Loading...
HomeMy WebLinkAbout2004-09-09; Housing Commission; MinutesMinutes of: HOUSING COMMISSION Time of Meeting: 6:OO P.M. Date of Meeting: September 9,2004 Place of Meeting: HOUSING AND REDEVELOPMENT OFFICE CALL TO ORDER Vice Chairperson Huston called the Meeting to order at 6:OO p.m. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was waived because there wasn’t a flag at the Housing and Redevelopment Office. ROLL CALL Present: Commissioners: Renee Huston Doris Ritchie Margaret Schraml Bobbie Smith Absent: Edward Scarpelli Staff Present: Housing and Redevelopment Director: Debbie Fountain Management Analyst: Craig Ruiz APPROVAL OF MINUTES Minutes of March 1 1,2004, were approved as written. VOTE: 4-0 AYES: 4-0 NOES: None 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 Chairperson Huston stated we would be reviewing CP 03-03, Bressi Ranch Financial Assistance. A recommendation of approval to the City Council to provide $2,000,000 in financial assistance and approval of the borrower loan documents for development of one hundred affordable condominium units to satisfy the requirements of the inclusionary housing ordinance for the Bressi Ranch Master Plan. Craig Ruiz gave a verbal presentation. Bressi Ranch is a Master Plan Community on the comer of Palomar Airport Road and El Camino Real. There will be a total of 623 residential units. As part of that, 523 of those units will be single-family homes, which will be market rate units. There will also be a condominium project of 100 for-sale units that will be available to low-income households. That will satisfy their inclusionary housing requirement. Out of the 100 units, they will be two and three bedrooms, ranging from 900 to a little over 1,100 square feet. In exchange for that, they are asking for $2,000,000 in financial assistance. The Staff Report breaks down the subsidy analysis on page 3. The average cost of the units are about $2 15,000. The units will sell for about $177,000. That average cost is just the cost of construction. It will not include the cost of the land. The total revenues for the project would be about $17,700,000 if all the units sold. The project cost will be about $21,500,000 so that leaves a shortfall. That gap doesn’t include the land so the proposal is to fill that 3.7 million dollars contribution from the developer of $1,700,00 and the City’s contribution would be $2,000,000. In the past, the assistance has been given to the builder during construction, which is a construction loan, and then the obligation to repay the loan is transferred to the buyer of those units. HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 2 of 8 Instead of providing the money during construction, we are going to give the money to the buyer of the affordable unit as part of the escrow process. It will be more of a first-time homebuyer program in that no real money will be coming to the buyer. It will be delivered into escrow; part of the sales transaction. That assistance as well as the developer’s assistance is recorded as a second deed of trust. The buyer must stay there for fifteen years. If they do sell within the fifteen years, they have to sell it to another affordable household. If they sell it after year fifteen, they can sell it at a market price, but the subsidy and the builder’s subsidy is recaptured, plus there is a share in the equity. In addition to recommending approval of the money, there is also the loan documents the borrower will actually use which is a typical promissory note, the deed of trust and a resale agreement. Also a dwlosure statement that explains in plain English the process to each of the buyers. Roughly a third of someone’s monthly income who is low income can go toward the total of their household cost. Household cost consists of paying the loan, the principal and interest, but it is also the property taxes, HOA fees. Usually the HOA fees pick up the insurance requirement, but if there is a separate insurance requirement, then it goes into the housing cost. The recommendation is the $2,000,000 in financial assistance as a homebuyer assistance program and approval of all related documents. Vice Chairperson Huston said she had a little difficulty understanding the documents and asked for clarification. Is the recommendation of $2,000,000 in financial assistance from the Housing Trust Fund in the form of low-income buyer down payment assistance? Craig Ruiz said that is correct. Vice Chairperson Huston continued, of the $2,000,000, there is down-payment money and approval of the borrower loan document for construction of 100 affordable condominiums. Craig Ruiz said he understands and it is a little misleading. He said the loan documents that are attached are separate from the money. All 100 households that buy those units are going to use these loan documents. Then the money plus the documents, are all to allow for the building of those 100 affordable units. Vice Chairperson Huston said she noticed the developer of Lennar Homes is not receiving a developer fee for the development of this project. How much would the developer fee be? Craig Ruiz answered that some developer fees for past projects, primarily on rental projects, have brought anywhere from 7% to 15% of the hard construction cost. Vice Chairperson Huston asked why they didn’t get a developer fee. Craig Ruiz replied that on one hand, there is Lennar and then affiliated with Lennar is Greystone Homes, another subsidiary. Greystone will be building the units, and there is a profit that Greystone will earn when building them Some money is being earned there. It is not in addition to the developer fee. If a general contractor was hired, there would be the cost of construction plus the profit. It would be reasonable to charge a developer fee, but it just adds to the cost and there is only so much money we will fill. Basically we just add to the subsidy amount needed to the project. Vice Chairperson Huston asked if the developer fee was waived then? HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 3 of 8 Craig Ruiz answered, yes. There is only so much money to be made on the sale, and if 10% is added, that would just widen the gap between the revenues and cost. There is no other subsidy sources out there for these types of for-sale projects. Vice Chairperson Huston asked the Commissioners if there were any questions. Commissioner Ritchie asked where the $2,000,000 comes from. Craig Ruiz replied that the City has an Affordable Housing Trust Fund that when builders build small projects, they pay in-lieu fees. Also, money from other affordable housing loans have been paid back with interest; that money goes into the Housing Trust Fund. Also, with the Villa Loma Project, there are all the extra units there. It was built with 183 extra units and we sell credits in those to smaller developments so people pay us that way. The fimd has a total value of $14,000,000 when you add in all the loans. There is over $8,000,000 in money available to lend to projects. Commissioner Ritchie asked about the cost per square foot. How does that compare with what we have dealt with previously? Craig Ruiz said it is hard to compare. The last for-sale project that we saw was in 1999 and the costs are so dramatically different we didn’t really go into that. Tom Sakai, Principal for Springbrook Realty Advisors, said from the developer’s perspective, these costs are the equivalent of what are seen for other market rate projects, not affordable projects, in Orange and San Diego County. This reflects the high quality of this project. Commissioner Smith asked if the two bedroom, one bathroom units are one bath or half a bath? Tom Sakai answered it is one bathroom in the two bedroom floor plan. For a three bedroom affordable unit, two bathrooms are provided. It is hard to serve all people on a limited construction budget. Vice Chairperson Huston stated that the fimd currently has a balance of 9.1 million dollars. If we take $2,000,000 out, that leaves it at 7.1 million dollars. With all the projects that are out there, is that an adequate remaining balance to do what is needed? Craig Ruiz replied that yes it is. Staff looks at the projects out there and their possible requests. It is difficult to judge since a lot of the loans that have been done are called residual receipts. That is the profit left over after paying expenses and paying the other loans that are ahead of us. It is an estimate so it is a revolving fimd. There should be enough money for all of the projects. There could be some timing issues or there may never be an issue. Vice Chairperson Huston said she understood, we are in the safety zone. Craig Ruiz said yes, definitely. Tom Sakai and Keith Remhawn showed a drawing of the plans. Keith Reinhawn is from Greystone Homes. He said they are building ten, ten-plex units. They are two and three bedroom. Each building is identical. It has been incorporated into the Master Plan for Bressi Ranch and will have access to amenities throughout the community. There is a recreation center and a pool and other amenities. Vice Chairperson Huston asked where the parking units are? Mr. Reinhawn said they have garages. There will be additional parking for guests throughout the community. HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 4 of 8 Commissioner Ritchie commented that Mr. Reinhawn said a pool. Commissioner Ritchie understood there wouldn’t be a pool in Bressi Ranch. Mr. Reinhawn said there is a pool being built at Bressi Ranch. The buildings will have a Spanish-type architecture. It blends in nicely with the community. It is being built with high speculation levels. For an affordable community, it is something that the City of Carlsbad can be proud of. The neighborhood of Bressi Ranch is a high end, upscale community that will fit in this neighborhood very nicely. Commissioner Ritche asked where the pool is located. Mr. Remhawn pointed it out on the plans. It will be in the center of the community up on the hill and has some ocean views. The recreation building and the pool is within walking distance. Commissioner Ritchie asked where the Boys and Girls Club will be located. Mr. Remhawn pointed out where the Boys and Girls Club will be, whch is close to the affordable housing units. He shared the different elevation drawings of the project. Vice Chairperson Huston said she noticed the vegetation shows 111 grown trees. She asked if they will be planting 111-grown trees? Mr. Reinhawn said no, probably not. John Slatton, Director of Operations at Lennar Homes, commented further on the vegetation and said there will also be planters. On the original Bressi Ranch, there were several mature trees saved and boxed and have already been replanted. This is a high-end affordable community. The exterior elevations are typical of any condominium project. Commissioner Schraml asked if there has been any discussion about the buildings being in the flight path of the airport? Any foreseen problems? Craig Ruiz said that was addressed when the master plan was approved through the planning process. There is a flight path adjacent to it. Th~s is why you see the commercial and industrial along the major roads and the residential is Mer in. Commissioner Schraml asked if the future buyers will be aware that they are on a flight path? Craig Ruiz said yes, when a project is approved anywhere in the City, that is one of the things they have to disclose. Then there is something they have to sign as well stating they are aware of it. Commissioner Smith commented that when Bressi Ranch was submitted to the San Diego Awards Committee, she happened to have been on it. She said it is a beautiful project and an honor to have them in Carlsbad. Vice Chairperson Huston asked if there were any other questions or comments. Vice Chairperson Huston asked for a recommendation of approval to the City Council to provide $2,000,000 in financial assistance and approval of the borrower loan documents for development of one hundred affordable condominium units to satisfy the requirements of the Inclusionary Housing Ordinance for the Bressi Ranch Master Plan. Commissioner Ritchie moved and Commissioner Smith seconded the approval. HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 5 of 8 VOTE: 4-0-0 AYES: NOES: None ABSTAIN: None Huston, Ritchie, Schraml, and Smith Vice Chairperson Huston continued with the second item, CT 98-14, ThompsodTabata request to purchase affordable housing credits. It is a recommendation of approval to the City Council to approve the request to purchase sixteen affordable housing credits in the Villa Loma Affordable Housing Development to satisfy a portion of the requirement of the Inclusionary Housing Ordinance for the ThompsodTobata Residential Development. Craig Ruiz said the ThompsodTabata Project was approved in 2002 by the City Council and it allows for 238 single-family homes and 24-unit for-sale condominium development. The single-family homes, like the last project, will be market rate units, and the condominiums are to satisfy a portion of their affordable housing requirement. This project is unique in that they are going to build some affordable units and then they are seeking to purchase credit. The requirement would be a total of forty units; 24 units would be built and 16 credits would be purchased. The site is unique in that it is more of an dill development. Around it are existing homes and existing communities. This project will have streets that will be going into these existing communities. Because this project is unique, we have come to this proposal and to be more compatible with the existing neighborhood. The condominiums have already been approved. All the units will be three and four bedroom units, whch is another reason we have supported this unique project. We don’t have a lot of large family units; that is one of our largest needs. Large for- sale units are unique to any project that we have seen. The reason this project is before you for the credit is because anytime a project is seeking to purchase ten or more credits, it has to come before the Housing Commission for a recommendation to the City Council. As part of the Staff Report, it is unique because it is within an existing community; more of an infill project. Staff is supportive of this proposal because it is compatible with the community. Vice Chairperson Huston asked what the reason is if they are building 24 units, then why do they need to put the other sixteen somewhere else? Craig Ruiz answered it was a combination of a negotiation between the City and the builder. It is also based on a lot of community input about where to put the affordable units. Vice Chairperson Huston asked if he was saying that the community didn’t want it. Was that it? Debbie Fountain, Director of Housing and Redevelopment, said they have a unique situation in that they have property on both sides of Poinsettia so when we were trying to find the location for the affordable housing, it was difficult to figure out where the best location was. It was constrained on how many total units can be produced there. Because they said they would do larger bedroom sizes, we agreed they could do a portion of the units on site and a portion of the units off site. Originally they wanted to do for-sale town homes and second dwelling units, but at the time all of that was going on, the second dwelling units were getting a lot of criticism because people felt like they really didn’t meet the affordable housing need. At that time, they wanted to do a split; some credits, some second dwelling units and some town homes. We agreed if they did the larger town homes, we didn’t really want to get the second dwelling units so we would agree to the credits. They were going to originally do the 24 units and then incorporate the second dwelling units in the homes, but we would rather them buy into Villa Loma rather then build a second dwelling unit. Because all of that was designed and it worked well and they were giving us the larger units, we agreed that we could accept that as a deal. Vice Chairperson Huston asked if Villa Lorna has sixteen units to spare? Debbie Fountain said yes. HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 6 of 8 Vice Chairperson Huston asked how many units are available there. Craig Ruiz said there is over 60 credits still available. Vice chairperson Huston said then by credits, you mean units? Craig Ruiz said yes. Vice Chairperson Huston commented that this would bring them to 44. Debbie Fountain said it has been determined that we have an adequate number and we have always included this number in that. Vice Chairperson Huston continued that by the time we get to the City's build out and add all the affordable units in, will that 44 be enough? Debbie Fountain answered that staff thinks so. Staff also has another project that they are loolung at across the street from Villa Loma that will give us additional credits. They are loolung at doing a 56 unit affordable housing project that is not being done as an inclusionary housing project. We will be able to have some extra credits in there if we needed to. Craig Ruiz stated that is a project we will see before the end of this year. Debbie Fountain agreed and said they would be coming back for financial assistance. Joanne Watanabe, Standard Pacific Homes, stated they are currently building at Poinsettia. The affordable units and the single family homes will all belong to one homeowner's association and they will all share the common amenities. Whether the amenities are near the affordable site or intermixed within the single-family homes, they are all equally shared by every resident. Commissioner Ritche asked if they are on both sides of the road? Joanne Watanabe said most of the amenities are on the south side of the road where the affordable units are. The north side is constrained because it is not a big site. The majority of the amenities are on the south side. Vice Chairperson Huston asked for a recommendation of approval to the City Council to approve the request to purchase sixteen affordable housing credits in the Villa Loma Affordable Housing Development to satisfy a portion of the requirement of the Inclusionary Housing Ordinance for the ThompsodTabata Residential Development. Commissioner Ritchie moved and Commissioner Schraml seconded the approval. VOTE: 4-0-0 AYES: NOES: None ABSTAM: None Huston, Ritche, Schraml, and Smith CHAIRPERSON'S REPORT No reports. HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 7 of 8 DIRECTOR REPORT: At the October 14, 2004 meeting, we are going to start having some workshops to get some community input on what the needs in Carlsbad are. The decision has been made that a good place to have those workshops is with the Housing Commission. This will be the first workshop and housing applicants will be invited to attend the meeting, the Planning Department will make a presentation and attain some feedback. We have hued a consultant to do the housing element where in the past the staff has always done the housing element, but we’ve decided this time to hire a consultant, Bridges. Veronica Kemp, the lead, will be at that meeting getting input from the Housing Commission. If you want to think,about any thoughts you might have about affordable housing and what the needs are within the community, we’ll be hearing from the advocate as well. There will probably be some more workshops to follow up because we believe there will be a lot of interest. Ths time around it will be for housing for the dlsabled, moderate- income housing, and the ongoing demands for housing for low-income groups. Senior housing will be another topic. Our housing element needs to address all of the different types of special needs groups. It is a fairly lengthy process. As mentioned previously, we have a 56-unit apartment project that has already been approved by the City Council, but we need to present the financial assistance for that project to the Housing Commission. It is unique because it is the first project being built that is not being built as a result of the inclusionary housing. It is an affordable housing developer that identified a piece of property and wants to come in and build a project. Though the structure of the deal is going to be a little different. It will not only be financial assistance, but we are going to look at other ways to assist the project. That project will probably not be October, more like November or December. We also have a project on Roosevelt Street that has been mentioned before. It is an eleven-unit apartment project and that financial assistance will need to come to the Housing Commission. Vice Chairperson Huston asked if they are only building eleven units, are they subject to inclusionary housing? Debbie Fountain answered that it is going to be a hundred percent affordable project. This is the property the Redevelopment Agency purchased so we are actually initiating the project. We partnered with Wakeland Housing who will actually be developing and owning and operating the apartment project. We are doing it for two fold reasons. One, the Redevelopment Agency itself has requirements to build affordable housing and most of the time we are going to include the inclusionary end with that project. There have been projects that have been prior to the inclusionary housing being implemented but the Redevelopment Plan was in effect so we have some need to provide some units. Commissioner Ritchie asked where that development is located. Debbie Fountain answered it is down toward the end of Laguna, next to Brittany Court office building. The property was used for storage and there was an abandoned house that was boarded up. We have cleaned up the site and we are working on the permit to get that project built. Everyone received invitations for the Mariposa Grand Opening. It would be a good idea to go to the site as it is beautiful. Some of the units have ocean views. Villages of La Costa is under construction and doing their affordable housing. Their project overlooks the golf course. Bressi Ranch is moving forward. ThompsodTabata project is moving forward. The Summit, which is a mixed income project, across from El Camino Real, and it is under construction. Commissioner Ritchie asked about the property being built on Cannon Road and Faraday; do we have anything in there? Debbie Fountain answered that it is called Pacific View and yes there are 11 1 affordable units in there, Vice Chairperson Huston asked how many units there were total? HOUSING COMMISSION MINUTES SEPTEMBER 9,2004 PAGE 8 of 8 Craig Ruiz said there are 450 total units, Debbie Fountain continued that they have luxury units and the affordable units. They are very nice. Commissioner Smith asked if that also has a home development? Debbie Fountain said yes. Vice Chairperson Huston asked if there was going to be another grocery store on that cobercial property? On the east side of El Camino Real? Debbie Fountain was not aware of that. She did say Sunny Creek or Robertson Ranch is supposed to have a grocery store in it. Commissioner Smith asked if Bressi Ranch was supposed to have a movie theatre and a shopping area? Debbie Fountain did say they are supposed to have a shopping area, a commercial area, but I don’t know what has been proposed. They are still working on it, but I don’t think it is supposed to have a theater though I may be wrong. Commissioner Smith also said they are supposed to have a school. Debbie Fountain did say there is a shopping area next to the affordable project along with the Boys and Girls Club. In addition, Craig Ruiz, Management Analyst, will be leaving the City of Carlsbad. ADJOURNMENT By proper motion, the meeting of September 9,2004 was adjourned at 6:45 p.m. Respectfully submitted, n Debbie Fountain Housing and Redevelopment Director PATRICIA CRESCENT1 Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED. 