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HomeMy WebLinkAbout2005-02-24; Housing Commission; MinutesMinutes of: HOUSING COMMISSION Time of Meeting: 6:OO P.M. Date of Meeting: February 24,2005 Place of Meeting: HOUSING AND REDEVELOPMENT OFFICE CALL TO ORDER Chairperson Scarpelli called the Meeting to order at 6:OO p.m. PLEDGE OF ALLEGIANCE There was not a pledge of allegiance because the Housing and Redevelopment Office did not have a flag. ROLL CALL Present: Commissioners: Renee Huston Doris Ritchie Edward Scarpelli Margaret Schraml Bobbie Smith Staff Present: Housing and Redevelopment Director: Debbie Fountain APPROVAL OF MINUTES Minutes of October 28,2004, were approved as written. VOTE: 3 -0 AYES: 3-0 NOES: None ABSTAIN: Commissioner Huston did not attend the October 28,2004 meeting 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 Chairperson Scarpelli called the meeting to order. The new business to be discussed is the Carlsbad Family HousinglCassia Heights, SDP 02-13, recommendation of approval to the City Council to provide $1,454,276 in financial assistance for construction of fifty-six affordable apartment units in the southeast quadrant of the city. Debbie Fountain, Director of Housing and Redevelopment, will give a presentation. This is a financial assistance request that is being reviewed. It is a fifty-six-unit apartment project across from the current Villa Loma. Manzanita Apartments are on one comer and Villa Loma is another comer and then this project will be on a third comer. The project will be where Cassia Road ends at El Camino Real. Chairperson Scarpelli asked for a clarification. The project has been approved but has the financing package been approved? Ms. Fountain answered no. The financial assistance has not been approved yet. That is why we are in this meeting today. The project, itself, has already received approval. That is normally how it works. We usually get the project HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 2 of 12 through the process and then there is a request for assistance. This way you will have a better idea what the costs will be. Chairperson Scarpelli asked Ms. Fountain to clarify the parcel of land, the 2.6 acres. Is that the piece just north of sun fresh flowers? Ms. Fountain said that is it, where that building is. Chairperson Scarpelli asked the Commissioners if they were all aware of the location being discussed? Ms. Fountain continued, tlus project is unique because Affied Housing has brought this as a stand-alone affordable housing project. It is not a result of the inclusionary housing ordinance. It has its own inclusionary requirement, but it wasn't done as part of a master development. It is not attached to a master developer. They have an option on the land, and they want to move forward on the project. They have submitted a financial assistance request and staff has reviewed it. We are looking at two forms of assistance to the project. We are lookmg at property acquisition so we would actually assume the option that Affied Housing has on the site and the city would buy the property and then ground lease it back to the project. We will most llkely purchase it with CDBG money or monies like that. That item is not actually before you today. The other part of the assistance is before you. That is the cash assistance to the project. In the Agenda Bill we are requesting you to review assistance in the amount of $1,454,276, which would be provided in a form of a loan that would go to Affied Housing to be repaid through surplus cash from the project. This would be after they have exhausted their operating expenses. The amount of money left over would be the funding to pay the loan and ultimately make a ground lease payment as well. This type of deal has been before this Commission in terms of the financial assistance. This is a little different because it is higher on the per unit cost then what has been before this Commission. The primary reason is there is not a master developer putting money into the project. Ms. Fountain asked the commissioners to go to page 3 of the report, which summaries the sources of funding for the project. At the moment, the project is estimated at a total cost of $14,125,000 and the sources of money that are being considered are the tax credit equity, one of the largest sources of money which would be about $9.4 million. Then they will have a conventional loan on the property. They are deferring some of their developer fee to help with the financing, and then the city contribution to the project. The contribution of buying the property and the cash assistance would be equal to about $2.8 million. Tonight we are asking the Housing Commission to decide whether or not you want to support a recommendation to the Council to support this financial assistance to the project. In terms of the cash assistance, it works out to about $25,970 per unit. In the past we have seen on projects, anywhere from about $10,000 to $15,000 a unit. That is provided for comparison purposes. Again, in most of those situations, there has been a master developer that has been part of the contribution to the project. In this particular case, that developer is not there. For this project, we have looked at the fact that this project would be able to serve as a combined project for the southeast and the southwest quadrant like Villa Loma does. So if we came to a point where we no longer have credits in Villa Loma for some of those small