HomeMy WebLinkAbout2002-09-12; Housing Commission; MinutesThe City of Carlsbad Housing and Redevelopment Department @ 7 HOUSING COMMISSION AGENDA
THURSDAY, SEPTEMBER 12,2002
CITY COUNCIL CHAMBERS
1200 CARLSBAD VILLAGE DRIVE
6:OO P.M. Carlsbad, California 92008
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CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL
APPROVAL OF MINUTES
AUGUST 1,2002
ABSENT:
ACTION:
VOTE:
COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED IN THE AGENDA
PIEASE hMiT YOUR COMMENTS TO TkREE MiNUTES. fi TOTAf OfbVf SpEakERSM4,VbEktAd)
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HOUSING COMMISSION AGENDA
SEPTEMBER 12, 2002
PAGE 2
PUBLIC HEARING:
HC RESO NO: 2002-004 1. RECOMMENDATION OF APPROVAL TO THE CITY
COUNCIL TO ALLOW THE DEVELOPER TO RECEIVE A
$1,000,000 DEVELOPER FEE FOR THE CONSTRUCTION
OF ONE HUNDRED SIX AFFORDABLE APARTMENT
UNITS TO SATISFY THE REQUIREMENTS OF THE
INCLUSIONARY HOUSING ORDINACE FOR THE
CALAVERA HILLS MASTER PLAN PHASE 11..
VOTE:
ACTION:
STAFF RECOMMENDATION: APPROVAL
STAFF: CRAIG RUIZ, MANAGEMENT ANALYST
ANNOUNCEMENTS
CHAIRPERSON REPORT
DIRECTOR REPORT
ADTOURNMENT
TIME:
I' Xtem No. 1
DATE: SEPTEMBER 12,2002
SUBJECT: SDP 01-05 - CALAVERA HILLS AFFORDABLE APARTMENT
DEVELOPMENT- RECOMMENDATION OF APPROVAL TO THE CITY
COUNCIL TO ALLOW THE DEVELOPER TO RECEIVE A $1,000,000
DEVELOPER FEE FOR THE CONSTRUCTION OF ONE HUNDRED SIX
AFFORDABLE APARTMENT UNITS TO SATISFY THE REQUIREMENTS
OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE CALAVERA
HILLS MASTER PLAN PHASE 11.
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 2002-004 recommending APPROVAL
to the City Council to allow the developer to receive a $1,000,000 developer fee for the
construction of one hundred six (106) affordable apartment units to satisfy the inclusionary
housing ordinance requirement for the Calavera Hills Master Plan Phase 11.
11. PROJECT BACKGROUND
On August 1, 2002, the Housing Commission recommended approval to the City Council to
provide $1,060,000 in financial assistance from the Housing Trust Fund, to issue tax exempt
bonds in the amount not to exceed $8,500,000, and approval of the Loan Agreement and related
documents with Chelsea Investment Corporation (Developer) for construction of one hundred six
(1 06) affordable apartment units to satisfy the inclusionary housing ordinance requirement for
the Calavera Hills Master Plan Phase 11. Also at that meeting, staff recommended that the
Developer be entitled to receive a developer fee of $1,000,000. The Developer requested that the
developer fee be increased to $1,200,000. The Housing Commission recommended that staff
return at a future meeting with further details of how staff arrived at the $1,000,000
recommendation, and an analysis comparing the developer fee received by other affordable
housing developments in the City of Carlsbad.
.
111. PROJECT DESCRIPTION
The affordable development, the Mariposa Apartments, will be located on the west side of the
future extension of College Boulevard, approximately ?4 mile south of Carlsbad Village Drive, in
what is known as Village Y of the Calavera Hills Master Plan Phase 11. The proposed 106-unit
affordable apartment project consists of 14 residential structures, a 2,100 square foot recreation
building, and a leasing office. The proposed development includes 10 one-bedroom, 64 two-
SDP 01-05 - CALAVERA HILLS AFFORDABLE HOUSING PROJECT
1
SEPTEMBER 12,2002
PAGE 2
bedroom and 34 three-bedroom apartments. Units will range in size from 615 square feet for the
one-bedroom unit, 905 square feet for the two-bedroom unit and 1,045 for the three-bedroom
unit. The project will contain three unique recreation areas, with amenities for all ages.
One significant feature of this project is the utilization of State of California Multifamily
Housing Program Funding (MHP). The MHP program is a competitive statewide loan program
that provides funding for affordable housing developments. In exchange for the loan, the MHP
program requires the Developer to rent 10 of the units at levels affordable to households earning
20% of the State Median Income (SMI) and 22 of the units at levels affordable to households
earning 30% of SMI (SMI is approximately 1% higher than the San Diego County Area Median
Income). Thus, a one-bedroom unit at 20% of SMI will rent for approximately $215 per month
while a two-bedroom unit at 30% of the SMI will rent for approximately $375 per month. The
remainder of the project, 74 units, will be affordable to household earning 60% of the San Diego
County Area Median Income. Thus, this project will contain the most affordable units of any
such development in the City of Carlsbad.
IV. DEVELOPER FEE
When requesting financial assistance from the City, the developer of the affordable housing is
required to provide detailed information regarding the development and operation costs of the
project (known as a “Proforma”). One of the costs of the project is the developer fee. A
developer fee is defined as the use of project funds to be paid as compensation for developing the
affordable housing project. The fee covers costs for developer overhead and profit, construction
management oversight, costs of personal guarantees, syndication consulting fees, and reserves in
excess of those customarily required by multi-family housing lenders.
In reviewing the Proforma, staff seeks to determine that all development and operation costs are
reasonable, and that the need for City subsidy is justified. It is important that any financial
assistance have the effect of making the units more affordable and not creating undue gain for
any party. One method that staff relies upon in making this determination is to compare the
proposed costs against previously developed affordable housing projects. Exhibit 6 shows the
development costs for each affordable housing project previously developed and approved in the
City. The two most similar projects to Mariposa are the Rancho Carrillo and Poinsettia Station
Apartments. Both projects are similar in size to the Calavera Hills project, and both projects
were financed with a combination of 4% Tax Credits and Tax Exempt Bonds. Exhibit 7 shows a
comparison of all 3 projects.
As shown in Exhibit 7, Rancho Camllo is a 116-unit apartment complex that received a
$910,000 developer fee, or 6.09% of the total project costs. Poinsettia Station is a 92-unit project
that received an $819,000 developer fee, or 5.82% the total project costs. The proposed
developer fee for Mariposa of $1,000,000 is larger on both a percentage and dollar basis when
compared with the two most similar projects developed in Carlsbad. This higher developer fee
recognizes that the developer has obtained additional subsidy sources (State of California MHP
funds), and that the project will provide more affordable rents than similar developments.
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SDP 01-05 - CALAVERA HILLS AFFORDABLE HOUSING PROJECT
SEPTEMBER 12,2002
PAGE 3
A second factor that staff reviews is the amount of direct financial assistance, exclusive of the
cost of land, that are contributed by the master developer who has the obligation to provide the
affordable housing units. Exhibit 8 shows the master developer financial contribution for each
affordable housing project while Exhibit 9 compares Rancho Carrillo, Poinsettia Station and
Mariposa Apartments. As shown in Exhibit 9, the developer of Rancho Carrillo, Continental
Homes, provided approximately $4.2 million, or 28% of the total project costs. Benchmark
Pacific, developer of Poinsettia Station provided approximately $1 million, or 7% of the total
project costs. Generally, staff has recommended a developer fee that is less than the amount of
the financial contribution of the master developer. The contribution of $115,000 by McMillin
Homes is significantly less than that provided by the master developers of similar projects.