'Ilhe CXtyofCarlsbad S€ousing& Redevelopment Departznent AREPORT TO THE HOUSING COMMISSION Staff: CraigRuiz Management Analyst Item No. 1 DATE: SEPTEMBER 9,2004 SUBJECT: CPO3-03 - BRESSI RANCH HOUSING PROJECT - RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL TO PROVIDE $2,000,000 IN FINANCIAL ASSISTANCE AND APPROVAL OF THE BORROWER LOAN DOCUMENTS FOR DEVELOPMENT OF ONE HUNDRED AFFORDABLE CONDOMINIUM UNITS TO SATISFY THE REQUIREMENTS OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE BRESSI RANCH MASTER PLAN. I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 2004-002, recommending APPROVAL to the City Council to provide $2,000,000 in financial assistance from the Housing Trust Fund in the form of low income home buyer down payment assistance, and approval of the borrower loan documents for construction of one hundred (100) affordable for-sale condominium units to satisfy the inclusionary housing ordinance requirement for the Bressi Ranch Master Plan. 11. PROJECT BACKGROUND On July 23, 2002, the City Council approved the Bressi Ranch Master Plan. The Master Plan allows for the development of 623 residential units (523 single-family and 100 for- sale affordable condominiums), as well as industrial, mixed use, community facilities and open space land uses. The ultimate development will include up to 2.16 million square feet of industrial buildings, 130,000 square feet of commercial buildings, 138,000 square feet of community-related services and/or facilities, open space totaling 187 acres and a 3 acre park. 111. PROJECT DESCRIPTJON The affordable housing condominiums will generally be located south of Palomar Airport Road and east of El Camino Real, in what is known as Planning Area 15 of the Bressi Ranch Master Plan. More specifically, the project is located south of the future Gateway Road, east of the future Village Green Drive and north of the hture Town Garden Road. CPO3-03 - BRESSI RANCH AFFORDABLE HOUSING PROJECT SEPTEMBER 9,2004 PAGE 2 Number of Bedrooms Two Three Three The proposed 1 00-unit affordable condominium project consists of ten residential structures, including 60 two bedroom units and 40 three bedroom. All of the 100 units will be affordable to households earning 80% of the San Diego County Area Median Income. The project will provide individual one-car garages and community gathering areas. In addition, the project is in close proximity to two large community recreation areas which contain amenities such as an Olympic size pool, play areas, gathering areas and passive recreation areas. Table 1 below shows the size and types of affordable units proposed. Size of Unit 901 SQ. FT. 60 1,003 SQ. FT. 20 1,139 SQ. FT. 20 Total 1 00 Number of Units I TABLE 1 - AFFORDABLE UNITS I IV. DEVELOPMENT TEAM The Developer for the Bressi Ranch Master Plan is Lennar Communities. Lennar has retained Greystone Homes to construct the affordable housing project. Greystone Homes is a large homebuilder, with experience in both single family and multi-family housing developments. In addition, Greystone Homes is also a wholly owned subsidiary, Lennar Communities. The architect for the project is William Hezmalhalch Architects of Irvine. V. FINANCIAL ASSISTANCE A, Cost Reasonableness The developer has provided a detailed development proforma for review by staff and the Housing Commission (See Attachment 2). Since development costs are one of the key variables determining the need for subsidies, it is important that those costs be reasonable. At approximately $21.5 million, not including the cost of the land, the average unit cost of $215,000 is generally consistent with typical affordable multi-family development within the City. B. UndueGain It is important that any financial assistance have the effect of making the units more affordable and not creating undue gain for any party. The Developer, Lennar Homes, is not receiving a developer fee for the development of this project. In addition, the pro forma does not include a cost for the land. However, the Builder, Greystone Homes, will CPO3-03 - BRESSI RANCH AFFORDABLE HOUSING PROJECT SEPTEMBER 9,2004 PAGE 3 receive a “profit” of $1,579,000, or approximately 7.3% of total project costs. As stated above, Greystone is a subsidiary Lennar Communities. The profit or builder fee of 7.3% is within acceptable limits for a project of this size and affordability. Further, the builder fee is a customary cost of construction. I PROFORMA SUBSIDY ANALYSIS Bressi Carrillo - Per Unit Average AVG. COST $2 15,030 C. Subsidy Analysis Developer Subsidy (Not Including Land Cost) CITY LEVERAGE (Not Including Land Cost) With projected costs and a known restricted purchase price based on the maximum household incomes, it is possible to determine the estimated level of subsidy required to develop and sell the affordable units. With this subsidy estimate, an amount of City assistance is recommended which effectively “leverages” the City’s housing funds. Leveraging is defined as the ratio of City subsidy to subsidy provided from other sources. The following chart estimates the required subsidy for the affordable project and shows the recommended level of City assistance and developer subsidy necessary for the project to be feasible. $17,630 $1 : $1.3 MAXIMUM PURCHASE PRICE* $1 77.400 SUBSIDY REQUIREMENT ($37,630) I SUBSIDY SOURCES I I I r Citv Assistance I $20.000 I The Developer is proposing to self-finance the project. Under this scenario, the developer will provide the financing to construct the project in its entirety. Staff is recommending the City provide $2,000,000 in financial assistance with the understanding that the Master Developer will provide $1.763 million in financial assistance, not including the cost of the land. Under this option, the City’s $2,000,000 million assistance equates to $20,000 per affordable unit. The $20,000 per unit is larger than what has been previously approved for similar projects. In 1999, the City provided $15,000 per unit for a similar project (Rancho Carrillo - Serrano). However, staff believes that the greater amount of assistance is warranted for two reasons. First, the Inclusionary Housing Ordinance requires that 10% CPO3-03 - BRESSI RANCH AFFORDABLE HOUSING PROJECT SEPTEMBER 9,2004 PAGE 4 of the project contain three bedroom units. With over 40% the of project containing large bedroom units, the project far exceeds this requirement. Second, in the five years since the City last assisted a similar project, construction and land costs have significantly increased. The higher assistance amount recognizes these increased costs. D. Form of Assistance Previously, City assistance was provided in the form of a loan that is first used for construction and then for deferred financing (no payment for a period of time) for the actual homebuyer. In this case, staff is proposing that the assistance be provided directly to the homebuyer at the time of purchase. This City subsidy will be in the form of down payment assistance and is structured as loan that is repaid to the City upon resale of the unit. Any real appreciation is shared between the City and the homebuyer based on the contribution to the initial purchase. No “windfall” comes to the subsidized buyer. The financial assistance will be provided from the City of Carlsbad’s Housing Trust Fund. The Fund currently has a balance of approximately $9.1 million. E. Security The’ City takes a security interest in the property for the affordable housing project. Because the amount of City assistance is only a portion of the total subsidy, the City will have a significant “cushion” of equity protecting its actual cash loan. In addition, the individual units will be required to remain affordable for fifteen years after the initial purchase. If the home owner wishes to sell the unit within the first fifteen years, the property must be sold to a low income household at a price that is affordable to said buyer. The requirement to sell the unit at an affordable price is guaranteed through the execution of a Deed of Trust and a Resale Agreement, which are both recorded against the property. F. Risk The two major types of risk in this for-sale development are construction risk (units do not get built) and market risk (units do not sell). In addition, it is likely that any City financial assistance will be subordinated to conventional bank financing. If a problem did arise, the bank’s interest would come ahead of the City’s. Although the City would be taking on some of the risk inherent with development, there are several factors that mitigate these risks. First, the City’s financial involvement would constitute a very small portion of the project, meaning that the other lenders and the Developer will be motivated to insure successfbl completion. Second, in terms of market risk, the City’s assistance will be fixed and additional subsidies required to insure sale of all units will be the obligation of the developer. VI. FINANCIAL ASSISTANCE DOCUMENTS Copies of the draft loan documents that will be executed between the home buyer and the City are provided as exhibits (Exhibit 3) to this report for review by the Housing CPO3-03 - BRESSI RANCH AFFORDABLE HOUSING PROJECT SEPTEMBER 9,2004 PAGE 5 Commission. The Commission is being requested to review and recommend approval of the loan documents in substantially the form presented and subject to approval by the City Attorney. VII. SUMMARY AND STAFF RECOMMENDATION It is the role of the Housing Commission to make financial assistance recommendations to the City Council based on several considerations with respect to affordable housing projects. These are: 0 The proposal's effectiveness in serving the City's needs and priorities as expressed in the Housing Element of the General Plan and the Consolidated Plan. 0 The proposal's consistency with the City's affordable housing policies and ordinances as expressed in the Housing Element and Inclusionary Housing Ordinance. 0 The proposal's development and operating feasibility, emphasizing the development team capacity, financing sources and the role of the City in providing financial assistance or incentives. Staff recognizes that affordable homeownership units of the size and type proposed are costly in comparison to other affordable housing alternatives. The financial information contained in the Proforma demonstrates the need for financial assistance to assist in the development of this project. The project will meet an affordable housing need and is consistent with City policies and ordinances on affordable housing. The Affordable Housing Policy Team (staff) is recommending that the Housing Commission approve a recommendation to the City Council to commit a total of $2,000,000 to the Bressi Ranch Affordable Housing Development for the development of 100 affordable two and three bedroom condominium units within Planning Area 15 of the Bressi Ranch Mater Plan. The funding will be provided from the City of Carlsbad's Housing Trust Fund. The Housing Trust Fund has a current undesignated fund balance of approximately $9.1 million. The Housing Policy Team (staff) is also requesting that the Housing Commission review and recommend approval of the borrower loan documents in substantially the form submitted subject to final approval by the City Attorney. VIII. EXHIBITS 1. Housing Commission Resolution No. 2004-002 2. Developer Request for Assistance Proforma 3. Draft Borrower Promissory Note, Deed of Trust, Resale Agreement and Buyer Disclosure Form. 4. Vicinity Map 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. 2004-002 THAT THE HOUSING COMMISSION RECOMMEND APPROVAL TO THE CITY COUNCIL TO PROVIDE $2,000,000 IN FINANCIAL ASSISTANCE FROM THE HOUSING TRUST FUND IN THE FORM OF LOW INCOME HOME BUYER DOWN PAYMENT ASSISTANCE, AND APPROVAL OF THE BORROWER LOAN DOCUMENTS FOR CONSTRUCTION OF ONE HUNDRED (1 00) AFFORDABLE ORDINANCE REQUIREMENT FOR THE BRESSI RANCH MASTER PLAN. FOR-SALE CONDOMINIUM UNITS TO SATISFY THE INCLUSIONARY HOUSING APPLICANT: LENNAR COMMUNITIES CASE NO: CP 03-03 WHEREAS, Lennar Communities is the developer of the Bressi Ranch Master Plan; and WHEREAS, Bressi Ranch intends to construct a total of 623 residential housing units within the Bressi Ranch Master Plan; and WHEREAS, pursuant to the City of Carlsbad’s Inclusionary Housing Ordinance, Chapter 21.85 of the Carlsbad Municipal Code, fifteen percent of all residential development within the Bressi Ranch Master Plan is required to be affordable to low income households; and WHEREAS, the developer is proposing to construct 100 two and three bedroom, for-sale, attached condominium units, which will be restricted for sale to low ’income households as a means to satisfy the affordable housing obligations for the Ranch Master Plan as permitted by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance; and WHEREAS, on September 9, 2004, the Housing Commission held a public meeting to consider the developer’s request for financial assistance to construct said affordable housing units; and WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all persons desiring to be heard, said Commission considered all factors relating to the request for financial assistance; 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 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. The project is consistent with the goals and objectives of the City of Carlsbad's Housing Element, the Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. 3. The project will provide a total of 100, for-sale, two and three bedroom attached condominium units affordable for purchase to households at 80% or below of the county median income which meets a "medium priority" affordable housing need as outlined within the City of Carlsbad's approved 2000-2005 Consolidated Plan. The project, therefore, has the ability to effectively serve the City's housing needs and priorities as expressed in the Housing Element and the Consolidated Plan. 4. That based on the information provided within the Housing Commission Staff Report and testimony presented during the public meeting of the Housing Commission on September 9,2004, the Housing Commission hereby ADOPTS Resolution No. 2004- 02, recommending APPROVAL to the City Council to provide $2,000,000 in financial assistance for the development of 100, for sale, affordable two and three bedroom attached condominium units to satis@ the requirements of the Inclusionary Housing Ordinance for the Bressi Ranch Master Plan. Funding for the project shall be provided from the City of Carlsbad's Housing Trust Fund. 5. That the Housing Commission recommends that the City Manager or his designee, and execute the borrower loan documents in substantially the form submitted subject to review and approval by the City Attorney. ... ... ... ... ... ... HC RESO. NO. 2004-02 PAGE 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 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 9th day of September, 2004, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: EDWARD SCAFWELLI, CHAIRPERSON CARLSBAD HOUSING COMMISSION DEBORAH K. FOUNTAIN HOUSING AND REDEVELOPMENT DIRECTOR HC RESO. NO. 2004-02 PAGE 3 EXHIBIT 2 July 27,2004 City of Carlsbad Housing and Redevelopment Department Debbie Fountain 2965 Roosevelt Street, Suite B Carlsbad, CA 92008 SUBJECT: Bressi Ranch Affordable Housing Subsidy Dear Debbie: Lennar Communities, the Master Developer of Bressi Ranch, is pleased to present our formal affordable housing subsidy request to you. Bressi Ranch is a true pedestrian oriented community, comprised of 523 single family detached homes and 100 for sale attached affordable condominium homes. These two and three bedroom affordable condominium homes are located on a 5.6 acre parcel of land in the heart of the mixed use retail component of Bressi Ranch. Future residents of these homes will be within walking distance of the Village Green RecreationalPool area, the Village Square, retail uses, and employment opportunities in the officehndustrial business park to the north. In addition to smart pedestrian oriented land planning, the condominium homes have been architecturally designed to fit within the design guidelines of the Master Plan. Street facing architecture has been planned to resemble single family residences from the front, accompanied by exterior decks, patios and planter boxes. Buildings have been designed with multiple exterior color schemes, exterior window and accessory treatments, tile roofs, and enhanced garage entries. Special consideration was made to allow for enhanced landscaped green spaces onsite for both passive and active uses. Meandering walkways connect throughout the site plan. Lennar Communities has entered into an agreement with Greystone Homes as the builder of the 100 affordable homes. Foundations are being poured for five of the affordable buildings or 50 homes, followed by the vertical steel construction framing. The remainder of the buildings will commence construction in the third quarter of this year. Attached is a project proforma reflecting a total subsidy requirement of $3.6 Million. Project revenues have been estimated based on City guidelines. The proforma costs are \ 1525 Faraday Avenue, Suite 300, Carlsbad, California 92008-731 9 - (760) 918-7765, Fax (760) 918-8868 based on detailed analysis of costs spent to date and detailed projections of future costs. Please note that no land value has been ascribed to the 5.6 acre site, which is in itself a considerable additional subsidy. Based upon these development costs, Lennar is requesting a subsidy in the amount of $20,000 per door for the 100 affordable homes. The remaining subsidy requirement will be hnded by Lennar. The future residents of Bressi will have the pride of home ownership in a wonderful garden district master plan. Please feel free to contact me with any questions or comments that you may have. '+j+-- Encl. Cc: ShermHarmer Tom Sakai N 2 W -l P 0 0 0 0 e3 A !2 VI -l 0 W 0 0 0 0 u1 0 0 0 2 -! --4 -0 .!a 0-4 OP 00 00 00 - c W Y 0 Q a W 8 I! 2. v) 5 I- : -4 UI P P 0 -l P 0 0 0 Ii: w N co ;;e 2 nr .. A w W UI W 0 w W VI W 0 0 0 -4 s ;;e wmmw CDCDmCD aQQa 0000 aaaa 3333 G ZJ U a, 3 n -0 a, Y 0 f: v) 73 4 P C 3 ln a, Ul 0. 0 E. s 5 2 U m Y 3 3 n 5. a 3 0 m cn - cu. B a, 3 C 3 a B Ct 2. L 1. m Q c c < m 3 m -w mm .. EXHIBIT 3 NOTICE TO BORROWER: THIS NOTE IS NOT ASSUMABLE PROMISSORY NOTE Secured by Deed of Trust Carlsbad, California ,200- FOR VALUE RECEIVED, the undersigned (the "Borrower") promises to pay to the City of Carlsbad, a municipal corporation (the "City"), or order, at the Housing and Redevelopment Department, 2965 Roosevelt Street, Suite B, Carlsbad, California 92008-2389, or such other place as the City may designate in writing, the principal sum of Dollars ($ ), plus Contingent Interest calculated pursuant to Section 3 below, plus any amounts due the City as Excess Sales Proceeds pursuant to the Resale Restriction Agreement and Option to Purchase (the "Resale Agreement") by and between Borrower and City of even date herewith. 1. Purpose of Loan. Borrower is purchasing the Residence located at in the City of Carlsbad. This Note evidences a loan made by (the "Seller") to the Borrower, utilizing subsidy funds provided by the City and the Seller, and assigned by the Seller to the City (the "City/Seller Loan"). The City/Seller Loan is in the amount determined by the City to be necessary for the Borrower to afford to purchase the Residence making a reasonable downpayment and using conventional first mortgage financing for the balance of the purchase price not financed by the City/Seller Loan. The Seller made the City/Seller Loan to the Borrower and assigned the City/Seller Loan to the City in fulfillment of certain inclusionary housing obligations pursuant to an Affordable Housing Agreement between LENNAR BRESSI RANCH VENTURE, LLC, a California limited liability company (Seller's predecessor in interest) and the City dated the Borrower is required and has agreed to execute a Resale Agreement which during the first fifteen (1 5) years of Borrower's Ownership of the Residence, restricts the price of the Property upon resale and which requires the Borrower to pay any Excess Sales Proceeds (as defined below) at resale to the City. This Note evidences both (a) the obligation of Borrower to repay the City/Seller Loan, and (b) the obligation of Borrower to pay any Excess Sales Proceeds to the City pursuant to the Resale Agreement. 9 ,200-. Because the purchase price was set at an affordable price, 2. Definitions. The terms set forth in this section shall have the following meanings in this Note. a. "Appreciation Amount" shall mean the amount calculated by subtracting the total original purchase price of the Residence paid by the Borrower, which was I 1 2/16/2003 -.- Dollars ($ ), from one of the following amounts, as applicable: (i) in the event of a sale of the Residence, the amount received by the Borrower as the sale price of the Residence, as certified by the Borrower pursuant to Section 15d or Section 17 of the Resale Agreement below; or (ii) in the event of a prepayment of this Note, a Transfer other than sale of the Residence, or in the event of a default, the Fair Market Value of the Residence; or (iii) in the event a creditor acquires title to the Residence through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the amount paid for the Residence at a creditor's sale of the Residence; or (iv) in the event of payment at the expiration of the thirty (30) year tern the Fair Market Value of the Residence. b. "Contingent Interest" shall mean the percentage of the Appreciation Amount set out in Section 4. C. "Excess Sales Proceeds" shall have the meaning set forth in Section 16 of the Resale Agreement. d. "Fair Market Value" shall be determined by a real estate appraisal made by an independent residential appraiser designated by the City. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three @)-month period. The cost of the appraisal shall be paid by the Borrower. Nothing in this subparagraph shall preclude the Borrower and the City from establishing the Fair Market Value of the Residence by mutual agreement in lieu of an appraisal. e. "First Mortgage" shall mean the promissory note and deed of trust evidencing and securing the first mortgage loan for the Residence. f. "Maximum Restricted Resale Price" shall have the same meaning as set forth in Section 14 of the Resale Agreement. g. "Resale Agreement" shall mean the Resale Restriction Agreement and Option to Purchase executed by the Borrower and the City in connection with the City/Seller Loan. I h. "Residence" shall mean the housing unit and land encumbered by the deed of trust executed in connection with this Note. 1. "Transfer" shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the Residence, including, but not limited to, a fee simple interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, or an interest evidenced by a land contract by which possession of the Residence is transferred and the Borrower retains title. Any Transfer without satisfaction of the provisions of this Note is prohibited. A transfer: (i) to an existing spouse who is also an obligor under the Note; (ii) by a Borrower to a spouse where the spouse becomes the co-owner of the Residence; (iii) between spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse or child of the Borrower by devise or inheritance following the death of the Borrower; (v) by the Borrower into an inter vivos trust in which the Borrower is the beneficiary; (vi) by deed of trust or imposition of a lien subordinate to the Deed of Trust; or (vii) by refinance of the First Mortgage meeting the 12/16/2003 2 requirements of Section 11, shall not be considered a Transfer for the purposes of this Note; provided, however, that the Borrower shall continue to occupy the Residence as his or her principal place of residence (except where the transfer occurs pursuant to subsection (iii) or (iv) above, in which event the transferee shall owner-occupy the Home and affirmatively assume Owner's obligations under this Note and the City Deed of Trust, and the Resale Agreement) and the Borrower shall provide written notice of such transfer to the City pursuant to Section 8 of the Resale Agreement. 3. Security. This Note is secured by a second deed of trust dated the same date as this Note (the "Deed of Trust"). 4. Contingent Interest. The Borrower shall pay contingent interest equal to percent ( %) [staff to insert appropriate percentage which shall in no event exceed (50%)] of the Appreciation Amount (the "Contingent Interest"). No interest other than Contingent Interest shall be due hereunder. The Contingent Interest shall be paid to the City at the time set forth in Section 6 below. Borrower acknowledges that the Contingent Interest percentage amount is equal to the City/Seller Loan principal amount as a percentage of the total purchase price of the Residence paid by the Borrower at the time of purchase, multiplied by seventy-five one hundredths (.75). Borrower acknowledges that this calculation of the percentage of the Appreciation Amount due to the City as Contingent Interest includes a twenty- five percent (25%) discount to Borrower to account for any capital improvements Borrower may make to the Residence. 5. Term. The Term of this Note shall mean the period commencing on the date of this Note and expiring on the date thirty (30) years thereafter. 6. Rmament. The total amount of the principal and any Contingent Interest owed under this Note (including Excess Sales Proceeds due to the City pursuant to the Resale Agreement) shall immediately become due and payable (i) in the event of a default by the Borrower under this Note, the Resale Agreement, the Deed of Trust, or the First Mortgage, (ii) on the date Transfer is made whether voluntarily, involuntarily, or by operation of law and whether by deed, contract of sale, gift, devise, bequest or otherwise, (iii) in the event Borrower ceases to occupy the Residence as his or her principal place of residence; or (iv) at the end of the Term of this Note as described above in Section 5. Failure to declare such amounts due shall not constitute a waiver on the part of the City to declare them due in the event of a subsequent Transfer. 7. Late Pawent Fees. If any payment due hereunder is not paid within five (5) days fiom the date such becomes due, Borrower shall pay a reasonable late or collection charge equal to five percent (5%) of the amount so unpaid. The City and Borrower agree that the actual damages and costs sustained by the City due to the failure to make timely payments would be extremely difficult to measure and that the charges specified in this paragraph represent a reasonable estimate by Borrower and the City of a fair average compensation for such damages and costs. Such charges shall be paid by Borrower without prejudice to the right of the City to collect any other amounts provided to be paid under this Note, the Resale Agreement or the Deed of Trust or, with respect to late payments, to declare a default. 3 12/16/2003 8. Prmaments. The Borrower may prepay all or part of the balance due under this Note including principal and Contingent Interest. In the event the entire amount of principal due under this Note is prepaid, all Contingent Interest, calculated as of the date of prepayment, shall also be due at the time of prepayment. In the event of partial prepayment, the amount of Contingent Interest due upon prepayment shall be determined at the time of any partial prepayment based on the Fair Market Value of the Property. Partial prepayments shall be allocated between payment of Contingent Interest and payment of principal in the same proportion as the ratio of each to the total amount due (principal and interest) at the time of prepayment. Following a prepayment, the percentage of Contingent Interest due the City shall be recalculated to reflect the paydown in principal owed the City. The recalculated Contingent Interest shall equal the outstanding principal amount of the Note divided by the original purchase price of the Property paid by the Borrower. Notwithstanding any prepayment of amounts due under this Note, the Resale Agreement shall continue in full force and effect for the period of time set forth in Section 25 of the Resale Agreement. 9. No AssumDtion of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the City to assist in the purchase of homes by lower income persons. Consequently, this Note is not assumable by transferees of the Residence, but is due in full upon Transfer. 10. Maintenance; Taxes; Insurance. Borrower shall maintain the Residence in good repair and in a neat, clean and orderly condition. Borrower shall promptly pay all property taxes due on the Residence prior to any delinquency and shall comply with the insurance requirements set forth in the Deed of Trust and Resale Agreement. 1 1. Refinance of First Mortgage Loan. The outstanding principal and interest on this Note shall not be due upon prepayment and refinance of the First Mortgage, and the Resale Agreement and Deed of Trust shall be subordinated to the refinanced loan, provided that (i) such refinancing is approved by the City, (ii) the amount refinanced does not exceed the outstanding principal balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii) the refinance does not result in higher monthly payments on the First Mortgage Loan than were due prior to the refinance. 