projects, we could use these fifty-six so we can recover some of the financial assistance. We don't have any guarantee that we are going to need these fifty-six units, but that is an option. Typically, the developers that are allowed to buy housing credits are those that have pretty small requirements like two or three units. They might have as much as ten units. If they are requesting to purchase credits of more then ten units, those come to the Housing Commission for recommendation. If they are smaller ones and they are developing in the southwest or the southeast quadrants, they are allowed to buy credits. Ms. Fountain stated that we are getting to the point that Villa Loma is getting much lower. We probably have about twenty-five units of credits left in Villa Loma. I HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 3 of 12 Chairperson Scarpelli asked what the cost is? Ms. Fountain answered they are $43,000 per unit. Chairperson Scarpelli continued that since this is a less subsidized program and it is a higher priced unit, would those credit prices go up? Ms. Fountain said it probably would. At Villa Lorna it was based on the amount of subsidy that the City put into the project. Back when we did that, it was about $28,000 a unit. Villa Lorna was unique because we bought the land and we ground leased it back, similar to what we would be doing in this situation. It was a much larger project though. Ms. Fountain continued there is precedence for this type of assistance because you have it right across the street with Villa Loma. Typically, what has been seen is that $15,000. We would satisfy that credit purchase price equal to the amount of our money going into it. With the land, we are looking at $50,000 a unit of credit fee. Chairperson Scarpelli reiterated that the direct financial assistance would equate to approximately $25,970 per affordable unit. Then you are saying plus the land? Ms. Fountain answered right. This is just the direct financial cash into the deal. Then if you add the per unit cost of what our cost of purchasing the land would be that add on another $25,000. Commissioner Huston asked what the total amount would be per unit, land and unit. Ms. Fountain said if you look at the last page on the pro forma at the bottom where it says the redevelopment agency contribution per unit that would actually be cityhedevelopment agency. She pointed out the $50,523 on the last page of the report. Commissioner Huston said then it comes to $50,523 as the subsidy amount? Ms. Fountain said right. So the direct cash assistance is what is in your report because we are not asking you tonight to take action on that property acquisition. That will be handled separately by the Council. She continued with an overview and said Jim Silverwood is here from Affmed Housing. He can give the Commission more of an overview of the project. On the second page of the report, there is a description of the project. It does have one, two and three bedroom units. We have broken that down so you can see 25% of the units will be one bedroom, 41% will be two bedroom, and then 32% will be three bedroom. Affmed Housing has a range of the rent. They are ranging from being affordable to households at 30% of the area median income up to 60% of the area median income. In terms of affordability and diversity, it is a great project for the city. In the 30 to 50% range, you are actually getting into the very low income and extremely low-income category. Looking again at the last page of the pro forma, it is showing the breakdown. On the right side where it shows the rental income, it presents the breakdown of income levels and the rent structure. If you look at the net rent calculation, you are looking at rent from $361 up to a little over a $1,000. That is good for the city because there is still a great need in those income categories. All of our affordable housing projects have waiting lists. We are consistently getting more requests for affordable housing. Ms. Fountain concluded her presentation. Jim Silverwood will say a few things about the project as well. Then we can discuss and answer any questions you might have on the financial assistance package. HOUSING COMMISSION MMUTES FEBRUARY 24,2005 PAGE 4 of 12 I 1 Jim Silverwood, the president of Affied Housing Group, which is based in Escondido, and has been active in San Diego county in affordable housing now for the past ten years. This would be our first project with the City of Carlsbad. To give a little history on this project, we have had the site under control in escrow for almost three years. The only reason it has taken us so long to get to your board and to have it considered, because in the very beginning we did some design work and the fire marshal and a new fire marshal came and we had to redesign the project. Eventually, we worked with staff and worked through all of that. We went to the Planning Commission hs past summer and they unanimously approved the project. In the early fall, the City Council also unanimously approved the project because it did have a general plan change and then was rezoned because the site was zoned for a much lower density at the time. We are excited to bring this project forward. One of the things that Ms. Fountain mentioned that would make this project a little unique compared to the other ones you have seen, is the affordability range. These apartments would start off as low as 30% of the area median income and up to 60% of the