Again, the proposed developer fee of $1,000,000 recognizes that the Developer has obtained
additional subsidy sources (State of California MHP funds), and that the project will provide
more affordable rents than similar developments.
Also, in making a recommendation on financial assistance, staff considers other factors that are
often difficult to quanti@. As stated above, the Mariposa project is providing greater
affordability levels than previous projects. Other projects, such as the Villages of La Costa,
provide a significant number of large bedroom units, while the Laurel Tree Apartments has
provided greater tenant amenities. All such factors are considered when making a
recommendation on the developer fee.
Lastly, it is important to note that the developer fee is not the only opportunity for the Developer
to earn fees for this development. As with all City loans, the City receives 70% of the cash flow
from the operation of the property while 30% is available to the Developer. While the cash flow
is not a large amount in the early years of operation, the Developer will receive a significant
amount hnding over the life of the project.
As stated previously, the Developer has requested that the Housing Commission recommend to
the City Council that the developer fee be increased to $1,200,000. The Developer’s justification
for the increased fee is stated in the minutes of the August 1 Housing Commission meeting
(Exhibit 2) and in a memo from the developer dated August 5,2002 (Exhibit 3).
VI STAFF RECOMMENDATION
As stated in the analysis above, staffs recommendation of the $1,000,000 developer fee is based
upon several factors. When comparing the Mariposa Apartment with similar affordable housing
projects previously developed in the City of Carlsbad, the recommended amount is both fair and
reasonable. Therefore, it is staffs recommendation that the Housing Commission recommend to
the City Council that the developer fee for the Mariposa Apartments be in the amount of
$1,000,000.
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SDP 01-05 - CALAVERA HILLS AFFORDABLE HOUSQ'JG PROJECT
SEPTEMBER 12,2002
PAGE 4
VI. EXHIBIT
1. Housing Commission Resolution No. 2002-004.
2. Minutes of the August 1,2002, Housing Commission meeting.
3. Developer letter seeking increased developer fee.
4. Proforma with $1,000,000 Developer Fee
5. Proforma with $1,200,000 Developer Fee
6. Development Costs - all projects
7. Development costs - similar projects
8. Master Developer Financial Contributions - all projects
9. Master Developer Financial Contributions -similar projects
4
HOUSING COMMISSION RESOLUTION NO. 2002-004
THAT THE HOUSING COMMISSION RECOMMEND APPROVAL TO
THE CITY COUNCIL TO ALLOW THE DEVELOPER TO RECEIVE A
$1,000,000 DEVELOPER FEE FOR THE CONSTRUCTION OF ONE
HUNDRED SIX (106) AFFORDABLE APARTMENT UNITS TO SATISFY
THE INCLUSIONARY HOUSING ORDINANCE REQUIREMENT FOR
THE CALAVERA HILLS MASTER PLAN PHASE 11.
APPLICANT: CHELSEA INVESTMENT CORPORATION
CASE NO: SDP 01-05
WHEREAS, the Master Developer of the Calavera Hills Master Plan,
McMillin Homes, has proposed to construct 106 apartment units affordable to lower
income households as a means to satisfy their affordable housing obligation as
required by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary
Housing Ordinance; and
WHEREAS, the City of Carlsbad Housing Commission did, on the lst day of
August, 2002, hold a special public meeting to consider a request for the City to
provide $1,060,000 in financial assistance from the Housing Trust Fund, for the City
of Carlsbad to issue tax exempt bonds in the amount not to exceed $8,500,000, and
approval of the Loan Agreement and related documents with Chelsea Investment
Corporation for construction of one hundred six (106) affordable apartment units to
satisfy the inclusionary housing ordinance requirement for the Calavera Hills Master
Plan Phase 11; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons
desiring to be heard, the City of Carlsbad Housing Commission approved said
request; and
HC RESOLUTION NO. 2002-003
5
PAGE 2
WHEREAS, the City of Carlsbad Housing Commission did, on the 1'' day of
August, 2002, direct staff to return at a subsequent meeting with further details
regarding staffs recommendation for a developer fee in the amount of $1,000,000,
and for staff to provide an analysis comparing the developer fee received by other
affordable housing developments in the City of Carlsbad; and
WHEREAS, said Housing Commission did, on the 12th day of September,
2002, hold a public meeting to consider staffs recommendation for a developer fee in
the amount of $1,000,000, and for staff to provide an analysis comparing the
developer fee received by other affordable housing developments in the City of
Carlsbad; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons
desiring to be heard, said Commission considered all factors relating to developer fee
related to construction of said affordable housing units
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 based on the information provided within the Housing
Commission Staff Report and testimony presented during the special
public meeting of the Housing Commission on September 12, 2002,
the Housing Commission hereby ADOPTS Resolution No. 2002-004,
recommending APPROVAL to the City Council to allow the
developer to receive a $1,000,000 developer fee for the construction of
one hundred six (106) affordable apartment units to satisfy the
requirements of the Inclusionary Housing Ordinance for the Calavera
Hills Master Plan Phase 11.
6
PASSED, APPROVED, AND ADOPTED at a special meeting of the
Housing Commission of the City of Carlsbad, California, held on the 12th' day of
September, 2002, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
EDWARD SCARPELLI, VICE-CHAIRPERSON
CARLSBAD HOUSING COMMISSION
DEBORAH K. FOUNTAIN
HOUSING AND REDEVELOPMENT DIRECTOR
HC RESOLUTION NO. 2002-003
PAGE 3
7
EXHIBIT 2
Minutes of:
Time of Meeting:
Date of meeting:
Place of Meeting:
HOUSING COMMISSION
6:OO P.M.
August 1,2002 HOUSING AND REDEVELOPMENT DEPARTMENT OFFICE
CALL TO ORDER
Vice-chairman Scarpelli called the Regular Meeting to order at 6:07 p.m.
PLEDGE OF ALLEGIANCE
Vice-chairman Scarpelli waived the Pledge of Allegiance since there wasn’t a flag in the Housing
and Redevelopment Office.
ROLL CALL
Present: Commissioners: C. Charles Griffin
Renee Huston
Edward Scarpelli
Absent: Doris Ritchie
Staff Present: Housing and Redevelopment Director: Debbie Fountain
Management Analyst: Craig Ruiz
APPROVAL OF MINUTES
Minutes of May 9,2002, were approved as written.
COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA
There was no audience in attendance, who wished to speak at this time.
NEW BUSINESS
Vice-chairman Scarpelli announced the agenda item to recommend to the City Council to provide
$1,060,000 in financial assistance, to issue tax-exempt bonds in an amount not to exceed
$8,500,000 and approval of the loan agreement and related documents for construction of the
Calavera Hills affordable housing project. Staff is recommending approval.
Mr. Ruiz presented the affordable housing project at Calavera Hills. A map was pointed out
behind the commissioners. The project is at College and Carlsbad Village Drive. The project is
106 units; 10 one-bedroom units; 64 two-bedroom units; 34 three-bedroom units. The rent will be
between 20 and 60% of the median income. This project will be receiving funds from the State of
California Multifamily Housing Program; a portion of the two and three bedroom units will be within
20 and 30% of the state median income. The state and the state median income is just slightly
higher then the San Diego County median income. The remainder of the project will be within the
60% of the San Diego County median income.
Mr. Ruiz continued, there will be a clubhouse, a play area, and a basketball court in the project.
The project roughly is going to cost about 16 million dollars to construct. Part of the project will
include tax-exempt bonds. The developer will receive a developer fee of $1,000,000 or
approximately 6.4% of the total project costs. The developer is proposing to receive
approximately 70% of the developer fee and the remainder of the fee would be repaid over the
first ten years from income derived from the operation of the project.