12. Default. a. The Borrower shall be in default under this Note if he or she is in default under the First Mortgage following the expiration of First Mortgage cure periods, or if, after the notice and cure period provided by the City to the Borrower pursuant to the notice and cure provisions of the Deed of Trust, the Borrower (i) fails to pay any money when due under this Note; (ii) breaches any representation or covenant made in this Note or Resale Agreement in any material respect; or (iii) breaches any provision of the Deed of Trust. b. Upon the Borrower's breach of any covenant or agreement of the Borrower in this Note, the Resale Agreement or the Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by the Deed of Trust, the City, prior to 4 12/16/2OO3 acceleration, will send, in the manner set forth in Section 17, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective, by which such breach, if curable, is to be cured and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by the Deed of Trust and foreclosure by the City. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. 13. Acceleration. Upon the occurrence of a default under this Note, the Resale Agreement, the Deed of Trust, or the First Mortgage, the City shall have the right to declare the full amount of the principal along with any Contingent Interest under this Note immediately due and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under this Note, the Resale Agreement, and the Deed of Trust. Nor shall acceptance by the City of any payment provided for herein constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. 14. No Offset. The Borrower hereby waives any rights of offset it now has or may later have against the City, its successors and assigns, and agrees to make the payments called for in this Note in accordance with the terms of this Note. 15. Waiver: Attorney Fees and Costs. The Borrower and any endorsers or guarantors of this Note, for themselves, their heirs, legal representatives, successors and assigns, respectively, severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and non-payment of this Note, and expressly waive any rights to be released by reason of any extension of time or change in terms of payment, or change, alteration or release of any security given for the payments hereof, and expressly waive the right to plead any and all statutes of limitations as a defense to any demand on this Note or agreement to pay the same, and jointly and severally agree to pay all costs of collection when incurred, including reasonable attorney fees. If an action is instituted on this Note, the Borrower promises to pay, in addition to the costs and disbursements allowed by law, such sum as a court may adjudge reasonable as attorneys' fees in such action. 16. No Waiver by the City. No waiver of any breach, default or failure of condition under the terms of this Note shall be implied from any failure of the City to take action with respect to such breach, default or failure or from any previous waiver of any similar or unrelated breach, default or failure. 17. Notices. All notices required in this Note shall be sent by certified mail, return receipt requested, or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained and shall be deemed to be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undeliverable as follows: To the Borrower: 5 1211 a2003 At the address of the Residence. To the City: City of Carlsbad Housing and Redevelopment Department 2965 Roosevelt Street, Suite B Attention: Housing and Redevelopment Director Catlsbad, CA 92008-2389 The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section. 18. Joint and Several Obligations. This Note is the joint and several obligation of all makers, sureties, guarantors and endorsers, and shall be binding upon them and their successors and assigns. 19. Nonliabilitv for Negligence, Loss. or Damage. Borrower acknowledges, understands and agrees that the relationship between Borrower and the City is solely that of borrower and lender, and that the City does not undertake or assume any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Residence or any other matter. The City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction or any condition of the Residence and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting from any condition of the Residence and will hold the City harmless fiom any liability, loss or damage for these things. 20. Indemnitv. Borrower agrees to defend, indemnifl, and hold the City harmless fiom all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the City may incur as a direct or indirect consequence of a. the making of the loan to Borrower; b. Borrower's failure to perform any obligations as and when required by the Note, the Resale Agreement or the Deed of Trust; of c. the City to be true and correct. the failure at any time of any of Borrower's representations to the Seller or 21. Termination of Restrictions. Any legal restrictions on conveyance of the Residence (as defined in 24 CFR 203.41(a)(3)) included in this Note shall terminate upon transfer of the Residence by foreclosure, deed in lieu of foreclosure, or assignment to the Secretary of the United States Department of Housing and Urban Development. 6 12/16/2003 22. Controlling Law. This Note shall be construed in accordance with and be governed by the laws of the State of California. 23. Assignment by City. The City may assign its right to receive the proceeds under this Note to any person and upon notice to the Borrower by the City all payments shall be made to the assignee. 24. Invalid Provisions. If any one or more of the provisions contained in this Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Note, and this Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Note. 25. Entire Agreement. This Note (along with the Resale Agreement and Deed of Trust) sets forth the entire understanding and agreement of the City and the Borrower and any amendment, alteration or interpretation of this Note must be in writing signed by both the City and the Borrower. BORROWER (Print Name) (Print Name) 7 12/16/2003 PROMISSORY NOTE CITY OF CARLSBAD ADMINISTRATIVE COVER SHEET (Remove Upon Completion) BLANK LINES: CHECKLIST Amount of City/Seller Loan, p. 1, upper left Date of Document, p. 1, upper right Borrower's Name, p. 1, first paragraph Amount of City/Seller Loan, p. 1, first paragraph Street Address of Residence, p. 1, Section 1 Name of Seller, p. 1, Section 1 Date of Affordable Housing Agreement, p. 1, Section 1 Original Purchase Price of Residence, p. 2, Section 2(a) Contingent Interest Percent, p. 3, Section 4 Signatures, p. 7 / 1010\15\172081.3 RECORDING REQUESTED BY City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk's Office Am Cityclerk 1200 Carlsbad Village Drive Carlsbad, California 92008 (Space above for Recorder's Use) NOTE TO BORROWER: THIS DEED OF TRUST CONTAINS PROVISIONS PROHIBITING ASSUMPTIONS DEED OF TRUST AND SECURITY AGREEMENT THIS DEED OF TRUST AND SECURITY AGREEMENT ("Deed of Trust") made as of ("Trustee"), and this day of ,200 -3 among ("Borrower") as trustor, and the City of Carlsbad, a municipal corporation (the "City"), as beneficiary. The Borrower, in consideration of the promises herein recited and the trust herein created, irrevocably grants, transfers, conveys and assigns to the Trustee, in trust, with power of sale, the property located in the City of Carlsbad, State of California, described in the attached Exhibit A (the "Property"). TOGETHER with all the improvements now or hereafter erected on the property, and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the property, all of which, including replacements and additions thereto, shall be deemed to be and remain a part of the property covered by this Deed of Trust; and TOGETHER with all articles of personal property or fixtures now or hereafter attached to or used in and about the building or buildings now erected or hereafter to be erected on the Property which are necessary to the complete and comfortable use and occupancy of such building or buildings for the purposes for which they were or are to be erected, including all other goods and chattels and personal property as are ever used or furnished in operating a building, or the activities conducted therein, similar to the one herein described and referred to, and all renewals or replacements thereof or articles in substitution therefore, whether or not the same are, or shall be attached to said building or buildings in any manner; and all of the foregoing, together with the Property, is herein referred to as the "Security"; 1 1211 W2OO3 To have and to hold the Security together with acquittances to the Trustee, its successors and assigns forever; TO SECURE to the City the repayment of the sums evidenced by a promissory note in Dollars ($ ) executed by the Borrower to the City the amount of as of the date of this Deed of Trust (the "Note"); TO SECURE to the City the payment of all other sums, with interest thereon, advanced in accordance herewith to protect the security of this Deed of Trust; and the performance of the covenants and agreements of the Borrower herein contained; and TO SECURE to the City the performance of the covenants and agreements of Borrower contained in that certain Resale Restriction Agreement and Option to Purchase executed by and between the Borrower and the City of even date herewith (the "Resale Agreement") and to secure the payment of Excess Sales Proceeds (as defined in the Resale Agreement) that may become due by Borrower to City; TO SECURE the performance of any obligations of Borrower in any other agreements with respect to the financing of the Property or the Security the failure of which would adversely affect Beneficiary, whether or not Beneficiary is a party to such agreements. BORROWER AND CITY COVENANT AND AGREE AS FOLLOWS: 1. Borrower's Estate. That the Borrower is lawfully seized of the estate hereby conveyed and has the right to grant and convey the Security, that other than this Deed of Trust, the Security is encumbered only by: (a) that deed of trust executed by the Borrower in connection with a loan made to the -Borrower by or its successors and assigns (the "First Lender"), dated ,200-, executed by the Borrower in favor of First Lender, and recorded in the County of San Diego on , 200, and assigned Recorder's Serial No. (the "First Lender Deed of Trust"), securing a promissory note executed by the Borrower in favor of the First Lender ("First Lender Note"), to assist in the purchase of the Property; and (b) the Resale Agreement. The Borrower agrees to warrant and defend generally the title to the Security against all claims and demands, subject to any declarations, easements or restrictions listed in a schedule of exceptions to coverage in any title insurance policy insuring the City's interest in the Security. (As used in this Deed of Trust, the term "First Lender" shall include all successors and assigns of the First Lender.) 2. Rwavment of Loan. The Borrower will promptly repay, when due, the principal, interest and other sums required by the Note and Resale Agreement, including all principal and interest on the City/Seller Loan (as defined in the Note) and the Excess Sales Proceeds due under the Resale Agreement. The Note contains the following provisions concerning repayment of the loan under certain conditions: No Assumution of Note. The Borrower acknowledges that this Note is given in connection with the purchase of property (the "Residence") as part of a program of the City to assist in the purchase of homes by lower 12/16/2003 2 income persons. Consequently, this Note is not assumable by transferees of the Residence, but is due in full upon Transfer. 3. First Lender Loan. The Borrower will observe and perform all of the covenants and agreements of the First Lender Note, First Lender Deed of Trust, and related First Lender loan documents. 4. Resale Agreement. The Borrower will observe and perform all of the covenants and agreements of the Resale Agreement. 5. Charges; Liens. The Borrower will pay all taxes, assessments and other charges, fines and impositions attributable to the Security which may attain a priority over this Deed of Trust, by the Borrower making any payment, when due, directly to the payee thereof. The Borrower will promptly furnish to the City all notices of amounts due under this paragraph, and in the event the Borrower makes payment directly, the Borrower will promptly discharge any lien which has priority over this Deed of Trust; provided, that the Borrower will not be required to discharge the lien of the First Lender Deed of Trust or any other lien described in this paragraph so long as the Borrower will agree in writing to the payment of the obligation secured by such lien in a manner acceptable to the City, or will, in good faith, contest such lien by, or defend enforcement of such lien in, legal proceedings which operate to prevent the enforcement of the lien or forfeiture of the Security or any part thereof. 6. Insurance. The Borrower will keep the Security insured with a standard fire and extended coverage insurance policy in at least an amount equal to the replacement cost of the Security, but in no event less than the amount necessary to prevent the Borrower from becoming a co-insurer under the terms of the policy. The insurance carrier providing this insurance shall be licensed to do business in the State of California and be chosen by the Borrower subject to approval by the City; provided, that such approval will not be withheld if the insurer is also approved by the First Lender, the Federal Home Loan Mortgage Corporation, Fannie Mae, Freddie Mac, the United States Department of Housing and Urban Development, the United States Department of Veterans Affairs, or successors thereto. All insurance policies and renewals thereof will be in a form acceptable to the City and will include a standard mortgagee clause with standard lender's endorsement in favor of the holder of the First Lender Note and the City as their interests may appear and in a form acceptable to the City. The City shall have the right to hold, or cause its designated agent to hold, the policies and renewals thereof, and the Borrower shall promptly furnish to the City, or its designated agent, the original insurance policies or certificates of insurance, all renewal notices and all receipts of paid premiums. In the event of loss, the Borrower will give prompt notice to the insurance carrier and the City or its designated agent. The City, or its designated agent, may make proof of loss if not made promptly by the Borrower. The City shall receive thirty (30) days advance notice of cancellation of any insurance policies required under this section. 3 12f 1612003 Unless the City and the Borrower otherwise agree in writing, insurance proceeds, subject to the rights of the First Lender, will be applied to restoration or repair of the Security damaged, provided such restoration or repair is economically feasible and the Security of this Deed of Trust is not thereby impaired. If such restoration or repair is not economically feasible or if the security of this Deed of Trust would be impaired, the insurance proceeds will be used, subject to the rights of the First Lender, to repay the Note and all sums secured by this Deed of Trust, with the excess, if any, paid to the Borrower. If the Security is abandoned by the Borrower, or if the Borrower fails to respond to the City, or its designated agent, within thirty (30) days fi-om the date notice is mailed by either of them to the Borrower that the insurance carrier offers to settle a claim for insurance benefits, the City, or its designated agent, is authorized, subject to the rights of the First Lender, to collect and apply the insurance proceeds at the City's option either to restoration or repair of the Security or to repay the Note and all sums secured by this Deed of Trust. If the Security is acquired by the City, all right, title and interest of the Borrower in and to any insurance policy and in and to the proceeds thereof resulting from damage to the Security prior to the sale or acquisition will pass to the City to the extent of the sums secured by this Deed of Trust immediately prior to such sale or acquisition subject to the rights of the First Lender. 7. Preservation and Maintenance of Security. The Borrower will keep the Security in good repair and will not commit waste or permit impairment or deterioration of the Security. If there arises a condition in contravention of this section, and if the Borrower has not cured such condition within thirty (30) days after receiving a City notice of such a condition, then in addition to any other rights available to the City, the City shall have the right (but not the obligation) to perform all acts necessary to cure such condition, and to establish or enforce a lien or other encumbrance against the Security to recover its cost of curing. 8. Protection of the City's Security. If the Borrower fails to perform the covenants and agreements contained in this Deed of Trust, the Resale Agreement, the First Lender Note, the First Lender Deed of Trust, or if any action or proceeding is commenced which materially affects the City's interest in the Security, including, but not limited to, default under the First Lender Deed of Trust, the First Lender Note or any other deed of trust encumbering the Property, eminent domain, insolvency, code enforcement, or arrangements or proceedings involving a bankrupt or decedent, then the City, at the City's option, upon notice to the Borrower, may make such appearances, disburse such sums and take such action as it determines necessary to protect the City's interest, including but not limited to, disbursement of reasonable attorney's fees and entry upon the Security to make repairs. Any amounts disbursed by the City pursuant to this paragraph, with interest thereon, will become an indebtedness of the Borrower secured by this Deed of Trust. Unless the Borrower and City agree in writing to other terms of payment, such amount will be payable upon notice fi-om the City to the BOKOW~~ requesting payment thereof, and will bear interest from the date of disbursement at the lesser of ten percent (10%) or the highest rate permissible under applicable law. Nothing contained in this paragraph will require the City to incur any expense or take any action hereunder. 4 12/16M003 9. Insnection. The City may make or cause to be made reasonable entries upon and inspections of the Security; provided that the City will give the Borrower reasonable notice of inspection. 10. Forbearance bv the City Not a Waiver. Any forbearance by the City in exercising any right or remedy will not be a waiver of the exercise of any such right or remedy, nor shall acceptance by the City of any payment provided for in the Note constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. The procurement of insurance or the payment of taxes or other liens or charges by the City will not be a waiver of the City's right to accelerate the maturity of the indebtedness secured by this Deed of Trust. 11. Hazardous Substances. Borrower shall not cause or permit the presence, use, disposal, storage, or release of any Hazardous Substances on or in the Property. Borrower shall not do, nor allow anyone else to do, anything affecting the Property that is in violation of any Environmental Law. The preceding two sentences shall not apply to the presence, use, or storage on the Property of small quantities of Hazardous Substances that are generally recognized to be appropriate to normal residential uses and to maintenance of the Property. "Hazardous Substances" shall mean those substances defined as toxic or hazardous substances or hazardous waste under any Environmental Law, and the following substances: gasoline, kerosene, other flammable or toxic petroleum products, toxic pesticides and herbicides, volatile solvents, materials containing asbestos or formaldehyde, and radioactive materials. . "Environmental Law" shall mean all federal and state of California laws that relate to health, safety or environmental protection. Borrower shall promptly give City written notice of any investigation, claim, demand, lawsuit or other action by any governmental or regulatory agency or private party involving the Property and any Hazardous Substance or Environmental Law of which Borrower has actual knowledge. If Borrower learns, or is notified by any governmental or regulatory authority, that any removal or other remediation of any Hazardous Substance affecting the Property is necessary, Borrower shall promptly take all necessary remedial actions in accordance with Environmental Law. 12. Remedies Cumulative. All remedies provided in this Deed of Trust are distinct and cumulative to any other right or remedy under this Deed of Trust or any other document, or afforded by law or equity, and may be exercised concurrently, independently or successively. 13. Successors and Assigns Bound. The covenants and agreements herein contained shall bind, and the rights hereunder shall inure to, the respective successors and assigns of the City and the Borrower subject to the provisions of this Deed of Trust. 14. be joint and several. Joint and Several Liability. All covenants and agreements of the Borrower shall 5 12/16/2003 15. Notice. Except for any notice required under applicable law to be given in another manner, all notices required in this Deed of Trust shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt, or personally delivered with a delivery receipt obtained, and shall be deemed to be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused, or the date the notice was returned as undeliverable as follows: To the Owner: At the address of the Residence. To the City: City of Carlsbad Housing and Redevelopment Department 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Attn: Housing and Redevelopment Director The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section. 15 Controlling Law. This Deed of Trust shall be construed in accordance with and be governed by the laws of the State of California. 16 Invalid Provisions. If any one or more of the provisions contained in this Deed of Trust, Resale Agreement or the Note shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions, and this Deed of Trust, the Resale Agreement and the Note shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Deed of Trust, Resale Agreement or the Note. 17 Captions. The captions and headings in this Deed of Trust are for convenience only and are not to be used to interpret or define the provisions hereof. 18 Nonliabilitv for Negligence, Loss, or Damage. Borrower acknowledges, understands and agrees that the relationship between Borrower and the City is solely that of an Borrower and the administrators of City inclusionary housing program, and that the City does not undertake or assume any responsibility for or duty to Borrower to select, review, inspect, supervise, pass judgment on, or inform Borrower of the quality, adequacy or suitability of the Security or any other matter. The City owes no duty of care to protect Borrower against negligent, faulty, inadequate or defective building or construction or any condition of the Security and Borrower agrees that neither Borrower, or Borrower's heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting from any condition of the Security and will hold City harmless from any liability, loss or damage for these things. 6 1211 6l2003 19. Indemnitv. Borrower agrees to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the City may incur as a direct or indirect consequence of: a. Borrower's failure to perform any obligations as and when required by the Note, Resale Restriction Agreement, and this Deed of Trust; or b. The failure at any time of any of Borrower's representations or warranties to be true and correct. 20. Default; Remedies. Upon the Borrower's breach of any covenant or agreement of the Borrower in the Note, Resale Agreement or this Deed of Trust, including, but not limited to, the covenants to pay, when due, any sums secured by this Deed of Trust, the City, prior to acceleration, will send, in the manner set forth in Section 14 of this Deed of Trust, notice to the Borrower specifying: (1) the breach; (2) if the breach is curable, the action required to cure such breach; (3) a date, not less than thirty (30) days from the date the notice is effective as set forth in Section 14 of this Deed of Trust, by which such breach, if curable, is to be cured; and (4) if the breach is curable, that failure to cure such breach on or before the date specified in the notice may result in acceleration of the sums secured by this Deed of Trust and sale of the Security. Notice shall be effective as of the date shown on the delivery receipt as the date of delivery, the date delivery was refused or the date the notice was returned as undeliverable. The notice will also inform the Borrower of the Borrower's right to reinstate after acceleration and the right to bring a court action to assert the nonexistence of default or any other defense of the Borrower to acceleration and sale. If the breach is not curable or is not cured on or before the date specified in the notice, the City, at the City's option, may: (a) declare all of the sums secured by this Deed of Trust to be immediately due and payable without further demand and may invoke the power of sale and any other remedies permitted by California law; (b) either in person or by agent, with or without bringing any action or proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its security, enter upon the Security and take possession thereof (or any part thereof) and of any of the Security, in its own name or in the name of the Trustee, and do any acts which it deems necessary or desirable to preserve the value or marketability of the Security, or part thereof or interest therein, increase the income therefrom or protect the security thereof. The entering upon and taking possession of the Security shall not cure or waive any breach hereunder or invalidate any act done in response to such breach and, notwithstanding the continuance in possession of the Security, the City shall be entitled to exercise every right provided for in this Deed of Trust, or by law upon occurrence of any uncured breach, including the right to exercise the power of sale; (c) commence an action to foreclose this Deed of Trust as a mortgage, appoint a receiver, or specifically enforce any of the covenants hereof; (d) deliver to the Trustee a written declaration of default and demand for sale, pursuant to the provisions for notice of sale found at California Civil Code Sections 2924, et seq., as amended from time to time; or (e) exercise all other rights and remedies provided herein, in the instruments by which the Borrower acquires title to any Security, or in any other document or agreement now or hereafter evidencing, creating or securing all or any portion of the obligations secured hereby, or provided by law. 7 1 2/16/2003 The City shall be entitled to collect all reasonable costs and expenses incurred in pursuing the remedies provided in this paragraph, including, but not limited to, reasonable attorney's fees. 21 Acceleration. Upon the occurrence of a default under the Note, the Resale Agreement, this Deed of Trust, the First Lender Note, or the First Lender Deed of Trust, the City shall have the right to declare the full amount of the principal along with any interest under the Note immediately due and payable. Any failure by the City to pursue its legal and equitable remedies upon default shall not constitute a waiver of the City's right to declare a default and exercise all of its rights under the Note, the Resale Agreement, and this Deed of Trust. Nor shall acceptance by the City of any payment provided for in the Note constitute a waiver of the City's right to require prompt payment of any remaining principal and interest owed. 22. Borrower's Right to Reinstate. Notwithstanding the City's acceleration of the sums secured by this Deed of Trust, the Borrower will have the right to have any proceedings begun by the City to enforce this Deed of Trust discontinued at any time prior to five (5) days before sale of the Security pursuant to the power of sale contained in this Deed of Trust or at any time prior to entry of a judgment enforcing this Deed of Trust if: (a) the Borrower pays City all sums, if any, which would be then due under this Deed of Trust and no acceleration under the Note has occurred; (b) the Borrower cures all breaches of any other covenants or agreements of the Borrower contained in the Note, Resale Agreement or this Deed of Trust; (c) the Borrower pays all reasonable expenses incurred by City and the Trustee in enforcing the covenants and agreements of the Borrower contained in the Note, Resale Agreement or this Deed of Trust, and in enforcing the City's and the Trustee's remedies, including, but not limited to, reasonable attorney's fees; and (d) the Borrower takes such action as City may reasonably require to assure that the lien of this Deed of Trust, City's interest in the Security and the Borrower's obligation to pay the sums secured by this Deed of Trust shall continue unimpaired. Upon such payment and cure by the Borrower, this Deed of Trust and the obligations secured hereby will remain in full force and effect as if no acceleration had occurred. 