation corridors which will allow direct access to the Village Redevelopment Area. The households residing within the proposed project will be able to take advantage of the public transportation systems which will allow them to work and shop in the Village Redevelopment Project Area. This will have a significant impact on the Redevelopment Agency’s efforts to revitalize the Village Project Area. That the Low and Moderate Income Housing Set-Aside Funds will promote the City of Carlsbad’s housing goals and satisfies specific requirements of the Community Redevelopment Law to expend a portion of its tax increment to produce affordable housing opportunities for low and moderate income persons. That the expenditure of the subject Low and Moderate Income Housing Set-Aside Funds is consistent with the Village Redevelopment Area Low and Moderate Income Housing Set-Aside Spending Strategy/Plan. -3- 5. That the Housing and Redevelopment Commission hereby authorizes the Housing and Redevelopment Director to execute documents required for the appropriation of $2,000,000 in funds from the Redevelopment Low and Moderate Income Housing Set-aside Funds in order to provide property and related improvements for construction of a 344 rental unit project for low and very low income persons within the City of Carlsbad. PASSED, APPROVED, AND ADOPTED at a special meeting of the a Housing and Redevelopment Commission of the City of Carlsbad, California, held on 9 the 26th day of October, 1993, by the following vote, to wit: 10 AYES: Comniissioners Lewis, Stanton, Kulchin, Nygaard, Finnila 11 NOES: None 12 13 14 15 16 17 ABSENT: None ABSTAIN: 21 22 23 24 25 26 27 28 -4- ITEMNO. STAFF-C,RSON(S): EVAN BECKER @ DATE: TO: FROM: SUBJECT: I. STAFF REPORT EXHIBIT 3 OCTOBER 14, 1993 HOUSING COMMISSION HOUSING AND REDEVELOPMENT DEPARTMENT VILLAS AT EL CAMINO REALi Request for approval of a recommendation to the City Council and Housing and Redevelopment Commission to author% acquisition of property with Redevelopment Low and Moderate Income Housing Set-Aside Funds, and to author& City assistance to the project. RECOMMENDATION That the Housing Commission ADOPT Housing Commission Resolution No. 93-009 recommending author-i&ion of the acquisition of real property for the purpose of developing affordable housing using up to $2 million in Redevelopment Low and Moderate Income Housing Set-Aside Funds; and ADOPT Housing Commission Resolution No. 93-010 recommending approval of City assistance to the project based on the findings and conditions contained therein., II. BACKGROUND The Villas at El Camino Real is a proposed affordable housing project resulting from the inclusionary housing obligation of the Aviara Master Plan. The City and the development team have combined efforts to structure a project that satisfies the Aviara inclusionary requirement, while also providing additional affordable units and affordability that is significantly greater than the minimum requirement of inclusionary units. On August 12, 1993, the Housing Commission approved two resolutions; Housing Commission Resolution No. 002 recommending the’ purchase of the land for the proposed project with Community Development Block Grant (CDBG) funds and Housing Commission Resolution No. 003 recommending application for acquisition funds from the CDBG Section 108 Loan Program. Outlined below is staffs description and analysis of the proposed project, in particular the affordability and financing. This analysis forms the basis for the staff recommendation regarding City financial support for the project. The recommendation complements the previous Housing Commission action of August 12, 1993, in terms of implementing this project. VILLAS AT EL CWO REAL s ’ OCTOBER 14, 1993 ‘. PAGE 2 III. PROJECT DESCRIPTION A. Location The proposed project consists of 344 residential apartments ‘on a 21 acre parcel located adjacent to and west of El Camino Real, between Camino Vida Roble and Alga Road. B. Unit Mix The project proposes the following unit mix: C. Other Features and Amenities The proposed project includes a common recreation complex containing a swimming pool, exercise room, leasing office, gathering room, kitchen and restroom. A second recreation area also includes a pool and children’s wading pool. There are two play areas ‘for children and flat grassy areas between buildings, driveways, and slope areas. The project’s l-3 story buildings would feature contemporary architecture consisting of roofs with varying roof lines, stucco exteriors and a patio or balcony for each apartment. D. Assessment This is an ideally located project that yields a substantial impact on Housing Element goals with a project design that equals or surpasses Carlsbad market standards. The unit mix will serve the needs of both seniors and larger families. Iv. DEVELOPMENT TEAM A. Develoner The project is being developed by Aviara Land Associates (ALA) in concert with Bridge Housing Corporation (Bridge), a non-profit housing developer, and’ Patrick/Picerne, a partnership of two San Diego-based builder-developers, Patrick Development and Picerne Associates. ALA’s role in assembling the development team stems from the affordable housing requirement of the Aviara Master Plan contained in the Aviara AtTordable VILLAS AT EL CAMCJO REAL $ ’ OCTOBER 14, 1993 PAGE 3 Housing Agreement adopted by City Council on July 20, 1993. Exhibit 1: Development Team Background, presents additional background about the individual team member. B. Development Oraanization Ultimately, the developer and owner will be a limited partnership in which Bridge Housing Corporation will be the managing general partner. The sole limited partner will be the entity providing equity to the project through the purchase of Low-Income Housing Tax Credits (Tax Credits). Mission First Financial, an investment subsidiary of Southern California Edison, is the prospective Tax Credit investor/limited partner. Bridge and Mission First Financial have successfully joined efforts in similar affordable housing projects. The Patrick/Piceme partnership and ALA may retain a general partnership interest in the project, but not to the exclusion of Bridge’s managing role. C. Builder The Patrick/Piceme partnership will serve as contractor. This team is an experienced multi-family apartment builder. D. Architect Design services are being provided by The McKinley Associates, also an experienced multi-family architect. E. Lenders At this time neither a construction nor permanent lender has been selected. Significant equity financing will be expected from the sale of the Tax Credits. Other planned sources of financing will include the developer, the City and the Federal Home Loan Bank Affordable Housing Program @HP). F. Assessment The development team is composed of highly experienced players, including one of the nation’s foremost non-profit affordable housing developers. The Tax Credit structure of this project requires that Bridge be in the pivotal ownership and management role which is desired by the City. This structure is ultimately controlled by the City as well, since the City’s financial participation will be required for a feasible project. VILLAS AT EL CAMFJO REAL . ’ OCTOBER 14, 1993 .L PAGE 4 V. SITE A. Site Control The site is currently owned by the Bank of America (formerly Security Pacific National Bank) as Trustee Under Declaration of Trust of Mary E. Bressi. ALA holds an option to purchase the property for $2 million. The optionagreement expires October 26, 1993. B. Value An appraisal ordered by Security Pacific National Bank valued the site at $3,995,000 as of November 7, 1990. Two additional independent appraisals will be ordered to update the value. C. Site Accentabilitv The site is situated between light industrial and agricultural uses. It is close to major existing and future employment generators, including a large proportion of moderate-wage jobs. The site is located within one mile of commercial centers, and within l/3 mile of a future community park and daycare center. The adjacent roadway, El Camino Real, is a prime arterial and provides transit services. D. Assessment From an affordable housing standpoint, the site’s proximity to jobs and services is superior. It is compatible with surrounding uses and creates minimal impacts. Land value will be supported by two new appraisals, and it is proposed that site control be insured by an expedited purchase of the land by the City. VI. AFFORDABILITY A. Rent and Income Levels The project will serve families at income levels up to’ 50% and 60% of the area median income for San Diego County. This results in the following approximate affordable rent schedule: VILLAS AT EL CAM-Q REAL 5 ’ OCTOBER 14, 1993 ‘\ PAGE 5 Consistent with other City programs, rents (including utility allowance) are based on households paying 30% of income. B. Targeted Ponulation The project is designed as a family project but provides a large (35%) one-bedroom component to serve independent seniors as well as young couples without children. The project contains 30% three-bedroom units, addressing the identified Housing Element goal of assisting larger families in a market area that provides few large units. While the affordability of the project enhances its marketability, a market study will be required to support the market absorption for the project. C. Term of Affordabilitv The minimum required term of tiordability will be 55 years. This will be a Tax Credit requirement. D. Consistencv with Housing Element and other Affordable Housina Policies The proposed affordability level and, the unit mix are consistent with Housing Element objectives and the City’s Comprehensive Housing Affordability Strategy. The project’s entire 344 units would serve as credit toward the City’s five-year lower-income housing “fair-share” goal of providing 1400 units; the project would provide for almost 25% of the 5-year goal. The affordability of the project exceeds the requirement of the City’s Inclusionary Housing Ordinance, Density Bonus Ordinance and Growth Management policy. E. Assessment The project will be a major stride toward City affordable housing goals. The, project will also be a product of key City policies which were put in place to facilitate this result. The project will be “100% low-income”, raising questions of project size and concentration; however, the project location, design, financing and ownership/management will be strong safeguards. Households making %20,000-$30,000 are low-income, but are a critical part of the Carlsbad working population and can form a stable community. As a “Combined Project” under the provisions of the Carlsbad Inclusionary Housing Ordinance, the project satisfies ALA’s affordable housing obligation off-site, that is, on a site outside the Aviara Master Plan. Because the project goes beyond ALA’s requirement of 160 affordable units, there are 184 additional affordable units available in the nroiect to satisfi other develoners’ inclusionarv reouirements. This presents the advantage not only of greater numbers of affordable units, but also the potential to satisfy developer obligations that may otherwise be difficult to resolve w&h new units in other locations. The participation of other developers in buying what will be referred to as “Affordable Unit Credits” in the Villas project is a key element in the discussion of fmancing which follows. VILLAS AT EL CW’O REAL . . OCTOBER 14, 1993 *\ PAGE 6 VII. FINANCIAL A. Sources and Uses of Funds The following sumxnarizes the proposed sources and uses of ‘funds which make up the financing plan for the proposed project. Detailed development and operating proformas are attached as Exhibit 2: Development and Operating Proformas. THE VILLAS AT EL CAMINO REAL SOURCES AND USES OF FUNDS USES Land Construction Costa Off-Sites Site Work BE Buildings Subtotal Fees & Permits soft costs TOTAL DEVELOPMENT COST s 59OJ23.00 16,475,885.00 SOURCES TOTAL PER UNlT s 2,060,000.00 $ 5,988.OO 1,716.OO 47,895.OO 17,066,108.00 49,6 11 .OO 5,878,622.00 17,089.OO 6,324,439.00 18,385.OO s31~29,169.00 s91,073.00 Bank Loan Limited Partnership Equity (Tax Credit) Affordable Housing Program Loan Developer Equity (ALA) City Loans: CDBG Set-Aside Fee Exemptions/Deferrals (estimated): PFF Grading Deposit Poinsettia Lane CFD Contingent Partner Equity TOTAL SOURCES $ 8,730,OOO.OO $25,378.00 15,047,985.00 43,744.Oo 2,064,000.00 6,OOO.OO 1,000,000.00 2,907.oo $2,000,000.00 500,000.00 S 2,500,000.00 S 7,267.OO $ 358,484.OO 104,046.OO 756,OOO.OO 666,98 1 .OO S 1,885,511.00 S 5,481.08 S 101,673.OO $ 296.00 S31,329,169.00 $91,073.00 B. DeveloDment Costs 1. Total The total proforma development costs are $91,073 per unit. This is considerably below the Carlsbad prototype construction cost of $133,783 for a two-bedroom VILLAS AT EL CWTO REAL OCTOBER 14, 1993 PAGE 7 apartment. Recently, the State of California Tax Credit Allocation Committee (TCAC) established development cost benchmarks for evaluating Tax Credit projects, These benchmarks were established on a regional basis using project “cost basis” per bedroom. The 1993 San Diego benchmark is $36,552 which compares to $41.013 for the Villas. If projects exceed the benchmark by $5,490 (one standard deviation from the benchmark) the TCAC would require cost justifications. Considering the Villas differential of approximately $4,461, the costs are reasonable by TCAC standards. This is further supported by the fact that Carlsbad is a generally higher cost location than those areas considered for the TCAC benchmark. Also noteworthy are costs that are not developer-controlled, such as local fees and off-site requirements. These are substantialIy above those used to establish TCAC benchmarks. TCAC also uses a cost per nerson benchmark. In this case, the Villas, at approximately $27,342 per person, is considerably below the benchmark of $30.283. This reflects the significant proportion of three-bedroom units. 2. Land While !a& cost/value will be supported by more current appraisals, the significant proposed increase in density has reduced per .unit land cost to approximately $6,000/u&, well below prototype unit land costs in the range of $20,000. 3. Construction Construction costs are approximately $38/sq. ft., a reasonable estimate for the quality of unit proposed. The City’s study “Economics of Developing Affordable Housing”, utilized a local building industry panel that estimated construction costs at $42/sq. ft. for a Carlsbad prototype two bedroom unit. 4. Contractor’s General Conditions, Overhead and Profit The cost is approximately $1,778,796, or 10.42% of hard construction costs. Up to twelve percent (12%) is a rough industry standard, provided the contractor is guaranteeing the construction price as is the. case with the Villas. Bridge was asked for further support for this cost based on their experience. This is provided in Exhibit 3: Supporting Information: Contractor Fees, Developer Fee, Cost Savings, and Cash Flow. 5. Developer Fee Developer fee is $1,500,000 or 6% of the tax credit cost basis (development costs less land and certain other “soft costs”). The TCAC permits a developer fee of up to 15%, but will likely “cap” the fee for a larger project such as the Villas. This fee level (at 6%)-reflects a considerable discount for project size. In Exhibit 3, Bridge also describes the distribution of developer fee and indicates what is done - VILLAS AT EL CAY-W REAL OCTOBER 14, 1993 PAGE 8 to earn the fee. In an affordable housing project structured like the Villas there is no developer profit, but there are fees. Like profits, these fees are an incentive to undertake the project, but they also relate to specific roles the developer must perform (e.g. capitalizing a general partnership, and guaranteeing construction completion, cost overruns, operating deficits and tax benefits for a limited partner). 6. Financing Soft Costs Prudent estimates have been utilized for permanent loan fees (2%), construction loan fees (1.50%) and construction period interest (8% for 18 months at a 60% average outstanding balance). Bridge’s Tax Credit syndication fees are relatively nominal in comparison to typical Tax Credit projects. 