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 2 of 9
Vice-chairman Scarpelli asked if there were any questions of Mr. Ruiz at this time. There were no
questions from the commissioners.
Mr. Brian Milich from Corky McMillin Company gave his presentation. His company is partners in
this project. He stated that his company purchased the property 6 or 7 years ago. They are
currently building out the last two phases of the project. The first phase is finished and now they
are entitling the last phase. They received approval of the master plan January from the City
Council. The requirement is to build 15% of affordable housing so the last phase is now being
applied. After reviewing the site, we have come up with our plan on the site. College Boulevard
will be extended; it meets Cannon Road down to El Camino Real. The affordable housing site is a
little over 7 acres, and there is a l-acre community facility site that also is required on the
property. Actually there is another community facility site that is about 2 acres. There has already
been a strong interest from a daycare operator so it seems to us to be a great location; it‘s on a
major corridor; there’s a bus turnout; it‘s about % of a mile from a brand new elementary school.
The possible daycare center site is one net acre.
Mr. Milich continued, it‘s a great location. They have worked very closely with the Cape
homeowners, the neighbors just above this site. Early on in the master plan the height of the
buildings was discussed as well as how many units are going to be on the site. The master plan
allows three story buildings with 441 units. We just received approval from the Planning
Commission for 106 apartments, which is all that is needed. This will create a less dense and
more neighbor friendly community to the Cape homeowners. We had a Planning Commission
hearing on July 17, 2002, and it was unanimously approved by the Planning Commission and it
now goes to City Council probably in August. There was an issue that Craig eluded to which is
part of the project. Handouts of the site plans have been handed out.
Commission Houston asked if this was all Village Y.
Mr. Milich answered, yes, and incorporated in that is the l-acre community facility.
Mr. Milich continued, one issue that came up was the location of one of the recreational amenities.
Early on there was a discussion with the Housing Department and the Planning Department and it
was decided that the basketball court would be a nice amenity to the project, and we still think it is.
We had it originally located in the back of the property next to the Cape property. The Planning
Commission raised some concerns about this being an attractive nuisance in terms of a lot of kids
using that, and how late they would be using it. Although I think we’ve mitigated most of those
issues, we were directed to find another site. We had some extra parking, 242 spaces and we
only needed 236 so we have designed a basketball court area to one side of the end of a parking
area. We presented that to the Planning Department. We want to make sure that you concur with
that. In place we put a volleyball court where the basketball court originally was. We had a
meeting with the homeowners on the property of the other side and they were supportive of that.
Vice-chairman Scarpelli stated it was indicated Mr. Milich feels that it won’t cause an impact on
those two units as well as the Planning Commission, but it appears as though it would. It must be
more area there then I’m able to visualize. Are you going to eliminate that parking or is that
parking remaining?
Mr. Milich answered that six parking spaces will be eliminated.
Vice-chairman Scarpelli reiterated the parking will be eliminated and inquired as to where the
front entrances of those homes are on those units by the basketball court.
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 3 of 9
Mr. Milich answered the entrances are on the side. These units are very similar to the Villa Loma
project architecturally. These are eight-plexes so there are two units down below and two above
on each side so there will be entrances on the side.
Vice-chairman Scarpelli continued as to whether the basketball court would be coming up to the
edge of the building.
Mr. Milich answered yes.
Vice-chairman Scarpelli asked if there was a hazard as far as vehicle traffic.
Mr. Milich said no. The way it was worked out, there wouldn’t be any impact from the basketball
court and traffic.
Vice-chairman Scarpelli stated it is not this committee’s decision, but wanted to make sure that
the area around the basketball court be protected as far as the landscaping goes. He asked what
would restrict people from parking there.
Mr. Milich answered the restriction would be signage and management. He commented that they
could look into barriers and something else that might add to that.
Vice-chairman Scarpelli said it is not this committee’s decision. He was just asking as a matter of
interest.
Mr. Milich continued that everyone thought it was a great project, low density, we’ve taken care of
the issues with the neighbors. This is going to be built along with the first phases of development.
It allows us to bring in up front the first units of the project. If all goes according to plan, the target
date for completion is October of 2003.
Mr. Milich said they are happy to have Chelsea as their partner in this. They’ve worked together
on several projects, including a very large project in Chula Vista. More details will be given on that
later in this presentation. Are there any questions?
Vice-chairman Scarpelli inquired as to what is the staffs position on the location of the basketball
court. Are you in concurrence with moving the basketball court, because it certainly appeared that
the other was a much better location?
Ms. Fountain stated that staff liked the original location much better, but came to the conclusion
that it had to be moved. We wanted them to keep it because they needed something for the
teenagers to do. It’s probably a good compromise. The volleyball court will be on grass and the
ball won’t be heard.
Vice-chairman Scarpelli was looking at another area for the basketball court and asked if there
was a reason it couldn’t be a possible site.
Mr. Milich answered that the site identified was an emergency access, actually an open access, a
secondary access for the project. It is a street so we need that for access.
James Schmid, President of Chelsea Investment Corporation stated he has been doing this for 18
years. His company’s focus is affordable housing. He has done several projects and they all
involve a collaboration with a non-profit. In his case it is Southwest Community Development
Corporation, executive director is Mike Wallace who is a long time resident of Carlsbad, and Red
Capital is a major player in affordable housing. Evan Becker, who is here tonight, has joined Red
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HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 4 of 9
Capital. Recently they opened a San Diego office. Wallace Dieckman our CFO is here and he
loves architecture and designs and will run through the project with you, later.
Mr. Schmid continued that also with him is Robert Harrington, but Jessica Skare is absent. They
will both be part of this operation, but tonight Ms. Skare is working at another project where they
are moving in tonight. They have all done a lot of lnclusionary housing. They did their very first
project with McMillin. They had pictures with them. He commented that some developers stick
these projects in the worst sites, hidden away from everything else. This project is located in a
site they can be proud of. They manage their own projects. These projects are all held by
partnerships, but they have the ownership and the management interest. We don’t feel that a
third party manager cares as much about it. We feel the same way about managing as we do
about the design so we own and operate. We have about 1500 units under management. All of
our managers are trained and certified, not only in property management issues, but also in client
issues as well. This will be their third project (affordable). We just closed our second affordable
project.
Mr. Schmid gave a quick tour with a slide presentation. He first showed a slide of Teresina, which
is the first lnclusionary project, built by a master developer. They’ve been working on this project
for two and a half years. They worked with McMillin for about a year on this 88-unit project and it
was decided to go with a 440-unit project. It is in Chula Vista.
Vice-chairman Scarpelli asked if it was part of the lnclusionary housing or is it non-inclusionary.
Mr. Schmid answered they had 88 inclusionary units and rather than doing 88 within the project,
we did a 440 unit project of which 88 are Inclusionary. They are not 88 specific units. They are
440 identical units and then the affordable tenants pick their own unit within the whole 440. It is a
terrific way to do a project, but it requires for huge projects to be done. Within the project was a
training center where the women’s national soccer team was there training for the last Olympics.
They put them up for a couple of months while they did their training at the training center in Chula
Vista. There were more pictures of Teresina.
Mr. Schmid continued with the second project. This was more advanced, also in Chula Vista, and
also an lnclusionary project. It is felt that with more density, the project is improved. Every project
we have ever done is 100% pre-leased. So essentially when move-in day comes, a traffic officer
is needed in the parking lot. We feel that will happen here at Calavera Hills. The senior’s projects
are normally developed because of the density, they have elevators, and are built with secure
courtyards.
He continued with a north San Diego project, which was built to satisfy a smaller requirement.