23. Reconveyance. Upon payment of all sums secured by this Deed of Trust, the City will request the Trustee to reconvey the Security and will surrender this Deed of Trust and the Note to the Trustee. The Trustee will reconvey the Security without warranty and without charge to the person or persons legally entitled thereto. Such person or persons will pay all costs of recordation, if any. 24. Substitute Trustee. The City, at the City's option, may from time to time remove the Trustee and appoint a successor trustee to any trustee appointed hereunder. The successor trustee will succeed to all the title, power and duties conferred upon the Trustee herein and by applicable law. 25. Subordination to First Lender Mortgage. Notwithstanding any other provision hereof, the provisions of this Deed of Trust shall be subordinate to the lien of the First Lender Deed of Trust and shall not impair the rights of the First Lender, or the First Lender's successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Borrower. Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of 12/16/2O03 8 foreclosure. After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure, or upon assignment of the First Lender Deed of Trust to the Secretary of the United States Department of Housing and Urban Development (the "Secretary"), this Deed of Trust shall be forever terminated and shall have no further effect as to the Property or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Property pursuant to a deed or assignment in lieu of foreclosure, or if the First Lender's Deed of Trust is assigned to the Secretary, this Deed of Trust shall automatically terminate upon such acquisition of title or assignment to the Secretary provided that (i) the City has been given written notice of default under such First Lender Deed of Trust and (ii) the City shall not have cured or commenced to cure the default within such thirty (30)-day period and given its firm commitment to complete the cure in the form and substance acceptable to the First Lender. Borrower agrees to record any necessary documents to effect such termination, if applicable. 26. Attorney's Fees. If any action or proceeding is brought to enforce this Deed of Trust or any provision of this Deed of Trust or the Note, the prevailing party shall be entitled to its attorney's fees and the cost of such action or proceeding. IN WITNESS WHEREOF, the Borrower has executed this Deed Of Trust as of the date first written above. Borrower (Print Name) (Print Name) 9 Borrower 12/16/2003 STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ) ss. ' on- 200, before me, personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hishedtheir authorized capacitflies), and that by hisherhheir signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) ) ss. on- 200-, before me, , personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within instrument and acknowledged to me that he/she/they executed the same in hishedtheir authorized capacitflies), and that by hishedtheir signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. EXHIBIT A Property Description 1010\15\172083.3 A- 1 DEED OF TRUST AND SECURITY AGREEMENT CITY OF CARLSBAD ADMINISTRATIVE CHECKLIST (Remove Upon Completion) BLANK LINES: CHECKLIST Date of Document, p. 1, first paragraph Borrower's Name, p. 1, first paragraph Trustee's Name, p. 1, first paragraph Amount of Promissory Note, p. 2, second full paragraph First Lender's Name, p. 2, Section 1 Date of First Lender's Deed of Trust, p. 2, Section 1 Recording Information for First Lender's Deed of Trust, p. 2, Section 1 Signatures, p. 9 Notary Include Exhibit A, Property Description 101 0\15\172083.3 RECORDING REQUESTED PURSUANT TO GOVERNMENT CODE SECTION 27383 RECORDING REQUESTED BY: City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk's Office Attn: City Clerk 1200 Carlsbad Village Drive CARLSBAD, CALIFORNIA 92008 (Space above for Recorder's Use) RESALE RESTRICTION AGREEMENT, AND OPTION TO PURCHASE CITY OF CARLSBAD HOMEBUYER PROGRAM - 200- Owner: Address of Home: This Resale Restriction Agreement and Option to Purchase (the "Agreement It) is entered into as of this day of 200-, by and between the City of Carlsbad (the "City "), (the "Developer It) and (the "Owner 'I). RECITALS A. The City has developed a second mortgage program designed to assist qualified lower income households purchase their homes located within the City of Carlsbad (the "Homebuyer Program 'I). B. In connection with the Homebuyer Program and in fulfillment of its inclusionary obligation pursuant to an Affordable Housing Agreement (the "Affordable Housing Agreement") between the LENNAR BRESSI RANCH VENTURE, LLC, a California limited liability company (the "Sponsor ") and the City dated ,200-, the Developer made a loan (the "City/Seller Loan") in the amount of Dollars ($ ) to Owner to purchase a single-family dwelling located in Carlsbad, California on that certain real property and more 1 12/16/2003 particularly described in Exhibit A (the "Home 'I) and then assigned the City/Seller Loan to the City. In consideration of the City/Seller Loan, the Owner agreed to enter into the Agreement. As used herein, the term "Home includes both the real property and all improvements now or hereafter erected on the property and all easements, rights, appurtenances, and all fixtures now or hereafter attached to the property. C. The purchase price of the Home is Dollars ($ ) (the "Purchase Price 'I). D. The Owner is receiving a First Lender Loan in the amount of "First Lender 'I). The First Lender Loan is secured by a deed of trust dated 9 20-, executed by the Buyer in favor of First Lender and recorded in the County of San Diego on , 20, and assigned Recorder's Serial No. (the "First Lender Deed of Trust 'I). Dollars ($ ) (the "First Lender Loan 'I) from (the E. The Loan is evidenced by a promissory note in the amount of the Loan (the "City Note 'I). This Agreement and the City Note shall be secured by a deed of trust (the "City Deed of Trust ") subordinate to the lien of First Lender Deed of Trust. F. The purpose of this Agreement is to place resale controls on the Home, to provide the City an option to purchase the Home at a restricted price and to ensure that the Owner complies with the Homebuyer Program requirements. G. This Agreement also meets the requirements of Health and Safety Code Sections 33334.2 and 33334.3 and permits the City to meet the affordable housing production requirements of Health and Safety Code Section 33413(b). H. This Agreement and the City Note require repayment of the loan plus contingent interest and, in certain instances, payment of excess proceeds of sale. This Agreement will remain in full effect as an encumbrance on the Property after any prepayment of the City Note by the Buyer. NOW, THEREFORE, in consideration of the benefits received by the Owner and the City, the Owner and the City agree, as follows: 1. DEFINITIONS AND EXHIBITS A. The following terms are specifically defined for this Agreement and their definitions can be found in the Sections indicated below: (1) "Agreement 'I - first sentence of the Agreement on page 1. (2) "City " - first sentence of the Agreement on page 1 2 1211 612003 "City Deed of Trust I' - Recital E. "City Designated Purchaser - Section 12B. "City/Seller Loan 'I - Recital B. "City Note 'I - Recital E. "City Option - Section 12A. "City Response Notice 'I - Section 10. "Eligible Purchaser Section 15B. "Extended Term 'I - 1OC. "Excess Sales Proceeds 'I - Section 16. "Fair Market Value - Section 14B. "First Lender - Recital D. "First Lender Deed of Trust I' - Recital D "First Lender Loan 'I - Recital D. "Home 'I - Recital B. "HUD - Section 30. "Initial Term - 10B. "Market Purchaser I' - Section I OC. "Maximum Restricted Resale Price 'I - Section 14. "Median Income 'I - Section 14A. "Owner 'I - first sentence of the Agreement on page 1. "Owner's Notice of Intent to Transfer - Section 8. "Proposed Purchaser - Section 15A. "Purchase Price 'I - Recital C. 3 1211 612003 5. HOMEBUYER EDUCATION CLASS The Owner shall attend all sessions of a first-time homebuyer education class offered by 6. MAINTENANCE AND INSURANCE PROCEEDS A. The Owner shall maintain the Home, including landscaping, in good repair and in a neat, clean and orderly condition and will not commit waste or permit deterioration of the Home. Failure by the Owner to maintain the Home shall constitute a default under this Agreement for which the City may exercise the City Option to purchase the Home pursuant to Section 21 below. B. The Owner shall maintain a standard fire and extended coverage Home insurance policy equal to the replacement value of the Home (adjusted every five (5) years by appraisal, if requested by City), naming the City as an additional insured. Additional insurance requirements are set forth in Section 6 of the City Deed of Trust. 7. TRANSFER AND SALE RESTRICTIONS Any Transfer of the Home will be subject to the provisions of this Agreement including, without limitation, exercise of the City Option pursuant to Section 12 below. "Transfer " shall mean any sale, assignment or transfer, voluntary or involuntary, of any interest in the Home, including, but not limited to, a fee simple interest, a joint tenancy interest, tenancy in common interest, a life estate, a leasehold interest, an interest evidenced by a land contract by which possession of the Home is transferred and Owner retains title, or a deed of trust. Any Transfer without satisfaction of the provisions of this Agreement is prohibited. A Transfer shall not include a transfer: (i) to an existing spouse who is also an obligor under the City Note; (ii) by the Owner to a spouse where the spouse becomes the co-owner of the Home; (iii) between spouses as part of a marriage dissolution proceeding; (iv) to an existing spouse of Owner by devise or inheritance following the death of Owner; (v) by Owner into an inter vivos trust in which Owner is the beneficiary; (vi) by deed of trust or imposition of a lien subordinate to the City Deed of Trust or (vii) refinance of the First Mortgage meeting the requirements of Section 28 of this Agreement; provided, however, that Owner shall provide written notice of all such transfers to City pursuant to Section 8 below; and Owner shall continue to occupy the Home as his or her principal place of residence (except where the transfer occurs pursuant to subsection (iii) or (iv) above, in which event the transferee shall owner-occupy the Home and affirmatively assume Owner's obligations under this Agreement, the City Note and the City Deed of Trust). 8. NOTICE OF INTENDED TRANSFER A. In the event the Owner intends to transfer (including without limitation all "Transfers I' as defined in Section 7) or vacate the Property, the Owner shall promptly give the City written notice of such intent (the "Owner's Notice of Intent to Transfer 'I) in the form shown in the attached Exhibit C. The Owner shall give the City the Owner's Notice of Intent to 5 1211 612003 Transfer prior to notifying real estate brokers or lenders of Owner's intent to Transfer the Property and prior to listing of the Property on the Multiple Listing Service. The Owner's Notice of Intent to Transfer shall be sent to the City in the manner and at the address provided in Section 33 of this Agreement. The Owner's Notice of Intent to Transfer shall include the information necessary for the City to determine the Maximum Restricted Resale Price of the Property, including the following information: (1) the address of the Property; (2) the date of purchase of the Property by the Owner; (3) the purchase price of the Property paid by the Owner at the time of hisher purchase; (4) a copy of the HUD-I Settlement Statement or equivalent document from the close of escrow on the Owner's purchase of the Property; (5) the date on which Owner intends to vacate Property; (6) the date the Property will be placed on the market; and (7) the name and phone number of the person to contact to schedule inspection of the Property by the City. 9. OWNER PREPARATION OF HOME FOR SALE A. The Owner may not wish to contract with a real estate broker to sell the Home until the Owner has received the City Response Notice pursuant to Section 10 below, as the services of a broker will not be required if the City exercises the City Option to purchase the Home pursuant to Section 12 below. B. Following delivery to the City of the Owner's Notice of Intent to Transfer, the Owner shall prepare the Home for sale, as follows: (I) within thirty (30) days of delivery of the Owner's Notice of Intent to Transfer, the Owner shall obtain and deliver to the City a current written report of inspection of the Home by a licensed structural pest control operator; (2) within the sooner of (a) sixty (60) days from the date of delivery of the Owner's Notice of Intent to Transfer, or (b) prior to close of escrow on the Transfer, the Owner shall repair all damage noted in the pest report including damage caused by infestation or infection by wood-destroying pests; (3) within thirty (30) days of the date of the Owner's Notice of Intent to Transfer, the Owner shall allow the City to inspect the Home to determine its physical condition; 6 12/16/2003 (4) if the Home is vacant, the Owner shall maintain utility connections until the close of escrow on the Transfer; (5) in the event of purchase of the Property by the City or City Designated Purchaser, the Owner shall permit a final walk-through of the Property by the City or City Designated Purchaser, in the final three (3) days prior to close of escrow on the Transfer. 10. CITY' RESPONSE TO OWNER'S NOTICE OF INTENDED TRANSFER City shall respond in writing (the "City Response Notice 'I) to the Owner's Notice of Intent to Transfer. The City Response Notice shall inform the Owner of the City's election to proceed under one (1) of the following two (2) alternatives: A. City Exercise of City Purchase @tion. The City Response Notice may notify the Owner that the City or a City Designated Purchaser elects to exercise the City Option to purchase the Home. The City Response Notice shall be sent within thirty (30) days of City receipt of Owner's Notice of Intent to Transfer and shall include the City's calculation of the (i) Maximum Restricted Resale Price pursuant to Section 14 below to be paid by the City or a City Designated Purchaser and (ii) the transaction fee to be paid by the Owner pursuant to Section 12 below. B. Initial Term: Owner Sale at a Restricted Sales Price to Eligible Purchaser. Alternatively, the City Response Notice may notify the Owner that the City or a City Designated Purchaser will not exercise the City Option to purchase the Home. In this case, if the Owner has sent the Notice of Intent to Transfer within fifteen (1 5) years of the date of recordation of this Agreement (the "Initial Term "), the City Response Notice shall tell the Owner that the Owner may proceed to sell the Home to an Eligible Purchaser at a price not to exceed the Maximum Restricted Resale Price, as set forth in Section 14 and pursuant to the procedure set forth in Section 14 below. In this event, the City Response Notice shall include the following information: (1) the maximum qualifylng income for an Eligible Purchaser (which shall be the same income category as the Owner at the time of the Owner's purchase); (2) the certifications required of an Eligible Purchaser; (3) the Maximum Restricted Resale Price the Owner may receive for the Home, calculated by the City pursuant to Section 14 below; (4) whether Homebuyer Program assistance from the City may be available to an Eligible Purchaser, (5) Owner's repayment obligation as required by Section 13. C. Extended Term Owner Sale to Market Purchaser. If the City Response Notice notifies the Owner that the City or a City Designated Purchaser will not exercise the City Option to purchase the Home, and the Owner has sent the Notice of Intent to Transfer between the fifteenth (IS*) and thirty (30) years of the Term, (the "Extended Term 'I), the City Response Notice shall inform Owner that Owner may proceed to sell the Home to a third party at any income level (the "Market Purchaser ") for an unrestricted price. The City Response Notice shall also inform Owner of Owner's repayment obligation as required by Section 13. 7 121 1 612003 (26) "Restricted Future Sales Price I' - Section 14A. (27) "Transfer 'I - Section 7. B. The following Exhibits are attached to this Agreement: (1) Exhibit A: Legal Description of Property (Home) (2) Exhibit B: Form of Owner Occupancy Certification (3) Exhibit C: Form of Owner's Notice of Intent to Transfer (4) ExhibitD: Form of Owner Acknowledgement of City Response Notice (5) Exhibit E: Form of Owner Request for City Subordination to Refinanced First Lender Loan 2. OWNER CERTIFICATIONS The Owner certifies that (i) the financial and other information previously provided in order to qualify to purchase the Home is true and correct as of the date first written above, (ii) the Owner is an Eligible Purchaser, and (iii) the Owner shall occupy the Home as the Owner's principal place of residence. 3. OCCUPANCY AND LEASING OF HOME A. The Owner shall occupy the Home as the Owner's principal place of residence within sixty (60) days of close of escrow on the City/Seller Loan. Failure by the Owner to occupy the Home as the Owner's principal place of residence shall constitute a default under this Agreement for which the City may exercise its option to purchase pursuant to Section 21 below. The Owner shall be considered as occupying the Home if the Owner is living in the unit for at least ten (10) months out of each calendar year. The Owner shall provide an annual written certification in the form shown in the attached Exhibit B, to the City that the Owner is occupying the Home as his or her principal place of residence. 4. LEASING OF PROPERTY The Owner shall not lease the Property to another party. Any lease of the Property in violation of this Agreement is prohibited, and shall be a default under this Agreement and the City Deed of Trust. The Owner further agrees that, in the event the Owner leases the Property to a third party in violation of this section, any rents in excess of the owners monthly housing payment, which includes the principal mortgage payment and interest, property taxes and insurance, paid to the Owner by the lessee over the shall be due and payable to the City immediately upon receipt thereof by the Owner. Such excess rental proceeds shall be considered a recourse debt of the Owner to the City, as evidenced by the Note, which the City may collect by legal action against the Owner and/or by foreclosure under the City Deed of Trust. 4 12/16/2003 11. OWNER ACKNOWLEDGEMENT OF CITY RESPONSE NOTICE No later than seven (7) days following the date of the City Response Notice, the Owner shall acknowledge in writing to the City, in the form shown in the attached Exhibit D, that he/she has received the City Response Notice and still intends to Transfer the Home. 12. CITY PURCHASE OPTION A. The Owner agrees that if the Owner decides to Transfer the Home, the City shall have the option to purchase the Home for the Maximum Restricted Resale Price calculated pursuant to Section 14 of this Agreement (the "City Option "). The Owner shall pay the City a transaction fee equal to six percent (6%) of the Maximum Restricted Resale Price if the City or a City Designated Purchaser exercises the City Option and purchases the Home. The City Option may be exercised by the City or by a City Designated Purchaser in the City Response Notice. If the City Response Notice notifies the Owner that the City or a City Designated Purchaser will exercise the City Option to purchase the Home, the City or the City Designated Purchaser shall purchase the Home within ninety (90) days of the date of the City Response Notice. B. The City may assign the City Option to another public agency, a nonprofit corporation, or an Eligible Purchaser selected by the City (any of which shall be referred to herein as a "City Designated Purchaser 'I). If the City assigns the City Option to a City Designated Purchaser, the City Response Notice shall be executed by the City Designated Purchaser and shall notify the Owner that a City Designated Purchaser is exercising the City Option in lieu of the City. C. In the event of exercise of the City Option and purchase of the Home by the City or a City Designated Purchaser, the Owner shall permit a final walk-through of the Home by the City or the City Designated Purchaser in the final three (3) days prior to close of escrow on the Transfer. 13. REPAYMENT OF CITY NOTE Upon any Transfer of the Property, the outstanding principal and interest due under the City Note shall be repaid pursuant to the City Note and shall not be credited against the purchase price; provided, however, that upon City exercises the City Option to purchase the Home, the outstanding amount of principal and Contingent Interest due under the City Note shall be paid to the City in the form of a credit against the purchase price to be paid by the City to the Owner. Repayment of the City Note shall not affect Owner's obligation to comply with this Agreement, which shall remain in full force and effect following any repayment of the Agency Note. 14. DETERMINATION OF MAXIMUM RESTRICTED RESALE PRICE The maximum sales price (the "Maximum Restricted Resale Price ff) that the Owner shall receive from the resale of the Home from purchase of the Home by the City or City Designated Purchaser or from other sale or Transfer by the Owner when the Owner sends the Notice of Intent to Transfer during the Initial Term shall be the Restricted Future Sales Price or 8 12/16/2003 the Fair Market Value, whichever is less. A. Restricted Future Sales Price. (1) The Restricted Future Sales Price of the Home means the sales price of the Home at the time of purchase by the Owner, as set forth in Recital E to this Agreement, increased by the percentage of increase in the Median Income from the date of the original purchase of the Home by the Owner to the date of receipt by the City of the Owner's Notice of Intent to Transfer. "Median Income It shall refer to the median yearly income, adjusted for a household size of four, in San Diego County, as published by the California Department of Housing and Community Development ( "HCD "), or, in the event such income determination is no longer published by HCD, or has not been updated for a period of at least eighteen (18) months, the City may use or develop such other reasonable method as it may choose in order to determine the median yearly income in San Diego County. As of the date of Owner's purchase of the Property, the Median Income for a household of four persons is Dollars (!§ ). (2) The Restricted Future Sales Price shall include a downward adjustment, where applicable, in an amount necessary to repair any violations of applicable building, plumbing, electric, fire or housing codes or any other provisions of the City of Carlsbad Building Code, as well as any other repairs needed to put the Home into a "sellable condition ". Items necessary to put a Home into sellable condition shall be determined by the City, and may include cleaning, painting and making needed structural, mechanical, electrical, plumbing and fixed appliance repairs and other deferred maintenance repairs, B. Fair Market Value. In certain circumstances it may be necessary to determine the fair market value of the Property without taking account of the resale restrictions imposed by this Agreement (the "Fair Market Value 'I). These circumstances include: (1) where the parties wish to determine if the Restricted Future Sales Price exceeds the Fair Market Value in order to determine the Maximum Restricted Resale Price pursuant to this section; (2) where the parties wish to determine if the sales price of the Home to a Market Purchaser is comparable to the Fair Market Value; and (3) to calculate the amount due under the City Note at the end of the term of the City Note. If it is necessary to determine the Fair Market Value of the Property, it shall be determined by a certified MA1 or other qualified real estate appraiser approved in advance by the City. If possible, the appraisal shall be based upon the sales prices of comparable properties sold in the market area during the preceding three (3)-month period. The cost ,of the appraisal shall be paid by the Owner, unless the appraisal is obtained from a new purchaser. Nothing in this section shall preclude the Owner and the City from establishing the Fair Market Value of the Property by mutual agreement in lieu of an appraisal pursuant to this section. 