7. Operating Reserves The $500,000 operating reserve is slightly more than 50% of initial annual operating expenses and reserve contributions. This is a prudent level, as it must also be looked to for initial operating deficits during lease-up. Bridge also discusses this in Exhibit 3. 8. Design Design fees for architectural and engineering services are $544,500, or approximately 4% of hard construction costs. 9. Fees, Permits At over $5.8 million, or $17,000 per unit, the estimated project fees are the largest project cost factor next to construction. This is also addressed later in the Financing Structure. Local fees are e&in&es, and some items may change as the project proceeds. Some fees, particularly Poinsettia Lane construction, are subject to exact determination based on further study. Major components of this cost ‘factor include the Mello Roos Community Facility District Fee ($966,640), School Fees ($864,638), Poinsettia Lane Construction ($756,800) and Public Facility Fees ($358,484). 10. Hard and Soft Cost Contingency Contingency is approximately 5% of hard costs and is a minimum acceptable level. C. Onerating Proforma The Operating Proforma is based on income generated by the schedule of affordable rents and applies a number of assumptions: a vacancy rate is assumed at 3%, reflecting greater demand at more affordable rents; rents are assumed to increase at 3% per year (based on VILLAS AT EL CAIv”-‘O REAL OCTOBER 14, 1993 PAGE 9 household median income increases) and expenses at 4%. Debt service assumes a 9%, 3 O-year loan amortization. The development team has estimated operating expenses at $2,500 per unit/year based on experience and project size. This factor is low in the typical range for apartments, but reflects the economies of a larger project and the capability of experienced management. The Operating Proforma provides for a contribution to an operating and replacement reserve. Cash flow is generated in the first full year and accumulates to $1.8 million in year ten. Use of cash flow is addressed further in the Financing Structure. D. Financing Structure The Villas financing structure is dictated largely by the Tax Credit investment that brings the most significant subsidy to the project (approximately $15 million). The supportable bank loan will raise approximately 28% of project cost, while the, Tax Credit raises 48%. The prospects of raising the Tax Credit investment are enhanced because of Bridge’s track record and relationships in similar projects. The Federal Home Loan Bank Affordable Housing Program @HP) is an additional “outside subsidy” from a program established by financial institution reform legislation. Both Tax Credits and AHP are programs which require competition for funds or fund allocations. Competition is very intense in these progkms. Exhibit 4: Program Summaries - Low-Income Housing Tax Credii and Affordable Housing Program, provides summaries of the Low-Income Housing Tax Credit and AHP programs. Developer equity of $1 million from ALA reflects a contribution roughly equivalent to the land value attached to the 160 unit affordable unit requirement being satisfied for ALA by the project. This concept establishes a reasonable precedent in cases where the developer is able to attract large additional subsidies such as Tax Credit equity. 1. City Participation City participation is in two forms: direct financing and fee exemptions or deferrals. a Fee Exemptions and Deferrals . Based on City Council Policy 17, providmg for exemptions of affordable housing from Public Facilities Fees (PFF), it is proposed that the project be exempted from PFF fees ($358,484). The Policy language covering this exemption is contained in Exhibit 5: City Council Policy No. 17. VILLAS AT EL CW’O REAL OCTOBER 14, 1993 PAGE 10 . Based on a guarantee of the project Grading Deposit from Redevelopment Low and Moderate Income Housing Set-Aside Funds (Set-Aside), it is proposed that the deposit be waived. . The allowable base density of the Villas site would permit a development yield of 108 units. It is proposed that the CFD Fee related to the 236 additional affordable units resultiw from the proiect’s urouosed increase in density be deferred. This creates savings to the project of approximately $666,981 for the CFD. Because of the nature of Poinsettia Lane as a future improvement and pending work to determine its cost, it is proposed that this project obligation be deferred entirely. The concept of deferring these costs is supported by the fact that the affordable units created in this way provide a mbenefit which equals or exceeds the fees deferred. Payment of these deferred fees would be made from proceeds from the sale of Affordable Unit Credits which are available as a result of the “excess” affordable units created in the Villas project. b. City Direct Financing It is proposed that $2,000,000 in CDBG funds and $500,000 in Set-Aside be loaned to the project as construction and, subsequently, permanent financing. CDBG funds ($880,000) would be drawn from the City’s CDBG housing fund balance and from a CDBG 108 Loan ($1.2 million) to be applied for. CDBG funds have been set aside for several years to create a fund for support of affordable housing. This is an eligible use of these funds and the Department of Housing and Urban Development (HUD) has expressed concern over this fund not yet being committed to a project(s). The Section 108 Loan program allows the City to borrow CDBG funds, pledging a portion of future years’ grants for repayment. The program is more fully described in Exhibit 6: Section 108 Loan Program Summary. Because of regulatory restrictions, CDBG funds are best used as land acquisition financing for affordable housing. For this reason, CDBG funds will be utilized to acquire the Villas site, with the site then leased or sold to the. project. . The City’s Set-Aside funds have accumulated to a balance of approximately $2,3 19,000. These funds must be devoted to the provision of affordable housing opportunities in the redevelopment project area, or given certain benefit fmdiigs, outside the redevelopment project area It is proposed that $2 million of Set-Aside Funds be utilized as interim financing to effect an immediate purchase of the project site until the CDBG funds are available to replace the Set-Aside funds. HUD processing will require approximately four (4) months before CDBG funds VILLAS AT EL CAY-!I0 REAL OCTOBER 14, 1993 PAGE 11 would be available. Ultimately $500,000 of the Set-Aside Funds are to remain in the project covering other development costs. In addition to authorizing the expenditure of Set-Aside Funds, Housing Commission Resolution No. 93-009, contains the findings of benefit necessary in order to expend these funds outside the redevelopment project area. 2. Terms of City Participation All City financial participation will be structured through a Loan Agreement to allow repayment of direct financing and deferred fees/costs from three sources: . Development cost savings, to the extent they are achieved, will be shared with the development team and will defray the costs of City direct fmancing, as well as providing the developer incentive to construct the project at or under budget. . Marketinp of “AfXordable Unit Credits” as credits to other developers will provide for recapture of City direct financing and deferred fees/costs. . Distribution of cash flow, to the extent it is available and when appropriate reserve levels are achieved, will also be a source of repayment of City loans. In Exhibit 3, Bridge describes methods of allocating cost savings and cash flow which will provide the basis for provisions. in the City’s Loan Agreement with the project. 3. Assessing the Level of City Participation Approximately 72% of the cost of the project is an “economic gap” filled with subsidy fmancing. A breakdown of the subsidy levels demonstrates the substantial leveraging of City participation: VILLAS AT EL CAM+-3 REAL . OCTOBER 14, 1993 PAGE 12 SUBSIDY ANALYSIS SOURCE AMOUNT cw PER UNIT Tax Credits !§ 15,047,985.00 2,064,OOO.OO ALA Equity 1 ,ooo,ooo.oo Contingent Partner Equity 101.673.00 SUBTOTAL $18,213,658.00 81% % 52,947&O City Participation: *Direct Financing $ 2,500,OOO.OO *Fee Exemptions/Deferrals 1.885.511.00 SUBTOTAL CITY $ 4,385,511.00 19% %12,749.00 TOTAL SUBSIDY $22,599,169.00 100% $65,696.00 City participation of $12,749/u& accounts for approximately 19% of the necessary project subsidy. Each City dollar will leverage over $4.00 of additional subsidy. City direct fmancing and deferred fees/costs will be recoverable through future sale of affordable unit credits. This will allow City housing funds to “revolve” into future projects. Although there is no established “price” for affordable unit credits at this time, it can be calculated that roughly $22,000 per credit for the 184 available excess credits would return all City direct financing and fee deferrals. This “price” compares to a typical economic gan or subsidy cost of producing an affordable unit’ in the $70,000 range. Although cash flow and development cost savings represent possible additional sources of return to the City, the City’s position is best evaluated by not assigning value to those sources. Should they materialize, they become added “up-side” benefits by first strengthening the project itself and then providing return to the City. VIII. LAND USE The project has been found by staff to be consistent with the requirements of the General Plan’ the Carlsbad Zoning Ordinance, the Local Coastal Plan, and the Growth Management Ordinance. The projects required land use approvals were recommended by stafT and approved by the Planning Commission on September 1, 1993. Ix, MANAGEMENT Bridge Housing Corporation will control the management of the project. It is their intention to either utilize their own management company or contract for day-today on-site management that VILLAS AT EL CA! -TO REAL OCTOBER 14, 1993 PAGE 13 ,- “. * they would oversee. Bridge Housing Corporation is experienced in the management of affordable rental housing. In its management role, Bridge will also llfill its responsibility to the City, project lenders and the Tax Credit investor to insure that the project remains in compliance with its affordability requirements. To the greatest extent possible the management plan will incorporate services and support that are important to family stability and upward mobility. This includes access to daycare, transportation, job training/education, etc. Management will seek to develop specific relationships with surrounding industries that employ the Villas residents, Establishment of strong resident organization to empower residents and create a sense of community responsibility will be a management plan requirement. x. ADMINISTRATNE REOUIRJZMIlWTS OF THE CITY The City’s major administrative tasks will be to insure that the project’s affordability restrictions, particularly with respect to the Aviara affordable housing requirement, are recorded in an Affordable Housing Agreement regulating the project. It will be an on-going City requirement to monitor compliance with this agreement. Given the Tax Credit structure of the project and the attendant regulatory requirements as to affordability and compliance monitoring, the City may find it possible to waive its requirements for monitoring and reporting that are redundant. XI. RISKS AND CONDITIONS A. Risks The City will be in a subordinate position with respect to its financial participation and as typical of “layered” subsidy projects, the City is a “lender of last resort”; however, the City participation will be structured to look primarily for repayment outside the project through the Affordable Unit Credit sales. The City’s risk is loss of all or part of its-direct financial investment ($2.5 million), failure to recover all or part of deferred fees/costs ($1,527,027), and/or the failure to achieve construction and/or lease-up the desired affordable units. Major factors mitigate the City’s risk First, is the capability and motivation of the development team. Second, is the presence of lenders and a major Tax Credit investor who will apply strict standards in underwriting the project. Guarantees will be required for project completion and coverage of operating deficits. A market study will be required to support the project’s ability to achieve timely lease-up. Should none of the City’s investment in the project be recovered, the level of subsidy (and leveraging of. other subsidies) would still leave the City in very strong cost-benefit relationship. B. Conditions The following conditions will be met prior to commitment of City assistance: VILLAS AT EL CAM?) REAL OCTOBER 14, 1993 PAGE 14 1. Final Development, Operating and Sources and Uses Proformas that are acceptable to the City Manager, and which are consistent with the financing proposal contained herein. 2. An agreement with ALA acceptable to the City Manager which effectively provides for the execution of ALA’s option for land purchase. 3. All partnership agreements and organizational documents regarding project development, ownership and management in a form acceptable to the City Manager. 4. A Loan Agreement detailing the terms of City financial participation in a form acceptable to the City Manager. 5. An Affordable Housing Agreement in a form acceptable to the City Manager. 6. A Market Feasibility Study deemed acceptable by the City Manager. 7. Two appraisals of the project site which support a value consistent with the purchase option price of $2 million. XII. SUMMARY ASSESSMENT The Villas-project is proposed by a develonment team with proven ability, particularly Bridge Housing Corporation. The involvement of Bridge and the Tax Credit nature of the project add credibility and safeguards insuring that the City gets a project that it can be proud of apart from its affordability. The City’s financial narticination is extremely reasonable in comparison to the overall subsidy requirement of the project. The project presents a unique opportunity for recapturing the City’s investment. The tiordabilitv level and unit-mix serve the highest priorities in the City’s Housing Element. Project location is ideal with respect to jobs-housing linkage and impact on adjacent uses. Overall, this project can be a model for achieving the City’s affordable housing goals. It is staffs recommendation that the Housing Commission recommend the use of $2 million in Redevelopment Low and Moderate Income Housing Set-Aside Funds for the project -- $1.5 million to be used as interim financing for the property acquisition and $500,000 to remain in the project to finance other development costs. Staff is also recommending that the Housing Commission recommend approval of the indicated fee exemptions or deferrals for the project. ATTACHMENTS: 1. Housing Commission Resolution No. 93-009 2. Housing Commission Resolution No. 93-010 3. Exhibits “1’‘-“6”, dated October 14, 1993. EXHIBIT 1 DEVELOPMENT TEAM BACKGROUND AVIARA HILLMAN PROPERTIES FACT SHEET DESCRIPTION: Hillman Properties is a development, investment and management group involved with a wide range of real estate projects throughout the United States. Ranked among the largest development groups in the United States. Hillman Properties develops residential, office, industrial, research and development, mixed-use and retail projects. Headquartered in Newport Beach, California, the group is the development arm of The Hillman Company, a privately owned diversified investment firm based in Pittsburgh. In addition to its corporate and regional offices in Southern Califoinia, Hillman Properties also has regional offices in Pittsburgh, San Francisco, Sacramento, Portland and Albuquerque. Established in 1984, Hillman Properties is currently developing approximately 125 projects in 64 cities and 22 states, valued in excess of $3 billion. Included in the portfolio are 14.8 milIion square feet completed, 1.2 million square feet .under construction, and 16.5 million square feet to be built on land held in inventory. COMMERCIAL: The portfolio is largely office and industrial. Representative projects -include: In&national Place -- Boston, Massachusetts Fifth Avenue Place -- Pittsburgh, Pennsylvania Tower Bridge -- Philadelphia, Pennsylvania One Thousand Broadway -- Portland, Oregon Stadium Towers Plaza -- Anaheim, California MIXED-USE: One of Hillman Properties’ most prestigious developments now under way is the 1,000 acre master-planned resort community of Aviara in Carlsbad, California. When complete, this resort . community is planned to include more than 2,000 homes, the 443 room Four Seasons Resort Aviara with additional villa suites, an 18 hole championship golf course, a 47,000 square foot sports center with 12 tennis courts, parks and a neighborhood school. 