This has a clubhouse, which has the T.V. room, the library, the computer room and other
amenities. It is located next to homes, which sold for $600,000 to $800,000. Again, it was built
first with the landscaping in.
This one was 76 units and it was built by Greystone. It is close to Torrey Highlands High School,
which is more like a university campus. The figures were taken in the final throws of construction.
This is a three story so what you see at Calavera is a lot less dense and a lot less bulky buildings. They will be very attractive. By the time we opened the doors, we had 200+ applicants for these
units as well which rent for much higher then Calavera Hills will be renting.
Mr. Schmid showed slides of Calavera. I will let Wallace Dieckmann talk with you further in more
detail.
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 5 of 9
Mr. Wallace Dieckmann stated that most of it has already been heard so he will 'quickly run
through it and try not to be too redundant. There are a 106 units, there are an allocation of units
of unit types. There is an 1800 square foot clubhouse that includes a computer laboratory, and
there are a lot of facilities throughout the complex. We have adjusted the number of parking spaces down to close to the number that Brian mentioned earlier. There are two different kinds of
amenities. Project amenities and unit amenities. Unit amenities include a refrigerator, range,
garbage disposal, dishwasher, balconies for the second floor units, and the first floor units will
have patios. The project amenities include the clubhouse, the turf play area, the play structure for
the young kids, the basketball court, and possibly a volleyball court as well. It is near a new
elementary school, which I believe is due to complete next fall. It is about three quarters of a mile
up College Boulevard. We provide community services as part of our program and the most
popular one is the after school program to help children with their homework and give them some
supervision after school. Part of that is computer skills training, not only for children, but for the
adults as well. Once we get a tenant base in, we survey the tenants and try to identify other
services that are appropriate for them.
Vice-chairman Scarpelli asked if they would be offering those types of amenities on a regular
daily basis or is it on a lesser schedule.
Mr. Dieckmann answered that it would be on a twice a week basis.
Vice-chairman Scarpelli further asked if this program would be offered in-house.
Mr. Dieckmann answered that is part of the role of Southwest Community, a non-profit performs.
Craig went over this, but the important thing to note is that 32 of the 106 units will rent at 20 and
30% of state median income, which means the poorest people will qualify to live here and that is a
tremendous asset. As Brian pointed out, the architect is Kirk McKinley of McKinley and
Associates.
Commissioner Houston stated the vegetation in the picture is more advanced then actual.
Mr. Dieckmann agreed it will take a couple of years to grow it in. It is an important aspect of these
projects for sound reasons and visual reasons. McMillin will start the site preparation by the end
of this year. The construction financing and bond issuance will be complete probably around June
or July of next year. With the construction starting early in the fourth quarter of next year and the
completion a year later, with a total lease up and conversion of the construction to permanent
status by the end of 2004.
James Schmid asked if there are any questions. Then wanted to let the Commissioners know
they previously had a conversation with Debbie Fountain and Craig Ruiz about the developer fee.
Under the tax credit bond it is allowable for a project of this sort to be allowed 15% of the cost up
to 1.2 million cap, and it is felt this project qualifies for that cap to be available. The city has a
housing policy guideline whereby the cap would be a million dollars. For two reasons, I would like
to ask you to waive that cap. One reason is that about a month or so ago you approved the La
Costa project which is 180 units and that permits the 1.2 million fee, which I know sounds like a lot
until you divide it by the six or so years we worked on the project and the thirty or fifty years of
compliance for management. This project is actually more work than the bigger project. That
wouldn't normally be so, but I think we are bringing something special to the table in this project.
We were thrilled to get two of the awards from the state for this project. There is a lot of work that
goes into that. That causes the City of Carlsbad and this community to get those very, very low rents. That happens to not be a feature of the La Costa project. So I would tell you that this
project is more work for us and considerably so. It is not just a loan application. We are going to
have to close it and comply with prevailing wage requirements and we have to report to another
x
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 6 of 9
regulatory agency for 75 years as well so this is a significant amount of work. I think that brings something special to the community. These will be the lowest rents in the community, and
certainly among the lnclusionary projects. That may or may not impress you, but I’m hoping will
convince you that it would be fair for us to receive the full fee that the other agencies would allow,
to increase it to 1.2 million, it will not cost the city a dime. There is a certain black magic in tax
credit financing, but the plain fact is that if you increase that fee, what can happen is the amount of
loan we are asking for will not go up. What it does is lets us get tax credits based on the
additional fee.
Point two is that you expect to get your loan paid back. Because of the way the numbers work, it
also does not decrease the cash flow to the city. So the only economic impact over this 10 year
period would be to that capital. The project costs more, you get more tax credits, you get more
tax credits to sell for Red Capital, and they put more money into the project. We would hope that
you would find because of our additional work, any additional benefit to the community, which is
not a penny’s worth of additional obligation, or cost to the city. We see that as a good selling point
to allow us the full fee that would be allowed by the other agencies. I understand that’s almost
incomprehensible, but it is true. James Schmid asked Evan Becker to speak.
Mr. Evan Becker said in addition to the tax credit fee levels being regulated already, each state,
through their state allocated agency, sets the 50% limit already mentioned. That has evolved over
the years a tremendous amount of public policy discussion; the developers, housing, and the
public sector. We will be a limited partner in the project for fifteen years. It will have to comply
with affordability restrictions. It is to our benefit that the investor keep us in it for 15 years. That
fee plays a very important part for us, not because we care that much about them making that fee,
but it‘s their stake in the project. If for some reason they don’t a) deliver the benefits to us that
give us the return for us putting in the tax payer equity or b) for some reason they don’t deliver a
project that complies with all of the affordability requirements and deliver to you what you want in
terms of these affordability levels, quality people, the unit built on time, leased up and so on. If for
any reason they falter, they are at risk and what is at risk is that developer fee. That is their stake
in the project. That’s their cushion that we would use as both the lender and an investor in the
project to make sure it has to get finished, that it gets leased up to qualified people, and actually
that over time, the entire 15 years we are in it, that they comply.
Mr. Becker continued they have a very good asset management group which is watching
throughout the construction, the lease up and qualification of move-in plus through the 15 years
that they are involved as a limited partner. The point of the developer fee, in the sense of an
affordable tax written project, is not profit in the sense of your more traditional conventional
project; either home ownership or rental. It is a fee that a) is earned for a tremendous amount of
effort, which is extraordinary in terms of dealing with affordable housing, and b) it is something
that compensates for a lot of risk that they take because they guarantee in several different ways
that they will deliver the project. In the case of an lnclusionary context, there is another player
that has a lot at stake there too. It plays a key economic roll and fee levels have been set.
Vice-chairman Scarpelli asked a question to staff. We are talking about a development fee of 1
million with a request by the Developer that the fee be increased to the maximum allowable by
200,000. Does staff want to make any recommendations to the commission?
Craig Ruiz said the Affordable Housing Policy Team reviewed the project and felt the fee was
comparable with other projects in the city.
Commissioner Renee Houston asked, is there a reason to set the cap there?
Evan Becker said, in this case it is $200,000 less then the maximum state allowance.
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 7 of 9
Craig Ruiz stated the criteria the Housing Policy Team utilizes and how the amount of the fee
compares with other projects.
Commissioner Renee Houston questioned whether there had been a time when staff had waived
it before.
Craig Ruiz answered that it is not necessarily a waiver. The last time we reviewed the issue of a
developer fee was with the Villages of La Costa project.
