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HomeMy WebLinkAbout2006-03-09; Housing Commission; MinutesMinutes of: HOUSING COMMISSION Time of Meeting: 6:00 P.M. Date of Meeting: March 9, 2006 Place of Meeting: CITY COUNCIL CHAMBERS CALL TO ORDER Chairperson Scarpelli called the Meeting to order at 6:00 p.m. PLEDGE OF ALLEGIANCE Chairperson Scarpelli dispensed with the Pledge of Allegiance. ROLL CALL Present: Commissioners: Sondra Boddy Doris Ritchie . . Edward Scarpelli Margaret Schraml Bobbie Smith Staff Present: Housing and Redevelopment Director: Debbie Fountain Housing Program Manager: Bobbi Nunn APPROVAL OF MINUTES Minutes of August 11, 2005, were approved as written. VOTE: 4-0 . AYES: 4-0 NOES: None ABSTAIN: 1 (Sondra Boddy .was not a member of the Commission at the August 11, 2005, meeting) NEW BUSINESS • ' . : Ms. Bobbi Nunn, Housing Program Manager, began with her presentation. To focus on the Streamlined Annual Public Housing Agency Plan, we are required by regulation to submit a five-year and an annual plan. The plan is a comprehensive guide to the policies of the Housing Agency, the types of programs we run are operations and our strategies for meeting our local housing needs and goals. We did submit the 5-year plan for 2005 through 2009 and that was approved by the Housing and Redevelopment Commission on April 12, 2005, and was submitted to HUD and then approved by HUD in November. Since we don't have any public housing units, as we-have tenant-based rental assistance,, we are required to submit a Streamlined Annual Plan. As you can see from your packet, it is a minimal document we have to submit. It is required by the Federal regulations. It does require a comment period, and the comment period will end on April 10, 2006. Then we tentatively have a public hearing that will be scheduled in front of the Housing and Redevelopment Commission on April 11, 2006. Any public comments on the draft PHA Plan will be addressed and included in the final document. As of today's date, I have not received any comments from the public. In addition to submitting the PHA Annual Plan, we have to identify if we have had any changes in our policies, programs or plan components from the last Annual Plan. We also have to submit a PHA, Public Housing Agency, Statement of Consistency with the Consolidated Plan. There had been two significant changes since the last Annual Plan was submitted. Even though we have had other policies that have changed, the only ones we are required to respond to are ones that were actually part of the Annual Plan. One of the two items that was part of the Annual Plan last year is our Section 8 Waiting List. Last year when we filed our Annual Plan, we did have an open waiting list. As a result of a decrease in funding that we received and since we had a significant number of people on our waiting list that are eligible for the program, the decision was made to close the Section 8 Waiting. List, and that was done HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 2 of 16 effective October 1, 2005. At this point, we do not anticipate opening the Section 8 Waiting List for the next year because of the funding we are receiving. We are receiving enough funding to assist the number of clients that we have at this point. The other change that was made is our minimum rent, which means the minimum rent that a tenant has to pay towards their share of rent, has been reinstated to $50.00. At one point it was $50.00 and then we changed the policy and reduced it to zero. Now we have reinstated that amount back up to $50.00. Now all of our clients are required to at least pay a minimum of $50.00 toward the contribution of their rent. Other than that, the PHA Plan Components remain the same. As part of the report, there are certain documents that have to be referenced in the plan and are incorporated as exhibits to the plan. One is the PHA Certifications of Compliance, with the PHA Plans and related regulations and board resolution to accompany the Streamlined Annual Plan; document B, the Regional Analysis of Impediments to Fair Housing Choice in the San Diego area, which was updated August 2004; document C, the City of Carlsbad 2005 through 2010 Consolidated Plana and the fiscal year 2005-2006 Action Plan; the Administrative Plan for the Section 8 Tenant Based Rental Assistance Program, our last Section 8 Management Assessment Program Seamap Notification Final Score letter, which ended fiscal year June 30, 2005; and then the City of Carlsbad Family Self-Sufficiency Action Plan. Staff is recommending the Housing Commission to adopt Resolution 2006-001 to be presented in front of the Housing and Redevelopment Commission for approval to approve the PHA Streamlined Annual Plan for Fiscal Year 2006 and to submit to the US Department of Housing and Urban Development. As part of the report, I did want to bring up some information regarding funding. We did get our final funding numbers in. The funding has changed according to how the Federal government funds. It used to be they would fund us in accordance with our fiscal year. Then they started to transition over to funding towards the federal fiscal year, which is October 1st. As of last year, the funding has now changed officially to a calendar year basis. We are now receiving our funds based on a calendar year. Unfortunately, a lot of times we are not getting information until after the fact. I know it was brought up that sometimes the information is not being disseminated to the Housing Commission and to the members of the community. Unfortunately, that is as a result of the fact that we a lot of times do not get the information until right before it goes into effect. A lot of times it is after the fact. We just now received our final funding information for calendar 2006 and we are in the month of March. For last year, our calendar year 2005 funds were $5,300,500 for housing assistance payments. That was enough to assist about 650 families. What we call our baseline units is what HUD had originally allocated us was 703. As a result of the amount of funding we are receiving, we are only able to assist 650 families. Chairperson Scarpelli asked if originally we were anticipating $7,300,000. Ms. Nunn said before funding was based on the number of units we were allocated, we had 703 units. We would advise HUD how much money our average housing assistance payment was per unit and they would fund us according to 703 units. They have now changed the funding process to a set amount of funding. Even when they identify the amount of funding that we are required to assist our program size, we are still receiving a reduction of that because of the reductions in funding for the program overall that has been made by the federal government. For this year, we only received 94.6% of our actual funding that they feel we are entitled to. That was as a result of prorated cuts they made because of funds they have actually allocated for the program in general. Back to calendar year 2005, we did receive $5,300,500 specifically for housing assistance payments. Then we received $509,000 for administrative costs, which cover our maintenance and operations. This year we did receive a 4% increase in our housing assistance payments. We'll be receiving, for calendar year 2006, approximately $5,600,000. For our administrative fees, it will be $512,000 that we will receive to cover our maintenance and operations for calendar year 2006. For the housing assistance payments, we basically realized a 4% increase from calendar 2005 and we received approximately $3,000 more in administrative costs for 2006 from 2005. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 3 of 16 Chairperson Scarpelli asked how the number 5.6 million matches up to what our actual need is that we are projecting. Ms. Nunn answered at our current level of assisting our clients since we are at approximately 60% of our program size, we are able to subsidize the current numbers that we had. One of the reasons we had to reduce our subsidy was it was either reduce subsidy per client and be able to maintain the number of clients we had on the program or else we would have been forced with having to look at actually cutting people from the program, which is what we wanted to avoid doing. At this point, with what we are being funded, we are able to assist between 650, maybe 670 families. It depends on what our family composition is. If we have a larger number of families that are eligible for a one-bedroom subsidy, then the costs are less to maintain that client base versus if you have more larger families where you are paying a three- and four-bedroom subsidy. When we are anticipating having funds available, then we have to consider who the next people are who are on the waiting list so we can determine how many of those people we would be able to assist if they were all successful in leasing up under the program. Chairperson Scarpelli asked when are the increases or decreases or changing of the fiscal year changing in the program? Is that a congressional bill that is providing that information or is it administratively done? Ms. Nunn said she is not quite sure what his question is. Chairperson Scarpelli said when we have a decrease like we had down to the $5,300,500, is it HUD administratively, the bureaucracy part of it, or is it something happening in congress on some bill? Ms. Nunn answered Congress. Congress determines the maximum amount of money they are going to pay for each program. The Housing and Urban Development, HUD, submits what they anticipate the cost to fund every housing agency at 100%. Then Congress establishes a set amount of money, and then based on what the need is, each housing agency receives a lesser amount of percentage. We were based on what HUD felt we needed. We actually needed $5,900,000, but because of the actual funding that was available that was allocated by Congress, we are only receiving 94.6% of that. We are actively involved with the industry as far as trying to advise and educate Congress on what the needs are and how important this program is. One of the agencies that we belong to as a housing agency is the Housing Authority Association of Southern California. We did put together a legislative paper for Los Angeles County, Orange County, Imperial County and San Diego County housing agencies that typically belong to HAASC. This legislative paper will be going to the Congressional NAHRO meeting which is the National Association of Housing and Redevelopment Organization and will be presented to various Congress people to advise them of what the need is, how successful this program is, and how it transforms people's lives and impacts their lives. These are some of the efforts we are making. Chairperson Scarpelli asked how much help have we received in trying to meet our needs here from our local congress people? For example, from our past congressmen? Ms. Nunn said she can't really answer that. I know that we receive legislative alerts where it advises the housing agencies that this is something we need to respond to. Then letters get sent out on behalf of the City of Carlsbad to the different congress people advising them of what the situation is. We are advising them on a regular basis what some of the issues are throughout the whole funding process. Right now they are starting the 2007 allocations so there is information being presented regarding the 2007 allocations. We are responding as we receive information. The housing agency itself is advised of these situations through the industry groups that we belong to such as HAASC and NAHRO. As far as what direct benefit we are receiving on behalf of Congress, I can't answer that question. Commissioner Smith asked if we have a lobbyist to Washington D.C. for housing in Carlsbad. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 4 of 16 Ms. Nunn said she is going to allow Ms. Fountain to answer that because it is not specifically for the housing department. Debbie Fountain, Housing and Redevelopment Director, said the City does have a lobbyist, Ron Packard, who is well known in Washington D.C. He doesn't specifically just focus on housing issues. It is any type of issues that we are having; if we are looking for funding or whatever; he actually walks the halls with our Council Members and makes those contacts with them. We do try to use him as much as possible. As Bobbi mentioned, we do send letters to our congressmen and senators and whoever else we think might listen. I must .say that if it wasn't for these lobbying organizations that that we do have like NAHRO and HAASC, we probably would have had greater cuts than we actually had because originally there were proposals that were a lot greater than what we ended up with. If these groups hadn't been lobbying as strongly as they are, we think it probably would have been even worst. Commissioner Boddy asked about the cuts that were mentioned. I thought Ms. Nunn said the funding had increased by 4% over last year so which cuts are you referring to? Ms. Fountain said originally last year, as you all remember, we had some big cuts in our funding; We had to make some decisions on how we were going to address the funding and that's what Ms. Nunn had commented that we had to lower our subsidy amount which increased the participant's subsidy amount. This year they are working off of that initial cut that we had and then they are adding on to that based on the funding that comes from Congress. So we are not facing any further cuts this year, but it is a different base than we had last year. Ms. Nunn added that as far as the cuts, we are looking at yes we did receive a 4% increase from 2005, but that increase does not really reflect what the increase in our costs were as far as our housing assistance payments, as far as the market rents go. We feel very fortunate that we did receive the same amount of money and a little more, but it is difficult to keep up with the escalating costs in the market. She continued that one of the things we do as part of our program is education. I know in the past the Housing Commission has been interested in some of the seminars we are providing. We do contract with Heartland Human Relations and Fair Housing Association and we do have a workshop next Tuesday, March 14, 2006, at the Carlsbad Senior Center. I did bring flyers for that. The flyers went out to all of the owners that we have in our owner base as well as all of our current clients. That concludes my report. Commissioner Schraml said she is still hoping the client base can somehow be made aware of the general problem, and you are all doing a wonderful job of handling what little money you are getting. I do appreciate that. My concern is the client base may not have enough knowledge to be able to make decisions for themselves in the future that this is going to impact them and they have no idea from what I am hearing from them. Ms. Nunn answered that she really doesn't know how to respond to that other than I agree with you. I know you had mentioned earlier about payment standards being reduced. That was something we just received information on the third week of February that went into effect on March 1, 2005. In fact, I haven't even had a chance to discuss this with the director of our department. When we originally made our payment standard changes, we basically had to do that as a reaction to a crisis. We were able to enact a provision within the regulation that gave us the ability to give us a 60 day notice to our clients that it impacted to advise them that our payment standard was being reduced. We are looking at our fair market rent has now been reduced to the 40th percentile of the market. Before when they looked at the San Diego County market and determined what our annual rents are, because HUD gives us guidelines on an annual basis on what the rents should be in the form of a fair market rent. Based on that fair market rent that is published by HUD and usually goes into effect October 1st, a housing agency can look at their program and make the determination whether or not they want to establish a payment standard at 90 to 110% of that fair market rent that is established by HUD. In the past, because we have always had such a high market area, we have kept our payment standards at 110% of the fair market rent and we've had the funding available to support that and be able to support our full program size of 703 units if we were fully leased. When we received the cuts, we had to then take action because we did not have enough money. As you are all aware, we ended up with a shortfall of what was anticipated HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 5 of 16 . to be 5341,000 and it ended up being about $326,000, but still it was a shortfall. One of the ways we looked at to try to avoid having an unfortunate situation of having to cut people off the program, we reduced the payment standards. We