2011 PI\LOMAR AIRPORT ROAD SUITE 206 CARLSEAD. CALIFORNIA 92009 (619)931-1190 F~x:(619)931-795c! Hillman Properties Fact Sheet Page 2 . : / RESIDENTIAL: ‘/ The .group's residential byilding arm, Republic Deiielopment ~ ‘_ r _’ .;: . . . . . . ‘. ; ‘; -. _ : _ - . -/ -.\ , -.-__ . ._ : - .:,. , 1 ~ .,. . _ , .- I -. - : I _,_- . :,_ _. -. : L- \ T- .- ._C> . . BRlDG E lcelebrates a decade of-service to the community . . . A MESSAGE FROM THE CZ-ZAZZU&WAND PRESZDENT This year BRIDGE celebrates its tenth anniversary of service to the community with a ranking as one of the largest homebuilders in the United States. The decade between 1983 and 1993 has seen many critical changes in the housing marketplace, including a complete restructuring of the tax treatment for housing, a virtual collapse of the real estate lending market, wild swings in interest rates, and the emergence and disappearance of numerous government programs. Throughout it all, however, the scope and depth of the Bay Area’s housing crisis has mmained relatively unchanged. Typical home prices hover at about 250% of the nation’s average, and typical rents exceed the national median by over 60%. ThisisthesettinginwhichBRlDGEhaslaboredfortenyearstobringdecenthousingtolower income famfliea around the Bay Area. To date we have over 4,600 units completed or in construction. and we expect BOO more to start this year. In addition we operate another 800 units which were built by others, and we expect to acquire over SOB more units this year, which we wfIl own and operate as mixed income housing. We are also developing two projecta which have been hailed as models for rebuilding the riot-tom nefghborhoods of Los Angeles. They consist of mixed-use developments in Richmond and Marin City whichcombine housing, open space, and conununity shopping cent-, comprising over a qua&r mfllion square feet of commercial space. Our operations have also expanded to include a first effort of nearly 4CU? units outside the Bay Area in Southern California, and a fullcare retirement community with nursing, meals, and housekeeping. All of these efforts are dwarfed however, by the mag- nitude of the unfilled need for large volumes of high quality affordable housing, not only in the Bay Area, but-throughout califomiaandthe~tion.Moreover,theproblemis~~pounded by the continuing “credit crunch,” and the prolonged recession still gripping our State. Thus as BRfDGE enters its second decade, we must discern how to advance our work by fuLl orders of magnitude, while maintaining both quality and affordability. This is no small task We invite you to review this report and to offer your ideas, your critique, and your help, if possible, as we rise to this challenge. Our goal is continued growth and service until the dream of decent, safe, and afford- able homes becomes a tangible reality for alI citizens. PLANS FOR GRC3VIl-i - BRIDGE Chairman, Alan Stein kaledcd).joimDonT-#Ftesidml,wlhe~discwe plansforBRRK;Fsreconddccrde.Theyappuinhnntd rrenderingdMuinCity.US~,amini-ncwtorm.which islhelugestMdmosldliousprojeclevaunderlakenal BRIDGE. Chairman ~P&&?nt - \ 1. I -I I fhtorabkDknarP&uteia USSauta,%td- -BRlrxxlmenabkdlm bmakesfgdcant limombk Pete Wlkoa Gowmm dtheSh(cdCaBfmnh =Epm/cca- &ekinddcan~ w-buildingw-b wbicbcanlsuaeadhothadtia thoughout the state and natim* LEADERSHIP i3RZNGZNG TOGETHER LEADERS FROM BUSINESS, GOVERNMENT, AND PHILANTHROPY T he BRlDGE name symbolizes a link that combines the resmnxs and expert& of business, government, and philanthropy. This linkage offers a unique opportunity to produce the large volumes of high-quality affordable homes needed in the Bay Area. BRIDGE works closely with all sectors of the community to achieve this goal- neighborhaxi lead-, elected ~fflcials, the academic community, a+ concerned individuals from all walks of life. BRIDGE has recruited nationally recu@xd leaders from throughout the Bay Area to join in its efforts. The top executives from 18 major corporattons and institutions have come together to form the Campaign Commtttee listed on the facing page. In addition to the individuals who have supported BRIDGE, many prominent Bay Area org& zati~havegivenustheirendorsements,indudingtheAssociati~ofBay AreaGovemments,theContra Costa County Mayors’ Conference, the Northern California Association for Npn-Profit Housing, and the Chambers of Commerce of Oakland, San Francisco andSanJCl@?. BOARD OF DZRECZ’ORS T he BEUDGE Board of Directors is drawn primarily from a “blu&in” Housing Task Force fornedin1981byTheSanFrandm,FoundationtoaddressthehousingaisisintheBayArea.The board includes develop, lenders, and realtors, as wel! as business executives, elected and appointed officials, community and civic leaders, and University of California faculty members. Thesqindividuals, all locally based, have national reputations in the housing and 5mnce fields, and participate actively in BRIDGE affaim. They meet bimonthly to review and consider BRIDGE policy and progns. AUNLSTElN ChaimmoftheBRlDGEBomhfDire&rs;Partner,Moni- gomery Scruritis, San Francisco; former Senetary of Busi- ness and Transportation for the State of Californir RICHARD BENDER &an Emeriti, college of Environmental Design, univa- sit)rd-BaLely EDWARD J. BLAKELY -*and(amachdnnan. DepaltmmtdckyAd RqJimal~udvcRilyofcaBfomia,BeTkeky ANlNoNYM.PRANK auinNn.Acrogen.tr,O+lJmd;fo-Us.P~ Gensll;fomvr ouirmanandcEodFustNationwi& Banlcsur- RICHARD HOLLIDAY PrrdQntMdCauitRaa+h)Qllirby,San- DENmso%RIpI l%sida& cmrim h Hicks, Inc., San Mate0 wNNEwluCHrMcPEAu l’msidmt d the Contra Cc&a County Board of Supervisors; Past President, County Supervisors Association of Califm PALJL SACK FVind& Paul sldr J%pehes, San Frandro ANGELO J. SIRACUSA Residmt,&yAIeacaudLsmp~ WlLLlAhl 0. STIPElC GmupSmiorviiPmiden& WaddSavin~and Loan.Qisda~~ CLARK E WALLACE CornmisdmrdRealEatak%tedCIWomL;Ctuirnull. Walk~andAndemRabrJM~C&P~ PmidentdtbeNationalAsdatbndRalbxa,and(hr Gworniaksocktia\dRdlon WARREN WIDENER Resident. UlbanHoldnglatihrtGOPljud;Mayu d&rl;cley;f-dqmbu,~~ SUSANNE WllSON PrimipdleSdhnwbyWikmilraLSanJon;fo-Pnsidentd SantaChraCountyBoarddSu~ 11 3 A A .Y,. t f ? t $ L 7 i 2. - BACKGROW’, THE AFFORDABILITY CAP IrAmaliarrHoummn 4. THE NEED F inding affordable housing is no longer just a problem of the very poor. It is a problem that confronts teachers, police officers, firefighters, nurses, commer&l and industrial workers, entry-level professionals - most of the work force. Furthermore, it ’ is a problem of both the young and the elderly. k Housing is even a problem for relatively affhznt middleaged homeowners, 3 s whooftenmustconfrontboththe housingneedsoftheirgrowncbildren as theyformnew g families, and of their elderly parents who are trapped on fixed tncomea - _ IlItheSanFmlUiSco BayArea,theseproblemsareamongthem&t&einthe nation. Rents have outpaced incomes, and over 90% of the region’s renters are trapped as B I - ..- “lifers” (i.e. renters for life), with virtually no chance of realizing the Amerkr+eam of homeownership. 3 Businesses, as well as consumers, suffer from the scarcity of reasonably priced i homes. As households migrate away from the Bay Area to regjona with more affordable 8 F housing, the competition here for qualifM employees increases, asdoestheprmsureto ; rairzsalariestoaccommodatehousingcosts,andtocompensateforlong,costly,andoften .: fa~g~~utes.Employeehunoveranddissatisfactionincrease,andlaborefficiency 3 decreases. .e GridIocked~aysarecIogged withfkustratedlong~mmmuters w& ‘=wastingF-w- t amamtsof@soBne,poEu&ganddegra&ngairquaMy,and . demanding huge investnwrnk of public and private funds in new htghvvrys, transit systems, and parking f&i&s. Many of these same people mistakenly t&eve that only d an end to job growth and a moratorium on new housing can solve the problem Despite these presures, it has been espe&lly difficult to deveIop affordable .I housingintheBayArea.Ihebay,theocean,andthemountainsthqtmakeSanEiandsco 5 so desirable, Emit available land for both residential and cornmenial development. In - addition, many communities in the area have imposed extremely r&r&&e growth and %, land-use regulations. At the same time, governmen tprogramstoeasethehousingcrisis 2 have been decimated, thus threatening the economy, prosperity,.and quality of life of the whole region. ‘;, - 4 T f n1981,TheSanFmnciscoFoundationreceivedananonymousgiftof!J66O,Oofj ::- to address the housing crisis in the Bay Area. The Foundation appointed a “blue-n&bon” Task Force, chaired by Alan Stein, which worked closely with the Bay Area Council, a group of 300 of the region’s largest corporations, and recommended the formation of ’ BRIDGE as an aggressive, non-profit, regional development corporation. BRIDGE de& i cated itself to the production of large vohuneeof highquality homes for families earning $12#ooo to Supoo annually. BRIDCErecelvedits501(cX3)tax~emptsta~sl1983andimmediaklybegur active development operations. Since that time, it has participated in the development of nearly 5,000 units valued at over $500 mi&m. Over $8 million in donations has been 1, added to the initial anonymous gift, and provides the working capital for BRIDGE . OperatlOM BRlDGE has since formed three additional non-profit, public-benefit sub&liar- iea, BRIDGE property MaMgement Company, Bay Area Senior !&vices (BASS), and 8 , BRIDGE properties Inc., which are discussed further on page 12. ,7y,*:* .- 4 lmAt4-r~ Jppl*mbfathtstambortpoimtAportma\b ‘Ihrpmjut,lmtJdonthesJnhudreDwJtok Embucdao,,rraidNJrty3lx)oJpp&r~ht,,S~~Jputmmlr KENNETH A. PICEME ltenneth Picerne iz a graduata of Yale Univereity. He ie Proeident and Chief Ebxeoutive Offioer of Picerno Aesociataz. Prior to foxming the uompany, the expanrion of a he warn the architeat and chief proponent of family real eetato bueineur from a Northeaat regional development aompany into an indurtry leader in the nation's major drvmlopment markdib+ During his tenure, over 8000 l paxtmentr, hundred6 of thourande of l uare feet of commoraial epaceI and hundrede of “For Gals” reuiden 1 ial unit@ were built and mark&ad. M~~;i~ini;~i~~;~rne ;gftrtFau in 1982 I Kenneth Piaezne moved to capabilltfrr to d&slop rapidly eetablirhad In-houee , build, dnd manage apartment unitr fn the Bouthwsrt. The Phoenix bared eubafdiary now owna and manager over 3500 apartment unitr in Phoenix and Ttiaeon, Arizona, and Lar Vegar, Nevada. Upon tha oreation and uuac~ee~~~ of the Southwest regional office, Isenneth Picsrno moved on to Orlando, Florida in 1984, Utilizing his Phoenix l xparience, he took advantage of strong central and routh Florida marketa which snablod the loutheaat office to break round on their firrt develom*nt s 1 zo ectr with&n eight nonthe, f P oorne Development Corporation oZ: F or da ourxently owne and manage8 over 2500 rpaxtment unit. in Florida. In 1987, Ken Piasrne returned to thm aotporate office in Rhode faland to re uvenate esvercl 1 the North&art development aotLvLty throu h rota 1 and xesidmtial projectr; to develop a high y P etrtictured and aontraliz~d Cocpomte Serviaez Divirion to provide financial rorvioeet to snrura etandard o erational procedurer for all of tha Ragion& Of fiaes) and with h P a finance and txeasury, expertise in corporate relationzhipe. helped the Company expand Sts financing Puneuant to the succereful ventures in New England, Arizona and Florida, Kenneth Piuerne oought to open another regional, offiae in the competitive California mark&, In on1 Pfuerne Aeeouistas wag formed, and bar mince % a few l hort yeare, e~omc) one of the most respected development companiee in zouthern California. Ken Piaerne’e goal is to dewlog and expand Pimrne Aaeoul,aterr through a carefully charted plan of developing quality reridential properties. PATRICK DEVELOPMENT .T Park& Kruer, the founder of Patrick Development, Ud, 18 weU known for quatlty and innovation in the thousands of apwtmants, aMorniniunw, and cllngle4amUy homor VUIMI he haa developed. Aa a wmmunlty leader, he b recqnized a8 a leading force in brldglng wmmunicadone between the 8pwtmerWbuii hdusby and gcwwwwt. In add&n to staying acflvo In real e&ate devslopment. Pat has aimed hia en&epreneurM abilities t high-ted)ndogy and has iwasted in sevwaI emerging growth compahs indudlng some in San Mego. Pat 8aoa the imm of emerging growth COlTlpKl~tOthefuar~OCO~lCh6althtiwdlbe(ngOfSenDieqo. Pat ha8 alway found time to devote to communfty actMle8, mq ofwMh relate toNshopeth~~Ipeop~ein~rsgsvdfessattncomo,beaMotoU\nln~nt f=Jal* ~18f8andl~Pst~onths~&~neFTnu\a~~, whereherasetotheposltionotVlceChainnanandChainnanoltheleadlngcomm~, CHFA is a statewide agency which issues bonds to finance low and moderate Income housing. From 1981 to 1988, he was a dWXor of the federal home Loan Bank of San Francisco, titi regulates the savings and loan hdustry. He was appoInted first under President Jimmy Carter in 1961 and twappmd under Presldmt Ronald Reagan. Betweenl984~1988,heal~wEwontheFedsralSsvl~~LoanAdviarKv Coundl, which ;acEs as a sped counselor to the Federal Home Loan Bank in Washington, O.C. Locally, Pat was on the iimt l=bus~ng Commission for the City of San DIego _ bkveen 1979 and 1982 The County of San Oiego selected him to serve. a3 First Chairman of the kiousing 6ond Finance Retview CommIttee Mhween IQ84 and 1986. He was the Rrst ChaIrman of the Reglonal Growtt~ and Planning Review Task Force for San Dlego County, Last year, he was re-appolntf@ to a three year term on the Centor Cii Developmsnt Corporadon, which is responsible for all development acMties ln the redevelopment area of duwntwn -m* WucationisanotherinterestofPti. SInce1981,heh8t3beenamemtwoftfw BoardoftheUnfvetsityof~~&Berkel~cefitsrtorRealEstatsandurban ASSOCIATES, INC, ARCHITECl-URE & PLANNING 4 The McKinley Associates, Inc. is a full senrice architectural/ land planning@m specializing in residential architecture as weil as focused experience in commerciai and instttlj- tional projects. Located in San Diego &ice 1983; it has provided services throughout the western states including Utah. Washington. Colorado, Nevada and California. The McKinley Associates’ portfolio of residential work includes over 10,000 units of multi-story high density, three and four story medium density, and one and two story low density development. Additlonally, The McKinley Associates are presently involved in designing one of the largest multi-use homeless housing projects (400 beds) in the State of California. The overall experience makes ‘The McKinley Associates. Inc. a valued team member on a variety of residential developments. The McKinley Associates’ knowledge of current design trends, construction practicies, and value engineering extends their capabilities beyond that of many firms. The McKinley Associates’ broad base understanding of land planning, product design, and cost control amply qualifies them to provide a broad scope of services integral to success of a project. 619&238-II34 FAX: 2384038 1818 FIRSTAVENUE SANMEGO.CALlFORNlA92101 THE AVENTINE 6910 UNIVERSITY CANTER LANE SUITE 580 SAN DIEGO CALIFORNIA 92 I 22 619-558-8977 TAX 619-558*~18t3 STATEMENT OF QUALIFICATIONS ’ ‘... Dennis W. Gillespie Gillespie Design Group, Inc. 8910 University Center Lane, Suite 580 San Diego, California 92 122, .