Debbie Fountain said that when the policy was looked at, a whole spreadsheet was laid out to
look at all the projects and how they compare. Not approving 1.2 million dollars is a policy from
staff, but it does not mean that the commission will be breaking any rule or we have to approve a
variance or waive it. If you think that the developers made a good argument that they should get the whole 1.2, you can make that decision from a policy standpoint at this level, and that is what
we told the developer we thought was most appropriate since the staff level was maintained from
the perspective of the team and this is how they look at the total costs and how it compares. But it
doesn’t mean that as policy makers, you, or the city council can’t raise that for good reason.
Commissioner Renee Houston asked, in La Costa was it 1.2 million? And staff recommendation
was consistent with that?
Debbie Fountain answered right. The La Costa project as a percentage was consistent.
Commissioner Renee Houston stated, in here you have a million, but that‘s what your recommendation was?
Debbie Fountain said right. They (the developer) are asking for 1.2 million.
Vice-chairman Scarpelli said the presentation by the developer and Becker would warrant a
consideration. He felt enough of a comparison was made, though it was hard to follow. The
commission would like to see that spreadsheet (reviewed by staff) and a comparison to some
previous projects to review why this project doesn’t have the benefit of the additional $200,000 as
being requested by the developer. Is that available, and how soon would it be available to us to
review it? I’d like to recommend to the commission to leave it open so that we can study the
request on the basis of the spreadsheet that was done. They certainly have made a good
argument for it, but then again staff is not supporting it. I’d like to review that spreadsheet.
Commissioner Renee Houston questioned the developer fee money. It was brought up at the last
meeting on La Costa. Where does that come from?
Craig Ruiz answered when put all together it is off the top.
Commissioner Renee Houston said okay.
Mr. Wallace Dieckmann interrupted. It doesn’t come off the top. The developer’s fee is the buffer of the project. If the project costs overrun what they are expected to be, it comes out of that.
Commissioner Renee Houston asked what would happen if there are no costs overrun.
Mr. Wallace Dieckmann said it is a project cost.
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 8 of 9
Debbie Fountain concurred it is a project cost. What they are saying is that they are only going to
have a certain amount of money to pay for costs, so if that exceeds the amount of money they
have, the developer fee will pay for the cost overrun.
Mr. James Schmid said if you were to approve this, it does not increase the city’s economic
interest.
Vice-chairman Scarpelli said that once again you made a very good argument for it and it is an
issue of $200,000, and still if staff was supporting it, it would be very easy to go along with that
recommendation. Since staff is not supporting it, we don’t have the details that were available to
staff to not grant the request for the $200,000. What I would like to do is make a motion that we
consider the request of the developer for the additional $200,000 subject to our review of the
analysis by the policy committee and that be accomplished within one week from today.
Debbie Fountain asked if they want another meeting in one week.
Commissioner Renee Houston said only an informational meeting.
Debbie Fountain said we would have to schedule another official meeting of the Housing
Commission because action would have to be taken.
Vice-chairman Scarpelli stated it is going from here to Council. How soon will it be going to
Council? So obviously we would have to meet before it goes to Council if we are going to
recommend a higher fee after review of the facts. That is if we want to support the request.
Debbie Fountain said it won’t go to council until the commission actually makes a
recommendation. It couldn’t go before September 10, 2002. If you want it to continue, I don’t
know how that affects the scheduling.
Craig Ruiz said there is a real time issue with our approval.
Vice-chairman Scarpelli asked how much time is needed?
James Schmid asked if everything could be approved except the $200,000 fee. Subject to review
at a subsequent meeting so that we can go forward with the MHP and demonstrate our readiness.
Vice-chairman Scarpelli said the commission will go ahead and approve the resolution as
recommended by the staff and take time later to review what is being requested. He commented
that it seems like a legitimate request and legitimate time and effort should be given to evaluate it.
ACTION: Motion by Commissioner Houston that the Housing Commission adopt
resolution 2002-03 recommending approval to the City Council to provide $1,060,000 in
financial assistance to issue tax exempt bonds in an amount not to exceed $8,500,000, and
approval of the loan agreement and related documents for construction of one hundred six
affordable apartment units to satisfy the requirements of the lnclusionary housing ordinance for the Calavera Hills Master Plan Phase II and to request additional time to explore the additional $200,000 requested in developer fee.
VOTE: 3-0-0
AYES: Huston, Griffith and Scarpelli
NOES: None
ABSTAIN: None
ABSENT: Ritchie
HOUSING COMMISSION MINUTES
AUGUST 1,2002
PAGE 9 of 9
DIRECTOR REPORT:
Debbie Fountain said she didn’t have anything to add.
ADJOURNMENT
By proper motion, the Special meeting of August 1,2002 was adjourned at 7:02 p.m.
Respectfully submitted,
Debbie Fountain
Housing and Redevelopment Director
PATRICIA CRESCENT1 Minutes Clerk
MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE
APPROVED.
Sent By: CHELSEA INVESTMENT C0;- 8502592644;
EXHIBIT 3
Memo
TO: Debbie Fountain, Craig Ruiz
5 Aug’02 I 12:27PM; Job 559;Page 2f4
Pram: JinSchmid
Date: August 5,2002
h
Re: Calavera Hills Developer Fee
Brian Milich, Wally Dieckmann, Evan Becker, Ched Hoffman
Thank you for your cooperation and assistance Thursday night. We appreciate the staff
report and presentation and the Committee’s approval of the project financing and City loan
corn rn itment.
This memorandum is offered in support of our request that the City allow the full $1.2 million
developer fee permitted under the California Tax Credit Allocation Committee regulations.
As you knaw, the Calavera Hills project will be unique among inclusionary projects developed in Carl8bad in the very low rents it provides to Very Very Low lncclme
households. Most inclusionary projects provide affordability to households earning 50% to
60% of Area Medlan income. In contrast, Calavera Hitls will offer 32 units to households earning 20% to 30% of Area Median Jncome. These families will pay rents that start as low
as $216 for a one-bedroom unit and $242 for a two-bedmom unit. The Staff Report
indicates “thk project wlll contain the most affordable units of any such development in the
City of Carlsbad.” Indeed, we are not aware of any inclusionary project in the entire County
providing this level of affordability.
There is one reason, and one reason only, that Calavera Hills will be affordable to Very
Very Low Income households. The additional subsidy that achieves this level of affordability is the Multifamily Housing Program funds that we obtained in a competitive
application process that resulted in an award of almost $3.8 million of state funds to the
Page 1
Sent By: CHELSEA INVESTMENT CO; - 8582592644 ; 5 Aug’02 12:27PM; Job 559;Page 3/4 -
project. The primary condition of the MHP award is that the project provides units at
affordable rents to Very Very Low Income households.
The application process required a great deal of work and was very competitive.
Approximately 70 applications were submitted for some $42 million of avallable funds.
Calavera Hills received one of just 15 MHP awards in the entire state and almost 9% of the
statewide allocation. In addition, to the work required to obtain the commitment, additional
work will be required to coordinate the award with other funding sources, observe prevailing
wage laws, and to comply with the MHP regulatory program. Compliance with the MHP
program guidelines and annual reporting and certification will be required for 55 years.
It is for this additional work, which results in achieving an important City housing policy of
deep targeting to Very Very Low Income families, that we request the full statutory fee of
$1.2 miltlon.
This requested fee is allowed under the regulations of the California Tax Credit Allocation
Committee, the California Debt Limit Allocation Committee and the MHP program, which
provide 92% of the funding required for the project.