area median income. Mr. Silverwood continued that he does have a rental range for the renters, based on this year’s rents so it will be slightly higher next year because of the index for inflation factors, would be as low as $306 for a one bedroom up to the high end on a three bedroom at about $900 per month. We think those are very good rents. We think this is a terrific site. It is close to all the employment centers there. Now there are obviously newer amenities coming to the area such as parks. There is a community building plan and a pool and tot lot within the complex. In regards to the cost, because the project is expensive, in January 1, 2004, over a year ago, the legislature in California passed a new law that allowed for prevailing wages to be paid on all affordable housing projects. This may or may not be your first prevailing wage project that ,you have seen, but in this project we will have to pay all commercial prevailing wages. It makes the cost quite a bit higher as you can imagine. Chairperson Scarpelli asked Mr. Silverwood if he had calculated the percentage of increase that will be? Mr. Silverwood answered that it is about 35%. Chairperson Scarpelli reiterated that it would be about an additional 35% in cost? Mi. Silverwood stated that really inflates the cost, but unfortunately, all affordable housing now has to deal with that until such time as we can have that changed by lobbying the legislatures. Right now that is what we have to live with. Mr. Silverwood continued that their company has enjoyed working with the planning staff and with the housing staff. We appreciate the support. I am open to any questions. Commissioner Ritchie asked Mr. Silverwood to discuss the parking. Mr. Silverwood asked if she meant how many spaces? Commissioner Ritchie said yes, how many spaces and where will it be located? Mr. Silverwood said it is on the plan. His company actually did not ask for any variance in parking from the city standards, so it meets all of the City of Carlsbad’s standards of parking. Commissioner Ritchie asked if she read somewhere that some of it is underground? Mr. Silverwood answered yes. In the building that is adjacent to El Camino Real, that runs parallel to El Camino Real, there is a parking garage half submerged, half buried parking garage under that whole building. Chairperson Scarpelli asked where the ingress and egress is? HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 5 of 12 Mr. Silverwood said it is on the ramp going down from the parking lot. Chairperson Scarpelli stated that he sees it. There is an arrow pointing it out. Commissioner Huston said she knows it has probably been through Planning, but she saw there is a pool in this. Because there really is not a grassy area for the children to play, though there is a tot lot, and given there is a lot of three bedroom units there, I imagine there is going to be children, and liability issues with the pool and the cost of insurance. I wonder why instead of having a grassy area where people could gather and barbeque and sit outside, you opted for a pool? Mr. Silverwood said that is a great question. He said his company originally asked Planning to have that be a grassy area, but the Planning Department wanted a pool, they wanted the amenities. Commissioner Huston commented that we are also getting the swim complex in that part of the city as well. Can you go back and change that? Mr. Silverwood said it is up to this Commission to make a recommendation to the City Council and the City Council can do whatever they want. Commissioner Huston said it would be cost effective as well in terms of insurance, heating the pool, the maintenance of the pool, and other considerations. Ms. Fountain said it was approved with the amenities that are included so they would probably have to go back and get an amendment for their permit to change it. Commissioner Huston asked if Affirmed Housing is a non-profit organization? Mr. Silverwood said no, it is not. Commissioner Huston said she read that it is stated that in paying back their loans through the revenues expected with the project. What revenues would that be, the rental income? Mr. Silverwood said yes, except for operating expenses, all of the income from the project after payment of all normal operating expenses, would be paid back to the city. Chairperson Scarpelli asked if that is behind the first trustee holder on the loan? Mr. Silverwood answered yes. Commissioner Huston stated when she was looking at the cost of the whole project, the $14,000,000 and then began subtracting the developer fees and various other things such as the tax equity, it really does come out to zero. In terms of leveraging, what does your organization have financially in it? Mr. Silverwood said the tax credit, the true leverage in this project, is that we bring the $9,000,000 plus dollars of equity is through our resources to bring and leverage the city’s money. Commissioner Huston asked if the resources are the tax equity? Chairperson Scarpelli asked Mr. Silverwood to give an explanation of the tax equity. Commissioner Huston asked him to explain what the tax credit investor equity is. . HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 6 of 12 Mr. Silverwood said that to begin with, he does not have the exact figures with hlm today. His company has already expended easily in the hundreds of thousands of dollars in predevelopment expenses on this project. To answer your question about tax credit