-. I . * . > _ Dennis W. Gillespie, founding principle of Gillespie Design’Group, Inc., established his -. .- : -- landscape architectural and land planning office in San Diego in 1976. Prior to establishing his own practice, he provided master planning services for city, county, and federal governmental agencies. Mr. Gillespie received his Bachelor of Science degree in Environmental Design from California State Polytechnic University, Pomona in 1970 and is a licensed Landscape Architect in California and Nevada. He is a member of the American Society of Landscape Architects (ASLA) and the Building Industry Association .. and serves on the B.I.A.‘s Quality Task Force. .- Mr. Gillespie has provided overall design coordination and management for a wide variety ; of land planning assignments during his -21 years in the landscape architectural field. His specific expertise has been in the development of planned communities, major recreational I facilities, country clubs, resorts, golf courses, bike paths, and parks for clients in both the public and private sectors. other arcas of expertise are feasibility studies, master planning, resource management, slope erosion control plans, and utility and transportation corridor improvements dealing with projects located in environmentally sensitive areas. Mr. Gillespie has received numerous awards for design excellence in parks, master planned residential communities, and city and governmental urban designs. Awards have been received from H.U.D., California Coastal Commission, A.I.A., A.P.A., City of San Diego, City of ,Chula V&ta, City of La Mesa, and the County of San Diego. Mr, Gillespie has received over 50 awards from the B&A., including SAM, Gold Nugget, MAME, and Laurel awards for excellence in residential neighborhood design. Some master planned communities designed bj Gillespie Design Group include, R&ho .e Bemardo, Ranch0 Bernard0 Heights, Twin Oaks Valley Ranch, Sunbow, Redhawk.and CarmelMountainRanch.~. . - “.,., . ._, . ,. ,-: ,, , I . -I .’ .’ BHA, INC. TEEFIRM BHA, Inc. is a land planning, civil engineering and surveying firm committed to providing the highest level of personal&d service for large and small clients in the public and private sectors. BHA’s ability to consistently find solutions through innovative and award winning work has earned the firm the respect and loyalty of a growing list of satisfied clients throughout Southern California Carl&ad based BHA has served .a diversified group of clients ranging from private developers to public municipalities. A trademark of the f&m is the direct involvement by founding principals Rod Bradley and Ron Holloway in every BHA project. Overseeing a staff of talented professionals, Bradley and Holloway ensure every project is completed on time and within budget. In addition, BHA offers a team of specialists who possess vast experience in dealing with planning challenges from both the public and private side of the development table. This knowledge is applied to every site plan, master plan, environmental impact report, land suvey and engineering study the firm undertakes. BHA’s track record of providing creative and functional solutions has made the firm a respected leader in its field. Though the firm’s steady growth, the level of service on which BHA was founded has remained intact. RESIDENTIAL DEVELOPMENT BHA is recognized for its sound planning of both small and large residential communities. Working within precise and stringent guidelines, BHA’s residential specialists consistently create quality residential environments which enhance their natural surroundings while maximizmg land use through expert planning, grading and design. BHA has planned and engineered over 3,000 multi-family residential units in San Diego County. Most of these projects have fallen within the Hillside Development criteria. Additionally, BHA is known locally for its involvement as engineers for the Carlsbad Village Faire project. --bkA , Inc. EXHIBIT 2 DEVELOPING AND OPERATING PROFORMAS Ju l * SW -- -- L . \ fOOX TXCR deal f7OXR SOZ, 50X I 60X)1 fed’1 crrdftc 4 130X1 W/unit MP i4-LS ~r~r~~~~r~~r)r:.~r~.~~.m.8~~.~.x.a.8.s.~4~8-~~8-8~a~8~~9a~~.~-n-n-~-8-s-a~z-u-~-~*-~~~~~~c~8-m4-~~-~~~-~8~~-e *+ PROJECTED cam +* . haaiptiaa hdg,t -- P fgJJ &wultMtr rgl,Wff llgprafsal Juu~t~r$Q 2.001 M ~cot~u&?~to. lkfa~ t cMtlJJ9NJq sdox ?or aIF* --- kll ri:sl l Jsl! . 4:: D tti 0:sr i27 . h . f:6 IB . L 111 . . : : *+ WElMTIwI Ll?ERSES ++a 1tn Cst* cmt r---r- Ruqrmt Fn -iizi 8: gathn t . l,ilMxa r + errclet) Rrpl, hsom wltlJd klad hit n. I# -% T# i8i MRKETIROI &SEDWal TXa 86X lid l&!/R 244 .-- 299,896 072 -311 U Totrlr l!JfyR &# p#tJ.w,..,.. TWU (Is v&X:X M~700qx lioygqmp . . . ..w.....* ftmat ltl)Jr*rrrrrr .,.. t22,670& db u,4 1 ‘tt I ’ E”~~~tlonr. ‘.**‘~*.. 414,44b‘W W tea LinmtaUr,,,,,,, to *!6‘a.2 i t;;iiijii 1 t MRtin mlTIOM f$of p,rwe&a#:a,.r ILKI r” ;;;~j;-a~ J”:R oparr %puJJws8..r~r hl#~~L~f;~~~. i:!t In Mb pmrrwrrrrm* 4,442 1 I x of y f&jr ill surnl . #,402 ! LIIIII--I--*mM- -.I------- Y.. -uI- . . SEP 20 ‘93 10: 11 . %JMnE’ BRSITXS 20-SW93 SUHRRRY of Fl~Inl PRtlFtIm ou98ET LINE ITER TOTM PER WT --------u------II------~---~-------.-------~ . IM 42,060.@00 $3,988 c8R9TRE150W cm9 ff F-SITES woJ23 $l,Ilb SITE MURK 4 oU1LDIN6S NBTOTM FEE9 8 PERMIT9 $16,479,999 w,o66,100 M,878,622 4!7,899 MO,611 w,o89 9m cm9 96,324,439 S1@,399 TOT& Uf,329,1& s91,on . . .* P.3 t MUJECTJ p;JoITE f INI Dmt 20-SW93 PA6E 3r EWITV rNvEs1nENT cMMnTro11 CMMATIOR ff EQUITY RRISE (Federal’ Credits Onlrla Total basis, Iess dtvelaomt fur tZb,ObO,413 Plus DeV#10Mf few MOO,OW Oasis kfon High Cost lrrr lldjustmt: *27,360,413 High CmtNurlifhd Cmrw Tract tdiurtrcclt~ 48,268,124 8asis far rctlJr1 alJocrtim: 1st year Federal Credit d!oc)r~tiJ ' ~iStUWd Credit f&J ' Too ytrr total rJlotrtJ~r factor for htwohin( rquitt rrfw Total qui ty fJiU (Fed'1 only It kcku# undefWitifIQJ r&4 4 MO.% CMIlAT1011 Q m tl WlilJ . . , totat dW8IOp#nt CMtS, to88 dove]. fWJ HiluHr , tudr Off-m8 Irgrave8rataJ fwoqmt LOM F~J Ti tlr/Recardiq (Pm. tarn): !hftetfItgJ Operrtfa9 RCWWJ TCAC Fetr @ldiCltfDA COStSI SUBTOTAL Total Eli9ibfr Basisa 1354828,W *s,ot9,w 4w95,971 0.44 *14,446,066\ ~lL3,047,985 / 429,029,!69 f N90,223) ~4174,OoQ~ W,tooJ 1*m,w Wtt,OODJ 0149,ow w10,¶001 03,768,7571 426,064,411 EXHIBIT 3 SUPPORTING INFORMATION. CONTRACTOR FEES, DEVELOPER FEE, COST SAVINGS AND CASH FLOW I- I . FILE: BRSITX3 DATE: 14-Seo-93 CONPMISON OF GENERIL CONTRMTOR COSTS LOCATION: TOT& CONTRACT TOTAL FEE Overhead Profit GENERAL COWDITIONS Supervision Terp. facilities Clean-up/Repairs Insurance Bond General Conditions Business Tax TOT& 6.C. COST4 YIO BOND W/O BOND & BUS. TAX 6.C. COSTS AS PERCENT Of CONTRACT N/O BONB N/O BOND C BUS. TAX ! SK;lll~AT i. Franciscg 10,136,480 525,446 SAN PAUL0 Irvine 23,662,OOO 545,000 ill::: FELL & EHERY CITY CNTR CENTERTOWN BRESSI 60U6l-l BBY II APARTtiENTS I\PARTHENTS SITE San Jose S. Francisco Eseryville Richmond S. Rafael Carlsbad 9,568,937 613,026 258,297 354,729 509,900 7,991,845 17,048,187 4,B97,519 4,748,004 17,066,108 449,721 465,000 303,706 776,912 926,000 375,000 158,000 293,000 551,628 378,762 197,150 62,100 119,512 135,220 243,764 1,028,796 170,621 133,085 243,420 750,000 79,651 107,129 46,770 294,511 23,567 1,001,349 954,579 931,012 18,000 71,119 57,484 618,062 30,247 1,302,358 1,244,874 1,214,627 12,650 100,000 509,900 117,220 230,770 1,471,ooo 1,122,926 1,471,Ooo 1,122,926 1,471,ooo 1,122,926 843,762 438,926 487,184 1,778,796 843,762 438,926 487,184 1,778,79b 843$762 438,926 487,184 1,778,796 12.851 6,22Z 11.74x 12.531 4.95z 8.9bZ 10.2bZ 10.42Z 12.282 6,221 11.74z 11.94x 4.95z 8.962 10.262 10.42Z 11.981 6,22Z 11.742 11.65z 4.951 8.962 10.2bZ 10.421 September 13, 1993 Ref. f4038F Evan Becker Carlsbad Redevelopment Agency 2965 Roosevelt Street, Suite B Carlsbad, CA 92008 Dear Evan: We would like to express our strong appreciation for the work done by you and the Planning Department staff to enable our proposed development on the Little Bressi site to come before the Planning Cormnission on the first of this month. It was clear from both the process and the results of the hearing that the Commissioners had been well briefed on the issues. We recognite that the schedule upon which we settled at our meeting on Thursday September 2nd is quite aggressive towards meeting the two critical goals ahead of us: 1. Purchasin 4 the Bressi through t e Section 1 o/i roperty prior to the year end with CDBG funds loan, an opportunity we cannot afford to lose. 2. Gaining all public approvals and financing commitments in time to begin construction in the spring of next year, thereby allowing us to build through the winter months and have units for rent in the spring of 1995. To accomplish these goals, we must work towards a City Council meeting on October 12 at which the Council considers three types of approvals: 1. Land Use (Site Plan) 2. Purchase of the Property by the City 3. Commitments to make land and funds available to our partnership, based on a financing plan acceptable to the City and our partnership. Based on our meeting, we have prepared the attached Action Plan, BOARD OF DIRECTORS cnum AuNIslEM Fannu, Monlgomy scckria. San Fr.awism. BKHABD BENDER kanEmm-ims.~d WI lksign, LlnivmiIy d uiiomh. &r)uky. CA EDWARD J. BLUELY Rdesa. ~cpvunrnt d City and Ikgimd Planning, Univmily d cllilank. Bcrkeky. CA. KENrcoLwEu F+nsi&m. TnmMaia Reahy sCWiCU.sulFnncirco. AWHONY Y. FltNuK c3uimnn. Acmm Inc.. -CA iwmRD M. HOLUDAY Fmidml,hIcK~.Rm& Hdwy Dcv+ma. Inc., SmFWKilCO. DENms0Twm Fresidmt. 0Bri.m 8 Hicks, Inc.. Sal Maleo, CA !5UNNBWBIGHTMcPEAK Supa+sa. DisnW Four. cumacmacounly.u PAuLsAcx ripal; sa& Ropada. ANGEU) J. SIRACUSA -.BZl~AIlSO3WldI. WIXIXAM D. ST&XX cnarpsenkrvitc- WddS3VillgSdLovl -. o&land. CA. CXNILE.wNlAcz CarmurrvnadRalW. Sated‘.XSoda wAuBBNulDENm Pl&hl,Uh~ Inaicw. chwmnd, CA susANNBvILsoN FlincIpI. SoIuciaa by vi. smJw.cA. OFFICERS LDONAIDW FluIdem CARfXJ. GNANlll Vii- A NOT-FOR-PRO FIT, PUBLIC-BENEFIT CORPORATION ;- Evan Becker September 13, 1993 Page 2 detailing the work to be done to meet the proposed schedule and the party responsible for each item. We ask you to review the plan, and to confirm that we have correctly identified the items upon which we agreed. To allow the City to move forward with an analysis of the economics of the project, we are providing in this letter the following: 1. An explanation of the uses of, and demands upon, the Development Fee. 2. A survey of the amounts paid to the general contractors on recent BRIDGE projects (as a percentage of the total contract amounts), and a breakdown of the component parts of the payment to be made to the general contractor for our project (assumed to be an affiliate of Patrick/Picerne). 3. A proposal concerning the use of any savings achieved in the CONSTRUCTION-RELATED line items in the agreed-upon project budget. 4. A proposal concerning the use of any savings achieved in the NON-CONSTRUCTION-RELATED line items in the agreed-upon project budget: 5. A proposal concerning the uses of the initial operating reserve proposed to be funded as a development-period project cost. 6. A proposal concerning the use of project income available after payment of debt service on private debt, operating expenses, replacement reserves, a partnership management fee, and the operating reserve. 7. A revised project proforma, taking into account the items discussed at our meeting and the costs of the requirements imposed on the project as a condition of approval by the Planning Cormnission. DEVELOPMENT FEE Though the Development Fee serves as compensation to the developers of the project, there are in turn three types of liabilities taken on by the lopers for which the Development Fee serves as an off-setting asset: deve A. Staff and overhead costs There is no separate line item in the budget to pay the actual staff and overhead costs of the developer incurred throughout a projected three- to four-year development period. These staff and overhead costs are significant, and can be paid only from the Development Fee. Evan Becker September 13, 1993 Page 3 B. Long term operating guaranties to lenders and investors In addition to the repayment and completion guaranties required by,the construction lender, as General Partners responsible for the long-term operation of the project we incur the following specific liabilities, the amounts of which can be quantified: i. Operating Deficit Guaranty To protect the Limited Partner against cost overruns in the lease-up and operation of the project, the GP's wfll sign a guaranty in an amount equal to 75% of the first full year‘s project income. Based on our current proforma, this amounts to a guaranty of approximately $1.4 million. ii. Tax Credit Indemnification To insure that the Limited Partner receives the tax benefits upon which their investment is based, the GPs will sign a guaranty to deliver a specific amount in tax credits and losses. This guaranty creates an exposure of up to $1,050,000. iii. Property Tax Guaranty Because the project operations are underwritten assuming no property taxes will be paid, the GPs will provide a guaranty against loss of the property tax exemption, amounting~to approximately $300,000 per year. It is our ho e that these amounts can be negotiated downward, as the total potent al P liabilities are likely to far exceed the total At the present time, however, these are the C. Capitalization of General Partner In order to assure the Limited Partner that the guaranties enumerated above are meaningful, and to meet an IRS standard, the General Partners must be able to show net worth of 10% of the total.equity invested in the partnership (aggregate amount.of approximately $1.4 million). Particularly for BRIDGE, this is an onerous requirement for a non-profit organization whose capital is needed to pursue a wide array of projects. The Development Fee constitutes the on1 source of capital to offset these very large liabilities. Without ad c+ ng some significant amount to the GP's corporate assets from the Development Fee, there would be a severe imbalance between the liabilities taken on by the GPs and the financial resources available to cover those liabilities. We expect to work with the Tax Credit Allocation Committee to gain approval for a larger fee, commensurate with the size of the project's liabilities. Should this request not be approved, ‘. Evan Becker September 13, 1993 Page 4 we would also wish to pursue discussions with the City regarding the funding of more significant reserves from the project income to cover these liabilities. GENERAL CONTRACTOR FEES Aside from the payment of lease-up costs incurred by BRIDGE Property Management Company, the payment of the general contractor's overhead, profit, and general conditions is the only compensation other than the Development Fee to be paid to any member of the development team. As such, the amount of these fees must conform to industry standards. The attached schedule shows the payments made (or committed) to general contractors on recent BRIDGE projects, alongside the proposed fees to Patrick/Picerne. CONSTRUCTION-RELATED SAVINGS Following conversations among the team members, we wish to arrangement with the general contractor that provides for a r ropose an 1 construction-related savings to be returned to the City as?reduction of its investment in the project. We have arrived at this recomnendation (for a "cost plus a fee" contract) for the following reasons: A. Given BRIDGE's track record in controlling costs through up-front value engineering, and the leverage the development team can exercise over subcontractors in the current economic climate, BRIDGE is confident in its ability to deliver high-quality housing at the most reasonable cost possible. As a general partner, BRIDGE is in a position to closely monitor these costs. B. BRIDGE (and the City) also have an interest in balancing the lowest costs against very high quality of construction and specifications. This may mean comnitting savings to upgrading some aspects of the project, to address both