15. SALE BY OWNER DURING INITIAL TERM IF CITY DOES NOT EXERCISE OPTION TO PURCHASE In the event the City Response Notice notifies the Owner to proceed to sell the Home to an Eligible Purchaser at a price not exceeding the Maximum Restricted Resale Price, the Owner may proceed to sell the Home in compliance with the following requirements: 9 1211 612003 A. Marketing. The Owner shall use bona fide good faith efforts to sell the Home to an Eligible Purchaser in compliance with this section, including listing the Home on the Multiple Listing Service, keeping the Home in an orderly condition, making the Home available to show to agents and prospective buyers, and providing buyers with Eligible Purchaser requirements, including income qualifications and the City's form of disclosure statement summarizing the terms of the buyer's occupancy and resale restriction agreement with option to purchase. A proposed purchaser ( "Proposed Purchaser ") who the Owner believes will qualify as an Eligible Purchaser shall be refmed to the City for an eligibility determination. If the Proposed Purchaser qualifies as an Eligible Purchaser the City will also determine if such Eligible Purchaser is eligible for City housing-related financial assistance that may be available at the time of resale. B. Eligjble Purchaser. A Proposed Purchaser shall qualify as an "Eligible Purchaser " if he or she meets the following requirements, as determined by the City: (1) Income Elikbility. The combined maximum income for all household members of the Proposed Purchaser shall not exceed the income level designated by the City in the City Response Notice. (2) Intent to Owner OCCUDY. The Proposed Purchaser shall certify that he or she will occupy the Home as to his or her principal place of residence throughout his or her ownership. Co-signers are not required to occupy the Home. (3) Agreement to Sign Resale Restriction Agreement and to Coorerate with the City. The Proposed Purchaser shall agree to sign a resale restriction agreement restricting future resale of the Home and shall agree to cooperate fully with the City in promptly providing all information requested by the City to assist the City in monitoring the Proposed Purchaser's compliance with the resale restriction agreement. C. Maximum Restricted Resale Price. The purchase price for the sale of the Home by the Owner to the Eligible Purchaser shall not exceed the Maximum Restricted Resale Price calculated by the City pursuant to Section 14 above, as set forth in the City Response Notice. The closing costs paid by the Eligible Purchaser shall not exceed reasonable customary buyer's closing costs in the County of San Diego . D. Disclosure and Submittals. The Owner and the Proposed Purchaser shall provide the following information and documents to the City: (1) The name, address and telephone number in writing of the Proposed Purchaser. (2) A signed financial statement of the Proposed Purchaser in a form acceptable to the City and any other supporting documentation requested by the City. The financial information shall be used by the City to determine the income eligibility of the Proposed Purchaser. 10 12/16/2003 (3) The proposed sales contract and all other related documents which shall set forth all the terms of the sale of the Home. Said documents shall include at least the following terms: (a) the sales price; and (b) the price to be paid by the Proposed Purchaser for the Owner's personal Home, if any, for the services of the Owner, if any, and any credits, allowances or other consideration, if any. (4) A written certification, from the Owner and the Proposed Purchaser in a form acceptable to the City that the sale shall be closed in accordance with the terms of the sales contract and other documents submitted to and approved by the City. The certification shall also provide that the Proposed Purchaser or any other party has not paid and will not pay to the Owner, and the Owner has not received and will not receive from the Proposed Purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract and documents submitted to the City. The written certification shall also include a provision that in the event a Transfer is made in violation of the terms of this Agreement or false or misleading statements are made in any documents or certification submitted to the City, the City shall have the right to foreclose on the Home or file an action at law or in equity as may be appropriate. In any event, any costs, liabilities or obligations incurred by the Owner and the Proposed Purchaser for the return of any moneys paid or received in violation of this Agreement or for any of the Owner's andlor the Proposed Purchaser's costs and legal expenses, shall be borne by the Owner and/or the Proposed Purchaser and they shall hold the City harmless and reimburse the City's expenses, legal fees and costs for any action they reasonably take in good faith in enforcing the terms of this Agreement. (5) An executed buyer's resale agreement and deed of trust to the City from the Proposed Purchaser in forms provided by the City. If the Proposed Purchaser is receiving assistance from the Homebuyer Program, a promissory note to the City shall also be required. The recordation of the new deed of trust and buyer's resale agreement shall be a condition of the City's approval of the proposed sale. (6) The name of the title company escrow holder for the sale of the Home, the escrow number, and name, address, and phone number of the escrow officer. (7) Upon the close of the proposed sale, certified copies of the recorded City deed of trust and buyer's resale agreement, a copy of the final sales contract, settlement statement, escrow instructions, and any other documents which the City may reasonably request. 16. PAYMENT TO CITY OF EXCESS SALES PROCEEDS If the Owner makes a Transfer in violation of this Agreement during the Initial Term or after providing the City with a the Notice of Intent to Transfer during the Initial Term, the Owner shall pay the Excess Sales Proceeds to the City. For purposes of this Agreement, "Excess Sales Proceeds " shall mean ninety-four percent (94%) of the amount by which the gross sales proceeds received by the Owner from the new purchaser exceed the Maximum Restricted Resale Price for the Home (in the amount that was stated in the City Response Notice). This amount shall be a debt of the Owner to the City, further evidenced by the City Note, and secured by the City Deed of Trust. The Owner acknowledges that the City shall have no obligation to cause 11 1211 612003 reconveyance of this Agreement or of the City Deed of Trust until the Excess Sales Proceeds are paid to the City. The City shall utilize the Excess Sales Proceeds for City affordable housing programs. The Owner and the City acknowledge that the formula for calculation of the amount of Excess Sales Proceeds due from the Owner to the City is intended to cause the Owner to receive the same net sales proceeds (following payment by Owner of a standard broker's commission) fiom sale of the Home at an unrestricted price to a market purchaser (in violation of this Agreement) as the Owner would receive from sale of the Home to the City, City Designated Purchaser or to an Eligible Purchaser at the Maximum Restricted Resale Price. 17. SALE OF PROPERTY BY OWNER DURING EXTENDED TERM In the event the City Response Notice notifies the Owner to proceed to sell the Home to a Market Purchaser at a price greater than or equal to the Fair Market Value of the Home, the Owner may proceed to sell the Home in compliance with the following requirements: Upon any sale of the Home, the Owner shall submit to the City at least fifteen (15) days prior to the close of escrow, a copy of the appraisal, and a copy of the sales contract and a written declaration, under penalty of perjury, from the Owner and the proposed purchaser in a form acceptable to the City stating the gross sales price of the Home. The certification shall also provide that the proposed purchaser or any other party has not paid and will not pay to the Owner, and the Owner has not received and will not receive fiom the proposed purchaser or any other party, money or other consideration, including personal property, in addition to what is set forth in the sales contract. At close of escrow, Owner shall submit to the City a copy of the HUD-1 Settlement Statement showing the purchase price paid for the Home. 18. DEFAULTS A. The following events shall constitute a Default by the Owner under this Agreement: (1) The City determines that the Owner has made a misrepresentation to obtain the benefits of purchase of the Home or in connection with its obligations under this Agreement; (2) The Owner fails to owner occupy the home, as required pursuant to Section 3 above, and such failure continues following written notice by the City and sixty (60) days opportunity to cure following the date of such notice. (3) The Owner rents the Home in violation of Section 4 above, and such failure continues following written notice by the City and sixty (60) days opportunity to cure. (4) The Owner fails to provide information to the City necessary to determine Owner's compliance with the requirements of this Agreement. (5) The Owner makes a Transfer in violation of this Agreement; 12 12/16/2003 (6) The Owner otherwise fails to comply with the requirements of this Agreement and such violation is not corrected to the satisfaction of the City within ten (10) days after the date of written notice by the City to the Owner of such violation; or (7) A notice of default is issued under First Lender Loan or other financing secured by the Home. (8) A lien is recorded against the Home other than the lien of a bona fide mortgage loan. (9) Owner places a mortgage on the Home in violation of Section 28 below. (10) benefit of creditors. Owner declares bankruptcy or makes an assignment of assets for the B. Upon a declaration of Default by the City under this Agreement, the City may exercise any remedies at law or in equity, including without limitation, any or all of the following: (1) Declare all Excess Sales Proceeds immediately due and payable without further demand, accelerate payments due under the City Note and invoke the power of sale under the City Deed of Trust; (2) Apply to a court of competent jurisdiction for such relief at law or in equity as may be appropriate; (3) Declare a Default under the City Note and the City Deed of Trust and pursue all City remedies under the City Note and the City Deed of Trust; and (4) Exercise the City Option upon Default as described in Section 21 below. 19. NOTICE AND CURE Upon Default or a violation of any of the provisions of this Agreement, the City may give written notice to the Owner specifying the nature of the violation. If the violation is not corrected to the satisfaction of the City within a reasonable period of time, not longer than thirty (30) days after the date the notice is mailed, or within such further time as the City determines is necessary to correct the violation, or if the Owner is in default under any other mortgage loan on the Home, the City may declare a default under this Agreement. The City shall notify First Lender at the address provided by the First Lender to the City in the manner set forth in Section 33 of this Agreement, if the City has declared a default under this Agreement or under the City Note or City Deed of Trust. 13 12/16/2003 20. NOTICE TO CITY OF DEFAULT A request for notice of default and any notice of sale under any deed of trust or mortgage with power of sale encumbering the Home shall be recorded by the City in the Office of the Recorder of the County of San Diego for the benefit of the City. The City may declare a default under this Agreement upon receipt of any notice given to the City pursuant to Civil Code Section 2924b, and may exercise its rights as provide in Sections 18 and 21. In the event of default and foreclosure under the First Lender Loan or any other mortgage loan on the Home, the City shall have the same right as the Owner to cure defaults and redeem the Home prior to the foreclosure sale. Nothing herein shall be construed as creating any obligation of the City to cure any such default, nor shall this right to cure and redeem operate to extend any time limitations in the default provisions of the underlying deed of trust or mortgage. If the City failed to file the request for notice of default, the City's right to purchase the Home shall commence from the date a notice of default is given by the City to the Owner. 2 1. PURCHASE OPTION UPON DEFAULT A. Purchase Option. Notwithstanding, and in addition to, the remedies provided the City in Section 18, and the City Option provided in Section 12, the Owner hereby grants to the City or the Designee the option to purchase the Home effective upon the declaration of a default by the City pursuant to Section 18 and Section 19 above, and subject to notice and cure rights set forth in Section 19. Said option to purchase is given in consideration of the economic benefits received by the Owner resulting from ownership of the Home made possible by the financial assistance of the City in the purchase of the Home. B. Exercise of Oution. The option to purchase may be exercised upon a default under this Agreement or upon default under any promissory note, deed of trust or any other lien, including a judgment lien, recorded against the Home. The City shall have thirty (30) days after a default is declared to notify the Owner and the First Lender of its decision to exercise its option to purchase. Not later than ninety (90) days after the notice is given by the City to the Owner of the City's intent to exercise its option, the City shall purchase the Home for the Maximum Restricted Resale Price set forth in Section 14. The City may assign its rights to purchase the Home under this section to a City Designated Purchaser. 22. NONLIABILITY OF THE CITY A. No Obligation to Exercise ODtion. The City shall have no obligation to exercise any option granted it under this Agreement. In no event shall the City become in any way liable or obligated to the Owner or any successor-in-interest to the Owner by reason of its option to purchase under Sections 12 and 21 nor shall the City be in any way obligated or liable to the Owner or any successor-in-interest to the Owner for any failure to exercise its option to purchase. 14 1211 612003 B. Nonliability for Negligence. Loss. or Damage. Owner acknowledges, understands and agrees that the relationship between Owner and the City is solely that of an owner and an administrator of a City inclusionary housing program, and that the City does not undertake or assume any responsibility for or duty to Owner to select, review, inspect, supervise, pass judgment on, or inform Owner of the quality, adequacy or suitability of the Property or any other matter. The City owes no duty of care to protect Owner against negligent, faulty, inadequate or defective building or construction or any condition of the Property and Owner agrees that neither Owner, or Owner's heirs, successors or assigns shall ever claim, have or assert any right or action against the City for any loss, damage or other matter arising out of or resulting fkom any condition of the Property and will hold the City harmless from any liability, loss or damage for these things. C. Indemnity. Owner agrees to defend, indemnify, and hold the City harmless from all losses, damages, liabilities, claims, actions, judgments, costs, and reasonable attorneys fees that the City may incur as a direct or indirect consequence of: (1) Owner's default, performance, or failure to perform any obligations as and when required by this Agreement or the Deed of Trust; or (2) the failure at any time of any of Owner's representations to the City to be true and correct. 23. RESTRICTIONS ON FORECLOSURE PROCEEDS If a creditor acquires title to the Home through a deed in lieu of foreclosure, a trustee's deed upon sale, or otherwise, the Owner shall not be entitled to the proceeds of sale to the extent that such proceeds otherwise payable to the Owner when added to the proceeds.paid or credited to the creditor exceed the Maximum Restricted Resale Price. The Owner shall instruct the holder of such excess proceeds to pay such proceeds to the City in consideration of the benefits received by the Owner through purchase of the Home under this Agreement. 24. RESTRICTION ON INSURANCE PROCEEDS If the Home is damaged or destroyed and the Owner elects not to rebuild or repair the Home, the Owner shall pay the City the portion of any insurance proceeds received by the Owner for such destruction or damage which is in excess of the Maximum Restricted Resale Price calculated pursuant to Section 14 above. 25. TERM OF AGREEMENT All the provisions of this Agreement, including the benefits and burdens, run with the land and the Home and this Agreement shall bind, and the benefit hereof shall inure to, the Owner, his or her heirs, legal representatives, executors, successors in interest and assigns, and to the City and its successors until the earlier of (i) thirty (30) years from the date of recordation of this Agreement or (ii) the date of Transfer of the Property to the City or another purchaser in compliance with this Agreement (including execution by the purchaser of a new resale restriction agreement for the benefit of the City). 15 12/16/2003 26. SUPERIORITY OF AGREEMENT The Owner covenants that he or she has not, and will not, execute any other agreement with provisions contradictory to or in opposition to the provisions of this Agreement hereof, and that, in any event, this Agreement is controlling as to the rights and obligations between and among the Owner, the City and their respective successors. 27. SUBORDINATION Notwithstanding any other provision hereof, the provisions of this Agreement shall be subordinate to the lien of the First Lender Loan and shall not impair the rights of the First Lender, or the First Lender's successor or assign, to exercise its remedies under the First Lender Deed of Trust in the event of default under the First Lender Deed of Trust by the Owner. Such remedies under the First Lender Deed of Trust include the right of foreclosure or acceptance of a deed or assignment in lieu of foreclosure. After such foreclosure or acceptance of a deed or assignment in lieu of foreclosure, this Agreement shall be forever terminated and shall have no further effect as to the Home or any transferee thereafter; provided, however, if the holder of such First Lender Deed of Trust acquired title to the Home pursuant to a deed or assignment in lieu of foreclosure, this Agreement shall automatically terminate upon such acquisition of title, provided that (i) the City has been given written notice of default under such First Lender Deed of Trust and (ii) the City shall not have cured or commenced to cure the default within such thirty (30)-day period and given its firm commitment to complete the cure in the form and substance acceptable to the First Lender. Owner agrees to record any necessary documents to effect such termination, if applicable. 28. REFINANCE OF FIRST LENDER LOAN The outstanding principal on the City Note shall not be due upon prepayment and refinancing of the First Lender Loan, and this Agreement and the City Deed of Trust shall be subordinated to the refinanced First Lender Loan, provided that (i) such refinancing is approved by the City, (ii) the amount refinanced does not exceed the outstanding principal balance of the First Mortgage at the time of refinance plus reasonable costs of refinance, and (iii) the refinance does not result in higher monthly payments on the First Lender Loan than were due prior to the refinance. Mortgage loans or equity lines of credit junior in lien priority to the City deed of trust are not permitted. The City and the Owner agree that the requirements of this section are necessary to ensure the continued affordability of the Property to Owner and to minimize the risk of loss of the Property by Owner through default and foreclosure of mortgage loans. Owner further acknowledges that violation of the provisions of this section shall constitute a Default under this Agreement. A form for use by the Owner in requesting City subordination to a refinanced First Lender Loan is attached hereto as Exhibit E. 29. NONDISCRIMINATION The Owner covenants by and for itself and its successors and assigns that there shall be no discrimination against or segregation of a person or of a group of persons on account of race, color, religion, creed, age, disability, sex, sexual orientation, marital status, ancestry or national 16 1211 612003 origin in the sale, transfer, use, occupancy, tenure or enjoyment of the Home, nor shall the Owner or any person claiming under or through the Owner establish or permit any such practice or practices of discrimination or segregation with reference to the use, occupancy, or transfer of the Home. The foregoing covenant shall run with the land. 30. RIGHTS OF BENEFICIARIES UNDER DEEDS OF TRUSTS This Agreement shall not diminish or affect the rights of the City under the City Note and the City Deed of Trust. Notwithstanding any other provision in this Agreement to the contrary, this Agreement shall not diminish or affect the rights of the California Housing Finance Agency ( "CHFA "), the United States Department of Housing and Urban Development ( "HUD "), the Federal National Mortgage Association ( "FNMA "), or the Veterans Administration ( "VA 'I) under the First Lender Deed of Trust or any subsequent First Lender deeds of trust hereafter recorded against the Home in compliance with Section 28 above. 3 1. HUD FORBEARANCE RELIEF Notwithstanding other provisions of this Agreement, the Option shall not be exercised by the City when a deed of trust insured by HUD is secured by the Home, and (i) the Owner is undergoing consideration by HUD for assignment forbearance relief, or (ii) the Owner is undergoing consideration for relief under HUD's Temporary Mortgage Assistance Payment (TMAP) program. 32. INVALID PROVISIONS If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Agreement, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained herein. 33. NOTICES All notices required herein shall be sent by certified mail, return receipt requested or express delivery service with a delivery receipt or personally delivered with delivery receipt obtained and shall be deemed to be effective as of the date shown on he delivery receipt as the date of delivery, or the date delivery was refused as indicated on the return receipt, or the date Notice was returned as undeliverable as follows: 17 12/ 16/2003 To the Owner: At the address of the Home. To the City: City of Carlsbad Housing and Redevelopment Department 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Attn: Homebuyer Program To the First Lender: [to be inserted] The parties may subsequently change addresses by providing written notice of the change in address to the other parties in accordance with this section. 34. INTERPRETATION OF AGREEMENT The terms of this Agreement shall be interpreted so as to avoid speculation on the Home and to insure to the extent possible that the mortgage payments remain affordable to low and moderate income households. 35. CONTROLLING LAW The terms of this Agreement shall be interpreted under the laws of the State of California. I.*.*.*.* 18 1211 612003 36. EXHIBITS Any exhibits referred to in this Agreement are incorporated in this Agreement by such reference. IN WITNESS WHEREOF, the parties have executed this Agreement on or as of the date first written above. CITY: City of Carlsbad, a municipal corporation a municipal corporation OWNER: Print Name By: Signature Name: Title: Print Name 19 Signature 1 21 1 612003 STATE OF CALIFORNIA COUNTY OF 1 ) ss. ) On personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name@) idare subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ,2003, before me, the undersigned, a Notary Public, WITNESS my hand and official seal. STATE OF CALIFORNIA ) COUNTY OF 1 ) ss. On personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) idare subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in hisherhheir authorized capacity(ies), and that by hisherjtheir signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ,2003, before me, the undersigned, a Notary Public, WITNESS my hand and oficial seal. 1010\15\172084.3 1211 OB3 STATE OF CALIFORNIA ) COUNTY OF 1 ) ss. on personally appeared , personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. ,2003, before me, the undersigned, a Notary Public, WITNESS my hand and official seal. 101 0\15\172084.3 1 211 0103 EXHIBIT A Legal Description of Property (Home) 101 0\15\172084.3 12/10/03 A- 1 EXHIBIT B Form of Owner Occupancy Certification To: From: Address of Home: Date: City of Carlsbad ( Tity 'I) [name of owner(s)] ( "Owner(s) ") ( "Property 'I) By signature below, I certify to the City under penalty of perjury that Vwe occupy the home located at [insert name or names of Owner] hereby [insert address] (the "Home 'I) as my/our principal place of residence and that I/we have occupied the Home for 0 [insert number] months of the calendar year Attached to this letter is a copy of my place of residence. [insert previous calendar year]. [insert utility bill or driver's license] showing This Owner Occupancy Certification is signed on -, 20-, under penalty of PdurY- By: Owner [type name] By: Owner [type name] Due Date: of each calendar year. Attach copy of utility bill or driver's license showing address of Home. 101 0\15\172084.3 1211 0103 B- 1 EXHIBIT C Form of Owner's Notice of Intent to Transfer To: From: Address of Home: City of Carlsbad ( "City 'I) [name of owner(s)] ( "Owner(s) 'I) ( "Property 'I) Date: Please be notified pursuant to Section 7 of the Resale Restriction Agreement and Option to Purchase between Owner and City dated Property listed above. , that the Owner intends to transfer the A. Agreement: The following information is provided to the City pursuant to Section 7 of the Resale 1. Address of Property: 2. Date Owner purchased Property: 3. Purchase Price paid by Owner when Property was purchased: 4. Date Owner intends to vacate Property: 5. Date Property will be placed on market: 6. Name and phone number of person for City to contact to schedule inspection: and (name) (phone number) B. Statement fiom Owner's purchase of the property is attached. As required by Section 8 of the Resale Agreement, the following the HUD-1 Settlement C. real estate broker or financial institution. I agree to prepare the Property for sale by: I have not yet listed the Property for sale with a multiple listing service, or contacted a 1. obtaining a pest control report within thirty (30) days of the date of this notice, 2. repairing all damage noted in the pest report within the sooner of (i) sixty (60) days fiom the date of this notice, or (ii) two (2) weeks prior to close of escrow or the transfer of the Property, 1211 0103 3. allowing the City or its designee to inspect the Property within thirty (30) days of this notice, 4. 