equity, we could actually spend hours tahg about because it is very complicated. What happens is that we as a developer in all of the affordable projects apply to the State of California to an agency that allocates or awards these tax credits per project. You have to compete against other projects throughout the state. We then take the tax credits that are awarded to us as the developer, and we turn around and we sell the tax credits, not to individuals but to major fortune one hundred companies, and those companies in turn direct money back to us to help pay for the cost of the project. Commissioner Huston had another question. The deferred developer fee that is in the report, is that fees that would normally be collected by the city? Ms. Fountain answered that it is part of their developer fees. So they are just agreeing to defer that to a future date rather than getting that up front. Chairperson Scarpelli pointed out that in the report there is a 10.6%, or close to that, on developer fee on total cost of the project. Therefore, they are requesting close to 80% on undue gain on page two. The developer will receive a developer fee of $1,500,000, which is approximately 10.6% fee of the total cost including the cost of the land. The developer is proposing to receive 83% of the fee for the amount of the $1,249,000 during the construction of the project and then is deferring the remainder. The remainder of $250,597 would be repaid over the first ten years. Commissioner Huston continued that 83% of that would be up front correct? Mr. Silverwood answered that it is paid to the developer during construction and some of it isn't paid until after the project is completely occupied and it might be a year after the construction. Commissioner Huston said okay because in here it states 83% during the construction of the project. Mr. Silverwood said that he thinks it just means during the development of the project. The deferred portion is a portion that we are turning back and assisting the City to help finance the project. Because if it wasn't deferred, it would be paid to us, which would increase the City's contribution. Chairperson Scarpelli reiterated that the $100,000 is being deferred out of the $1,249,000 or bein'g deferred out of the remainder? Ms. Fountain answered that they are saying that if they were paid the full amount of the developer fee up front, they would be asking for more assistance up front from the City. They are willing to wait for that portion of the developer fee and then tahg it out of some other source like other development sources. Commissioner Huston asked if we were talking about the $250,000? Ms. Fountain said right. They are putting themselves at risk that there is not enough money at the end to pay that, but if there is, then they would recover that amount of the deferred fee. Just to add to what Mr. Silverwood is takng about, this is typical of a lot of the structures and how they work on affordable housing. There are tax credits or there are bonds that issue for financing. There is a percentage of a conventional loan, but it is a very small percentage. Most of the other projects have a master developer that is putting in several million dollars into the project. They do bring their expertise to the table in getting those tax credit dollars and getting as much in the tax credit equity as they can into the project. They have relationshps that they have developed to be able to get that llke we might get with a private lender. This is another way to bring the equity into it. Chairperson Scarpelli said with most of the Commissioners currently, we probably should have a workshop for them on tax credits. HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 7 of 12 Ms. Fountain agreed that we should have a workshop as it is confusing. She said the investor is giving equity to this project in exchange for getting a tax credit. Commissioner Huston asked if the money is going into investments while you are waiting for the revenue from it? Ms. Fountain said it is actually the equity that goes to the project. Commissioner Huston continued by asking about the 20% subsidy, right? Ms. Fountain said staff was figuring total when we include the land is about 20%. Commissioner Huston asked about other projects that we have done that have had 20% subsidies? Ms. Fountain answered that we haven’t really done that many that are like hs. Usually we are putting in about $10,000 or $15,000 a unit, which isn’t as substantial, but in this particular case, one of the reasons we decided to structure this as part of it being a land acquisition, is we then have that asset that we have control over. That feels more comfortable to be able to put a little more money into the project. It is a unique project, and it is higher then what you have seen on other projects. It is for the reasons we have already discussed, because we don’t have that master developer contribution so it needs to come from the City or somewhere else, and there really aren’t many other sources for that to come from. Chairperson Scarpelli asked if another other Commissioners had any questions. Commissioner Huston asked where else in San Diego County has Affirmed Housing done affordable projects like this? Mr. Silverwood said they have done projects in the City of San Marcos, Escondido, El Cajon, and the City of San Diego. Chairperson Scarpelli said he would like to make a comment regarding the developer fee since Commissioner Huston did raise