aesthetic and long-term maintenance concerns. To do so under a guaranteed-maximum contract could put us at cross-purposes with the general contractor. As we noted in our meeting last week, this arrangement, while ensuring all savings are returned to the City, also shifts responsibility for cost overruns to the City as well. We believe we have included a healthy contingency in the budget to off-set this potential liability. \ Evan Becker September 13, 1993 Page 5 NON-CONSTRUCTION-RELATED SAVINGS The Development Fee will ultimately be capped, and will include all direct compensation to the developers. This amount cannot be increaseme to savings in other budget line items. Therefore all net savings (the total of all soft cost line items below the projected totals) will be returned to the City to reduce the financing gap. INITIAL OPERATING RESERVE The initial operating reserve, funded as a development-period cost, is intended to offset the risks of: A. Not being able to lease-up the units as quickly as planned, and so incurring operating expenses with less income. B. Construction interest that accrues between the completion of construction and the closing of the permanent financing due to delays caused by complications with multiple lenders. In this project, the difference between interest on the full construction loan (of approximately $21 million) and the permanent mortgage (approximately $7.6 million) would amount to nearly $3,000 per day. C. Operating expenses that are higher than initially projected. Keep in mind that our projections will be more than 2 years old at the time the project goes into operation. In order to ensure that we are not forced to come back to the City for additional funds during operation of the project, and because of the risks listed above, we believe it is essential that we begin operations with a signficant operating reserve in place. We would propose an arrangement concerning the release of a portion of this reserve as the project operations are normalized and both lease-up costs and operating expenses become better defined, with time periods for review of the status of the project operations to be worked out with the City. CASH FLOW Upon satisfaction of certain project operating expenses, the great majority of the cash flow should be returned to the City as repayment of the City's investment. We would propose that, followin 9 payment of the following costs, 902; of the cash flow be paid to the C ty: ,- ’ ‘ \ Evan Becker September 13, 1993 Page 6 A. B. c. D. E; Private mortgage debt service Operating expenses Because payments to the City will depend in part on .the operating costs, we would propose an initial operating budget for review by the city. As long as the budget increases in any year by no more than CPI, City review of the annual operating budgets would be proforma. Increases above CPI would have to be specifically justified. Replacement Reserves We would propose to establish an initial annual replacement reserve to be funded from project income, to be based on a reserve study carried out by a third party. City approval would be required for any increase in the annual replacement reserve funding above CPI. Partnership Management Fee This fee, established at a base of $15,000 per year, covers the asset management functions carried out by the Managing General Partner (reporting to investors and lenders; filin approval would be required for any annual 3 tax returns). Again, City ncrease above CPI. However, we would like to reserve the ri costs may prove to be higher. B ht to review the base figure, as actual his is due to both the size of the project and its greater distance from BRIDGE's office. Operating Reserve To continue funding prudent reserves we would establish a set-aside of 3% of the operating expense budget. Should the initial operating reserve prove to be adequate, we would agree to forego the continued funding of operating reserves as long as the capital account did not drop below an agreed-upon base. As noted in the "Development Fee" discussion above, should the Tax Credit Allocation Committee unduly limit the fee allowed, we may need to fund a greater reserve from cash flow to ensure that adequate resources are available to the project in the event the guaranties are drawn upon. REVISED PRGIECT PROFORMA We have made the changes to the project proforma on which we agreed at our meeting. We have discussed the mix of rents (the number affordable at 5C8 of median and at 60%). My understanding is that the final mix will include a maximum of 3oxT at 60x1, with the remainder at 5D%, unless the results of the market study lead us to conclude that there is not an adequate market for the 60% rents, given the limitations on the incomes of the residents. % Evan Becker September 13, 1993 Page 7 Once you have had a chance to review the information in this letter, we invite you to arrange either a meeting or a conference call to discuss any items which require further clarification. We look forward to hearing from you. Ken Picerne EXHIBIT 4 PROGRAMSUMMARIES LOW-INCOME HOUSING TAX CREDIT AND AFFORDABLE HOUSING PROGRAM /- JWFORDABLE HOUSING PROGRAM FACT SHEET WHAT IS THE AFPORDABLE HOUSING PROGRAM? Created by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the Affordable Housing Program (AHP) of the Federal Home Loan Bank of San Francisco is a subsidy fund designed to encourage and assist housing finance lenders in the development of affordable housing in their communities. To facilitate such activities, the Bank provides subsidized advances (Ioans) or direct subsidies to shareholders engaged in lending for long-term, very low-, low-, and moderate income housing projects. Both owner-occupied and rental projects may be eligible for fhding. HOW MUCH MONEY IS AVAILABLE?’ As provided in FIRREA, the Bank contributes a percentage of its preceding year’s net income to the AHP each year. Beginning in 1990, this amount was 5 percent of the preceding year’s net income, increasing to 6 percent in 1994, and to 10 percent annually thereafter. The final regulations also set forth minimum annual total amounts that must be contributed by the Bank System as a whole. From 1990 to 1993, at least $50 million must be contributed annually, increasing to $75 million in 1994, and to $100 million each ye& thereafter. AHP funds are generally leveraged with conventional and other sources of financing. WHOHASACCESSTOAHPFUN’DS? Each of the 12 Federal Home Loan Banks sponsors an Affordable Housing Program and holds District-wide competitions each year for its shareholders; Shareholders of the Federal Home Loan Bank of San Francisco are headquartered in California, Arizona, and Nevada, but may apply for AHP subsidies for housing projects located in any community they serve in the U.S. Shareholders are encouraged to work with nonprofit organizations and public agencies in developing applications for MP funds. HOW MAY AHP FUNDS BE USED? AHP funds may be used to finance the purchase, construction, and/or rehabilitation of owner-occupied housing for families with incomes at or below 80 percent of the median income for the area; and/or to finance the purchase, construction, or rehabilitation of rental housing in which at least 20 percent of the units are occupied by and affordable to households with incomes at or below 50 percent of the median income for the area. Shareholder applicants must be able to comply with the Bank’s credit policy guidelines, Loans made by shareholders using AHP funds should meet prudent, flexible, and innovative underwriting stan- dards that do not expose the institution to undue risk. . HOW ARR SUBSIDI& CALCULATED? The amount of the AHP direct subsidy (cash grant) or interest rate subsidy (subsidized advance) will depend on the amount of subsidized assistance required to make the project feasible. AHP regulations prohibit AHP assistance to shareholders in excess of that amount needed to reduce the monthly housing cost for the targeted households below 20 percent of the household’s gross monthly income. Additionally, a shareholder receiving a subsidized advance shall extend credit to qualified borrowers at an effective rate of interest discounted to at least the same extent as the subsidy granted to the shareholder by the Bank. WHAT IS THE APPLICATION APPROVAL PROCESS? The 1993 deadlines to submit applications for the two rounds of competition are April 15 and October 15. Applications for program funds are available from the Federal Home Loan Bank of San Francisco’s Community Investment staff. Each application is evaluated against a number of priorities and objectives set forth by the regulations and is scored using a ltXl-point system. Those projects which score highest receive funding priority. Applications are reviewed, evaluated, and ranked by Bank staff within 30 days following the applica- tion deadline. The Bank then submits those applications recommended for funding to its oversight agency, the Federal Housing Fiiance Board, which has 30 additional days to give final approval. WHOM SHOULD 1 CONTACT tiR ADDITIONAL INFORMATION? The Community Investment staff of the Federal Home Loan Bank of San Francisco is available to provide technical assistance and information to the Bank’s shareholders, local governments, and com- munity organizations that are interested in participating in the Bank’s Affordable Housing Program. For assistance, call the Community Investment staff at (415) 6162542. Mailing Address: Community Investment Federal Home Loan Bank of San Francisco P.O. Box 7948 San Francisco, CA 94120 Working with YOU to PWCW AfTordabk Housmg ~.brl c\c*ulw L*RLcr 1*sn 4 Pwlwr . . L,. d V.lltl 1 Vlhr f .I ..! .*,I I .‘!,‘.‘l -.I,‘\’ ;I\,. lim& I,” a -8 4TL’J i -. :- ‘t . . ..i:. ..- LOW INCOME HOUStNa TAX CREDrT Aa part of the Tax Reform Act of 1986, Con(pess created the Cow Income Houslng Tax Credit, whfch ptides a t&c shelter for limIted partners In low Income housfng prOfgct3. thetaxcfedit gives private corporations and indlvkturils an incentive to invest In low inmme. housirtg, by protidIng a dollar-fat-dollar kredlt* against their federa) tax obligations. Onerr ta csedlt Investors can recoup their entim investment In just a few years, through the tax cmdlts and 0th~ tax !oss0s, In ord8r to obtain these beneftt$, Investors will put substandal money Into a t&x credit pfq/ed- as much as one-third of the total deve(apment costs. A nonprofIt brings tax credit Investmetttsr Into 8 project by forming a limited partnershIp to own the project, and then Wirrg partnership interests to prtvate limited partner?, who warrt the &Wl’bQ8S Ot the tax ct8djt. 7hg nonprofit then b8cofnes the general partner in charge of all of the business and management decisiona & the pln8fship, and th8 hited pWhW inv8stoti become ‘sikmi partnefs” who fec8ive only tax beneMs ffom the p reject* There is a statesride ceiling on. the avaiiabfe amount of tederal tax credits, and on the similar state ta% cradlts which are also availabk In California. For this reason, the cmdts are allocateij gevml the3 each year by a state tax Credit Allocation Committee in a very competitive proc8ss. NonprofIts have a competltlve advantage in this a!lckSdOfl if they provide lower rents than those required by law, N-8 to keep the rerrts low for at least 55 yeam, and have substantial private of govenment Investment in the project. m Othrr Offices: If’25 !Oth v +I[<- :<‘I. l .t~r.mh’ws’ . ; .ii- I a :,.i .l!(\,-;‘.;.I\: I.,,\ ..I’#. --: - EXHIBIT 5 CITY COUNCIL POLICY NO. 17 ’ . c c S c EXHIBIT “A” Cl’. OF CAWSUAD Policy No. 17 -.- COUNCILPOLICY S’i=A’1’EMEN’l Date Issued 712191 __- 3eneral Subject: ;Ixcilic Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILlTIES ELEMENT OF THE GENERAL PLAN El feclive Drrtc ;/z/91 -- Cancehtiw Uate Supersedes No. ~~~~~a ,‘olks lo: City Council, City Manager, City Attorney,. Delrartntent and Divisiw 1 Icatls, Eq-hyee Bulletill Bwmis, Press, File BACKGROUND In order to protect the public health, safety and general welfare of all the citizens of Carlsbad and- to ensure a continued high quality of life within the City, the Public Facilities Element of the Carlsbad General Plan requires than an applicant or proponent of a development project present evidence satisfactory to the City Council that all necessary public services and facilities will be available concurrent with community needs before any, zoning, subdivision, development, or redevelopment approval or permit may be giqen or issued. , It is the policy of the City to mitigate the public service and facilities impacts created by new development and ensure that all public services and facilities will be provided in the manner which will ensure the continued high quality of life in Carlsbad. Prior to July 3, 1979, the City Council relied on a report of availability of public facilities and services received from City staff. On July 3, 1979, the City Manager reported that in the future, those services and facilities cannot be made available to new development from the City’s resources. As a result of that report, the City Council adopted City Council Policy No. 17 on August 29, 1979. Policy No. 17 has subsequently been amended at various times by the City Council. The most recent amendment to City Council Policy No. 17 was effective on April -10, 1984. The City Council has been provided with various reports and information by the City staff since the adoption of City Council Policy No. 17 and the City Council finds that the facts and circumstances which required the adoption of Policy No. 17 continue to exist. On January 21, 1986, the City Council adopted Urgency Ordinance No. 9791 after a finding on January 14, 1986 that establishment of the development management system and public facilities and improvement phasing plan for the City was required to eliminate public facility shortages and to protect the community character and quality of life in Carlsbad. This system and plan is required in addition to the requirements established by City Council Policy No. 17. On March 25,1986, the City Manager reported to Council on the status of public facilities in Carlsbad and recommend an increase in the public facility fee. This report identified a list of facilities and services which would be funded by the public facilities fee. The list was approved by the City Council. In addition to the fee established pursuant to City Council Policy No. 17, the City requires developers to provide ‘public improvements by a variety of different means. By utilization of all available methods, the City Council will be able to find that public facilities will be provided concurrent with need as required by the Public Facilities Element of the Carlsbad General Plan. CH . OF CARLSUAD Policy No. I7 COUNCILPOLICYSTATEMENT Date Issued 712191 Ef’lective Date 712191 Cancellatiofi DG -- ~. - tietwal Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILITIES ssue ELEMENT OF THE GENERAL PLAN Supersedes No. IB.f_y pecilic Subject: Yopies to: City Council, City Manager, City Attorney, Departme,nt and Division .I-k;ds, Employee Bulletin Boards, Press, File On July 28, 1987, the City Council accepted a revised report on the availability of public facilities and adopted a revised public facilities fee of 3.5% which allows for interest costs associated with debt financing library and civic buildings. On June 25, 1991, the City Council introduced and on July 2, 1991, adopted the necessary ordinances and resolutions to place into operation Community Facilities District No. 1, a Community Facilities District (CFD) established by the voters within its boundaries in order to provide a guaranteed source of funds for sew&al critical public projects. This list of projects included the main Library facility and future Library expansions, a City administrative office, and a portion of Macario Canyon Park, all projects previously financed through the Public Facilities Fee program. With the implementation of the CFD, the City now had the ability to levy taxes on property within the boundaries of the CFD to finance these three projects. Tbis