reduced the payment standards to 100% of the fair market rent. When they published the fair market rents for October 1, 2005, originally when they proposed the fair market rents, they proposed them for San Diego County at 40% of the market versus 50%. The reason they had increased to 50% in the first place is because they identified there were too many pockets of San Diego County that had people of high poverty level. Now that we have been able to deconcentrate the areas, we are now being brought back down to 40 percentile on the fair market rents. Our fair market rent went down significantly. Ms. Nunn continued that Commissioner Schraml said she had heard that Oceanside has reduced their payment standard. This is something we have had to do as a result of receiving information from HUD that effective March 1, 2006, that change was definitely going to go into effect. When they had first proposed it, because of industry outcry, they retracted it and said they would look at comments before they made the final decision. As of October 1, 2005, we still had the original fair market rents that were published that were determined at the 50th percentile of the area. After public comments, they determined they were still right in making that reduction to the 40th percentile so about the second week of February we received the notification that was going to go into effect March 1, 2006. By statutory requirement, we cannot allow a payment standard that exceeds 110% which is why our payment standards are going to have to change. A one-bedroom payment standard with the fair market rents at the 40th percentile at 110% is $957. Under the regulations, except for when we had to do that emergency decrease in subsidy, those will not go into effect until a person's second annual re-examination. So for those that had a March 1s' re-examination, if the fair market rents continue to be at the 40th percentile and continue to keep reducing, they will not receive that impact of the reduction until March 1, 2007. At this point, it doesn't really impact any of our clients unless they are looking to move. We can request an increase up to 120% of our fair market rent. That does require HUD approval to do so, but then we also have to look at what we can afford to do with our budget, and we have to make the decision on whether or riot we can financially afford to pay more of a subsidy which means we are going to assist less people or be able to assist more people and they may not get quite as much subsidy. Right now it doesn't impact anybody unless they are planning on moving or if there is somebody who is planning to transfer into our jurisdiction from another agency. Commissioner Schraml said she appreciates that information greatly. That helps and we all on the commission, I'm sure I can speak for all of us, appreciate the huge job you have and the wonderful job you are doing with it. I still would like the general client base to be aware of the troubles you are having and not be surprised with it at the end of the day. Ms. Nunn said she can appreciate that, but unfortunately, sometimes when we do those mass mailings, it ends up causing more problems because then all of a sudden we've got clients that think this is impacting them now. It is a balance you have to come up with; being able to advise clients of what the information is, but also not to cause a panic in the community. When we have any kind of suggestions that something is going on as far as our payment standards, and all of a sudden the program is cut, and then we are getting calls that they heard the program is cut completely, not just that we have to cut subsidies. It is a balance on being able to provide and educate people without causing panic in the community. Commissioner Schraml said she can appreciate that, but is approached with questions people are hearing from other districts and what is happening in them and wondering what is going on in Carlsbad and hearing rumors. The subject is out there. Ms. Nunn said it is inherent in the program. Anytime there is any suggestions of change in the program, we hear from the clients more sometimes than from HUD. Commissioner Schraml said it might be helpful if even the Commission was kept up to date on the difficulties you are having and what you have to deal with. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 6 of 16 Chairperson Scarpelli said the point is well taken that it is a delicate balance. You don't want people to become concerned to the point it puts their life in a real stress mode, sometimes unnecessarily. However, people do need to plan and especially those who are working from paycheck to paycheck or social security check to social security check. They need as much advance notice of what is coming down the pike. So it is a matter of how it is communicated and how clear the language is used. I think the point is well taken that there is a balance necessary, but also that as much advanced notice is properly communicated so people can plan is also important. Commissioner Boddy said she got a lot more from Ms. Nunn's presentation than she did from the material in the packet about our 2006 Plan. I gather that a lot of the detail is in some of the supporting documents. I imagine they are voluminous and that is why they weren't attached or provided to us. I just don't feel like I have a sense from this material, which I gather what is going before the Housing and Redevelopment Commission as to what exactly the 2006 Plan is. You make it difficult for me to approve it. Ms. Nunn said the plan is a template provided by HUD that is required for us to fill out. What I am giving you is more information, but this is just a regulatory requirement we complete this document and submit it. We are affirming to the fact that we haven't made any changes except for the two I have identified since 2005. Commissioner Boddy said right. I gather there is a five-year plan right? Ms. Nunn said right, the five-year plan was approved last year. Commissioner Boddy said since she wasn't on the Commission at that time, I'm not familiar with it. Maybe everybody else here is and that could be part of the reason, but it does say here that the PHA Plan is a comprehensive guide to our policies, programs, operations and strategies for meeting local housing needs and goals. I'm sure the five-year plan covers a lot of that. I just would have liked to have seen that as well as part of the package to really understand where we are and what we are planning to do for the current year. Is there any way you can provide that to me? Ms. Nunn said as identified in the staff report, those are available at both libraries and the City Clerk's Office and the Housing and Redevelopment Department. It is an electronic file and I could easily e-mail that to you. Commissioner Boddy commented that she probably will not be able to vote one way or the other on this item tonight not really having enough information to make a decision. Chairperson Scarpelli called the motion to a vote. Commissioner Ritchie moved that the Housing Commission adopt Resolution 2006-001 recommending that the Housing and Redevelopment Commission approve the Carlsbad Public Housing Agency Streamlined Annual Plan for Fiscal Year 2006 for submission to the U.S. Department of Housing and Urban Development. Commissioner Schraml seconded the motion. Commissioner Boddy asked if the item could be continued to the next meeting. Is it necessary or is there a deadline or a timeline here that requires us to approve this tonight? Ms. Fountain said we actually do have a deadline. Maybe what we can do is we can go ahead and if you approve it, we can bring it back again next month if you'd like to have more discussion and we can get you a copy of the five- year plan; Unfortunately, we do need to get this to HUD to be in compliance. Ms. Nunn said it needs to be submitted to HUD by April 17, 2006. Ms. Fountain said we need to go to Council before we can submit it to HUD. But we can get you that information if we want to have some more discussion so if there is anything we do need to change, then we could process that separately. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 7 of 16 Ms. Nunn commented that at any time you can submit an amendment to your five-year plan or your annual plan throughout the reporting period. VOTE: 5-0-0 AYES: Boddy, Ritchie, Scarpelli, Schraml, and Smith NOES: None ABSTAIN: None Ms. Debbie Fountain presented a project that has some history. In 2003 the Redevelopment Agency purchased a piece of property on Roosevelt. The intent at that time was to build an affordable housing project on it. It is a little over a half acre site. We did some conceptual studies of how many units would fit on the site and looked at what kind of product we wanted to do. At the time, we decided about 11 or 12 units could fit on the site and meet all of our standards downtown. We decided to pursue a project on the site. We started working with Wakeland Housing, which is a local affordable housing developer that had actually done one other project in the city, the Vista Las Flores Apartment Project. We worked on a permit for an apartment project that was approved in December of 2004, an 11 unit apartment project. We looked at providing that in terms of affordable housing for very low income persons so that would be people at 50% or less of the area median income. The reason we were focusing on that very low income group is the redevelopment area has a requirement of its own for inclusionary housing. Even if we didn't have a city-wide inclusionary housing program, redevelopment areas have inclusionary requirements and one of those requirements is to provide housing for low income persons and the other is very low income persons. The very low income requirement had not been met for the redevelopment area. We've been able to meet the low income requirement at 80% or less of the area median income but not the very low so the redevelopment agency decided to initiate a project and that is why we bought the property and started working with Wakeland Housing. In March of 2005 the Housing Commission approved financial assistance for that rental project. At that time, you recommended to the Council almost 2.4 million dollar cash assistance. As you might remember from that discussion, there was concern about the cost of that project and the overall subsidy that was required. However, the recommendation was forwarded to the City Council and the City Council took quite a bit of time trying to figure out if that project was still feasible and whether they wanted to move forward with it as an apartment project. They ultimately decided not to pursue the rental project primarily because of the amount of cash subsidy that would be required from the City to make that work. We researched a lot of other 'sources of funding and could find no other funding available for it so pretty much the entire subsidy would have to come from the City of Carlsbad. The Council decided not to pursue that. We did submit a number of options to the Council at the time of their consideration of it like purchasing an existing rental project and maybe rehabbing it and reducing the rents like we did on Tyler Court Apartments or trying to find another site that was bigger and could produce more units so the per unit subsidy would be less. One of the ideas we threw out at the time, this was a more recent occurrence, that came up after the Housing Commission had taken action on this item, is Habitat for Humanity has entered into the condo business. They used to build single-family homes and would do maybe one, two, three, four at a time, and they weren't doing larger projects. When we first looked at our property, we couldn't get enough units through Habitat for Humanity if you were just doing single-family homes. When we discovered they were actually getting into the condo business and had already done one project in Escondido, we decided to contact them again and see if they might be interested in partnering with us on a condo .project on this site. Habitat for Humanity indicated they were interested in partnering with us and that option was presented to the Council as a possibility that we could go do that instead of the rental product. The Council liked that idea and said they wanted to pursue that so we have been meeting with Habitat for Humanity to try to figure out how much in financial assistance they would need to do the project. As you are probably aware with Habitat for Humanity, they work with volunteers and sponsorships and material donations and that type of thing to get their projects built. So they could bring additional resources to the table that we weren't able to get to the table with Wakeland Housing when we were using them. This is what Habitat does and this is not what Wakeland does. It was nothing against Wakeland. It was just a different product and a different way of accomplishing a goal. The Council told us to work with Habitat for Humanity and see what we could come up with and then come back to the Council with the financial assistance request. That is what we have HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 8 of 16 been working on for the last few months; trying to figure out what it will take. Typically, Habitat does require you to donate your land to them; they don't buy the land from you. You would have to donate the land plus cash assistance to the project. Tonight we are proposing that we take forward a recommendation to the Council from the Housing Commission that would recommend donation of the Roosevelt Street property to Habitat for Humanity with cash assistance. The cash assistance that Habitat is looking for is to cover predevelopment type of costs because those are the types of donations they can't really get. Those are for preparation of architectural plans to get their permits, do their construction drawings, to pay the fee the city has, and any other impact fees like school fees. That is where cash is needed and that is generally not the type of donations they get. They get donations and sponsorships for actually building the units themselves. In your report is the request for a1 total value assistance of $1,326,037. It works out to about $120,548 per unit. That does include the land and costs of transferring the land to Habitat of about $717,000 and then direct cash assistance of about $608,000. Until Habitat for Humanity actually gets a commitment on the land donation and they have some money to start working on the plans, they can't go out and ask for the sponsorships. They don't actually know at this time the exact value of their sponsorships so we may have to come back to the Housing Commission at a later date and say they didn't quite raise everything they thought they were going to raise and there might be some additional assistance required. This is different than the way we have come to you before because before when we've asked for assistance, it's for everything we think they are going to need. We enter into the loan agreements and then we move forward. On this particular project, as you may remember, we did give predevelopment monies to Wakeland because they were in a similar situation where they didn't have that initial money to be able to create the project. We will benefit from that because they are going to be using the same architect that Wakeland was using. So it is just the additional work to change them to condos from a rental project so it isn't starting from scratch with the architects, which is somewhat helpful. They do have to do additional plans because now there is a condo plan required. There are different utility requirements for a condo project versus a rental project so they will have to revise those plans and get new construction drawings done. At this point, the project is going to be similar to the one you saw before but it is going to be condos instead of apartments. The projected number of units, 11 units, is going to be the same; the sizes of those units are going to be pretty comparable so they still are going to be primarily one bedroom, one-bath units. Within the project, there will be eight one-bedroom, one-bathroom units which will be around 670 square feet so they are small units and it is expected that it would probably be more for seniors or one person households. Possibly the disabled might benefit more from this project than others. There will be three two-bedroom, two-bathroom units that are around 900 square feet. All of these units, as I mentioned earlier, will be sold to very low income households. I included on page 2 of your report the current income charts. Those will probably change fairly soon. We usually get the new income numbers for each year about this time, but we haven't received the new 2006 ones yet. These are the 2005 numbers. So if you were a household of one, that would mean you would be making under $24,150 to be eligible to purchase