As we understand it, the City has a policy which determines a developer fee based primarily
or exclusively on the cost of the project. We understand that it Is important that the City
have a policy on this issue in order to maintain costs at a reasonable level and to maintain
fairness among developers. Clearly, however, the amount of work and the risk involved
with a project is not directly or solely correlated with project size alone. Therefore, we think
that the policy should allow flexibility in calculating the developer fee in order to avoid
discouraging developers from undertaking the more difficult projects that satisfy important
City housing goals. Rather, we suaaest that the City dicv allow for the waiver of the cap
on the fee where mod cause is shown. “Good cause” could include woiects that are more
difficult to finance and develop such as soscial needs projects. mixed income or mixed use
proiects, or, as here. extra0 rdinarlv deep taraetina to Verv Very Low Incoq&€arn ilies. In
other words, the developer should be able to show good cause for a waiver of the fee cap
where he demonstrates that the project satisfies an important City housing goal and that it
takes significant additional work to do so. We believe tbat those criteria are satisfied here.
As it is appears to be structured, the current rigid “percentage of cost” method of
determinlng the development fee would discourage developers from undertaking unique
projects even if they satisfy important City goals and objectives, since the Crty offers no
compensation for the additional time, efforf and risk required to do so.
Here are some additional facts that we think you should take into consideration:
1. The additional affordability achieved at Calavera Hills is solely a result uf our success in obtaining MHP funds. The project is receiving $10,000 per unit subsidy from the City, the same amount 01 subsidy it has loaned to other projects
that provide 50%--60% affordability.
Sent By: CHELSEA INVESTMENT CO; 8582592644; 5 Aug’02 - 12:28PM; Job 559;Page 4/4
subsidy from the City, the same amount of subsidy it has loaned to other projects
that provide 50%-150% affordability.
2. Permitting the requested developer fee would not result in an_y increase of the
City financial contribution to the project. It will remain at the $10,000 per unit
level approved for most other projects which achieved much lower affordability.
3. Further, altowing the fee does not reduce the amount of cash flow available to
repay the City loan. Cash flow will remain as projected.
4. Allowing the requested developer fee does result in increased tax credit equity
invested in the project by the tax credit investor. The investor, Red Capital
Markets, Inc. favors the requested development fee and will contribute additional equlty to the project if the larger fee is approved.
5. As Evan Becker testified, the tax credit investor pays the development fee
through is equity contribution to the project. However, the investor controls the
payment of the fee throughout the development and lease-up of the project, SO
that a portion of the fee is always held in resetve to insure the completion of
construction, lease-up and sound management of the project.
6. If there are cost over-runs or other problems in the development process, the
funds earmarked for payment of the development fee are instead expended lo
remedy the problems.
SUMMARY AND CONCLUSION
Calavera Hills is a unique project that offered dramatically lower rents than any other
inclusionary project in the City and perhaps in lhe entire County. This affodability will be
achieved through the use of Multifamily Housing Program funds the we secured through
successful participation in a competitive appflcation process. Other affordable housing
developers could have applied for the MHP funds and could have brought the same level of
affordability to inclusionary projects in Carlsbad, but none did. We should be compensated
for the additional work which satisftes an important priority in the City’s Housing goals. The
requested developer fee, which complies with the regulations of every other lender and
investor in the transaction, as well as the State agency which regulates the tax credit
program, does not increase the costs to the City, nor does it diminish the City’s cash flow or
security. Therefore, we respectfully request a developer fee in the full amount of $1.2
million permitted by law.
- EXHIBIT 4 Calave-1 .XIS
Calavara Hills Ranch
MHPlFNMA I Low-Income Housing Tax Credits 4%
PROJECTEDSOURCESANDUSESOFFUNDS
106 units 309CbS09/.AMI
Subtotal
$1.2M - 525K AM FEE 6-1-02 REVISED 8-14-02 ___________________ construction period Completion Construction break-even
1.30 PM
SOURCES OF FUNDS
1 Deferred Fees(BO%Developer Fee 8 Contractor Fee)
MHP
2 B of A Construction Loan
3 LIH Tax Credits (25%, 30%,30%,15%)
4 Activity Bonds Used
5 City Loan @ $10,00O/unit
5 Master Developer Contribution
5 Master Developer Contribution (Bridge Bonds)
6 Total Sources of Funds
USES OF FUNDS
7 Site Acquisition
8 TitlelRecording 8 Escrow
9 Subtotal Site Acquisltion
10 Grading I On-site Infrastructure
11 Structures @Mt 12
15
16
17
18
19
20
21
22
23 SDGE 8 $345/unit
23
24
25
26
27
26
29 Water 8 Sewer Fees
30
31 Architects I Engineering Fees
32 Pretonstruction - Studies
33 Preconstruction - Appraisals 34 Pre-construction - Environmental Study
34 Bond PremiumlContractw
35 Title 8 Recording
36 Real Estate Taxes
37 Legal I Improvements Fees
38 Other - AccountinglFinance
39 LiabilitylCOC Insurance
40 Subtotal Improvements 41 Other LoanlTCAC Costs
Quarter1 Quarter 2 Quarter 3 Quarter 4 Period Qtrs 5 8 6
o 256,638
0 3,786.342
1,864.786 1,864,786 (1,864,766
1,392,860 . 1,671,432 1,671,432 4,735,724 835,716
5,126,700 302.482 4,199,954 624,264
1,060,000 1,060,000
123,000 123,000
2,600,000 2.600.000 (2,600,000
5,478,342 4,199,954 4,160,482 1,671,432 15,510,210 413,910
5,000 5,000
5,000 5,000 1,338,688
708,780
104,452
93,051
301,269
120,000
36,570
77,168
407,994
71 1.048
412.976
300,000
10,000
10,000
10,000
101,760
15,000
7,500
15,000
10,084
446,229
2,835,120 3,189,510
159,474 155,010
22,111 23,766
481,715 468.233
120,000 120,000
15,000
5,000
9.894 9,905
1,784.917
354,390 7,087,800
0
17,223 436,160
0
10,422 149,350
0 52,026 1,303,243
0
120,000 480,000
0
36,570
77,168
0
407,994
0
71 1,048
0
412,976
0
300,000
10,000
10,000
10,000
101,760
15,000
22,500
20,000
29.883
21,831
720,000
5,000
35,000 35,000
52,431 52.431
4,826,340 4,074,542 3.986.424 554,061 13,441,367 746,831
42 Co 76,900
43
44 Bank Legal Counsel Fee 8 Documentation 35.000
76,900
0
35.000 46 Construction lnsoection Fee $450 oer month 3.350 1350 1 350 1350 7 400 2 700 _. .. .. .~ .~ ~ ~ , ~. ,. . .