that issue. That would be typical. So he is not going to be typical as far as what a developer fee for the amount of responsibility they have in the development of the project and the cost and so on in developing the project. Commissioner Huston said, but the amount they are aslung for is in addition to the developer fee? Chairperson Scarpelli said that is just to construct the project. I just wanted to make a comment since that was raised. Our experience would indicate that is typical. I did have some concerns, which I think now have been answered in my own mind is the unit cost per square foot. Also, I had a question regarding land cost, but I guess that is answered by the amount that the City would contribute. So we assume the land is $2.8 million? Ms. Fountain said on the pro forma that is just the total. That is what the cash assistance plus the land. If you look at the land acquisition on the pro forma, it shows about $1.5 or $1.4 million on the land. Chairperson Scarpelli said he would like to bring to the attention of the Commissioners to go to page 2, on the top paragraph, the proposed unit affordable apartment project, and I took those numbers and broke them out. I thmk what is significant for our consideration in our role being that of reviewing for recommendation to the City Council that it meets affordable housing requirements that we are attempting as a Commission to achieve for the City of Carlsbad and its residents. If you look at that carefully, we are talking about five of the units being in the 30% of the area median income, 6 in 40%, but even more significantly, 28 units will be in the 50% of average monthly income. The majority of these fall below the 50% of income level. It is meeting a considerable need that we have when it HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 8 of 12 deals with people’s income versus the cost of housing. I think that is significant, and I would like to draw that to your attention. Commissioner Huston asked what the area median income now? Ms. Fountain said it is based on a family of four. We just got the new income levels. (The income levels were given to the Commissioners.) Ms. Fountain said it is broken down by households. Chairperson Scarpelli stated that in the third category of 30% where there will be five units available, we are dealing with income of $20,700. Twenty-eight out of the fifty-six are at the 50% level so again for a family of four, the area median income is $34,500. The other observation that I had on this project is the fact that these units being used in the future doesn’t sound realistic to price the units as to the City’s investment. It will obviously run that way up. Ms. Fountain said the Council can set it at what they want. Right now Villa Loma is $43,000 and it goes up every year. It will depend on if we decide we need to use those, what the Council recommends. Chairperson Scarpelli said he only raised that as an observation as a practical thing that we may never have to use them. Ms. Fountain answered that is why it is not included in the report as being a way you can recover the money. We are saying it will go into the project as a loan and be repaid through cash surplus. At some point if the credits are sold, then the income will come back into the project. We don’t count on that or guarantee that would happen. Chairperson Scarpelli indicated that if we approve the recommendation to the City Council that this meets the affordable housing element from this Commission’s perspective, does that in any way, negate our opportunity to discuss this on a land purchase lease back versus a straight land purchase. Ms. Fountain asked if he meant anythmg done in this Commission? Chairperson Scarpelli said right. In this particular case, we are talking about purchasing the land and putting the land as the City’s equity into this for return of the equity, and I suspect it is a very low interest on it or no interest? Ms. Fountain said all loans are set at 3%. Chairperson Scarpelli said this versus we remain the titleholder on the land and lease it to the property. That is another option the City is looking at? Ms. Fountain said yes, that is what we are proposing. Chairperson Scarpelli asked if we approve this tonight, do we negate the leasehold environment? Ms. Fountain answered no. It would be a separate action. This is just the cash assistance into the project, then the acquisition of the property. We are proposing that the City buy the property and then we enter into a ground lease back to Affirmed Housing and then they ground lease. But the City gains ownership of the land. Chauperson Scarpelli stated that it would be interesting to see how that turns out. Of course, we don’t have any option other then to talk to our CounciI Members about that, but I would almost lean towards the leasehold on something like that. HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 9 of 12 He thanked MI. Silverwood for bringing forth this project. I think it is a great project and well needed within the City. Certainly it will meet the needs of a lot of the people. I do have one more question. Will hs apply to all the people on Section 8 as well, if they meet the standards? These units will be available to them? Ms. Fountain said right. Chairperson Scarpelli said from our perspective as a Commission who are responsible to try to do everythmg we can to bring about affordable housing for people in these income groups, this project certainly meets