one of those units. These prices are going to be down much lower then we have seen in any of our other projects. It is also important to note that we do have to amend the Redevelopment Permit that we had on this project. So we are still going to have to go through that process of amending the Redevelopment Permit and to get started on that, Habitat for Humanity would need some of this funding that is being requested. As I mentioned, Habitat for Humanity is the development company that would be working on this. The San Diego Habitat for Humanity is an affiliate of the Habitat for Humanity International. They just produce in San Diego, this particular group. Up until this point, they have produced a little over 50 homes in San Diego County. Habitat for Humanity International has done much larger numbers than that. Generally they sell them, as I mentioned, to very low income families. They do a 20 year zero interest mortgage on the units. They typically like to build between eight to twelve new homes annually. This will be 11 so if they only did this project, they would meet their goal for this year, but they actually have several projects in the works right now. They do build the homes by using HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 9 of 16 contributions of land, materials and money. Interestingly enough, as soon as the Council took action and there was an article in the paper, we started getting phone calls from people who wanted to volunteer to work on the project so I don't think they will have a big problem with getting volunteers. Maybe the donations and the sponsorships might be different, but the volunteers might be easier for them to get. They do require each home buyer to put in 500 hours of sweat equity or labor. That labor actually can be on construction or it can be working in their offices or there are other ways people can do things if they are not physically able to actually build a house. So they are able to accommodate the needs of the households. In terms of the financial assistance itself, I did provide you with a basic summary of their development pro forma within the report. It reflects right now what the anticipated costs are for the project. We see construction costs continuing to go up in costs in Carlsbad so the overall costs are continuing to be pretty high at an approximately 3.8 million dollars. That would average unit costs of about $346,000 per unit. Again, as I mentioned last time, the problem is the small size of the project. If it was a bigger project, some of these costs could be amortized a little better over the different areas, but it is reasonable when you look at the current costs of construction and the small size of the project. Again, they will be using primarily volunteers to construct so this is a value they have placed on that. They will get sponsorships that will actually pay for that. They most likely will not have to hire a contractor to do it because they manage that themselves, but if they did have to hire a contractor and pay them, this is what they are valuing what that cost would be. When we look a pro forma and if we are going to provide assistance, a lot of times we want to look at what the developer fee would be for the project to make sure they are not walking away with some huge windfall. Habitat for Humanity does work a lot differently so their developer fee is actually quite small. It is only a $130,000 for the project, which represents about 3% of the total project costs. We've seen the developer fee average between 7 to 10%. We have had some a little bit higher then 10%, but it is usually 7 to 10% so they are actually fairly low. At this time, since we are just proposing that a land donation and cash assistance for the predevelopment, we actually wouldn't even be providing funding for the developer fee. That would come through their sponsorships or other cash donations they receive. I just wanted to share that information since we look at that pretty much on every project just so you can see how it compares to other projects and what is being done out there: If you just look at the subsidy analysis itself and if we are looking at the assistance we would be providing to Habitat, the direct financial assistance again would be about $608,000 and that would be about $55,295 per affordable unit. It is higher than what we have typically provided to other developers. The only one we have had higher than that has been on the Laguna Point project where the Council provided $70,000 per unit in subsidy. That was a cash subsidy to that developer. If you add the land to that and consider that part of your subsidy, than you are up to about $120,000 per unit, which again is much larger. But this is a different project in terms of the fact that the Redevelopment Agency is a partner in it where all of these other projects we actually have a master developer that has a requirement for the affordable housing. In this case we have to consider ourselves the master developer and those master developers are usually putting a lot of cash to make the affordable housing. They are putting land donations and cash assistance. So we have moved ourselves into a master developer where before we were helping to finance the project so it does change the dynamics as to what is happening with the projects. Outlined on page 5 of the report are the different sources of funding to build this project. If you look at that bottom chart, the cash assistance from the agency and the land transfer would be the City's contribution at this point. They are looking for an affordable housing program grant of about $220,000 which Habitat has always been pretty successful in getting so that would help with the project. Then their in-kind donations and their cash donations and sponsorships are the largest portion of where the funding comes in for these projects. I have put an asterisk next to the in-kind donations because this is the area there is the most uncertainty as to what they will actually get. As far as their sponsorships and their cash donations, they are usually pretty good at figuring out what they believe they will receive. The in-kind donations are harder because what we would be looking for in terms of on-site improvements, they might need an engineer that could come out; they might need someone to actually do those on-site improvements because they don't use the volunteers. On-site improvements would be like their parking lot or their dry utilities, their sewer or their water. The volunteers and the sponsorships and cash donations go to actually HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 10 of 16 building the building and they find it harder to find people who will donate services for these other types of improvements because it is not as glitzy to say "I built a parking lot" as it is to say "I built buildings people are living in." That is the area there is still a little bit uncertainty. When I said earlier we may be back again to look at some more financial assistance, will depend on how successful they are in getting those types of contributions. So if you know anybody who does those things that might be willing to donate, that would be great for them. The form of assistance will come with the donation of the subject property and the cash assistance that we'll provide as a loan like we do all of our assistance, but it will actually run as a second on the mortgages or the loans on the property itself. If the unit is sold, that is how we recapture our funding, which is typical of how we provide all of our assistance so we are able to get that funding back if the unit is sold to another person who is not a very low income. This project will have the same restrictions as our for-sale projects in that for the first 15 years they have to sell them to another very low income person at the very low income affordable price. After 15 years up to 45 years, they can sell it to a non low-income person at a market rate, but that is when we recapture our loan amount plus any shared equity we have in the project. That is typical of how we have structured all of our other deals. In terms of the risk analysis we do, this is similar to other types of projects we have done where we have this predevelopment risk where we get all of this done and it doesn't go to construction, which is what we faced with Wakeland since the project didn't go to construction on an apartment project. Hopefully, we won't lose as much because we are