47 Net Construction Interest 105,932 124,062 172,708 174,009 576.710
48 Subtotal InterestlFees 273,613 125.412 174.058 175.359 748.442 2.700 49 Marketing Fees
50 Replacement Reserve
51 Insurance Reserves
52 Operating Deficit Reserve
53 FNMNDUS Commitment Fee
54
53
54
55 Legal(undewriter. DUS lender, FNMA) I Financing
57 Cash Flow Verification Consultant B Audit
58 Non Permanent Loan Oper Interest
59 Trustee
60 Rating Agency
60 CDLAClCDlAC
61 Bond Counsel
62 Printing 8 Mailing
63 Borrower's Counsel
77,267
92,720
80,000
4,000
10,000 13,500
4,000
35,000
4,084
40.000
2,500 2,500 2,500
0 53.847
0 23,451
322,400 322,400
77,267
0
92,720
0
80,000
4,000
28,838 28,838 172,857 10,000
13,500
4.000
35,000
4.084
40.000 64 Issuer Fee - 25 bps Total Uses of Funds
Net Source 8 Use
Distributions
Balance of Funds
12,817 12.81 7 5,478,342 4,199,954 4,160,482 1,083,157 14,921,935 1,002,186
425,482 4,199,954 624,264 0 4,073,149 3,786,343
0 0 0 588,275 588.275 (588,275
0 0
0 0 0 588,275 580,275 0
Total Project Costs
51.87%
Total
256,638
3,786.342
0
5,571,441
5,126,700
1,060,000
123,000
0
15,924,121
0
5,000
5,000
1,784,917
7,087,800
0
436,160
0
171.181
0
1,303,243
0
1,200,000
0
36,570
77,168
0
407,994
0
71 1.048
0
412,976
0
300,000
10,000
10,000
10,000 101,760
15,000
22,500
25,000 29.883
35,000
14,188,198
52,431
76,900
0
35,000
10,100
576,710 751.142
5,000
53.847
23,451
322,400
77,267
0
92,720
0
80,000
4,000
201,695
10,000
13,500
4,000
35,000
4,084
40,000
12,817 15,924,121
0
0
0
15,924,121
OOGROM 455 PM
Calave-I .XIS
11,244
737.021
31,255
792,196
30,188
347.385
180.557
727,700 5,706,018 Sofl Costs Totals 3,101,716
Arbitrage- Interest Earned on Undisbursed Bonds
Beginning Bond Loan Balance 5,126,700
Quarterly Construction Disbursement 302,482
Bonds Undisbursed at End of Quarter 4324,218
Average amount of Disbursed Bonds 100,827
Interest From Closing 0
Previous Balance Interest 0
Quarterly Average Interest on disbursed during quarte (630) 3 months Interest on Undisbursed Proceeds (30,151)
Total Interest per Quarter (30.782)
Balance of Undisbursed Funds 4,824,218
Interest on Bonds Proceeds Upon Closing 5.1 26,700
Interest for 18 months 86.513
Payments
4,824,218
4,199,954
624,264
1,399,985
624,264
624,264
0
208,088
0
0
0
0
(8.750)
(3,902) (12,652)
0
0
0
624.264 0
5,126,700
86,513
5,126,700
86,513
5,126,700
86,513
5,126,700
173,026
5,126,700 5,126,700 5,126,700 5,126,700 Loan Balance Interest Rate@ 5,126,700
Master Developer Contribution (Bridge Bonds) 2,600,000
6.50%
Construction Interest 42,250
0 B of A Construction LOC against MHP Commitment
0
0
42,250
0
0
0
0
42,250
1,864,786
37,296
37,296
0
42,250
0
37,296 8 00% 0
55.732 Net Interest Paid on Bonds 73.862 85,213 86,513 173,026
TCAC 8 Other Related Costs
Initial Filing Fee
Reservation Fee, as Oh Of Federal Credit Amount
TCAC Monitoring Fee $41 0
FilinglPreparation
43,460
52,431
OQEW2002 4 55 PM
Calavara Hills Ranch
106
Total Rents 106 92,704 844,680 I
94,504
Total Income $81 6,240
Operating Expenses
Yearly
Managers Salary
Utilities:
ITotal ExDenses . $ 2.740 Per Unit $290.461
lNet ODeratina Income $525.779
lNet Income Available for Debt Service 483,379
Perm Loan :
Debt Service Coverage
Interest
Amortization
Valuation Cap Rate
Loan to Value @
Potential Reduction in Loan
** Value without tax credits
Bond - Tax Exempt
Taxable Tail 15%
5,126,700
5,126,700
5,859,139
5,273,225
(1 46,526)
$1.2M - $25K AM FEE 8-1-02 REV 70%
DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS
30%
ELIGIBLE BASIS
LAND COSTS:
LAND COSTS
LEGAL\ BROKERS FEES\TITLE
OFF-SITE IMPROVEMENTS
DEMOLITION EXPENSE
TOTAL LAND COSTS
$0 XXXXXXXXXXXXX xxxxxxxxxxxxx
$5,000 XXXXXXXXXXXXX XXXXXXXXXXXXX
$0 xxxxxxxxxxxxx xxxXXxxxxxxxx
$0 xxxxXXxxxxxXX xxxxxxxxxxxxx
$5,000 XXXXXXXXXXXXX XXXXXXXXXXXXX
NEW CONSTRUCT/ON
SITE WORK
STRUCTURES
GENERAL REQUIREMENTS
CONTRACTOROVERHEAD
CONTRACTOR PROFIT
TOTAL CONSTRUCTION
$1,784,917 $1,784,917
$7,087,800 $7.087.800
$543,018 $543,018
$217,207 $2 17,207
$543.01 8 $543,018
$1 0.1 75,960 $1 0,175,960
DEVELOPMENT BUDGET 8 CALCULATION OF TAX CREDIT EQUITY (Con't)
OTHER. LEGAL, MlSC $1 57,267 I XXXXXXXXXXXXX I XXXXXXXXXXXXX
TOTAL PERM FINANCING COSTS $373.388 I XXXXXXXXXXXXX I XXXXXXXXXXXXX
ACTUAL OR EST. 70% 30%
DESCRIPTION OF COSTS OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS I
LEGAL FEES
LENDER LEGAL $25,000 $12,500
OTHER (Including CPA Opinions 8 Acctg.) $29,883 $29,883
TOTAL LEGAL (NOT INC. SYNDICATION) $54,883 $54,883
MA RKET/A PPRAlSA L
MARKET STUDY
APPRAISAL
TOTAL MARKET/APPRAISAL
$10,000 $10,000
$10,000 $10,000
$20,000 $20,000
SUBTOTAL RESIDENTIAL COSTS $1 4,724,121 $13,695,880
DEVELOPER COSTS
DEVELOPER OVERHEADlPROFlT - Limit
DEVELOPER OVERHEADlPROFlT
CONSULTANTS
PROJECT ADMINISTRATION
$1,200,000 $1,200.000
$2,054,382 $2,054,382
$0 $0
$0 $0
TOTAL DEVELOPER FEE $1,200,000 I $1,200,000
4
4
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Calavara Hills Ranch
MHPlFNMA I Low-Income Housing Tax Credits 4%
PROJECTEDSOURCESANDUSESOFFUNDS
106 units
EXHIBIT 5
$1M - $25K AM FEE REVISED 8-14-02.XLS _________ construction period Completion Construction breakeven
1 :30 PM
SOURCES OF FUNDS
Quarter1 Quarter 2 Quarter 3 Quarter 4 Period Qtrs 5 & 6
1 Deferred Fees(50%Developer Fee 8 Contractor Fee) 0 256,63€
MHP 0 3,786,341
2 B of A Construction Loan 2,033,591 2,033,591 (2,033,591
3 LIH Tax Credits (25%, 30%,30%,15%) 1,374,411 . 1,649,293 1,649,293 4,672.996 824,64e
4 Activity Bonds Used 444,445 4,200,871 481,383 5,126,700 5 Citv Loan @ $10.000/unit 1.060.000 1.060.000
5 Master Developer Contribution (Bridge Bonds) 2,600,000 2,600,000 (2,600,OOC
6 Total Sources of Funds 5.478.856 4.200.871 4.164.267 1.649.293 15.493.287 234.035
USES OF FUNDS
7 Site Acqulsition
8 TitlelRecording & Escrow 5,000 5,000