ability to levy a tax in advance of development takes the place of the need to collect a public facility fee, or at least that portion of the fee applicable to these three projects. On June 25, 1991, the City’ Council adopted this revised Council Policy allowing a credit against the 3.5% public facility fee for properties within the boundaries of and subject to taxation by the CFD. The amount of this credit is based on the proportion of PFF projects now funded through the CFD. The credit amount is 1.68%, thereby reducing the PFF for qualified properties to 1.82%. Any property not within the CFD boundaries and subject to taxation by the CFD shall continue to be subject to the additional License Tax on New Construction as established by Chapter 5.09 of the Carlsbad Municipal Code. PURPOSE: 1. To establish a policy regarding the requirements which must be met before the City Council will find that the Public Facilities Element has been satisfied. ,2. To establish a policy that will allow development to proceed in an orderly manner while insuring that the requirements of the Public Facilities Element will be satisfied by establishing a fee to. fund the cost of City-provided . facilities, including but not liited to: parks, major streets, traffic signals, storm drains, bridges and public buildings such as fire stations, police facilities, CH . OF CARLSUAD COUNCILPOLICY S'I'ATEMEN'I I’dicy No. 17 Date lssued 712191 _ ___ __ _ eneral Subject: pecific Subject: Effective Date 712191 REQUIREMENTS NECESSARY TO Cancellation Date ____ ._ __. SATISFY THE PUBLIC FACILITIES Supersedes No. E ELEMENT OF THE GENERAL PLAN Zopies to: City Council, City Manager, City Attorney, Department and Division f ftx~l~, Employee Bulletin Boards, Press, File I maintenance yards, libraries and general offices, which will insure they will be . available concurrent with need. POLICY: 1. In determining whether or not service provided by another entity will be available concurrent with needs in connection with a project, the Council, in the absence of evidence to the contrary, shall be guided by a letter of availability from that kntity, provided, however, developments which are required to dedicate land or pay fees for school facilities pursuant toChapter 21.55 of the Carlsbad Municipal Code, shah be deemed to have satisfied the Public Facilities Element in regard to schools for that development without the necessity for an availability letter. 2. The City Council finds that the report entitled, “A Public Facilities Fee for the City of Carlsbad”, dated July 3,1979, accurately reflected the City’s need for and lack of ability to provide public facilities, and services to new development and was therefore approved by the original Policy No. 17 adopted on August 29, ‘1979. The City Council also finds, based on the reports submitted in support of Ordinance No. 9791, and in support of an increase to the public facilities fee as presented to the City Council on July 28,1987, that in addition to a public facilities fee, other means of providing needed facilities and services must be established. These other means include the adoption of a development management system and various impact fees. ’ The Council also finds that the continued development of the City,. with the consequent increase in population and in the use of public facilities, will impose increased requirements for such facilities, including, but not limited to, parks, major streets, traffic signals, storm drains, bridges and public buildings, such as fire stations, police facilities, maintenance facilities, libraries and general offices. The necessity for such facilities results directly from new construction and the need cannot be met from ordinary City revenues. The most prac&al and equitable method of paying for such facilities is to impose a fee upon a new development in the City. Payment of such a fee will enable the City to fund a construction program to provide public facilities. If a project developer agrees to pay the public facilities fee established by this - ~. _ .-• dl t. - .s... 2 -_ Page ,/I of i CITk dF CARLSI3AD COUNCIL POLICY STATEMENT Gerwral Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILITIES ELEMENT OF THE GENERAL PLAN Specific Subject: Policy No. 17 Date Issued 712191 Effective Date’ T/2/91 Cancellation .Dat: ssue Supersedes No. Lid Copies to: City Council, City Manager, City Attorney, Department and Division l~lcacls, Employee Bulletin Boards, Press,‘File . policy and other impact fees as may be adopted by City Council ordinance or resolution, and complies with any applicable facilities plan, the City Council will be able to fmd that public facilities and se&es will be available concurrent with need and that the requirements of the public facilities have been met. In addition, the Council finds that the creation of Community Facilities District No. 1 has provided an alternative source of funding for three projects previously funded entirely from the public facilities fee. These projects are the construction of the new main Library and remodel of the existing Library facility; construction of new City administration facilities, and the construction of a portion of the park improvements within the Macario Canyon area. Those properties within the boundaries of and subject to taxation by CFD No. 1 have therefore met a portion of their public facilities obligation and should receive a credit against-the public facilities fees due at the time of development. 3. Before any zoning, subdivision, development or redevelopment approval or permit may be given, the applicant shall pay or agree to pay (on the forms attached hereto) a public facilities fee in the amount of 3.5% of the building permit valuation of the buildings or structures, or a fee of $1,150 for each mobilehome space to be constructed pursuant to such approval. If the property applying for the above actions is within the boundaries of the Community Facilities District No. 1 and.is subject to taxation by the District, the amount of the public facilities fee due shall be 1.82%. of building permit valuation as defined above or a fee of $598 for each mobile home space to be constructed pursuant to such approval shall be required. The fee shall be paid prior to issuance of building or other permits, and shall be based on the valuation at that time. 4. . All proceeds from the fee collected pursuant to this policy shall be paid into a special capital outlay fund of the City entitled, “Public Facilities Fund.” The fund shall be used only for the purpose of acquiring, building, improving, expanding and equipping public property, and public improvements and facilities including, but not limited to, the following types of capital projects: Public buildings (such as fire stations, police facilities, maintenance and yard . facilities, libraries and general city offices) parks, major streets, traffic signals, storm drams, bridges and other similar projects as the Council may deem .I i -.<. a_ :ps . CH-‘ JF CARLS’BAD COUNCILPOLICYSTATEMENT Gewral Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILITIES ELEMENT OF THE GENERAL PLAN Specific Subject: Policy’ No, 17 Date Issued 712191 Effective Date 7/2/91 Cancellation Dat! ssue Supersedes No. B.‘_,_7d Copies to: City Council, City Manager, City Attorney, Department and Division Heads, Employee Bulletin Boards, Press, File necessary and a&ropiate.. Design&on of expenditures of funds available from the fund shall be made by the City Council in the context of approval of the City’s annual operating and capital improvements budget or at such other time.as the Council may direct. 5. The following exceptions from payment of the fee shall apply: (a) The construction of a building or structure or mobilehome space which ’ is a replacement for a building or space being removed from the same lot or parcel of land. The exception shall equal but not exceed the fee which would be payable hereunder if the building being replaced were being newly constructed. If the fee imposed on the new building exceeds the--amount of this exception, such excess shall be paid. (b) Accessory building or structures in mobilehome parks, such as a club house, swimming pool, or laundry facilities. (c) Buildings or structures which are clearly accessory to an existing use such as fences, pools, patios and autombbile garages. (d) Additions to existing single-family or two-family residential structures, provided the addition does not create a new dwelling unit or economy dwelling unit as defined by the Uniform Building Code. (e) The City Council may grant an exception for a low cost housing ptiject where the City Council finds such project consistent with the Housing Element of the General Plan and that such exception is necessary. In approving an exception for low cost housing, the City Council inay attach conditions, including limitations on rent or income levels of tenants. If the City Council finds a project is not being operated as a low cost housing project in accordance with all applicable conditions, the fee, which would otherwise be imposed by this chapter, shall -immediately become due and payable. (0 . The City rn+y not waive or otherwise adjust the amount of the tax due or imposed by Community Facilities District No. 1 under this policy. .,. -. ( :.: :,.. * ,- i> _ ..: ,’ .. : ..*,i-- .r &I;.;.< Page 6 of 7 Cl-1 OF CARLSI3AD . COUNCIL POLICY STAl’EMENT Policy No. 17 Date lssued 7/2/91 .- 3eneral Subject: specific Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILITIES ELEMENT OF THE GENERAL PLAN Effective Date 712191 _ Cancellation Datt ssue Supersedes No. LTd Copies to: City Council, City Manager, City Attorney, Department and Division I le;~rls~ Enqhyee Bulletin Bards, Press, File . 6. 7. 8. . There is excluded from the fee imposed by this policy: , (a) Any person when imposition of such fee upon that person would be in . violation of the Constitution and laws of the United States or the State of California. (b) The construction of any building by a nonprofit corporation exclusively for religious, educational, hospital or charitable purposes. (c) The construction of any building by the City of Carlsbad, the United States or any department or agency thereof or by the State of California or any department, agency.or political subdivision thereof. Y. The City Manager shall be responsible for the administration and enforcement of this policy. His decisions may be appealed to the City Council whose decision shall be final. On August 29,1979, the City Council adopted Policy No. 17. In so doing, the Council found that public facilities were adequate for existing structures but not for any new development. Policy No. 17 shall apply to projects involving the conversion of an existing building or mobilehome park to a condominium, planned unit development, stock cooperative or other similar form of ownership as follows: If the building or park being converted was constructed before August 29, 1979, the fee to be paid shall be limited to 3.5% of the building permit valuation of any new construcdon done as a part of the conversion. If the building or park being converted was constructed after August 29,1979, a fee of 3.5% of building permit valuation at the time of construction shall be paid plus a fee of 3.5% of the building permit valuation of any new construction done as a part of the conversion. These fees are subject to adjustment as described in Section 3 above for property within the, boundaries and subject to taxation by CFD No. 1. . . - . .i I: . C1’1”1 31; CARLSBAJD Policy No. 17 - COUNCLLYOLKY S'I'AI'EMEN'T Date issued 712191 Etfective D;lte- 7/2/91 -- I Gewral Subject: REQUIREMENTS NECESSARY TO SATISFY THE PUBLIC FACILITIES ELEMENT OF THE GENERAL PLAN Carlcellatiw lht; Supersedes No. ssue $;hid Specific Subject: I Copies to: City Council, City Manager, City Attorney, Department and Division I leads, Employee Bulletin Boards, Press, File 9. Pursuant to City-of Carlsbad Ordinance No. 6082, the public facility fee shall apply to all project for which building pennits were or will be issued after July 28, 1987. 7 EXHIBIT 6 SECTION 108 LOAN PROGRAM SUMMARY CITY OF CARLSBAD UNITED STATES SECTION 108 GUARANTE ED LOANS PROGRAM SUMMARY: The U.S. Department of Housing and Urban Development offers low interest, guaranteed loans for entitlement communities for various types of development projects. These loans are for front-end financing for large-scale community and economic development projects that cannot be financed from annual grants. Projects eligible for this fnancing include the . acquisition of property, the rehabilitation of housing and related relocation, clearance and site improvements. Section 108 financing is ideal for communities with immediate needs. Most loan applications are approved within six (6) weeks. Communities can create a repayment schedule that best fits the cash flow requirements of the specific project. However, the repayment period shall not exceed 20 years. Any entitlement city may apply for a loan up to five (5) times the amount of its most recent Conummity Development Block Grant. (No commitment to guarantee shall be made if the total outstanding notes or obligations guaranteed on behalf of a public entity would exceed an amount equal to five times the amount of the most recent grant.) If an entitlement city’s application for a Section 108 loan is approved, the City must pledge all grants made or for which the City may become eligible in future years. In some cases, HUD may also require additional security (i.e., lien on property). HUD provides guarantees for all Section 108 debt, backed by the full faith and credit of the United States government. After HUD has approved Section 108 loan applications, the loans are bundled together by a private underwriter into securities and resold as serial amortizing notes to private investors. Proceeds from the sale of these notes are distributed to the borrowing communities, which may receive the funds directly or designate a public agency to receive them. Beside the principal amount of the loan, communities pay interest costs and an application processing fee. The interest rate is determined by the market at the time the notes are sold. The application fee is approximately $1700. The City must also pay any issuance, underwriting servicing or other costs associated with the private sector financing of the guaranteed loans. Such costs are payable out of the guaranteed loan funds and will be shared by all borrowers. APPLICATION PROCES!k An application for a Section 108 loan may be submitted at any time. The same presubmission requirements required for CDBG funding applications must be adhered to in submitting an application for the Section 108 loan. To save time and money, the City can submit the Section 108 loan application with the CDBG application due by June 1 of each year. The loan application must include a statement of the City’s community development objectives, a breakdown of the projected uses of the Section 108 loan funds and a schedule for repayment of the loan. The schedule must identify the sources of repayment. In addition, the City should provide a certification of the City’s authority to pledge CDBG funds as security and statements showing that the proposed project has undergone citizen review. HUD may also require other certifications, such as statements showing that the City has made good-faith efforts to obtain financing without the federal guarantee. The City must hold at least two (2) public hearings on the Section 108 Loan Application to obtain public comments. HUD may disapprove an application or may approve loan guarantee assistance for an amount less than requested if HUD determines that the guarantee constitutes an unacceptable financial risk, HUD will notify the City in writing that the loan guarantee request has either been approved, reduced or disapproved. If the loan is approved, the City will be required to enter into a contract with HUD for repayment of the loan. 1. 2. 3. 4. 5. 6. 7. 