moving over into the for-sale project and we can use a lot of that information. We also have risk that construction gets started and doesn't get finished. Those risks we share with you in every single project. Adding to the risk is that we are subordinate to any conventional financing on the project. We do think there is a number of factors that mitigate the risk. The development team does have a strong record. Habitat for Humanity has been around for quite a while and has been successful in what they are doing. Their projects do tend to take longer though than most projects because they are relying on volunteer labor so it is when the volunteers can work and most of the volunteers can only work on the weekends. They are basically working on the project on the weekends, where if you had another project, they would be doing construction during the week and probably moving a lot quicker. All of this will depend on how many volunteers they get and when those volunteers can work. In this particular case, the developer is not going to have any out-of-pocket expenses to purchase the land or to finance costs of predevelopment, which helps to ensure there is a better chance of success because they do not have to put the money out at that level and can use their money towards construction. That helps the project to be a little less risky, at least from our investment standpoint. As I said, any development project has risks on any level. If your money is the first in, you are sharing more of the risk then any other coming in at a later date. That completes the presentation. We are asking the Housing Commission to take a look at this, see if this is something that you do want to recommend to the Housing and Redevelopment Commission and City Council. If it is not something you want to recommend to them, then we would take that action forward as well. Commissioner Smith asked about Ms. Fountain stating that when the Habitat for Humanity comes in, they work voluntarily so if I wanted to purchase a condo, I might not be able to purchase it for about a year or something like that. Ms. Fountain answered yes. Their current project timeline is conservative and it is projected that it will be two years before these units will be available. They did say that will all depend on how quickly their sponsorships come in and how many volunteers they get and when those volunteers can work. They anticipate it will probably be less then two years, but they are saying two years so people don't get too upset with them if it takes longer. Commissioner Smith commented she is so impressed with this project. Ms. Fountain said that Habitat for Humanity has shown they have been successful so it is a well established organization. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 11 of 16 Commissioner Ritchie said she would like to see us go forward with this project because I think we need to explore any and every opportunity we have to increase our affordable housing and particularly for very low income. It is a very significant project even though it is small. Commissioner Boddy had a question about the land donation. Would the transfer of the land to Habitat for Humanity be contingent upon their successful completion of the project such that it would revert back to the City if there was some problem such as the project didn't get built? Does that get worked in to the document? Ms. Fountain said yes, that is part of our directive to our attorneys is we want to make sure there is some trigger point that if the project, for whatever reason, can't go forward, then the property comes back to the City of Carlsbad. I think at this point, they are just looking for a commitment that we are willing to do this so they can go raise the monies. Chairperson Scarpelli commented that he has had first-hand involvement with San Diego Habitat for Humanity in their last project in Escondido, which was a great success. My involvement was through the Rotary District 5340, which really got behind this as a volunteer organization, as support. I think that was 16 units. Our own Rotary Club in Carlsbad was actively involved with both cash donations and actually work in-kind. I have had the opportunity to meet with the Board of Habitat for Humanity. I have had the opportunity to be on site a number of times during the construction of that project, and I have also had the opportunity to meet with some of the people in the City of Escondido as it related to this build out in Escondido, which was completed last year. I even had the opportunity of being there for the dedication of the opening of the project. All of that experience indicated that they know what they are doing, they are very successful at what they do, and they are able to get both the cash donations and the in- kind donations. Through third party contacts, for example in Rotary, were able to get donations of all the finish material for the units. I know our club was there one weekend and we painted one or two of the units' interiors. They have it very well organized. I too would support this. I think I might have even mentioned that we look into this at that time, I don't recall. The success that Habitat for Humanity had in assisting the affordable housing in Escondido was so good that the City of Escondido immediately donated a second piece of property, which is now being developed in the City of Escondido on Mission Avenue. That success caused the City of Escondido to move ahead directly on another project with them. I am looking forward to this as well. One question I do raise, and only because I ran into this situation in another city just today, is the weekend work. We normally have a noise factor as to the kind of work that can be done on a Saturday but we don't have anything that says anybody can work on a Sunday so that is one issue the City may have to look at its own regulations as it pertains to that. A lot of the noisy work that would not be allowed on a Saturday is the kind of work that will be done on this kind of a project. Just a note to you that we have to check into that area. I am happy to see that our City is considering becoming involved with Habitat for Humanity in helping us to meet our affordable housing goals, and in particular for-sale properties, especially the very low income range. Commissioner Schraml asked if there is any information available as to what the cost per unit would be to the buyer. Ms. Fountain said they haven't actually calculated that number yet because we usually wait until we get a little bit closer. I can give you a general idea. The general rule I tell people when they try to figure out the price, if you take the income level and multiply it by three, that is generally the maximum price that you are going to be able to pay. Some of it depends on what the homeowner's association fees might be, if there are any, because that all has to calculate into your approval. We are thinking probably these will be in the $70,000 to $80,000 range. If it is still two years away, the income levels will go up and it may end up being higher. It just depends on what the income levels do at that point. You are looking at no more then a $100,000 unit that people will be allowed to purchase. A lot of it depends on how much down payment is required. Commissioner Smith made a motion that the Housing Commission recommend approval to the Housing and Redevelopment Commission of $1,326,037 in financial assistance including land donation and cash assistance from the Village Redevelopment Agency housing set aside funds to San Diego Habitat for Humanity for construction of HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 12 of 16 eleven affordable condominium residential units to be located at 2578 Roosevelt Street in the Village Redevelopment Area of the City of Carlsbad. Board Member Ritchie seconded the motion. VOTE: 5-0-0 AYES: Boddy, Ritchie, Scarpelli, Schraml, and Smith NOES: None ABSTAIN: None Ms. Debbie Fountain said the next project is also for assisting very low income persons, which went with the first item on the rental assistance and having very low income people being assisted through that program. We actually have a project that is currently under construction called the Bluffs. It is overlooking the Agua Hadionda Lagoon where the water sports place is off of 1-5. That project has a requirement to build ten units affordable to very low income persons. The reason they ended up agreeing to do very low income on this