9 Subtotal Site Acquisition 5,000 5,000 1,764,917 10 Grading / On-site Infrastructure 1,338,688 446,229
11
12 708,780 2,835,120 3,189,510 354,390 7,087,800
0
15
16
17
18
19
20
21
22
23
Contingency % of Hard Costs
SDGE & $345/unit
104,452
93,066
301,269
120.000
36.570
23 Permit Fees & Plan Check 77,168
407,994
159,474
22.137
481,715
120,000
155,010 17,223 436,160
0
0
468.233 52,026 1,303.243
0
120,000 120,000 480,000 520.000
0
36,570
77,168
0
407,994
0
23.876 10,523 149,603 15,831
27 School Fees
28
29 Water & Sewer Fees
30 Wunit
31
32 Preconstruction - Studies
33 Preconstruction - Appraisals
34 Pre-construction - Environmental Study
34 Bond PremiumlContractor 35 Title & Recording
36 Real Estate Taxes
37 Legal I Improvements Fees
38 Other - AccountinglFinance
39 Liability/COC Insurance
40 Subtotal Improvements
41 Other LoannCAC Costs
42
43
44 Bank Legal Counsel Fee 8 Documentation
46 Construction InsDection Fee $450 Der month
47 Net Construction Interest
48 Subtotal InteresUFees
71 1,048 71 1,048
0
412,976 412,976
0
300,000 300,000
10,000 10,000
10,000 10,000
10,000 10,000
101,760 101,760
15,000 15,000
7,500 15,000 22,500 15,000 5,000 20,000 5,000
10.084 9,894 9,905 29,883
35,000 35,000
52,339 52,339
76,900 76,900
0
35,000 35,000
4,826.355 4,074,569 3,986,534 554,162 13,441,621 540.831
3.350 1.350 1.350 1.350 7.400 2.700
106,523 124,953 176,382 177,385 585,243
274,112 126,303 177.732 178,735 756,882 2,700
49 Marketing Fees
50 Replacement Reserve
51 Insurance Reserves
52 Operating Deficit Reserve
53 FNMNDUS Commitment Fee 77,267 54
53 Underwriting Fee 92,720
54
55 Legal(undewiter, DUS lender. FNMA) / Financing 80,000
57 Cash Flow Verification Consultant & Audit 4,000
58 Non Permanent Loan Oper Interest
59 Trustee
60 Rating Agency
60 CDLAC/CDIAC
61 Bond Counsel
62 Printing & Mailing
63 Borrower's Counsel
64 Issuer Fee - 25 bps Total Uses of Funds
Net Source & Use
Distributions
Balance of Funds
2,500 2,500 2,500
0 53.847
0 23,451
322,400 322,400
77,267
92,720
80,000
4,000
28,838 28,838 173,366
10,000 10,000
13,500 13,500
4,000 4,000
35,000 35,000
4,084 4,084
40,000 40,000
12,817 12,817 5,478,856 4,200,872 4,164,266 1,086,634 14,930,628 796,695
444,445 4,200,872 481,383 0 5,126,700 3,786,343
0 (0) 1 562,659 562,659 (562,659
0 0
0 (0) 0 562,659 562,659 (0
Total Project Costs
52.57./.
Total
256,638
3,786,342
0
5,497,643
5,126,700
1,060,000
0
15,727,323
0
5,000
5,000
1,784.917
7.087.800
0
436,160
0
165,434
0
1,303,243 0
1,000,000
0
36,570
77,168
0
407,994
0
71 1,048
0
412,976
0
300,000
10,000
10,000
10,000
101,760
15,000
22,500
25,000
29.883
35,000
13,982.452
52,339
76,900
0
35,000
10.100
585,243
759,582 5,000
53.847
23,451
322,400 77,267
0
92,720
0
80,000
4,000
202,204 10,000
13,500
4,000
35,000
4,084
40,000
12,817 15,727,323
(0
i 15,727,323
OQlOB&'WZ 4 53 PM
Calave-2.xls
Soft Costs Totals 3,102,215
Arbitrage- Interest Earned on Undisbursed Bonds
Beginning Bond Loan Balance 5,126,700
Quarterly Construction Disbursement 444,445
Bonds Undisbursed at End of Quarter 4,682.254
Average amount of Disbursed Bonds 148.148
Interest From Closing 0
Previous Balance Interest 0
Quarterly Average Interest on disbursed during quarte (926) 3 months Interest on Undisbursed Proceeds (29,264)
Total Interest per Quarter (30,190)
Balance of Undisbursed Funds 4,682,254
Interest on Bonds Proceeds Upon Closing 5.1 26,700
Interest for 18 months 86,513
Payments
Loan Balance Interest Rate@ 5,126,700
Master Developer Contribution (Bridge Bonds) 2,600,000
6 50%
Construction Interest 42,250
0 B of A Construction LOC against MHP Commitment
8 00% 0
Net Interest Paid on Bonds 56,323
TCAC 8 Other Related Costs
lnltial Filing Fee
Reservation Fee, as % Of Federal Credit Amount
FilinglPreparation
TCAC Monitoring Fee 5410
11,244
737.912
4,682,254
4,200,871
481.383
1,400,290
(8.752)
(3.009) (1 1,760)
481.383
5,126,700
86.513
5,126,700
0
0
42,250
0
0
74,753
31,255 30.188
795,870 350,761
481,383
481,383
0 0
160,461 0
(1,003) 0
0 0
(1.003) 0
0 0
5,126,700 5,126,700
86,513 86,513
5,126,700 5,126,700
0 40,672
0 0
42,250 42,250
2,033,591 0
40,672 40,672
85,510 86,513
181.066
527,700 5,514,458
0
0
>
0
0
0
0
5,126,700
173,026
5,126,700
173,026
43,460
0910612002 4 53 PM
Calavara Hills Ranch
106
Q1 Q2 Q3 Q4
Bond Amount
5,126,700 4,682,254 481,383 0 0
444.445 4.200.871 481.383 0 0
4,682,254 481,383 0 0 0
Calavara Hills Ranch
106
Operating Expenses
Yearly
Managers Salary
Taxes:
Utilities:
ITotal Expenses $ 2,740 Per Unit $290,461
[Net Operating Income $525,779
lNet Income Available for Debt Service 483,379
Perm Loan :
Debt Service Coverage
Interest
Amortization
Valuation Cap Rate
Loan to Value @
Potential Reduction in Loan
** Value without tax credits
Bond - Tax Exempt
Taxable Tail 15%
5,126,700
5,126,700
5,859,139
5,273,225
(1 46,526)
Calavara Hills Ranch
0
EXHIBIT 6 - DEVELOPMENT BUDGET 8 CALCULATION OF TAX CREDIT EQUITY
06-Sep-02
04:53 PM
TITLE & RECORDING
OTHER: LEGAL, MISC.
TOTAL PERM FINANCING COSTS
$0 xxxxxxxXXXxXX XXXXXXXXXXXXX
$1 57,267 XXXXXXXXXXXXX XXXXXXXXxXXXX
$373.388 XXXXXXXXXXXXX XXXXXXXXXXXXX
DEVELOPMENT BUDGET 8 CALCULATION OF TAX CREDIT EQUITY (Con't)
DESCRIPTION OF COSTS
ACTUAL OR EST. 70% 30%
OF COSTS ELIGIBLE BASIS ELIGIBLE BASIS
NON PERMANENT OPERATING LOAN INTEREST
TOTALRESERVECOSTS
S202.204 XXXXXXXXXXXXX XXXXXXXXXXXXX
S601,901 XXXXXXXXXXXXX XXXXXXXXXXXXX
r TOTAL COMMERCIAL COSTS
CONTINGENCY (SOFT COSTS)
OTHER: SYNDICATION COSTS
TOTAL OTHER COSTS
MAXIMUM TAX CREDITS $0
[TX CREDITS OVER TEN YEARS $6,878,932 42 I
$165,434 $165,434
$0 xxxxxxxxxxxxx xxxxxxxxxxxxx
$1,864,459 $1,815,999
SUBTOTAL RESIDENTIAL COSTS $14,727,323 I $1 3,698,574
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EXHIBIT 6
EXHIBIT 7
EXHIBIT 8
EXHIBIT 9
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