5. maintaining utility connections until the Property is transferred, permitting a walk through by the City prior to close of escrow or the transfer. This Owner's Notice of Intent to Transfer is certified by Owner to be true and correct and is signed on [insert date] under penalty of perjury. By: Owner 101 0\15\172084.3 1211 W03 c-2 EXHIBIT D Form of Owner Acknowledgement of City Response Notice Name: Address of Property: Date: I, Response Notice (as described in Section 10 of the Resale Agreement on date]. [insert name] hereby acknowledge that I received the City [insert By: 1010\15\172084.3 1211 0103 D- 1 EXHIBIT E Form of Owner Request for City Subordination to Refinanced First Lender Loan To: City of Carlsbad ( "City 'I) From: ( "owner 'I) Property Address: ( "Property 'I) Date: The Owner hereby requests the City to approve the Owner's refinance of the existing first mortgage on the Property. The Owner provides the following information which it certifies to be true and correct: 1. Original Purchase Price of Property: $ 2. Original principal balance of existing First Lender Loan: $ 3. Interest rate of existing First Lender Loan: $ 4. Outstanding principal balance of existing First Lender Loan: $ 5. Monthly payments due on existing First Lender Loan 6. Principal amount of proposed new First Lender Loan: $ 7. Interest rate of Proposed'new First Lender Loan: $ 8. Monthly payments to be due on new First Lender Loan: $ The Owner hereby certifies the above information is true and correct and this Owner Request is executed under penalty of perjury on [insert date]. By: Owner 1010\15\172084.3 1 211 Of03 By: Owner E- 1 CITY OF CARLSBAD HOMEBUYER PROGRAM - 200- RESALE RESTRICTION AGREEMENT AND OPTION TO PURCHASE ADMINISTRATIVE COVER SHEET (Remove Upon Completion) BLANK LINES: CHECKLIST Name of Owner, p. 1, upper right Address of Home, p. 1, upper right Date of Document, p. 1, first paragraph Developer's Name, p. 1, first paragraph Owner's Name, p. 1, first paragraph Date of Affordable Housing Agreement, p. 1, Recital B Amount of City/Seller Loan, p. 1 , Recital B Purchase Price of Home, p. 2, Recital C First Lender Amount and Lender, p. 2, Recital D First Lender Deed of Trust Recordation Information, p.2, Recital D Median Income for a Household of Four on Date of this Agreement, p. 9, Section 14A( 1) Address of First Lender, p. 19, Section 33 Signatures of City and Owner, p. 19 Attach Legal Description of the Property, p. A-1 Notary 1213 612003 Buyer's Disclosure Statement HOMEBUYER PROGRAM CITY OF CARLSBAD (2003 The City of Carlsbad (the "City") is assuming the loan made to you by so that you will be able to buy your home in the Bressi Ranch Condominium Development. The City is providing this financing in order to enable lower-income households to own their own homes in the City. In exchange for providing you with second mortgage loan, the City will require you to sign a Promissory Note, Deed of Trust and a Resale Restriction Agreement and Option to Purchase (the "Resale Restriction Agreement"). The Deed of Trust and the Resale Restriction Agreement will be recorded against your proper@. These documents are enforceable by the City. In general, the Promissory Note, Deed of Trust and the Resale Restriction Agreement set forth conditions that you must meet, including but not limited to the following: The Resale Restriction Agreement requires you to live in your home as your principal place of residence, and prohibits you from renting-out your home. The Resale Restriction Agreement places controls on the sale of your home. In addition, you must follow certain steps and procedures when you decide to sell your home. There is a limit to the price at which you can sell the home during the first fifteen (1 5) years that you own your home. You will have to pay the City a share in your home's appreciation upon the sale of your home. The City has an option to purchase your home at a restricted price when you put the home up for sale. The second mortgage loan (the "City Loan") is due and payable upon any default under the Promissory Note, Resale Restriction Agreement, or Deed of Trust, upon any transfer of the home, and at the end of the thirty (30) year term. The purpose of the Resale Agreement is to ensure that the goal of the City financing -- to help lower income households own their own homes -- continues to be met by keeping your house affordable to other lower-income households should you choose to sell or move. The City has helped you to buy a home; it wants to help others as well. 1211 612003 1 This Disclosure Statement explains the major provisions of the Promissory Note and Resale Restriction Agreement so that you will understand their requirements. You should, of course, read the entire Promissory Note, the Resale Restriction Agreement, and the Deed of Trust and become completely familiar with them.' A. REOUIREMENTS IN EFFECT FOR 30-YEAR TERM The requirements that are in the Resale Restriction Agreement apply until the earlier of (i) thirty (30) years from the date of the Resale Restriction Agreement, or (ii) the date you sell or transfer your home in accordance with the Resale Restriction Agreement and the Deed of Trust. If you own and live in your home for the whole thirty (30)-year term, all of the requirements of the Resale Restriction Agreement go away. B. PRIMARY RESIDENCE AND LEASING YOUR HOME Your house at Bressi Ranch must be your main place of residence. This means you must live in your home for at least ten (1 0) months out of each calendar year. Each year during the thirty (30)-year term described in A. above, you must tell the City in writing that you are meeting this requirement. You are not allowed to lease or rent the house to anyone. If you violate these requirements you will also be in default under the Resale Restriction Agreement and the City may require you to sell the home to the City in the manner described in the Resale Restriction Agreement. You will also be in default under the City promissory note and the City may require you to repay the City Loan. The Deed of Trust and Resale Restriction Agreement will remain in effect even if you are required to repay the City Loan. C. MAINTAINING YOUR HOME/ PROPERTY INSURANCE By signing the Resale Restriction Agreement, you agree to keep your home and landscaping in good repair and in neat, clean, and orderly condition and to prevent deterioration of the home. You also agree to keep a standard fire and extended coverage homeowner's insurance policy, with the City named as an additional insured. The insurance policy shall be in an amount equal to the replacement value of the home. Every five (5) years (or every year, if provided by the policy), the replacement value will be reviewed and adjusted as needed. D. NOTICE TO CITY OF YOUR INTENT TO SELL YOUR HOME When you decide to sell your home, you must let the City know in writing before you contact a real estate broker or lender and before you list the home in the Multiple Listing Service. This notice is called the "Owner's Notice of Intent to Transfer." The Owner's Notice of Intent to Transfer (see Exhibit C of the Resale Agreement for a form of this notice) must be sent in a particular way and must include specific information (for ' Numerical examples are included in this Disclosure Statement to help you better understand the concepts, terms, and provisions of the Buyer's Resale Restriction Agreement and Promissory Note. Please be aware that these are simply to show how things work and that they are situation. If you follow along with a calculator, you may not get exactly the same answers. Any differences are probably due to how your calculator "rounds-off' numbers. intended to represent your specific 2 12/16/2Oo3 example, it must include a pest report) as detailed in Section 8 and Exhibit C (Notice of Intended Transfer; Prmaration of Home for Sale) and Section 33 (Notices) of the Resale Restriction Agreement. If you fail to send the City this notice, you will be in default under the Resale Restriction Agreement and the sale of your home may be delayed. E. PREPARATION OF HOME FOR SALE You are responsible for putting the home in good condition for its sale. Once you have sent the Owner's Notice of Intent to Transfer, you must take the steps to prepare the home for sale as described in Section 8 and Exhibit C motice of Intended Transfer) and Section 9 (Owner Prmaration of Home For Sale) of the Resale Restriction Agreement. F. CITY HAS OPTION TO PURCHASE In exchange for the opportunity given to you to buy your home at an affordable, below-market price, you agree that the City has an option to buy your home at a restricted price if you sell your home during the term of the Resale Restriction Agreement. In other words, the City has the first opportunity to buy your house before anyone else. The City may also give its option to purchase your house to another public agency, a nonprofit organization, or a person or family meeting income and other requirements. After you send in the Owner's Notice of Intent to Transfer the City will then let you know in a notice called the "City Response Notice" whether or not it will use its option to purchase. See Section 10 (City Response to Owner's Notice of Intended Transfer) and Section 11 and Exhibit D (Owner Acknowledgment of City Response Notice) of the Resale Restriction Agreement for details on what you must do once you receive the City Response Notice. If the City decides to use its option to purchase (or assigns this right) and the City or a City designee will buy the home at a restricted sales price (which is described in greater detail in Section G below). The City will let you know that it wants to buy your home and will inform you of the restricted sales price amount in the City Response Notice. The purchase by the City shall take place within ninety (90) days of the date the City Response Notice is sent to you. When your home is bought by the City or a City designee under the City's option to purchase, you will pay to the City a transaction fee equal to six percent (6%) of the sales price. This fee takes the place of the fee for a broker's services. The City will be performing those services when it purchases the home or assigns its option to another buyer who will purchase the Home G. SALES PRICE OF HOME IS RESTRICTED: MAXIMUM SALES PRICE The City has helped make the cost of buying a home affordable to you. The City also wants to make sure that others like you get the same chance. Therefore, the Resale Restriction Agreement limits the sales price of your home if the City exercises its option to purchase your home or if you send in the Owner's Notice of Intent to Transfer within the first fifteen (15) years of the Resale Restriction Agreement. The Maximum Restricted 3 12/16/2003 Resale Price that you can receive is the lower of the result of the Restricted Resale Price formula in Section G. 1 below and the Fair Market Value as described in Section G.2. 1. RESTRICTED RESALE PRICE (a) Original Sales Price of Home (price at which you bought it) (b) increased by the percentage increase of the Area Median Income for the County of San Diego for a household size of four (4) persons fi-om the date of your original purchase (the recording date of the Grant Deed for the property) to the date of receipt by the City of the Owner's Notice of Intent to Transfer It is also important to understand that if the home has suffered fiom any damage or deferred maintenance while you own it, any decrease in value of your house will be subtracted in the calculation of the Restricted Future Sales Price, as will the amounts necessary to put the house in a "sellable condition." Example 1 shows how the Indexed Price formula works. EXAMPLE 1 You sell your house at the end of eight years. The original sales price of your home was $289,000. The median income for a family of four in San Diego County when the home was bought was $61,100. Median income increases by 24% over the eight years. (a) Original Price of Home $289,000 (b) , Median Income Increases by 24% over eight years multiply (a) by 24%, then add result ($69,360) to (a) $69,360 $358,360 RESTRICTED RESALE PRICE $3 58,3 60 2. FAIR MARKET VALUE Under the Resale Restriction Agreement, the Fair Market Value can be determined in one of two ways. First, it can be established by a real estate appraiser approved in advance by the City. If possible, the appraisal will be based on sales prices of homes similar to yours that are sold in your market area during the preceding three (3)- month period. The appraisal will not take into account the fact that the resale price of your home is restricted by the Resale Restriction Agreement. The value of any damage or deferred maintenance that occurred while you owned the house that decreased its value shall be included as a separate value in the appraisal. In this case, the appraisal will state what the Fair Market Value of the home would be without the damage or deferred maintenance. The value of the deferred maintenance, if any, will have a direct impact on the Restricted Future Sales Price. 4 12/16/2003 You must pay the cost of the appraisal used to determine Fair Market Value, unless a new buyer has obtained an appraisal that you may utilize. The City is not responsible for paying for any portion of an appraisal used for any purpose under the Resale Restriction Agreement. The Resale Restriction Agreement also allows you and the City to set the Fair Market Value of your home by mutual agreement instead of relying on an appraiser. Both you and the City would have to agree to this particular method (instead of hiring an appraiser) and to the final Fair Market Value amount. If you and the City fail to agree on the Fair Market Value, either one can require use of the appraisal method. Example 2 shows how the Restricted Resale Price and the Fair Market Value of the home are compared to determine the Maximum Restricted Resale Price at which you can offer your house for sale. EXAMPLE 2 The assumptions are the same as in Example 1. You sell your house at the end of eight years. The original sales price of your home was $289,000. The median income for a family of four in San Diego County when the home was bought was $61,000. Median income increases by 24% over the eight years. The Fair Market Value of your home is determined by appraisal, the cost of which is paid by you. The appraisal determines the Fair Market Value at $375,000. INDEXED is less FAIR MARKET MAXIMUM RESTRICTED PRICE than VALUE then RESALE PRICE $358,360 < $375,000 a $358,360 Since the Fair Market Value of the home is greater than the Indexed Price of the house, the Maximum Restricted Resale Price which you can receive fiom the sale of your home is $358,360. H. SELLING YOUR HOME WITHIN THE FIRST FIFTEEN (15) YEARS Under the terms of the Resale Restriction Agreement, when you go to sell your home within the first fifteen (15) years of the thirty (30) term, there are two (2) different ways that the sale can take place: 0 The City chooses to use its option to purchase your house at the restricted sales price or assigns the option to a third party who purchases the house at the restricted sales price. You sell the home at a restricted sales price to someone who meets specific income requirements like you had to meet. This buyer is called an "Eligible Purchaser" in the Resale Restriction Agreement. 0 . The City's option to purchase your home is described in Section F above. The sale to the Eligible Purchaser and what will occur if you sell your home in violation of the Resale Restriction Agreement during the first fifteen (1 5) years that you own your home are described below. 5 1211 6/2003 1. SALE TO AN "ELIGIBLE PURCHASER" AT THE RESTRICTED SALES PRICE If you have sent in your Notice of Intent to Transfer during the first fifteen (15) years that you own your home and the City notifies you in the City Response Notice that it will not execute its option to purchase your home, you will have to fhd an Eligible Purchaser to buy the home at the restricted sales price which the City will provide in the City Response Notice. An Eligible Purchaser is a household who will live in the home, and whose income meets the requirements set by the City. The City will provide you with the current income limits when you sell your home. See Section 10 (Citv ResDonse to Owner's Notice of Intended Transfer) and Section 15 (Sale By Owner if City Does Not Exercise Option To Purchase During Initial Term) of the Resale Restriction Agreement. Once you find a potential Eligible Purchaser, you will refer the proposed buyer to the City so that the City or its designee can determine if in fact he or she meets the requirements of an Eligible Purchaser. You and the proposed buyer must give specific information and documents to the City as described in Section 15 (Sale of Home BY Owner If City Does Not Exercise City Option to Purchase During: Initial Term) of the Resale Restriction Agreement. When the sale of your home to the Eligible Purchaser is completed, you must submit to the City the information and documents listed in Section 15.D(7) of the Resale Restriction Agreement. 2. SALE IN VIOLATION OF THE RESALE AGREEMENT; PAYMENT OF "EXCESS SALES PROCEEDS'' TO CITY If you sell your home in violation of the Resale Restriction Agreement for more than the Restricted Sales Price during the first fifteen (1 5) years that you own your home or after sending in the Owner's Notice of Intent to Transfer during the first fifteen (15) years that you own your home, you will have to pay to the City the "Excess Sales Proceeds" as a remedy for your violation. The term Excess Sales Proceeds is defined in Section 16 of the Resale Restriction Agreement (Pavment To City Of Excess Sales Proceeds) as ninety-four percent (94%) of the amount by which the gross sales proceeds you receive from the buyer exceed the Maximum Restricted Resale Price for the home as set out in the First City Response Notice. Another way to put it is the following: 6 Gross Amount of Money the New Buyer Paid for the House MINUS Maximum Restricted Resale Price (fiom First City Response Notice) THE REMAINDER MULTIPLIED BY Ninety-Four Percent (94%) Equals the Payment to the City of Excess Sales Proceeds The reason that the City gets "94%" rather than the full (or "100%") amount is so that the real estate broker that assists in the sale of your home can be paid his or her commission, even though you will have violated this Resale Restriction Agreement. The Excess Sales Proceeds formula is intended to ensure that you receive the same net amount of sales proceeds from an unrestricted sale (in violation of the Resale Restriction Agreement) that you would have received if the City had purchased your home at the Maximum Restricted Resale Price. This provision is intended to eliminate any incentive for homeowners to violate the Resale Restriction Agreement when the home is sold. The amount of Excess Sales Proceeds that you pay to the City is used by the City for other affordable housing programs it runs. You were given the chance to buy your home at a price that was affordable to you. When you pay the Excess Sales Proceeds because of a sale in violation of the Resale Restriction Agreement, those funds are going to help other lower income families who, like you, would not be able to obtain affordable housing without assistance. Example 3 shows how the Excess Sales Proceeds are calculated. EXAMPLE 3 You sell your house at the end of eight years. You originally paid $289,000 for your home. The First City Response Notice sets the Maximum Restricted Resale Price at $358,360. The house is appraised at $375,000. You sell the home in violation of the Resale Restriction Agreement to a third party for $375,000. You must pay the City Excess Sales Proceeds as calculated below: Total Amount Paid For House $375,000 Maximum Restricted Resale Price (from MINUS First City Response Notice) - $358.360 $1 6,640 MULTIPLIED BY x.94 Ninety-Four Percent (94%) Amount of Excess Sales Proceeds You Pay to City $1 5,642 (in addition to original loan amount) 7 12/16/2003 I. SELLING YOUR HOME DURING ARER THE FIRST 15 YEARS THAT YOU OWN YOUR HOME If you mail your Owner's Notice of Intent to Transfer to the City after the first fifteen (15) years that you own your home but within the thirty (30)-year term of the Resale Restriction Agreement, there are still two (2) ways the sale of your home can take place: 0 The City can use its option to purchase your home at a restricted sales price or assign its option to purchase to a third party. 0 You sell the home at an unrestricted price to a third party. The City's option to purchase your home is described in Section F above. If the City does not exercise its option to purchase your home, the City Response Notice will tell you that you may sell the home on the market for a price that is greater than or equal to your home's fair market value. Fifteen (1 5) days before you close escrow on the sale of you home, you will have to send in to the City a copy of the sales contract and a declaration certifjing the sales price of your home to the third party. At the close of escrow of the sale of you will have to send in additional information verifying the purchase price paid for your home by the third party. J. REPAYMENT OF CITY ASSISTANCE Your loan from the City is a "deferred" loan. This means that you do not have to pay it back until the end of the thirty (30) year term as long as you own the home and you do not violate any of the terms of the Promissory Note, Deed of Trust, and the Resale Restriction Agreement. As soon as you sell the home, though, or if you break the terms of the loan documents or Resale Agreement, the loan will be due and you will have to pay it back. The City Loan cames "contingent interest" or "shared equity" which is described in the next section. 1. CONTINGENT INTEREST As mentioned earlier, the City wants to help lower income persons and families who would not be able to buy homes in the City without City funds. City resources, however, are limited. You benefited from City financial help; it is only fair that you repay the City in proportion to that benefit. That is why the City has included "contingent interest" (also known as "shared equity") in your loan repayment. In general, contingent interest is a percentage of the difference between the original purchase price of your home and the price at which you sell it. This difference is called the "appreciation amount." The contingent interest you pay represents the benefit you received from the City Loan less a 25% credit for any capital improvements that you may have made to your home. More specifically, the Contingent Interest is 75% of the percentage which is 1211 612003 a figured by dividing the amount of the City Loan by the original purchase price that you paid for your home. For example, if the City provided 2 1 % of the original purchase price of your home, when you sell the home, 75% of 2 1 % (or 10%) of the appreciation amount is owed to the City as contingent interest. Example 4 sets this out with numbers. EXAMPLE 4 You sell your home after living in it for 18 years. Your loan fiom the City is $60,000. The original purchase price you paid for the home when you bought it was $289,000. You sell the home for $375,000. Contingent Interest: 75% of 2 1 % = 75% = 16% This means that the City will receive 16% of the appreciation on your home, which is the difference between the original purchase price of your home and the price at which you sell it. If we use the Fair Market Value bm Example 2 8s the actual sales price, the following would result: Resale Price $375,000 Original Purchase Price -$289,000 Total Appreciation Amount $86,000 City Share of Appreciation (16% of $86,000) $13,760 Share of Appreciation That You Keep $72,240 Under these assumptions, if you sell your home in 18 years, the total you would owe the City is the following: City Loan Amount City Share of Appreciation $60,000 + $13,760 TOTAL AMOUNT YOU OWE CITY $73,760 In cases where you transfer your home to an Eligible Purchaser, the appreciation is the difference between the original purchase price and the Maximum Restricted Resale Price. In cases where you transfer your home to a third party by sale, the appreciation amount is the difference between the original purchase price and the unrestricted price for which you sell your home. In cases where you transfer your home to a third party is by means other than sale (with the exception of a creditor taking title), the appreciation is the difference between the original purchase price and the Fair Market Value of the home at the time of transfer. 2. PREPAYMENT OF CITY LOAN You have the right to prepay part or all of the City Loan. If you prepay all of the loan, contingent interest will be due the City based on the Fair Market Value of your home at the time of prepayment. Fair Market Value shall be determined by an appraisal . 1211 612003 9 (conducted as set forth in Section G.2 above entitled Fair Market Value). In the case of prepayment, you will be responsible for paying the cost of the appraisal. If you prepay only a part of the City loan, the payment that you make will be applied to both the amount of principal and the amount of Contingent Interest you owe the City based on the following calculations: Amount of Prepayment Amlied to Principal Amount of Prepayment Amlied to Interest Principal Amount of City Loan (Total Principal + Interest Due at Time of Prepayment) City Contingent Interest (Total Principal + Interest Due at Time of Prepayment) Divided By Divided By In addition, your Contingent Interest percentage will change because you paid off a portion of the original City Loan amount (the principal). Example 5 shows how this would work. EXAMPLE 5 You have a City Loan in the amount of $60,000 (the principal). The original purchase price of your home was $289,000. Contingent Interest is 16%. You decide to prepay $10,000 of the loan 20 years after you have purchased the home. At the time of prepayment, the fair market value of the home is $375,000. Fair Market Value $375,000 Original Purchase Price -$289.000 Total Appreciation Amount (established by new appraisal) $86,000 City Share of Appreciation (Contingent Interest = 16%) $13,760 Your $10,000 prepayment is applied to principal and Contingent Interest in the following manner: Amount of Prepayment ADDlied to PrinciDal Amount of Prepayment ADplied to Interest $60,000 + ($60,000 + $13,760) $13,760 f ($60,000 + $13,760) 60,000 + 73,760 13,760 + 73,760 .8 I or 8 I % of the prepayment of $10,000 is applied to principal . I9 or 19% of the prepayment of $10,000 is applied to interest or 10 or 1211 612003 $1,900 $8,loo Principal Amount Left Owing: New Contingent Interest: (for future loan repayment) $60,000 - $8,100 = $5 1,900 75% of New Principal + Original Purchase Price Amount 75% of $51,900 + $289,000 New Contingent Interest = 75% of 18% =13.5% (for future loan repayment) K. DEFAULT PROVISIONS When you accept the City Loan, you agree to meet all of the conditions of all of the City documents, including the Promissory Note, Resale Restriction Agreement, and Deed of Trust. If you violate any provisions of the documents, you are considered to be in default under your City Loan. Also, if you default under any other loan on the home, such a$ the first mortgage, you would also be considered to be in default under the City Loan. If you do not correct the violation, the City could require you to repay the City Loan and/or exercise its option and buy your home. The City and could also go to court and get a court order to enforce the provisions of the City documents, which may result in a foreclosure on your home. L. REFINANCE OF YOUR FIRST MORTGAGE The Resale Restriction Agreement allows you to refinance your First Lender Loan but places restrictions on the amount received by you from the refinancing. As a requirement of refinancing, First Lenders usually require that the City subordinate its documents to them. The City will only subordinate the Resale Restriction Agreement and City Deed of Trust if the loan amount of such refinancing does not exceed the then outstanding balance of principal and interest (plus refinancing and closing costs) of the existing First Lender Loan and if the refinance does not result in higher monthly payments on the first mortgage than were do prior to the refinancing. If you refinance your First Lender Loan for an amount that is greater than the outstanding principal and interest plus refinancing and closing costs, you will be in default under the Resale Restriction Agreement and the Deed of Trust. ................................ 