the spirit and also the requirements. Ms. Fountain asked if Ms. Socorro Rodriguez Anderson would like to say anythmg? Ms. Anderson commented that considering that a lot of Section 8 has been cut back, the affordable housing need is great here in Carlsbad. There is a waiting list on a lot of our inclusionary housing requirements of two to three years. To me this makes a lot of sense to be able to have something like this. commissioner Ritchie asked Ms. Fountain how faithful we are at determining the ability to continue to live in affordable housing. Do we determine if people continue to be able to live in these categories able to live in these affordable complexes? Ms. Fountain asked if she meant if they are still qualifjmg for it. They get recertified every year. We include in the regulatory agreement the guidelines, but they don’t get immediately kicked out of the unit. That is something that is looked at. All the people who are living in the affordable units, are still qualifying for them. Commissioner Ritchie asked if that is once a year? Ms. Fountain answered yes, once a year. Commissioner Huston asked what the interest rate is on the loan? Ms. Fountain answered 3%. Commissioner Ritchie commented that what she likes about the project is it is near the geographical center of Carlsbad. We definitely need housing in that area. Chairperson Scarpelli added that it is near an employment center along Palomar corridor. Ms. Fountain added that its location is helping with the competitiveness of it in the tax credit application. Commissioner ktchle asked if there was any public transportation in that area? Ms. Fountain answered that it is right on the bus line. Commissioner Huston commented that she agrees this is a good project with the exception of the pool. The Commissioners all agree that affordable housing has needed projects like this; good location, good project. I can’t find anythmg wrong with the project. In terms of the financing, I am not completely comfortable because I don’t think there is enough leverage on the part of the developer. Chairperson Scarpelli suggested to Commissioner Huston that if she wanted to make more then a comment regarding the pool, she can also make a motion. Again, that would only be in the form of advisory that since the developer came in with a grassed in area in the pool area, and it was staff that requested it be turned into a pool, if you get HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 10 of 12 support of this Commission, it would strictly be advisory in its nature, but it could be asked that.hs be looked at again for the purpose of going back. Commissioner Huston asked if she can make that motion? Chairperson Scarpelli answered sure. Commissioner Huston moved that the Planning Commission and staff review the project as it was first put out there by Affirmed Housing Group to be a grassy area. Perhaps that would be more appropriate for the children that will be living in that community as an advisory. Commissioner Smith asked Commissioner Huston if she is saying because of the insurance liability with the children involved? Commissioner Huston said she thinks there are numerous reasons. The cost of maintaining and heating the pool, there will not be good runoff because you have less grassy area there, and also you will have to have a big fence around it and it needs to be watched because of small children getting in there and drowning. The liability issues are great. You are going to have a higher premium on insurance because of those issues. Not to mention that the swim complex is going in that quadrant of the city, which is in process. Commissioner Smith seconded the motion. Chairperson Scarpelli supports the recommendation and the motion, possibly revisiting the issue on the basis that Commissioner Huston presented. It might be worth a second look with encouragement that it go back to a grassy area or a play area. VOTE: 5-0-0 AYES: NOES: None ABSTAIN: None Scarpelli, Huston, Ritche, Schraml, and Smith Chairperson Scarpelli entertained a motion on the staff recommendation to the City Council to provide $1,454,276 in financial assistance for construction of fifty-six affordable apartment units in the southeast quadrant of the City. Commissioner Ritchie moved that we accept the Carlsbad Family HousingKassia Heights recommendation of approval to the City Council to provide $1,454,276 in financial assistance for construction of fifty-six affordable apartment units in the southeast quadrant of the city. Commissioner Schraml seconded the motion. VOTE: 4- 1-0 AYES: NOES: Ritchie Scarpelli, Ritchie, Schraml, and Smith ABSTAIN: None DIRECTOR’S REPORT Ms. Fountain doesn’t have any specific projects to talk to the Commission about, but she does want to bring them up to date what is happening with the Rental Assistance Program. Actually, Socorro mentioned this with her comment. There have been fairly significant cuts in the rental assistance program. The Federal government has approved some cuts to that which we are still trying to figure out how it will impact our overall program. Right now, we have a temporary policy in place that we are not accepting any new people onto the Rental Assistance Program and we are HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 1 1 of 12 not allowing any people to port in or port out, which means they cannot come in or leave with a voucher. We have those temporary policies in place until we can figure out how we can best address the