8. SECTION 108 LOANS COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM Section 108 Loans are for front-end financing for large-scale community and economic development projects that cannot be financed from annual grants. Projects eligible for this financing include the acquisition of property, the rehabilitation of housing and related relocation, clearance and site improvements. City must prepare an application outlining the purpose of the funds. Also, the City must follow applicable citizen participation requirements which includes a minimum of two (2) public hearings. Application for a Section 108 loan may be submitted at any time. It must include a schedule for repayment of the loan which identifies the sources of repayment. Also, the City must provide a certification providing assurance that the public entity has made efforts to obtain financing for activities described in the application without the use of the loan guarantee and the City cannot complete such ftincing consistent with the timely execution of the program plans without such guarantee. The amount any one entitlement public entity may receive may be limited to $35,000,000. No commitment to guarantee shall be made if the total outstanding notes or obligations guaranteed on behalf of the public entity would exceed an amount equal to five times the amount of the most recent grant. Security requirements: 1) contract with HUD for repayment; 2) pledge all grants made or for which the City may become eligible; 3) at discretion of HUD, provide other security (i.e., lien on property, etc.) The repayment period shall not exceed 20 years. City must pay any issuance, underwriting, servicing and other costs associated with the private sector financing of the guaranteed obligations. Such costs are payable out of the guaranteed loan funds. - EXHIBIT 4 ITEM2 STAFF PERSON(S): E&W BECKER DEBBIE FOUNTAIN STAFF REPORT kk DATE: AUGUST 12, 1993 TO: HOUSING COMMISSION FROM: HOUSING AND REDEVELOPMENT DEPARTMENT SUBJECT: PURCHASE OF REAL PROPERTY AND SECTION 108 LOAN (CDBGl APPLICATION: Request for approval of a recommendation to the City Council to purchase approximatr;ly $enQ (20) acres of real property located generally on the west side of El Camino Real between Palomar Airport Business Park and Sunfresh Rose Greenhouses (APN: 2 15-02fi!-15 & 215-020-01) for the. purpose of causing the development of affo+ble housing; and authorization to submit an application to the U.S. Department of Housing and Urban Development (HUD) for the purposes of providing additional funding for purchase of the subject Property. .., L I. RECOMMENDATIOI’( . . That the Housing Commission ADOPT Housing Commission Resolution No. 002 recommending to the, City Council the purchase of approximately twenty (20) acres of real property subject to the terms and conditions outlined therein and ADOPT Housing Commission Resolution No. 003 . recommending authorization from the C,ity Council for staff to submit an application for a Section 108 Loan to the U.S. Department of Housing and Urbm Development for the purpose of providing additional funding for the purchase of subject property. II. BACKGROUND The City of Carlsbad’s 1991-96 Housing Element sets forth the objective (3.12) of land banking. Land banking is a process used for acquiring land suitable for the development of afZorclahle housing. Typically, the land banking c&rcept seizes the opportunity to acquire and hold, or “bank”, land in advance of approval of specific development plans for a project. In this way, the City takes the initiative to capitalize on the availability of sites which are suitable for affordable housing and available at a reasonable price. For the past four (4) program years, the City ha& set &de, or allocated, federal Community Development Block Grant (CDBG) funds for t?xs purpose of land acquisition for affordable housing. The City currently has a balance of $880,372.30 in the CDBG-AfZordable Housing Acquisition Fund. Per recent discussions with $e v.SY,J?epartment of Housing and Urban Development (BUD), the City must take action soon toexpend the noted balance of funds or risk losing them due to inactivity. Staff has indicated to HUD that every att&mpt will he made to PURCHASE OF BREW 1 -‘PERTY ‘AUGUST 12, 1993 PAGE 2 expend the funds by December 3 1, 1993 in order to remain in compliance with regulations for the CDBG funds. The property, outlined in more detail below, is currently available at a reasonable price (approximately $2 million). It is staffs recommendation that the City use its existing CDBG funds ($880,3723(l) in combination with a loan from HUD through the Section 108 program to purchase property, as identified within this report, for affordable housing purposes. A description of the Section 108 Loan Program is provided in Exhibit 3 of this report. The program basically allows the City to borrow against future allocations of CDBG funds. For example, if the City borrows $1.2 million through the program, the loan could be repaid over a 10-15 year period by. using a portion ($150,000 - $200,000) of our annual CDBG entitlement funds. The City would still have funds available to fund other projects through the CDBG program. The City of Carlsbad’s CDBG total allocation for 1993-94 was $512,000. The subject property is described in the Legal Description provided in Exhibit 4. It is currently owned by the Bank of America as Trustee Under Declaration of Trust of Mary E. Bressi. The property is commonly referred to as the “little Bressi property” because it is a portion of the larger Bressi Ranch property. Aviara Land Associates Liited Partnership (ALA) currently holds 813 option to purchase the property which expires on October 26, 1993. The property was optioned by the Aviara Land Associites Limited Partnership (ALA) for the purpose of developing affordable housing which would saris@ its obligations to the City of Carlsbad as outlined within their Inclusionary Housing Development Agreement. If approved, the City would exercise ALA’s option, or have the option assigned to it, to purchase the subject property. The City would retain ownership of the property and, if so desired, could lease the property back to a for-profit or non-profit developer on a long term basis for the purposes of developing affordable housing. III. ANALYSIS The timely acquisition of the subject property till insure that an attractive site is retained and ultimately devoted to an affordable housmg development. The purchase of the subject property has a number of advantages as highlighted below: . It helps the City to meet one of its Housing Element objectives which is to “bank” land for affordable housing. . It helps the City to remain in compliance with federal regulations for the CDBG program by expending fi.rnds allocated for the purchase of property in a timely fashion; eliminates theriskof~osingtheseCI?BGfunds.-”, *I ;- __ -_ ‘5 ..’ ii ;y ,, . ; . It provides the City v&h a vahr&le resource in its.effort(s) to provide a~‘co&ierable number of affordable housing u&s at a desirable, suitable site. :>)ZL: ; ~ 1 _ I-, PURCHASE OF BRESSI PROPERTY AUGUST 12, 1993 PAGE 3 . Public land ownership is desirable regardless of the type of affordable hoeing project to be developed due to the return on investment opportunities; it is an accepted practice. . By eliminating “holding costs”, it helps, to reduce the costs associated with eventual development of an affordable housing project by a for-profit or non-profit developer/builder which benefits the community. Unused CDBG funds are not held or invested by the City. Ultimately, all or part of the investment in the subject property may be recaptured in a development transaction, or the land value may be used to enhance project affordability. In even the best situation, there is always some elemerit of risk when purchasing property. Although staff believes these risks are minim& we have outlined them blow for your consideration as well: . By using CDBG funds, the City is obligated to ensure that the use of the property benefits low/moderate income persons. Therefore, if for some reason an affordable housing project cannot be developed. on the subje property, the City must develop another project on the site which has direct benefit to low/moderate income persons. If the City is unable to develop any type of project w&h benefits low/moderate income persons, it must sell the property and return the fi,mds to the federal government or reallocate them to an eligible project. . While staff believes it is unlikely, the termination of the CDBG program could result in the loss of the City’s source of repayment’ for the Section 108 Loan. Staff will not propose to HUD any other sources of repayment or security beyond CDBG, the land or the eventual affordable housing project develqped on the land. . The worst case’scenario would be for the City to own a piece of property which could not be developed for the intended purpose(s). The risk of this happening is slight. However, there is always some chance that something could happen to prevent the City for using the property in an advantageous manner. Staff believes that the advantiges of purchasing the subject property far outweigh the disadvantages or risk of the transaction. We believe that the site is highly suitable for the dkvelopment of affordable housing. By owning the subject property, staff also believes that housing can be provided which is affordable to households with incomes at 50% or 60% of the County Median, not only those at 80% of the median. This means that we can meet a critical housing need of low income households re&ng, or expected to reside, in our community. .5 IV. . COkDTIlONg _. This prope&y acquisitioti is recommended subject to the terms and conditions outEn within the Resolution No. 002 and highlighted below. ‘These terms and conditions are intended to insuk PURCHASE OF BRESSI - QPERTY AUGUST 12, 1993 PAGE 4 a purchase at reasonable value; the dedication of the site exclusively to affordable housing purposes; and to respect the position of the current option holder, ALA. 1. The City Council shall authorize expenditure of up to $2.1 million for the purchase and attendant costs of appraisals and closing. 2. Funds shall be drawn from the City’s Community Development Block Grant (CDBG) Housing Fund and other CDBG funds which are approved for the transaction by the U.S. Department of HUD (e.g., a loan from the Section 108 Program). 3. The purchase shall be subject to all applicable HUD terms and conditions governing the . federal CDBG program, including, but not limited to: . Contract with HUD for repayment of any loans; . Pledge of grants made or for which the City may become eligible for any loans provided to the City; . At discretion of HUD, provide other security which may be required for any loans made to the City; . Repay loan(s) made to the City witbin.a period which shall not exceed 20 years;. . Use the property for-a purpose which provides direct benefit to Iow/moderate income person 4. The value’ of the site in relation to the option purchase price shall be supported with at least one MAI appraisal. 5. The purchase shall be subject to an agreement with ALA, holder of the option on the subject property, whereby the land shall be held for a period of at least eighteek (18) months exclusively for ,the deveIopment of affordable housing as proposed by ALA and their partners and as approved by the City of Carl&ad. If the ALA project does not commence within eighteen (18) months, ALA shall have, for a periodof six (6) months, the option -of purchasing the property from the City for its full purchase cost. In any event, the property shall remain devoted exclusively to affordable housing development. v. SUMMARY As stated above, staff is requesting that the Housing Commission approve Housing Commission Resolution Nos. 002 and.003 recommending that the City Council authorize the purchase of the property identified within this report and the submission of an application for a Section 108 Loan through the CDBG program. If the Housing Commission recommends and the City Council author&s the purchase of the subject property, the acquisition will be completed in accordance with federal regulations for the CDBG program. This process includes a req tii+ment for two (2) appraisals of the property to ensure that the purchase price is fair and reasonable. . PURCHASE OF BRESSI PROPERTY AUGUST 12, 1993 PAGE 5 The City will be required to complete a full application for the CDBG loan through the Section 108 program. If recommended for approval by the Housing Commission and author&d by the City Council, staff will submit an application requesting approximately $1.2 million from the Section 108 Loan Program and combine this loan with our existing allocation of $880, 372.30 to purchase the subject property. Staff ~$1 recommend that the Section 108 Loan be repaid with a portion of the City’s future allocation of CDBG funds. ATTACI-IlvIENTS: 1. 2. 3. 4. Housing Commission Resolution No. 002 Housing Commission Resolution No. 003. Exhibit No. 3, Summary of Section 108 Loan Program. Exhibit No. 4, Legal Description of property owned by Bank of America as Trustee Under Declaration of Trust dated June 2, 1988 F/B/O Mary E. Bressi, known as the “little Bressi“ property. 1 2 I! 4 F . e ‘; I ! It 1: 1: 1: 1 1 1 1 1 1 2 2 2 2 2 2 HOUSING COMM[SSION KLQQZ A RESOLUTION OF THE HOUSING COMh4ISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING APPROVAL OF SUBMISSION OF APPLICATION FOR SECTlON 108 LOAN THROUGH THE FEDERAL COMMUNlTY DEVELOPMENT BLOCK GRANT PROGRAM IN THE MAXIMUM AMOUNI’ OF $1.2 MILLION FOR THE PURPOSE OF PURCHASING PROPERTY FOR THE DEVELOPMENT OF AFFORDABLE HOUSING. CASE NAME LITTLE BRESSI . 21542@15& 21542041 WHERBAS, the City of Carlsbad has identified a need to purchase property for the purposes of the development of affordable housing; and WHEREAS, property located generally on the west side of RI Camino Real between Palomar Airport Business Bark and Sunfresh Rose Greenhouses, APN: 215-U20-15 & 215-020-01, i! housing; and s available for purchase for the purpose of causing the development of affordable WHEREAS, the Housing Commission supports the purchase of property for the purposes of providing affordable housing within the City of Carlsbad; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission as foltows: A) That the foregoing recitations are true and correct. B) That the Housing Commission recommends ,@at the City Council of the City of .Carlsbad APPROVI$ purchase of property identified by APti 2154X20-15 and 215-020-01 subject to the following terms and conditions: . . . . . . . . . , * 1 2 3 4 5 6 7 E S 1c 13 1: 11 1’ I! u 1’ 1r I! 21 2: 21 2 2 2 2 2 2 Eertns and Conditions: 1. The City Council shall authorize expenditure of up to $2.1 million for the purchase and attendant costs of appraisals and closing. 2. Funds shall be drawn from the City’s Community Development Block‘ Grant (CDBG) Housing Fund and other CDBG funds which are approved for the transaction by the U.S. Department of Housing and Urban Development. 3. The purchase shall be subject to all applicable HUD terms and conditions governing the federal CDBG program, including but not Umited to: t: c. d. e. contract with HUD for repayment of any loans for the purchases; pledge of grants made or for which the City may become eligible to repay any loans for the purchase; at d&cretion of HUD, provide other security which may be required for any loans made to the City for the purchase; repay any loans made to the City by HUD within a period not to exceed twenty (20) years; and, use the property for a purpose wi&h provides direct benefit to lo#v/moderate income persons, such as affordable housing. 4. The value of the site in relation to the option purchase shall be supported with at least one MAI appraisal. 