1211 612003 Please sign this Buyer's Disclosure Statement in the space provided below, and keep a signed copy for your records, and return the original to the City at the following address: City of Carlsbad Housing and Community Development Dept. 2965 Roosevelt Street, Suite B Attn: Homebuyer Program Carlsbad, CA 92008-2389 I have read and understand the above Buyer's Disclosure Statement. By: Signature of Buyer Dated: ~~ Print Name of Buyer By: Signature of Buyer Dated: Print Name of Buyer 12 1211 6l2003 EXHIBIT 4 ‘SITE Bressi Ranch Affordable Housing Project TYae C~tyof~.bad~ouu~Bt Redevelopmeaxt Department A-PORT TO TXXE HOUSING COMMlSSXON Stdf: CraAgRuiz Managexnent JLndvt Xtem No. 1 DATE: SEPTEMBER 9,2004 SUBJECT: CT 98-14 - THOMPSOND’ABATA REQUEST TO PURCHASE AFFORDABLE HOUSING CREDITS - RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL TO APPROVE THE REQUEST TO PURCHASE SIXTEEN AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA AFFORDABLE HOUSING DEVELOPMENT TO SATISFY A PORTION OF THE REQUIREMENT OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE THOMPSONlTBATA RESIDENTIAL DEVELOPMENT. I. RECOMMENDATION That the Housing Commission ADOPT Resolution No. 2004-03, recommending APPROVAL to ,the City Council to allow the purchase of sixteen affordable housing credits in the Villa Loma affordable housing development to satisfy a portion of the requirement of the inclusionary housing ordinance for the Thompsoflabata residential development. 11. PROJECT BACKGROUND In February 2002, the City Council approved the ThompsodTabata residential development. The project approval allows for the development of 238 single-family homes and a 24-unit for-sale condominium development affordable to low-income households. The single-family homes will range in size from 2,700 to 4,200 square feet on parcels of 6,000 and 7,500 square feet. The project is generally located both north and south of Poinsettia Lane, between Aviara Parkway and Snapdragon Drive. The Thompsoflabata subdivision is required to provide 40 units of housing affordable to lower income households as required by the City’s Inclusionary Housing Ordinance. The developer proposes to satisfy its inclusionary housing requirement through a unique combination of 24 on-site, for-sale affordable condominium units and the purchase of 16 offsite affordable housing credits. The condominiums will contain 1,129 square foot three bedroom units and 1,872 four- bedroom units. Of the 24 for-sale units, 16 will contain four-bedrooms. These units will serve CPO3-03 - THOMPSONITABATA AFFORDABLE HOUSING CREDIT PURCHASE SEPTEMBER 9,2004 PAGE 2 large family households, which are identified as a special needs group in the City’s Housing Element. As required by the Inclusionary Housing Ordinance, the project is conditioned to enter into an Affordable Housing Agreement. This agreement (Exhibit 3) will establish the specifics of the project including the exact level of affordability of the units (based upon the current San Diego County Median Income figures), the schedule for production of the units and purchase of the off-site credits, the tenure of affordability of the units, and resale restrictions. The City’s Inclusionary Housing Ordinance permits off-site satisfaction of an inclusionary requirement through participation in a Combined Inclusionary Housing Project (“Combined Project”) if the City Council determines that it is in the public interest. Purchase of credits in the Villa Lorna project constitutes participation in a Combined Project. All requests to sell or purchase affordable housing credits for transactiodpurchases of ten credits or more to satisfy an inclusionary housing obligation must first be reviewed by the Housing Commission. 111. POLICIES FOR THE PURCHASE OF AFFORDABLE HOUSING CREDITS The City Council has adopted two policies that deal with off-site or Combined Projects and the sale of Affordable Housing Credits. Council Policy 57 was developed to establish the criteria to be utilized in order to make the necessary finding that off-site satisfaction of an inclusionary housing requirement, when proposed through a Combined Project, is in the public interest. Council Policy 58 was established to determine the price of credits and the mechanism to satisfy a developer’s obligation under the City’s Inclusionary Housing Ordinance. The Council Policies require staff to evaluate the request for off-site satisfaction of the inclusionary housing obligation and the purchase of credits based upon three primary criteria. The criteria includes: 1) feasibility of on-site proposal; 2) relative advantages/disadvantages of an off-site proposal; and 3) the advancement of housing goals and strategies. The following is a summary of staffs analysis of the criteria for the project. Feasibilitv of On-site Proposal 0 With the exception of the multifamily development along the project’s northwestern side, the land uses surrounding the project site are single-family with intermittent open space along a portion of the eastern boundary. In addition to satisfjrlng the inclusionary housing ordinances preference to provide on-site affordable housing, there is also the issue of neighborhood compatibility with the existing and proposed single-family residences. While the overall site is relatively large (80+ acres), the area to provide on-site affordable housing that would be compatible with the hture and existing surrounding low-density development is relatively small. Staff therefore supported the developer’s proposal to locate the affordable project within the interior of the overall project site and gains access off of Rose Drive, a future public street that forms a signalized intersection with Poinsettia Lane. Because of the small size of the affordable housing location, it would be impractical to design a 40-unit project that is compatible with the CPO3-03 - THOMPSON/TABATA AFFORDABLE HOUSING CREDIT PURCHASE SEPTEMBER 9,2004 PAGE 3 surrounding neighborhood while at the same time being a desirable place to live. Thus a smaller scale multi-family project and the purchase of affordable housing credits is a more reasonable alternative solution. Relative AdvantaPes/Disadvantapes of an Off-site Proposal 0 The participation in the off-site project will allow the City to recover the costs associated with the development of excess affordable housing units. 0 The proposal meets both the objective of providing on-site affordable housing while also attempting to be compatible with the design and density of the surrounding single-fmil y neighborhoods. 0 By allowing the developer to purchase some credits and reduce the on-site obligation, the 24 condominiums will be produced with no financial assistance required from the City. Advancing HousinP Goals and Strategies 0 The recovery of the City's investment in the Villa Loma Project will provide for additional financial resources which are needed to hrther affordable housing development in the community. Based upon the analysis of the above criteria, it is the Affordable Housing Policy Team's (staffs) opinion that adequate justification has been provided to make the finding that the off- site satisfaction of the inclusionary housing requirement is in the public interest. Therefore, staff is recommending that the request to purchase credits be recommended for approval by the Housing Commission. IV. EXHIBITS 1. Housing Commission Resolution No. 2004-03 2. Applicant Request to Purchase Credits 3. Affordable Housing Agreement 4. Vicinity Map 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. 2004-003 THAT THE HOUSING COMMISSION RECOMMEND APPROVAL TO THE CITY COUNCIL TO ALLOW THE PURCHASE OF SIXTEEN AFFORDABLE HOUSING CREDITS IN THE VILLA LOMA AFFORDABLE HOUSING DEVELOPMENT TO SATISFY A PORTION OF THE REQUIREMENT OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE THOMPSON/TABATA RESIDENTIAL DEVELOPMENT. APPLICANT: STANDARD PACIFIC CORPORATION CASE NO: CT 98-14 WHEREAS, Standard Pacific Corporation has received approval of Tentative Map CT 98-14 for the development of a 262 unit residential development; and WHEREAS, said subdivision of land requires the developer to provide 40 units of housing affordable to lower income households as required by Carlsbad Municipal Code Section 21.85 of the City’s Jnclusionary Housing Ordinance; and WHEREAS, the Villa Lorna housing project was conceived and developed with City participation based on the creation of 184 excess affordable housing units which would be available to satisfy other developers inclusionary housing obligation; and WHEREAS, Standard Pacific Corporation has received approval to develop a 24 unit for- sale condominium project to satisfy a portion of their overall inclusionary housing requirement; and WHEREAS, Standard Pacific Corporation has requested to purchase Affordable Housing Credits as a means to satisfy the remainder of their affordable housing obligations as permitted by Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance and consistent with City Council Policies 57 and 58; an d WHEREAS, the request to purchase Affordable Housing Credits has been submitted to the City of Carlsbad’s Housing Commission for review and consideration; and 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 WHEREAS, said Housing Commission did, on the 9* day September, 2004, hold a public meeting to consider said request for the purchase of Affordable Housing Credits by the Standard Pacific Corporation; and WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of all persons desiring to be heard, said Commission considered all factors relating to the application and request to purchase Affordable Housing Credits; NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. 2. 3. 4. 5. Ill Ill The above recitations are true and correct. The project is consistent with the goals and objectives of the City of Carlsbad’s Housing Element and Consolidated Plan, the Inclusionary Housing Ordinance, and the Carlsbad General Plan. Based upon the analysis contained within the Housing Commission Staff Report, the Housing Commission finds that the off-site satisfaction of a portion of the inclusionary housing requirement is in the public interest. That based on the information provided within the Housing Commission Staff Report and testimony presented during the public meeting of the Housing Commission on September 9, 2004, the Housing Commission recommends that the City Council APPROVE a request by the Standard Pacific Corporation to purchase 16 affordable housing credits in the Villa Loma housing project in order to satisfy the affordable housing obligation of the ThompsodTabata project under the City’s Inclusionary Housing Ordinance. That the Housing Commission recommends that the City Manager or his or her designee be authorized to execute the Affordable Housing Agreement in substantially the form presented in the Exhibit 3 for the Housing Commission Staff Report and to execute such other documents, or take other actions as may be necessary or appropriate to assist the developer in acquiring the Affordable Housing Credits. HC RESO. NO. 2004-03 PAGE 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 PASSED, APPROVED, AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad, California, held on the 9th day of September, 2004, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: EDWARD SCARPELLI, CHAIRPERSON CARLSBAD HOUSING COMMISSION DEBORAH K. FOUNTAIN HOUSING AND REDEVELOPMENT DIRECTOR HC RESO. NO. 2004-03 PAGE 3 ?- Jack Henthorn & AssociateP 5375 Avenida Encinas, Suite D Carlsbad, California 92008 Fax (760) 438-0981 (760) 438-4090 EXHIBIT 2 January 12,2000 Ms. Deborah K. Fountain Housing and Redevelopment Director City of Carlsbad 2965 Roosevelt Street, Suite B Carlsbad, CA 92008-2389 Subject: Thompson/Tabata Poinsettia Properties - Request to Purchase Off-site Affordable Housing Credits - CT 98-14 Dear Ms. Fountain: This letter serves as a formal request by Standard Pacific Homes, acting on behalf of the property owners of the Thompsonmabata Poinsettia Properties (CT 98-14) to satisfy their affordable housing obligations through: 1) purchase of off-site affordable housing credits in the existing Villa Loma development, 2) construction of 15 for-sale town-home units on site and, 3) construction of 15 second dwelling units. Upon approval by the City, this proposal will satisfy the inclusionary housing obligations associated with the proposed subdivision. This request complies with City Ordinances and City Council policies previously adopted by the City Council as explained below: The City’s lnclusionary Housing Ordinance (CMC Chapter 21.85) establishes certain requirements under which residential developers must provide housing that is affordable to lower-income households as a condition of project approval and permit issuance. The ordinance provides that “circumstances may arise in which the public interest would be served by allowing some or all of the inclusionary units associated with one project site to be produced at an alternative site or sites.” City Council Policy 57 establishes procedures for the City to use in determining if a proposed development meets the criteria to satisfy lnclusionary Housing Ordinance obligations at an alternative site or sites. Further, City Council Policy 58 sets for the specific evaluation and ranking procedures for the City to use when authorizing proposed developments to satisfy inclusionary housing obligations by the purchase of credits in the existing Villa Lorna project (a “Combined lnclusionary Housing Project”). The options available to Thompsonnabata Poinsettia Properties (CT 98-14) to satisfy its inclusionary housing obligations are: I) construct affordable units on-site, 2) participate in an off-site combined inclusionary project within the southwest quadrant in accordance with the requirements set forth in Chapter 21.85 of the Carlsbad Municipal Code and City Council Policy 57 dated August 8, 1995, 3) enter into an agreement with the City to purchase credits from the Villa Lorna Combined lnclusionary Housing Project in accordance with City Council Policy 58 dated September 12, 1995, or 4) provide a combination of the previous alternatives. The Housing Commission has reviewed a report that analyzed the projected inclusionary housing requirements of undeveloped property within the Southwest Quadrant of the City. The report examined whether ultimate build-out of the Quadrant would result in a demand for off-site credits exceeding the number of available credits in the Villa Loma project. The analysis shows that there are sufficient excess credits to satisfy the potential demand of the Quadrant, including that associated with these properties. In the case of the Thompson/Tabata Poinsettia Properties application, there are particular circumstances that warrant this project’s participation in the purchase of credits in the Villa Loma project, pursuant to Council Policy 58 criteria. The primary circumstances relate primarily to the economics of constructing a small affordable housing project and have driven the formulation of the hybrid approach contained in this request. Secondarily, the proposed combination of 15 townhomes and 15 secondary dwelling units with the remainder of the inclusionary housing obligation being met through the allocation of credits in Villa Lorna allows for an equitable solution to the obligation requirements. This results in the production of 30 affordable housing units (over 75% of the requirement) on-site, while minimizing the required public subsidy. This combined approach was specifically designed to eliminate the necessity for the City to pay out substantial hard-dollar subsidies that would be required to satisfy the entire inclusionary obligation by building affordable apartments on-site. This proposal to purchase credits in the Villa Lorna project will result in increased public benefit by reducing the level of housing fund subsidy to a level where current fund balances would be available for use in other City assisted inclusionary projects. We understand that a staff Project Review Committee will evaluate this request to determine its compliance with the criteria defined in Policies 57 and 58, and that staff will then take the Committee’s recommendation to the Housing Commission and the City Council. Our analysis of the Thompsonnabata Poinsettia Properties’ compliance with criteria set forth in City Council Policies 57 and 58 is attached to this letter for your use and reference. 2 Please call if you need additional information or if we may be of any other assistance. We look forward to receiving your response to this request. Very truly yours, n f JEH:wpc Enclosure cc: Craig Ruiz, Housing and Redevelopment Department Mike Grim, City of Carlsbad, Planning Department Gregg Linhoff, Standard Pacific Homes 3 THOMPSONITABATA POINSETTIA PROPERTIES OFF-SITE AND COMBINED INCLUSJONARY HOUSING PROJECT ASSESSMENT WORKSHEET -- BACKGROUND The following background information is provided to assist you in your assessment. I. OwnerlApplicant Information: 0 wner/Applicant: Standard Pacific Homes Attn: Gregg Linhoff 9335 Chesapeake Drive San Diego Division San Diego, CA 921 23-1 01 0 858-292-2200 Applicant’s Representative: Jack Henthorn & Associates Attn: Mr. Jack Henthorn 5375 Avenida Encinas Suite D Carlsbad, CA 92008 760-438-4090 Owner Owner David & Karen Thompson Revocable Trust Attn: David & Karen Thompson 7040 Rose Drive Carlsbad, CA 92009 Mendivil Family Partnership Attn: Consuelo Duncan & Carmel Verodi Frees 21241 San Miguel Mission Viejo, CA 92692 & DKST Limited Liability Company 760-438-1 189 949-830-3386 Owner Owner William E. Engler 10468 Hot Mineral Spa Road Niland, CA 92257 760-354-1 533 P.O. Box 943 Tabata Family Trust Attn: Noboru & Evelyn Tabata & lsokazu Tabata Carlsbad, CA 92018 Owner 760-438-0280 Evelyn M. Weidner, Richard John Dennis P.O. Box Cardiff By-The-Sea, CA 92007 & Kathleen M Dennis 2. Off-site/Combined Project Name: VILLA LOMA APARTMENTS I 4 3. Description of Project with lnclusionary Housing Obligation: The Thompsonnabata Poinsettia Properties, CT 98-1 4, is a proposed 248-lot, 243 single-family unit development (with fifteen attached second dwelling units) with a 15-unit affordable town- home complex on 80.64 acres incorporating nine individual parcels under six different ownerships. The table below demonstrates the inclusionary housing responsibilities of each of the ownership parcels/entities. These individual obligations result in a total 38.7-unit affordable housing obligation for the proposed subdivision. Standard Pacific CorD. Owners I Title Rep. 1 APN’s I Proposed I Inclus. Hsg I Area Ref. Du’s DU’S Oblig. A, B & E 214-170-75 & 36 8, 15 & 37 9.00 I David 6. Thompson & Karen R. ’ C 214-170-09 por. 6 .90 Thompson Revocable Trust, Trustees DKST Limited Liability Company D 214-170-09 por. 54 & 18 10.80 The Mendivil Family Partnership F 214-170-73 24 3.60 William Engler G, H & I 214-170-58 & 59 6 & 5 1.65 & 47 Tabata Family Trust, Noboru & Evelyn J & K 214-140-44 and 12 & 51 9.45 Tabata, Co-Trustees (1/2 interest) and 214-1 70-74 lsokazu Tabata (1/2 interest) Evelyn Weidner, Richard & Kathleen L 214-1 70-46 22 3.30 Dennis Total I I I 258 I 38.7 4. On-site Affordable Housing Description: The Thompsonnabata Poinsettia Properties on-site inclusionary housing project would consist of 15 attached for-sale town-home units (requiring a reduction of 6 proposed single-family lots in order to provide usable land) and 15 restricted second-dwelling units dispersed throughout the project site on the single-family residential lots. The units would be offered in a maximum saledrent range that is affordable to households earning incomes of 80% of the Area Median Income. To achieve financial feasibility, the project would require a net subsidy of approximately $400,415 (assuming a fully constructed pad is provided by the developer and unit revenues are based on a 95% occupancy rate factor) which the developer is requesting in the form of a fee credit against the purchase of housing credits in Villa Loma. These rates also assume a set base market price for the for-safe affordable units. A reduced purchase price below the assumed market rate would result in the necessity of additional hard dollar subsidy from the public. 5. Proposed Off-site Project Description: The Villa Loma project is a 344-unit apartment development in which all units are restricted and affordable to households with incomes not exceeding 60% of the San Diego County Median. Villa Loma was developed by La Terraza Associates, with Bridge Housing Corporation as the Managing General Partner. The complex contains 1, 2, 3, & 4 bedroom units. Villa Loma was financed with assistance from the City of Carlsbad and the Carlsbad Redevelopment Agency. The assistance was structured to create affordable unit credits that are now marketed exclusively by the City to other developers to satisfy affordable housing obligations. The Villa Loma Apartment complex is a Combined Project according to the lnclusionary Housing Ordinance, and developers may participate in this as an “off-site” method of satisfying affordable 5 housing obligations. Carnation, Hadley, Roesch, and other projects in the vicinity.) (This is also an approved site for Greystone Cove, Ocean Bluff, Lohf, The proposed purchase of 8.7 Villa Loma Affordable Housing Credits as a part of the approach to mitigate the inclusionary requirements of the ThompsonlTabata Poinsettia Properties application together with the provision of 15 for-sale affordable units and 15 secondary rental units on-site is consistent with the terms established by City Council Policies 57 and 58 and the inclusionary housing ordinance. 6. Description of On-site Project Constraints: Site specific and ownership constraints exist at the Thompsonmabata Poinsettia Properties site which diminish the feasibility of producing the full inclusionary obligation with on-site affordable housing. These constraints include the independently owned parcel configuration within the project and the significant product type difference between a large high-density attached apartment complex and the existing single-family homes in the neighborhoods adjacent to the subject site. The applicant is proposing to buffer the on-site town-home project with single-family homes to be built immediately north of the proposed site. The site is further buffered by Poinsettia Lane on the south and the parking area for the adjacent multi-family project located immediately west of the proposed site. The use of second dwelling units and Villa Loma credits reduces these conflicts and provides for integration of the units into the total project. The costs of providing a 39-unit affordable housing apartment project on-site to satisfy the full inclusionary housing obligation would result in substantial subsidies being required from public sources, including the City. The proposed allocation of off-site credits combined with the provision of for-sale units and secondary units on-site, maximizes construction new on-site affordable housing units, while minimizing the amount of subsidy required. The construction of a full 39-unit affordable facility on-site would require additional public subsidy of over a million dollars. 6 THOMPSON/TABATA POINSETTIA PROJECT OFF-SITE AND COMBINED INCLUSIONARY HOUSING PROJECT ASSESSMENT WORKSHEET -- WORKSHEET 1. Feasibility of the On-site Proposal a. Are there significant feasibility issues due to factors such as project size, site constraints, amount and availability of required subsidy, and competition from multiple projects that make an on-site option impractical? The applicant‘s proposal incorporating three avenues, credit purchase, secondary units and new rental product increases the feasibility of on site construction. The net gap of the proposed 15 unit affordable town-home project results in over $400,000 after developer site dedication. Credits can be granted in the existing Villa Loma to offset a large portion of this gap. This approach would result in no additional cost to the City beyond fee revenues that would otherwise been paid and reinvested into the project. The combined proposal reduces the need for outside subsidy. The construction of the full 39-unit obligation (24 for-sale units and 15 second dwelling units) on-site could require an additional approximately I million-dollar contribution by the City. The construction of the 15 affordable town-home units and 15 secondary units on-site results in the project’s market units being required to absorb about $4,650 per unit so that land value could be contributed by the applicants. This figure rises to approximately $6,300 per unit if the applicants are required to build the units on-site and close the post land development gap of approximately $400,400. The proposed combined approach, while producing over 75 percent of the project’s requirement on-site, greatly reduces the potential burden that would entail if the entire obligation of 39 affordable units had to be built on-site. For example, the addition of 9 units in the proposed for-sale affordable project would result in a greater than 50% increase in both the private and public subsidies required. Given the multiple ownerships within the proposed project area, an on-site affordable project apportioned to each ownership would not be of sufficient size to be viable. A large on-site inclusionary apartment project located on a particular parcel in the CT 98-14 project area would unfairly burden certain property owners to the unearned benefit of other property owners. b. Will an affordable housing product be difficult to integrate into the proposed market development because of significant price and product type disparity? The proposal of 30 integrated on-site affordable units composed of for-sale town-homes and secondary rental units will provide affordable units that better blend in with the existing higher-end single-family detached homes in the vicinity. The combined town-home, secondary unit, and credit request proposal provides for the most effective use of the City’s affordable housing budget by reducing required subsidies while providing over 75% of the inclusionary units on-site, integrated within the proposed development. The applicant is proposing to buffer the on-site town-home project with single-family homes to be built immediately north of the proposed site. The site is further buffered by Poinsettia Lane on the south and the parking area for the adjacent multi-family project located immediately west of the proposed site. A larger affordable housing project could raise greater price, product type disparity, and land use compatibility opposition with regard to the existing larger lot, higher-end detached single-family homes in surrounding developments. This could also occur with the proposed new homes in this development ranging in size from 2,800 to 4,300 square feet on 5,700 to 39,000 square foot lots with estimated base prices ranging from the upper $300,000’~ to the mid $500,000’~. 