cuts. The cuts were significant enough that they are equal to about one month of our Housing Assistance Payments, whch are close to half a million dollars. We will be bringing a report back to you at a later date on what the strategy is for dealing with that. In case you begin hearing about this issue, I wanted to let you know it is real. We had cuts in both the administrative cost related to operating the program as well as the rental assistance payments that go out. Right now we are in a holding pattern on that program as to whether or not we are going to be able to process any additional people on to it. We are hoping that the cuts do not get any worst. There are proposals that probably in the next three years, we could see more cuts. This is difficult for us because we have over 2,000 people on our waiting list for rental assistance and we may have to tell people there isn’t a chance right now that they can get on the program. We are trying to make sure at a minimum that we can maintain the people we have currently on the program. Ms. Fountain continued that the good thing about these types of projects coming forward though is they are getting the rents down low enough where a lot of those people on the waiting list would hopehlly be able to qualify for them without assistance. Our hope is to keep adding units. As you saw tonight, it is going to keep getting more expensive to do those because costs of construction have gone up, the prevailing wage is about 35%, and typically between 35% and 40% is what we are seeing on projects. More of this may be seen in the newspapers as people become more aware of that. In the next year the new budget appropriations proposals are coming out and not looking much brighter than what we have right now. Commissioner Huston asked if this means the Commission will not be meeting for a while? Ms. Fountain said we have several things we are working on including projects in the Villages of La Costa, their second phase, which is going to be coming forward with a fmancial assistance request. It may not be in March, but probably at our next meeting in April. There are still projects in the pipeline that will come before you. The housing element is being processed too so that will be coming forward to this Commission for recommendation on programs. CHAIRPERSON’S REPORT Chairperson Scarpelli stated that he feels we have enough new people on the Commission that we need to go into the hdamentals of how affordable housing really works, with all the subsidies that are available. Since we do not have that many scheduled meetings due to the lack of projects that will be coming forth to us, getting back to our last official meeting. We had talked about starting to look for new ways and new ideas on how to approach old problems, and he asked Ms. Fountain to give consideration to inviting the Commission members to staff meetings and staff planning sessions, even as sitting in, so that we can get a better understanding. For example, the concern Commissioner Huston had about the leverage that doesn’t exist for the developer. We know how much leverage is guaranteed. Sometimes with the Commissions misunderstandings because we don’t know what it really entails, then maybe we can get some type of workshop or planning session. This is not in any way trying to do staffs job, but to sit in as observers for learning to help us. Ms. Fountain said we can do another workshop. We have actually put together some spreadsheets that show all of the projects that we have in Carlsbad and how they’ve been financed. It is interesting to see the different ways projects have been financed, how much money has been brought to the table from different components. We just did that recently. Commissioner Ritchie asked if we were supposed to have one more workshop meeting on the Housing Element? Ms. Fountain said we will have one more Housing Element workshop. There was one scheduled and we decided not to hold it because we weren’t ready to make recommendations on any of the programs, because we are still working through some issues. One of the main issues is we haven’t agreed on the numbers yet as to what our obligations are HOUSING COMMISSION MINUTES FEBRUARY 24,2005 PAGE 12 of 12 in providing housing in Carlsbad. Actually, it is not just Carlsbad, it is a region-wide issue because SANDAG gets numbers from the state. Commissioner Huston asked if we were already locked into that by way of our General Plan of Growth 1985? Ms. Fountain answered we have housing caps through ow growth management plan, but this is something that we are supposed to work into the housing caps. Commissioner Huston asked what if it conflicts with the General Plan, or in Carlsbad’s case, it’s growth management plan? Ms. Fountain said that is one of the major issues that is being discussed right now, which is why we don’t have any programs yet to recommend. That is the question as to whether or not you can be forced to accept units that you have a growth management plan that says you can’t. There is some opinion that the state overrules any local decisions like that, but that hasn’t been tested in the courts yet. Ms. Fountain said there is supposed to be a decision tomorrow on those housing numbers at SANDAG. ADJOURNMENT By proper motion, the meeting of February 24,2005 was adjourned at 6:45 p.m. Respectfully submitted, Debbie Fountain Housing and Redevelopment Director PATRICIA CRESCENT1 Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.