5. The purchase shall be subject to an agreement with Aviara Land Associates Lhnited Partnership (ALA), holder of the option on the subject property, whereby the land shall be held for a period of at least eighteen (18) months exclusively for the development of affordable housing as proposed by ALA and thek partners and as approved by the City of Carlsbad. If the ALA project does not commence within eighteen (18) months, ALA shall have, for a period of six (6) months, the option of purchasing the subject property from the City for its full purchase cost. ?.n any event, the subject property shall remain devoted exclusively to affordable housing development. . . . . . . . . . . . . . . . . . . . . HC PESO NO. 002 2 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 12th day of August, 1993 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: ATTEST: EDWARD SCARPELLI, Chairperson HOUSING COMMISSION EVAN BECKER HOUSING AND REDEVELOPMENI’ DIRECTOR HC RESO NO. 002 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 HOUSING CO-SSION NO. 003 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA RECOMMENDING APPROVAL OF SUBMISSION OF APPLICATION FOR SECTION 108 LOAN THROUGH THE FEDERAL COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM IN THE MAXIMUM AMOUNT OF $1.2 MILLION FOR THE PURPOSE OF PURCHASING PROPERTY’ FOR THE DEVELOPMENT OF AFFORDABLE HOUSING. CASENAME: LIITLEBRESSI WHEREAS, the City of Carlsbad has identified a need to purchase property for the purposes of the development of affordable housing; and WHEREAS, property located generally on the west side of El Camino Real between Palomar Airport Business Park- and Sunfresh Rose Greenhouses, APN: 215-020-I5 & 215-020-01, is available for purchase for the purpose of causing the development of affordable housing; and WHEREAS, the Housing Commission supports the purchase of property fa the purposes of providing affordable housing within the City of Carlsbad; WHEREAS, the City of Carl&ad currently has allocated $880,372.30 in federal Community Development Block Grant (CDBG) Entitlement funds for the purpose of purchasing property for the development of affordable housing for low/moderate income persons; and WHEREAS, the City of Carlsbad has the need to raise an additional $1.2 million to purchase subject property through the fderal Section 108 Loan program. NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission as follows: 1 2 3 4 5 6 7 E S 1c 13 1: 1: 14 I! 3 1’ 11 11 2( 2: 2, 2 2 2 2 2 2 A) That the foregoing recitations are true and correct. W That the Housing Commission recommends that the City Council of the City of Carlsbad APPROVE submission of an application to the U.S. Department of Housing and Urban Development for a Section 108 Loan in the maximum amount of $1.2 million for the purposes of purchasing property for the development of affordable housing for low/moderate income persons subject to the following terms and conditions: J’erms and Conditiong : 1. 2. 3. . . . . . . . . . . . . . . . . The purchase of p&perty with Community Development Block Grant (CDBG) funds shall be subject to all applicable HUD terms and conditions governing the federal CDBG program, including but not limited to: k c. d. e. contract with HUD for repayment of any loans for the purchase; pledge of grants made or for which the Clty may become elimle for to repay any loans for the purchase; at discretion of HUD, provide other security which may be required for any loans made to the City for the purchase; repay any loans made to the city by HUD within a period not to exceed twenty (20) years; and, use the property for a purpose which provides direct benefit to low/moderate income persons, such as affordable housing. The value of the site in reMion to the option purchase shali be supported with at least one MAX appraisal. The City shall reimburse owner for all reasonable expenses he/she incurred for: recording fees, transfer taxes, documentary stamps, evidence of title, boundary survey and legal description of the real property; penalty costs and any other prepayment charges; prerata portion of any prepaid real property taxes which are allocable to the period after the City obtains title to the property. Whenever feasible,these expenses shall be paid directly by the City so that the property owner does not need to seek re’hnbursement. HC RESO NO. 003 2 . ! 1t 3: 1: 1: L 1 1 1 1 1 2 2 2 2 2 2 2 2 2 PASSED, APPROVED, AND ADOPTED ataregular meetingoftheHousing Commission of the City of Carlsbad, California, held on the 12th day of August, 1993 by the following vote, to wit: AYES: NOES: ABSENT: EDWARD SCARPEUI, Chairperson HOUSING COMMISSION AllTESTi EVANBECKER HOUSING AND REDEVELOPMENT DIRECTOR HC ti0 NO. 003 SECTION 108 LOANS COMMUNlTY DEVE@i’MWT BLOCK GRANT PROGRAM 1. Section 108 Loans are for front-end financing for large-scale community and economic development prOjeCtS that cannot be financed from annual grants.’ 2. Projects eligible for this financing include the acquisition of property, the rehabilitation of housing and related relocation, clearance and site improvements. 3. City must prepare an application outlining the purpose of the funds. Also, the City must follow applicable citizen participation requirements which includes a minimum of two (2) public hearings. 4. Application for a Section 108 loan may be submitted at any time. It must include a schedule for repayment of the loan which identifies the sources of repayment. Also, the City must provide a ccxtification providing assurance that the public entity has made efforts to obtain f’mancing for activities descrii in the application without the use of the loan guarantee and the City cannot complete such financing consistent with the timeiy execution of ‘the program plans without such guarantee. 5. The amount any one entitlement public entity may receive may be limited to $35,000,000. .No commitment. to guarantee shall be made if the total outstandii notes or obligations guaranteed on behalf of the public entity would exceed an amount equal to five times the amount of the most recent grant. 6. Security requirements: 1) contract with HUD for repayment; 2) pledge all grants made or for which the City may become .eligrble; 3) at discretion of HUD, provide other security (i.e., lien on property, etc.) 7. The repayment period shall not exceed 20 years. 8. City must pay any issuance, underwriting, servicing and other costs associated with the private sector financing of the guaranteed obligations. Such costs are payable out of the guaranteed loan funds. EXHIBIT 4 EXHIBIT A THE VILLAS AT EL CAMINO REAL LEGAL DESCRIPTION A PORTION OF PARCEL 2 OF PARCEL MAP NO. llti, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF FLED IN THE OFFICE OF COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 20,1972. BEING A DIVISION OF A PORTION OF LOT A OF RANCH0 AGUA HEDIONDA, IN THE COUNT-Y OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 823, FILED IN THE OFFICE OF COUNTY RECORDER OF SAN DIEGO COUNTY, AND A PORTION OF SECTIONS 25 AND 26, AND FRACTIONAL SECTIONS 23 AND 24, IN TOWNSHIP 12 SOUTH, RANGE 4 WEST, . SAN BERNARDINO BASE AND MERIDIAN, ACCORDING TO OFFICIAL PLAT THEREOF. EXCEPTING THEREFROM, THAT PORTION OF COUNTY ROAD SURVEY NO. 1800-1, AS GRANTED TO THE COUNTY OF SAN DIEGO BY DEED RECORDED JULY 24, 1970. BRESSI\AFTHSGAGR 9 VILLASATELCAMlNOREAL AFFORDABLE HOUSING PROJECI’ SOURCES AND USES OF FUNDS EXHIBIT 5 USES TOTAL PERUNIT Land % 2,060,000.00 $ 5,988.OO Construction Costs Off-Sites $ 590,223.OO 1,716.OO Site Work & Buildings 16,475,885.00 47,895.OO Subtotal 17,066,108.00 49,611.OO Fees & Permits/Public Improvement 19,593.oo costs 6,739,998.00 18,385.OO Soft costs 6,324,439.00 TOTAL DEVElLOPMENT COST !$32,190,545.00 $93$77.00 SOURCES Bank Loan Limited Partnership Equity (Tax Credit) Affordable Housing Program Loan Developer Equity (ALA) City Loans: CDBG Set-Aside Subtotal Fee Exemptions/Deferrals (estimated): PFF Grading Deposit Poinsettia Lane CFD Subtotal Contingent Partner Equity TOTAL SOURCES $ 8,730,OOO.OO $25,378.00 15,047,985.00 43,744.oo 2,064,OOO.OO 6,OOO.OO 1,000,000.00 2,907.OO %2,000,000.00 500,000.00 $ 2,500,OOO.OO $ 7,267.OO $ 358,484.OO 104,046.OO 1,617,376.00 666,981.OO $ 2,746,887.00 % 7,985.OO $ 101,673.OO $ 296.00 $32,190,545.00 $93,577.00 UPDATED AS OF October 19, 1993 VILLAS AT EL CAMINO REAL AFFORDABLE HOUSING PROJECT SOURCE Tax Credits AHP ALA Equity Contingent Partner Equity SUBTOTAL City Participation: *Direct Financing *Fee Exemptions/Deferrals SUBTOTAL CITY TOTAL SUBSIDY SUBSIDY ANALYSIS AMOUNT I (o/o) I PER UNIT $15,047,985.00 2,064,OOO.OO 1 ,ooo,ooo.oo 101.673.00 %18,213,658.00 78% % 52,947.OO $ 2,500,000.00 2.642.841 .OO $ 5,142,841.00 22% $14,950.00 %23,356,499.00 1 100% 1 $67,897.00 UPDATED AS OF October 19. 1993 OCT-14-93 THU 15!5:35 - EXHIBIT 6 u R.#E:G,$L ArID SWILE’L”Y OF SAN DIEGO, INC. Ofhe of ha PJJic Atfonuy 2 16 s. Tw\lllOllt Sh?t Octuw;&, CA 92054 (619) 7243740 i\- ic;: (689) 722-P935 II October 14, 1993 Cl ARE MAC!USI,~Y Pn, knf, LA &f I)irc,c.r. GP EGORY E. KNOLL e xccyt .a DirecdCh;rf CIIIIU~I FAXED ANI, HAILED 720-2037 . Edwaled Scarpelli, Chair City of Carlsbad Housing Commission 1200 Catlsbad Village Drive Carlsbad, CA 92008 Ret Parameters for Using Carlsbad Redevclo mant 5 Agency’s ltow c Moderatq InCOme Housing Fun to Assist The Villas at El Camino Real Dear Mr. Scarpelli: f have reviewod the Staff Report dated October 14 1993, regarding The Villas at El Camino Real, Aviara’s answer to its inclusionary housing obligation. This project not on11 imple- ments the City’s Bousing Element but marks an historic turning point in the City’s use of CDBG monies to benefit lower income residents by providing much-needed housing. For thts, the developer and the.City should be commended. tfowever, in order for the Agency to support this project with its Eousing Fund, more should and could be done. First, given the limited resources which the Agency has designa:.ed for housing and its commitment to target these Funds to benefit hour,eholds with income levels below that which the market can 5erver is it not possible to reserve at least Some of the units for households at or below 25% or 351 of median income? At present the project targets household affordability at the to sl P of the very-low income scale, 50% of area median, and to 4 htly above that at 60% of area median. While :his is mov ng in the right direction, affordable rents (3t these income levels approach market rates. Contrary to the figures that are cited at -the bottom of Page 4 of the Staff Report, RUD has set the following maximum affordable rents: 20% AMIS 60% AMI$ Maximum Afford- able Rent One bdrm Two Bdrm $17,550 $439 (2)f or $494 (3)* $21,050 $526 (2)* or $S93 (3)) $21,9SO $26,350 $549 (4)* or $593 (s)* $659 (O)* or $711 (S)* Page 2 c 1Cbrecl Bdrra $25,450 $636 (6)* 01: $ti80 (7)* $30,550 $763 (6)* or $1116 (7)* $ AKea Median Xncome. * Figures in blrackets indicate family size. The maximum affordable rents cited aKe from Attachment A, HUD Regional Median Income and AffoKdable Rent Schedule for the County of San Diego, May 1993, a copy of which is encl(lsed, With regard to the duration of affordability, Redevc.lopment Lao requires that when the Agency’s Housing Fund is used to develop new housing, that housing must remain available at affordable housing costs to the targeted income levels for the “longest feasible time? Realth c Safety Code S 333:;4.3(f). The Staff Report (Page 5, IV(c)), references fift -fife years because that is the minimum duration of affordabil 1 ty required by virtue of the Federal Low Income Housing Tax Credit Program. Unless the Agency has made a finding, based upon substantial evidence, that “the longest feasible time” is less than in perpetuity, then the covenants or deed restrictions which must be recorded (section 33334,3(f)), must assure ongoing affordability. Since a fundamental purpose of Community Redevelopment Law is -to expand the community’s supply of affordable housing and assure a mix of residential and commercial development within the Project Area, there is no need to make a finqjing of benefit when an Agency’s Housing Fund is used to supgart the development or rehabilitation of housing within the Project Area. Staff acknowledges that in ordee to spend its Housing Fund outside the Project Area, both the A ency and the legis- lative body must adopt a resolution base 8 uponxndings that the pro r sed project will benefit the Project Area. 1 roposeU Re$olut on 93-009 may satisfy the requirement of a Kerolution by the legislative body, typically the City Council, but it cannot substitute for the requisite resolutkon by the Agency., NOK is it supported by substantial evidence. What statistics or studies form the basis for the corclusion that the Village Redevelopment Area offers employment to not low or moderate income wage earners, which will not be served by The Villas at El Camino Real, but Kather those making at or below 50% and 60% of area median income? And how will this project be structured so that it serves employees who do work but do not live in the Project Area or the City? The %esolut- ion also states that it is feasible for residents of The Villas at El Camino Real to use public transit to access the Village Redevelopment Area to work and shop, Yet there is no discussion of the length of time that public transport takes. oc-r-14-93 IHU 13:sf I P. 534 L r ggg.mgj I . Page 3 nor the directness or circuitousness of its route, Without this, how can it be determined that it is feasible to utilize pub1 ic transport? Further, what is the factual basis for the conclusor statement that those living at The Villas ~~11 have “signi icant r impact” on tevitalizing the Village Project rtca by working and shopping there? The downtown area is primarily a tourist destination. Clearly this proposed use of the Agency’s Bousinq Funds promotes the City of Carlsbad’s housing goals, as claimed in Paragraph 3, Page 3, of Resolution No. 93-009; Whether it v satisfies Comunlty Redevelopment Law, the Agency’s Rec’evelop- mcnt Plan, and/or benefits the Project Area 1s subject to doubt. Factual support is needed before the Agency ahd City can consider adopting the necessary resolutions. 1 appreciate the opportunity to comment on this propcsed use of the Agency’s Bousing Fund, and would be happy LO work further wath the Bousing Commission or Staff to assure that the Agency complies with Community Redevelopment L,iw. I remain, Sincerely, LBGAL AID SOCIETY OP SAW DIBGO, INC. CATHERINE A. RODW Attorney at Law CAR/b Enc. cc: Evan Becker, Housing 6 Redevelopment Director Glenn Wasserman, at Kane, Ballmer, & Berknran , --. -. - -,, . . . . - -- --. - . . i- L * w / * “A7TACZRIQ;NT A” HUD R~GIONAt MEDIAN XHCOHE ti A3ZORbABLE %kNT 8CEEOUfiE . FOR l!HE COWNTY OP #MN OXEGO * KAY 1993 (HVD Regional Median Encome - $43,900) L 9 Of si*a XtdAUr WaXL~ MUXbU Xi Alqftcable: M?uias Qf Axmual umtbly AffOXXl. (Siw of ~nca4-i-i --..- gmdf.lx Jncorae J~came , ,Ree.w as m&l --CC-‘II”-e----“-------------------~-------~--~---“------~-””-. .--WC- 1 3 b bXS,3SO ;;,;g 5$?6 "g %o4 f;t;:':"' * zQ3 : 21: 930 a:829 494 549 (2 brj 23,200 1,97s : 2s,4so ? f3; ix: (3 b:-) . ;%x 4 r:r1s 680 8 124 (4 b::) ---C-lllr"----~*lt~--~V~CL-~----~~~----~---~------~~-"----~---.,--~-- 11 Sfi# ;g 23;too 5;4::5 % y!tp' . 3 693 !a : 26,350 3:975 2,196 28,4SO 2,371 6S9 721 (2 b.:) tb fit vi 2,S46 764 (3 b.:) 8 d7SO z! 0 816 849 (4 b:) -------‘-c--~~---~cL------------~ ---~---~--“------I---*~~~---~~ W.-m41 : 519,PSQ 22,800 6;';;; $499 570 K"' : al I x: 30: 800 p; 642 f 33,106 ',h; 714 (2 b:) 770 a27 (3 b-1 7 3s,400 , a: 950 88s 8 37,650 3,138 941 (4 b:) ---‘-C-----~-----I-----CI--“--u-u.”--cl i s::‘::: $11792 $537 27:650 2,050 691 60 :"I": c Y) L??A i 2 :E!l :z: I gh; 2:767 769 (2 be) ! 2,971 E11 (3 bcl 8 4o:ssb 3,17s 953 3,379 1,014 ' (4 bc) -----Y--c----II---I--~----------------~~----~------------------------- 1 i s;gm~ sp; 31:aoo 2:m % y?r 790 go0 : 3x: 4o:')so f4 ::: 836 (2 bcl t (3 kc1 43,550 ;:g 949 :% 6 46,350 $063 a:159 (4 kc) ----c--r---~rr----r*--"-~---sC--- ----LI-----~"--+*--"--e-C'---r 5 s;g, 3;; 52,563 ) S769 987 (at~dlo) :;h; 2,92s 070 .(l tr1 3,292 Lpu x 47:roo 3,6f6 1,097 (2 &cl 1,185 6 so, 900 m : 51,450 4:sso 1,272 (3 1Cl 1,361 S7,QSO 4,829 1,449 (4 ICI VW ..---*---'r---CLC-..-------C-------~------~--~--------------"--- we-----