0 0 0 7 c. Does the on-site development entity have the capacity to deliver the proposed affordable housing on -s i te? 0 The ability to obtain off-site credits for the proposed combined development, in lieu of the subsidies that would be required from the City, greatly enhances the economic viability of providing the inclusionary housing project on-site, for the applicant and the City. Standard Pacific Homes is a reputable company with a long history of development success in this area. Standard Pacific Homes is working with an affordable housing development team that are experienced in Carlsbad, as well as with the requirements and procedures of State and Federal affordable housing agencies. 0 2. Relative AdvantaneslDisadvantaaes of the Off-site Proposal. a. Does the off-site option offer greater feasibility and cost effectiveness than the on-site alternative, particularly regarding potential local public assistance? 0 0 Villa Loma is built and has proven its feasibility; no additional assistance is required. The CT 98-14 project participation in Villa Loma will minimize the expenditure of City funds to the amount that the associated with the proposed Villa Loma credits. Future collected funds could then be used to provide additional affordable housing in other developments and locations. Conversely, an on- site inclusionary project meeting the full 39-unit obligation at this location would create demand for significant additional subsidy from the City. The ability to obtain off-site credits allows for 15 new affordable for-sale units and 15 new affordable rental units to be built onsite while minimizing additional subsidy impacts to the City. 0 b. Does the off-site proposal have location advantages over the on-site alternative, such as proximity to jobs, schools, transportation, services, less impact on other existing developments, etc.? The combined proposal has the advantage of dispersing the affordable housing obligation across the project and within the Villa Loma development, which also results in less impact to surrounding single- family neighborhoods. The combined proposal also allows for the dispersing of affordable units within Zone 20 as the proposed development is located further to the west from Villa Lorna, adjacent to Palomar Airport Road. The Villa Loma development is located within close vicinity of public transportation, jobs (in the nearby business parks and shopping centers), schools, library, shopping, parks, as well as, other amenities and services due to its location along a major thoroughfare, El Camino Real. Villa Loma is a self-contained affordable development in an area designated for higher density residential development such as condominiums and townhomes. A 157-unit multi-family residential project, Manzanita Apartments located just to the south of Villa Loma recently received City approvals. 0 c. Does the off-site option offer a development entity with the capacity to deliver the proposed project? The Villa Lorna project is an existing project, developed and managed by a highly experienced and specialized affordable housing developer. d. Does the off-site option satisfy multiple developer obliqations that would be difficult to satisfy with multiple projects? 0 0 The Villa Lorna project was originally established as a Combined Project specifically to address this purpose. The obligation to provide all inclusionary units on-site would result in an affordable housing project that would potentially be one of several projects in the southwest quadrant competing for scarce financial assistance. Villa Lorna has already been financed and built and thus, is not competing for subsidy financing. The combined proposal on-site minimizes the competition for outside financial assistance. 8 3. Advancing Housing Goals and Strateav a. Does the off-site proposal advance andlor support City housing goals and policies expressed in the Housing Element, CHAS and lnclusionary Housing Ordinance? General Plan Housing Element and CHAS Goals: 0 0 The Villa Lorna Apartment affordable project is targeted to the highest priority need identified, larger rental units for low-income households. The recovery of the City's investment in the Villa Lorna Project through the applicant's participation will provide for additional resources that are needed to sustain the city's affordable housing activities. Villa Loma provides a large quantity and diversity of affordable housing stock with its 344 units, including a generous supply of different size units to meet various housing needs of the community. lnclusionary Housing Ordinance Policies: 0 0 Consistent with the City and public interests to use existing "excess" affordable units before supporting additional new construction. In conjunction with the combined Villa Loma project, the Thompsonflabata Poinsettia Properties will provide for 15% of the total units for affordable (lower income) residential units. The project also complies with the lnclusionary requirements as contained in the General Plan Housing Element. Growth Management Zone, Ord. No. NS-257 Guidelines: 0 The combined proposal to construct 30 affordable housing units on-site with the opportunity to obtain off- site credits for the remainder of the affordable housing obligation associated with the proposed project is consistent with the guidelines. The proposed on-site affordable housing is coordinated within the proposed development and with surrounding properties and provides access to Palomar Airport Road, as well as circulation and pedestrian access to public facilities. Villa Loma is coordinated with surrounding properties by providing direct access to a major Circulation Element Roadway, El Camino Real, as well as circulation and pedestrian access to public facilities. 0 0 9 THOMPSOIWAEATA POINSETTlA PROPERTIES INCLUSIONARY HOUSING COMPARATI’JE PRO FORMA PRICE UNITS REVENUE PLAN 3 - 3 BEDROOM Sl68,ooO 5 $840,000 RV PLAN 2 - 2 BEDROOM $148,000 5 9740,000 PUN 5 - 3 BEOROOM 57 73,090 5 $885.000 GROSS REVENUE 42,445,OOO 1 4ND 0 WELOPMFNT COS TS UNO ON SITE IMPROVEMENTS FEES AND TECHNICAL OESIG WCONSULTANTS IMPROVED SITE COST UNO CARRY 18MO LAND DEVELOPMENT COST S1,?25,000 ~430,oao $500,000 sds,oco $2,140,000 $1 72.000 S2,312,000 UNIT CONSTRUCTION COST8 2 BR 3 0R 3 9R UNIT SIZE 1129 1262 1542 SQUARE FEET (project) 5.645 ea10 771 0 20.155 STRUCTURE COST S51.00 3287,895 $347,310 9393,210 51.028.415 ON SITE INDIRECTS OVERHEAD SALES 6 MARKETING (inclods closing costs) CONSTRUCTION COSTS si 4a,ooo $1 45,000 $225,COO $1,548,416 $1,548,415 CONST FINANCING $1 12.000 PROJECT COST 53,970,415 TOTAL GAP $1,625,415 Oeveloper land contribution NET GAP $1,125,000 $400,415 PER UNlT NET GAP $20,694 PER UNlT GROS3 SUBSIDY $101,694 1M c/o0 Page 1 JACK H EFl THOR N AS SOCIA TES MKNAYordablc Frolorrna - 15 THs.xir EXHIBIT 3 RECORDING REQUESTED BY: City of Carlsbad WHEN RECORDED MAIL TO: City of Carlsbad City Clerk's Office Attn: Cityclerk 1200 Carlsbad Village Drive Carlsbad. California 92008 (Space above for Recorder's Use) AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON REAL PROPERTY This AFFORDABLE HOUSING AGREEMENT IMPOSING RESTRICTIONS ON by and between the CITY OF CARLSBAD, a municipal corporation (hereinafter referred to as the ("City"), and Standard Pacific Corp., a Delaware Corporation, (hereinafter referred to as the ("Developer"), is made with reference to the following: REAL PROPERTY ("Agreement"), entered into as of the day of 2002 A. Developer is the owner of certain real property in the City of Carlsbad, in the County of San Diego, California (hereinafter referred to as the ("subject property") descried in Exhibit "A", which is attached hereto and incorporated herein by this reference. B. Developer wishes to construct 238 residential housing units for sale at prevailing market prices ("Market Units") and 24 residential housing units for sale at affordable prices ("Affordable Units") on the subject property. The City has approved Zone Change ZC98- 08, Local Coastal Plan Amendment LCPA 98-04, Carlsbad Tentative Tract Map CT 98-14, Planned Unit Development 98-05, Condominium Permit CPOO-02, Hillside Development Permit HDP 98-15, Coastal Development Permit CDP 98-68 and Site Development Plan 99-06 for the proposed development (Development). The City issued these approvals subject to certain Conditions of Approval, including a condition requiring the Developer to enter into an Affordable Housing Agreement in which Developer agrees to provide 24 dwelling units affordable to lower-income households and to purchase sixteen (1 6) Affordable Housing Credits within the Villa Loma Apartment project. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. Satisfaction of Affordable Housing Obligation and Conditions of Amroval. In order to satisfy the Conditions of Approval and requirements of the City's Inclusionary Housing REV. 02/05/03 Ordinance, Carlsbad Municipal Code Chapter 21.85, Developer shall provide a total of twenty- four (24) Affordable Units that shall be restricted and affordable to lower-income households. In addition, the Developer shall purchase sixteen (16) Affordable Housing Credits within the Villa Loma Apartment project. This Agreement is an Affordable Housing Agreement pursuant to Section 21.85.140 of the Carlsbad Municipal Code. Developer shall submit this Agreement to City and Agreement shall be executed prior to the approval of the final map for the subject property. 2. Terms Governing Provision of Affordable Units. 2.1. Obligation to Provide Affordable Units. 2.1.1. Developer shall provide the twenty-four (24) Affordable Units in relation to Market Units ("Market Units") on the Subject Property. The Affordable Multifamily Units shall include three and four bedroom units in the numbers and with the square footage indicated in "Attachment B" to this Agreement. The maximum allowable income level of buyers of the affordable units shall be restricted to a maximum of 80% of the area median income. 2.2 Schedule for Developing Affordable Units. 2.2.1. Prior to the approval of any Final Map for the Development: (i) this Agreement shall be duly executed and recorded; (ii) the developer of the Affordable Units shall have received approval of a Site Development Plan for all of the Affordable Multifamily. 2.2.2 Prior to the release of any building permits for the Development, the Developer shall purchase 16 affordable housing credits in the Villa Loma Apartments. 2.2.3 Upon satisfLing the applicable conditions stated in Sections 2.2.1 and 2.2.2, building permits can be released for a total of eighty (80) market rate units and twenty- four (24) Affordable Units. 2.2.4 Once building permits have been released and the foundations for the twenty-four (24) Affordable Units are complete, inspected and approved, an additional seventy-nine (79) building permits for market rate housing shall be released at Developer's request. 2.2.5 Once the final Certificate of Occupancy is issued for the last of the twenty-four (24) Affordable Units to be constructed, the building permits for the remaining seventy-nine (79) market rate housing units shall be released at Developer's request. 2.3 Terms for Sale of Affordable Units. 2.3.1. The Schedule of Maximum Eligible Buyer Incomes and Affordable Subsidized Purchase Prices (the "Schedule") attached hereto and incorporated herein as Exhibit REV. 02/05/03 D sets forth the City's requirements for determining the maximum household income of buyers of the Affordable Units ("Eligible Buyers") and the methodology for calculation of the subsidized purchase prices of Affordable Units which will be affordable to each of the Eligible Buyers (the "Affordable Purchase Prices"). The Schedule also includes initial estimates of Eligible Buyer actual incomes and the corresponding Affordable Purchase Prices. The Final Schedule shall be established prior to sale based on the San Diego County Area Median Income and the cost factors applicable at the time. The Final Schedule shall be submitted by the Developer and approved by the City's Housing and Redevelopment Director prior to the marketing of the Affordable Units. 2.3.2. The Developer shall sell the Affordable Units only to Eligible buyers whose household incomes have been verified by the Developer. The purchase price for an Affordable Unit (the "Market Purchase Price") shall be the market price charged for a comparable unit (and not to exceed fair market value); provided, however, that the Developer shall carry back financing equal to the difference between the Market Purchase Price and the Affordable Purchase Price for the particular Eligible Buyer (the "Primary Affordability Subsidy"). The carryback financing shall be assigned by the Developer to the City, and shall be evidenced by a promissory note from the Eligible Buyer to the City, secured by a second mortgage deed of trust on the Affordable Unit (the "City Second Mortgage"). The balance of the Market Purchase Price shall be paid by the Eligible Buyer to the Developer in cash, utilizing downpayment monies and fist mortgage proceeds. 2.4 Terms for Re-sale of Affordable Units. After the initial sale of the inclusionary for- sale units at a price affordable to the target income level group, inclusionary for-sale units shall remain affordable to subsequent low income eligible buyers pursuant to a resale restriction for a term of fifteen (15) years. Beginning sixteen (16) years after the initial purchase of an Mordable Unit, for-sale units may be sold at a market price to other than targeted households provided that the sale shall result in the recapture by the City or its designee of a financial interest in the units equal to the amount of subsidy necessary to make the unit affordable to the designated income group and a proportionate share of any appreciation. Funds recaptured by the City shall be used in assisting other eligible households with home purchases at affordable prices. To the extent possible, projects using for-sale units to satisfy inclusionary requirements shall be designed to be compatible with conventional mortgage financing programs including secondary market requirements. 3. City Approval of Documents. 3.1. The following documents, in form and substance acceptable to the City, shall be used in connection with the sale of Affordable Units. Documents to be prepared by the Developer shall be submitted to the Housing and Redevelopment director for review and approval no later than the start of construction of the Affordable Units. 3.1.1. A marketing plan establishing the process for seeking, selecting and determining the eligibility of buyers of the Affordable Units shall be prepared by the Developer. REV. 02/05/03 3.1.2. An educational program informing Affordable Unit purchasers of the obligations of home ownership and the specific features of this program shall be prepared by the Developer. 3.1.3. Purchase and Sale Agreements for sale of the Affordable Units shall be prepared by the Developer. 3.1.4. City Second Mortgage promissory note, deed of trust, and borrower disclosure form shall be provided by the City. 3.2 Any of the documents identified in this section 3.1 may be revised by Developer from time to time with the prior written approval of the Housing and Redevelopment Director. 4. Mortgage Credit Certificate Promam. Buyers of the Affordable Units may qualify for income tax credits pursuant to Mortgage Credit Certificate (MCC) Program, for a portion of the annual interest paid on a first mortgage used to acquire the Affordable Unit. City shall cooperate with Developer in obtaining and providing to prospective buyers Mortgage Credit Certificates from allocations that it may receive. 5. Reuortin~ and Compliance Monitoring. A report verifjlng compliance with the requirements of this Agreement covering the initial sales of the Affordable Units shall be provided to the City by the Developer and approved by the Housing and Redevelopment Director. Developer shall provide the City with other reports as reasonably required by the City to verify compliance with this Agreement. 6. Default. Failure of the Developer to cure any default in the Developer's obligations under the terms of this Agreement within (90) days after the delivery of a notice of default from the City (or where the default is of the nature which cannot be cured within such ninety (90) period, the 'failure of the Developer to commence to cure such default within the ninety (90) day period or the Developer's failure to proceed diligently to complete the cure of such a default within a reasonable time period but in no event not greater than 180 days) will constitute a failure to satisfy the Conditions of Approval with respect to the Subject Property and the requirements of Chapter 21.85 of the Carlsbad Municipal Code and void the approval of the Final Map and Site Development Plan; and the City may exercise any and all remedies available to it with respect to the Developer's failure to satis@ the Conditions of Approval, including but not limited to, the withholding of building permits for the Market Units within the Subject Property until such cure is completed. 7. Appointment of Other Agencies. At its sole discretion, City may designate, appoint or contract with any other public agency, for-profit or non-profit organization to perform the City's obligations under this Agreement. 8. Release of Subiect Propertv From Agreement. The covenants and conditions herein contained shall apply to and bind the Developers and its heirs, executors, administrators, REV. 02/05/03 successors, transferees, and assignees of all the parties having or acquiring any right, title or interest in or to any part of Subject Property and shall run with and burden the Subject Property and shall run with and burden the Subject Property until terminated in accordance with the provisions hereof'. Prior to the issuance of building permits, the Developer shall expressly make the conditions and covenants contained in this Agreement a part of any deed or other instrument conveying any interest in the Subject Property. Notwithstanding anything to the contrary set forth in the Agreement, individual purchasers of units pursuant to an approved public report in compliance with the California Subdivided Lands Act, and mortgage lenders holding deeds of trust on such individual units after sale to such purchasers, shall not be subject to the terms of this Agreement; and the terms of this Agreement shall be of no further force or effect with respect to such completed unit on the date of the recordation of a deed to the individual purchaser. Upon issuance of certificates of occupancy for all of the Affordable Units, the entire Subject Property, with the exception of the property subject to the approval Site Development Plan SDP99-06, shall be released from the burdens of this Agreement. The burdens of this agreement shall remain in full force and effect and recorded against the property subject to the approval Site Development Plan SDP99-06 for the duration of this agreement. 9. Hold Harmless. Developer will indemnify and hold harmless (without limit as to amount) City and its elected officials, officers, employees and agents in their official capacity (hereinafter collectively referred to as "Indemnitees"), and any of them, from and against all loss, all risk of loss and all damage (including expense) sustained or incurred because of or by reason of any and all claims, demands, suits, actions, judgments and executions for damages of any and every kind and by whomever and whenever made or obtained, allegedly caused by, arising out of or relating in any manner to Developer's performance or non-performance pursuant to this Agreement, and shall protect and defend Indemnitees, and any of them with respect thereto. The provisions of this section shall survive expiration or other termination of this Agreement or any release of part or all of the Property from the burdens of this Agreement? and the provisions of this Section 9 shall remain in full force and effect 10. Insurance Requirements: Developer shall obtain, at its expense, comprehensive general liability insurance for the development of the Subject Property naming Indemnitees as additional named insureds with aggregate limits of not less than five million dollars ($5,000,000) for bodily injury and death and property damage, including coverages for contractual liability and products and completed operations, purchased by Developer or its successors or assigns from an insurance company duly licensed to engage in the business of issuing such insurance in the State, with a current Best's Key Rating of not less than A-:V, such insurance to be evidenced by an endorsement which so provides and delivered to the Housing and Redevelopment Department prior to the issuance of any building permit for the Subject Property.. 11. Notices. All notices required pursuant to this Agreement shall be in writing and may be given by personal delivery or by registered or certified mail, return receipt requested, to the party to receive such notice at the addressed set forth below: REV. 02/05/03 TO THE CITY OF CARLSBAD CITY OF CARLSBAD Housing and Redevelopment Department Attn: Housing and Redevelopment Director 2965 Roosevelt Street, Suite B Carlsbad, California 92008-2389 TO THE DEVELOPER: STANDARD PACIFIC COW. Attn: 9335 Chesapeake Drive San Diego, CA 92123-1010 Any party may change the address to which notices are to be sent by notifying the other parties of the new address in the manner set forth above. 12. the parties and no modification hereof shall be binding unless reduced to writing and signed by the parties hereto. Integrated Agreement. This Agreement constitutes the entire Agreement between 13. Duration of Agfeement. This Agreement shall terminate and become null and void upon the earlier of: (a) the closing of the sale of the last of the Affordable Units to an individual purchaser pursuant to a sale on an approved public report in compliance with the California Subdivided Lands Act, or (b) upon the granting of a written release by the Community Development Director. This Agreement, and any section, subsection, or covenant contained herein, may be amended only upon the written consent of Developer and the Community Development Director. 14. Recording; of Agreement. The parties hereto shall cause this Agreement to be recorded against the Subject Property in the Official Records of he County of San Diego. 15. Severabilitv. In the event any limitation, condition, restriction, covenant, or provision contained in this Agreement is to be held invalid, void or unenforceable by any court of competent jurisdiction, the remaining portions of this Agreement shall nevertheless be and remain in full force and effect. REV. 02/05/03 IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed as of the day and year first above written. I DEVELOPERS CITY City of Carlsbad, a Municipal corporation By: By: Todd Palmer, President Standard Pacific of San Diego, a Division of Standard Pacific Corp., Authorized Representative Sandra L. Holder Community Development Director By: Brian Utsler, Vice President, Standard Pacific of San Diego, a Division of Standard Pacific Corp., Authorized Representative Proper notarial acknowledgment of execution by contractor must be attached. If a Corporation, Agreement must be signed by one corporate officer fiom each of the following two groups. *Group A. Chairman, Secretary, President, or Vice-president **Group B. Assist ant Secretary, CFO or Assistant Treasurer Otherwise, the corporation corporate seal empowering the officer(s) signing to bind the corporation. attach a resolution certified by the secretary or assistant secretary under APPROVED AS TO FORM: RONALD R. BALL, City Attorney Assistant City Attorney REV. 02/05/03 ATTACHMENT A LEGAL DESCRIPTION OF SUBJECT PROPERTY REV. 02/05/03 ATTACHMENT B LOCATION, SIZE, AND BEDROOM COUNT OF AFFORDABLE UNITS REV. 02/05/03 ATTACHMENT C BUILDING PERMIT PHASING PLAN Action Required Phasing Receive Approval of an SDP for the affordable housing project, execute and record the Affordable Housing Agreement approved by the Housing and Redevelopment Director, purchase 16 affordable housing credits. All building permits issued and foundations complete, inspected and approved for all 24 affordable condominium units. Final Certificate of Occupancy issued for all 24affordable condominium units. TOTAL # of Building Permits & Type Released 80 market rate building permits. 24 affordable condominium units 79 market rate building permits 79 market rate building uermits 262 Units % of Total Permits for Project 31% and 9% 30% 30% 100% Comments Final maps allowed for a total of 262 units. A total of 104-building permits could be issued at this point in time; 40% of total permits At this point, 159 market rate units (67% of the market rate units) could be under, or begin construction. At this point, all 238 market rate units could be under, or begin construction. Allows for a total of 238 market rate and 24 affordable units. REV. 02/05/03 ATTACHMENT D MAXIMUM ELIGIBLE BUYER INCOMES REV. 02/05/03 Exhibit 4 CT98- i 4 ThompsonlTa bata