project, even though the requirement is for low, is that we gave them a two unit credit for going to very low. The original requirement was to do twelve units. They couldn't quite work all the units on the site that they needed so they asked us if we would give them incentive credit if they did them at very low. We agreed to do that. Again, the income levels are the same as what we were talking about before. These are small units. They do have primarily one-bedroom units. These are actually smaller than the ones we were talking about on the Roosevelt Street project. They are 555 square feet and they do have one three-bedroom, two-bathroom unit at 952 square feet. The reason we felt these smaller units are okay for this very low income group is we do tend to see more seniors, more disabled in this very low income group where the smaller household size seems to be appropriate. Especially if it is a for-sale product. Trying to make it affordable, the smaller unit is necessary. We were a little concerned at first when we looked at the site plans for these on the sizes for one bedrooms, but when we looked at the layouts of them and gave it some analysis, we felt they were okay. They originally started out with much smaller and we actually got them up to that number. The project is primarily one bedroom so there are nine one-bedroom units and one three-bedroom unit, which is an inclusionary requirement that they have to do one three-bedroom unit. Only one model of the one-bedroom unit is at 555 square feet. The rest of them are at 777 square feet. What this developer is asking for is not financial assistance to the developer, which a lot of times we are giving the money to the developer for constructing units. In this particular case, the developer is asking for the assistance for the home buyers so it is basically down payment assistance of $20,000 per unit. We had a similar request from this same developer on the Village By The Sea that you might remember in the downtown area. They had an eleven unit requirement. Originally they were working with the California Housing Finance Agency to get low-interest loans that were down at about 4% and both of these projects were moving along to get those low interest loans for the low and very low income households. At the last minute CalHFA changed their position that these home buyers would be eligible for these low interest loans because of the restrictions that we have on the project for shared appreciation. We weren't willing to change our requirements because the Council has felt very strongly that if a unit is sold, there should not be a windfall to the homeowner so we share in the equity. CalHFA had a problem with our share of that and ultimately wouldn't approve it. Although, initially they said they didn't have a problem with our restrictions. That is unfortunate for those home buyers that were getting ready to move forward to buy units because now they are not able to unless they can come up with an additional down payment. We proposed to the Housing Commission and you recommended to the City Council that we provide down payment assistance to those home buyers so there is no money going to the developers. It is just straight to the home buyers to help them be able to afford the down payment and closing costs on the unit so the loan amount they can get will be a little higher to be able to afford the higher interest rates they will have to pay on the units. It is harder, especially for the very low income group, to have enough money in savings to be able to make those down payments. So the developer is actually requesting, on behalf of the home buyers, that the City Council provide $20,000 in down payment assistance to each of these ten home buyers. That would be a $200,000 investment from the City of Carlsbad. Staff is recommending that we do HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 13 of 16 this like we recommended with the Village By The Sea so we are successfully able to get these home buyers into these homes. Commissioner Boddy asked if we were sure $20,000 is enough? Ms. Fountain answered at this point, we believe that is enough. If we find out that it is not, we will probably be back, but at this point in time, both the developer and our staff are feeling comfortable with that $20,000. Commissioner Boddy commented that interest rates may be going up so I was just curious if that could be reopened. Ms. Fountain said it can be. That is a very good question because until the unit is actually ready to sell, you don't have that interest rate as a known factor. We believe this will probably be enough. Commissioner Boddy asked when do they expect to have these units available for sale. Ms. Fountain said the project is moving pretty slow. They are just now grading the site. There will probably be another year or so before we actually see units on the ground. It may be less depending if it starts moving quicker than it is right now. Chairperson Scarpelli commented that at one time developers were aware of the fact that they were able to purchase interest rates in advance by going into contract with a lender on an interest rate and pay an appropriate fee to hedge that rate. We haven't had to use that probably in twenty years because of interest rates being relatively low. However, maybe on projects like this we could talk to them about talking to their lenders as to the cost of locking in a rate. Ms. Fountain said we could suggest that to them. Chairperson Scarpelli continued they can do that for a year or more. Obviously the longer the rate is at risk for the lender, the higher the cost is going to be up front. Sometimes that cost up front, locking it in, makes everything possible. Ms. Fountain said we can definitely share that with them. Commissioner Ritchie asked Ms. Fountain to tell the Commision exactly what the Housing Trust Fund is. Ms. Fountain said when we adopted the inclusionary housing ordinance, at the same time we set up a housing trust fund, which is basically where we collect the fees related to housing. If somebody has the ability to pay the in-lieu fee for housing rather than to produce the units, that money goes into that account. Any repayment of loans that we get go back into that account. If somebody sells a unit and we get shared appreciation, it goes back into that account. A lot of times if we get any grants or that type of thing that are just general to affordable housing, they would be recorded as coming into the housing trust fund. It is accumulated funding over the years, because it now has over $9,000,000, but most of the money that we give as loans comes out of the housing trust fund. The last item we actually specifically mentioned a different funding source, which is the village redevelopment low and moderate income housing fund. A lot of times we use the housing trust fund because it has less strings attached to it. If it is not federal or state money, it has less strings. It is where we return all of our money that comes back in. In Villa Loma we sell credits and that money goes into the housing trust fund so we can recycle it and send it back out to affordable housing projects. It can only be used for affordable housing programs or projects. It can't be used for any other purpose in the city. Chairperson Scarpelli asked if Ms. Fountain has any idea what kind of return the housing trust fund is receiving on the $9,000,000 and if it has been invested. HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 14 of 16 Ms. Fountain said in terms of the interest rate on that, I don't know the exact amount of what that is. I could find that out for you, but off the top of my head I'm not remembering what it is. I know finance has told me several times, but it is at the same investment rate they use for all of the other city funds. Our City Treasurer has been successful in getting us good return on our money. Chairperson Scarpelli commented that with $9,000,000 in the pot that's a lot. Ms. Fountain said it does get quite a bit of interest each year, which adds to it definitely. Commissioner Schraml moved that the Housing Commission recommend approval to the City Council to provide $200,000 in financial assistance from the Housing Trust Fund in the form of low income home buyer down payment assistance loans to the buyers of ten affordable condominium units within the Bluffs Development in the northwest quadrant of the city. Commissioner Smith seconded. VOTE: 5-0-0 AYES: Boddy, Ritchie, Scarpelli, Schraml, and Smith NOES: None ABSTAIN: None DIRECTOR'S REPORT Ms. Debbie Fountain said we are starting construction of the Cassia Heights affordable housing project that is across the street from Villa Loma on El Camino Real. It is a 56 unit project. They have started grading and they will be starting construction soon. If you will remember, that project actually wasn't done as an inclusionary requirement. That was just one of the developers that came into the city, found a piece of property, and they happened to be. experienced in building affordable housing so they agreed to provide that project. The good thing about that construction is we are starting to get to the point where we have sold out all of our credits at Villa Loma, We are down to about twenty something credits. This project will give us another fifty-six credits. So the small projects in the southeast and the southwest will have another opportunity to be able to buy credits if they can't do their units on site. Typically if they are going to do them in second dwelling units, we usually say we'd rather have them buy credits so we can then spend that money to get some other units. Also Hunter's Point that is in the Villages of La Costa project, which is the second phase of their affordable project, which will be 168 units, has been successful so far in getting all of their financing. They have gotten approval of their housing program loan from the state, which is actually hard to get. The City agreed to their bond financing on their project. Now they are getting ready to move forward with their tax credit application. That project will probably be moving forward fairly soon as well. Things are going strong and we'll keep you posted on anything new. Commissioner Ritchie asked if the city ever foresees building senior-only projects. Ms. Fountain said we do get that question and there are a few developers that are looking into that as an option. We don't have an application yet on file, but there are a few that are looking at it trying to make it work. Commissioner Schraml asked if that is something the city does not pursue? It is just up to the developers to come to the city with the idea? HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 15 of 16 Ms. Fountain said our general philosophy is we want to partner with the experts in the field that build housing. There are a couple of developers that own property that are interested in doing that. They are still working through their concepts. Commissioner Schraml commented that she's heard there is a subdivision in Oceanside that is low income and rent is based strictly on the income. Does Carlsbad know anything about that? Ms. Fountain said there are two ways you can actually set rents. You can set it at an assumed household size or you can set it according to the actual income of each person coming in. Most developers would rather set it at an assumed household size because they know exactly what their income is going to be for repaying their loans. When you set it based just on the household income, it can vary every time you rent a unit. We always give that option to developers if they don't like our assumed household size that we give them to calculate it on. It is very difficult to finance projects that way though because you need to convince a bank that you are going to have adequate revenue to repay their loan. So unless they didn't need a lot of financing from a bank, it would probably be a little bit difficult to do that. Some come in with quite a bit of equity and they have a little bit better situation where they might be able to do that. , Commissioner Schraml said it was her understanding that this was some kind of government program. Ms. Bobbi Nunn said it is a HUD funded program. It is similar to public housing so the assistance is based on each individual's income and usually the same criteria they use for the Section 8 Rental Assistance Program which is 30% of their adjusted program. Commissioner Schraml asked if it is different than the voucher program? Ms. Nunn said right, it is a specific HUD fund. Commissioner Schraml asked if the two can work together. s Ms. Nunn answered no.. We can use Section 8 with our affordable housing complexes because they have a reduced rent. But because that is already HUD funded, you can't duplicate the funding because there wouldn't be any type of subsidy. When you are renting a place at a public housing complex or a subsidized complex, you are only paying 30% of your adjusted income towards your rent anyway. The product you are discussing is solely within that complex itself. Once you move, you lose the assistance. Commissioner Schraml asked if that is built by HUD. Ms. Nunn said it is funded by HUD, but they are not always built by HUD. It just depends on what pocket of funds it is from. HUD has gotten away from HUD owned housing, but they will establish certain funds where.they have a private individual developer that owns the property. Commissioner Schraml asked if something like that possible for the City of Carlsbad to look into to apply for? Ms. Fountain said we can look into those programs and we could put it on a future agenda to talk about. We have stayed away from public housing and made it more private type of housing for a number of reasons. That is something we can put on a future agenda if you'd like to discuss it further. Commissioner Schraml said she would and she would like to look at it possibly being strictly senior. Commissioner Smith asked if a tenant has been displaced because of rehabbing or a place has been sold and they have to move, who is responsible for finding them another home? I have been asked that question. Say for instance, the condos they are building on Madison and I understand it was very difficult for some of the tenants to find homes HOUSING COMMISSION MINUTES MARCH 9, 2006 PAGE 16 of 16 because they had been there for so long; who has the responsibility, the owners, to give them funding to find homes and also to try and find them a place? Ms. Fountain asked if she is talking about where there has been an apartment project converted to condominiums? Commissioner Smith answered yes. Ms. Fountain said there isn't actually a requirement that they pay to relocate the people. If they had a lease and they have been on a month to month lease and they give them notice they are not continuing their lease, then unfortunately they are on their own. When we are looking at conversions of projects, if they are large projects, they are going to have a 15% inclusionary requirement. So even if they convert to condominiums, they are still going to have to make those condominiums, at least 15% of them, affordable to low income persons. The small projects, they again are going to pay a fee rather then having to convert if they are six units or less. But if they are more than that, they are going to have an obligation on some of those units. Sometimes we at least feel better we are getting the affordable housing out of it,'but it is something we look at pretty closely when there is a large project that wants to come forward and convert, we try to actually negotiate more affordable units because it is removing some inventory that typically has been affordable. It is a tough one and it is actually why we are not encouraging conversions where in some other cities they are encouraging conversions because we don't have, as much rental stock as some other cities do. They are still allowed to do it and they are not obligated to pay for relocation for them. Commissioner Boddy asked if there is anything Ms. Fountain can tell the Commission on the update of the Housing Element and do you have any sense of when that might be coming before the Housing Commission? Ms. Fountain answered she does not have a specific date. I know the Planning Department is working on it now, and I think we are shooting for April to bring that to the Housing Commission. We actually have an outside consultant putting together a large part of that for us this year, so it will depend on when we get it back from them. I know they are getting close to having it done so I am assuming probably April. CHAIRPERSON'S REPORT The Chairperson has no report to make. ADJOURNMENT By proper motion, the meeting of March 9, 2006, was adjourned at 7:40 p.m. Respectfully submitted, fT*"" "~-- i- Debbie Fountain Housing and Redevelopment Director PATRICIA CRESCENTI Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.