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HomeMy WebLinkAbout2008-02-14; Housing Commission; MinutesMinutes of: HOUSING COMMISSION Time of Meeting: 6:00 P.M. Date of Meeting: February 14, 2008 Place of Meeting: CITY COUNCIL CHAMBERS CALL TO ORDER Acting Chairperson Smith called the Meeting to order at 6:05 p.m. PLEDGE OF ALLEGIANCE Board Member Wrisley led with the Pledge of Allegiance. ROLL CALL Present: Commissioners: Emelda Bradwell Doris Ritchie Bobbie Smith Hope Wrisley Absent: Craig Kirk Staff Present: Housing and Redevelopment Director: Debbie Fountain Housing Program' Manager: Bobbi Nunn APPROVAL OF MINUTES Minutes of June 14, 2007, were approved as written. VOTE: 2-0 AYES: Ritchie and Smith NOES: None ABSTAIN: Bradwell and Wrisley (not members at June 14, 2007, meeting) ABSENT: Kirk Ms. Fountain said the first item on the agenda is the election of Chairperson and Vice-Chairperson. Board Member Wrisley commented that since we only have two people who are on-going, she feels one should be the Chairperson and one should be the Vice-Chairperson. Board Member Ritchie nominated Board Member Smith to be the Chairperson of the Housing Commission. Board Member Wrisley seconded that motion. VOTE: 4-0 AYES: Bradwell, Ritchie, Smith and Wrisley NOES: None ABSTAIN: None ABSENT: Kirk Board Member Wrisley nominated Doris Ritchie to be the Vice-Chairperson of the Housing Commission. Board Member Smith seconded the nomination. VOTE: 4-0 AYES: Bradwell, Ritchie, Smith and Wrisley NOES: None ABSTAIN: None ABSENT: Kirk HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 2 of 12 ITEM NOT ON AGENDA There were no items that were not on the agenda. NEW BUSINESS Debbie Fountain, Director of Housing and Redevelopment, said the item on the agenda tonight is informational. The meeting is for the Housing Commission to meet each other. Craig Kirk was disappointed he wouldn't be able to be here. Tonight we would like to give you a general update on where we are on affordable housing. I will share some information with you, and then Bobbi Nunn, Housing Program Manager, will share some information about the Rental Assistance Program. If you have any questions, feel free to ask them. If there is anything you would like to be placed on a future agenda for a discussion by the Housing Commission, you are welcome to bring that up tonight as well. It is a workshop type of setting tonight. There is nothing for you to take action on. It is just information. If you do have something you want to take action on, we would put that on a future agenda for you to talk about. The Housing Commission has been given a number of handouts and they may be referred to periodically tonight. First of all since we do have three new members to the Housing Commission, I wanted to go over what the Housing Commission's roles and responsibilities are. The Housing Commission is the advisory group to the City Council on housing issues. If there are any new housing programs or policies or regulations being proposed for the city, those would come to the Housing Commission for a recommendation. There is no final decision that is made by the Housing Commission on any issue, but there are a number of program policies and regulations you would make a recommendation to the City Council on. Also there is the adoption or amendment to the Housing Element. The Housing Element is in draft form right now so eventually that will be coming back to the Housing Commission again for you to take action on and make a recommendation. The Housing Commission reviews any of the offsite combined projects under the Inclusionary Housing Program, and I will talk about that a little more when I talk about the Inclusionary Housing Program. You also review requests for financial assistance from developers for affordable housing; you will look at any requests to purchase housing credits that are ten credits or more. We actually don't have this happen very often. Most of the credit purchases are two or three credits at a time, and they are for small projects that have an inclusionary requirement. Then there is also the part of any ordinance of any of the commissions or boards that say "it is other duties as assigned." If the Council finds a special project or has another special assignment they would like you to provide a recommendation on, then that would come to the Housing Commission. Next are the Inclusionary Requirements, what they are and how we are doing in terms of our status on meeting inclusionary requirements. We first adopted the Inclusionary Ordinance in 1993, and it was revised again in 2000 to update it. It says 15% of all residential units must be set aside for occupancy by lower income households. This is the requirement any new housing development that is built in the city is going to have an inclusionary requirement of at least 15%. It even applies to a single-family home, but a single-family home pays a fee. It doesn't have to produce a unit. If you have a project of seven units, you are going to have to produce an inclusionary unit; anything less than that you will pay a fee on. Under the Inclusionary Ordinance if you have a for-sale product, it has to be affordable at 80% of the area median income. If it is a rental product, then it has to be affordable at 70% of the AMI. We have had 1,981 affordable housing units constructed. Those have people living in them and they are for low, very low and extremely low income households. The Housing Commission has a chart showing the breakdown of all the different projects we have had constructed as part of the inclusionary requirement. I have totaled the numbers on the chart, and about 1,500 of those units have been provided in apartment product, which is about 77% of our total; 289 have been provided in town homes or condos, those are a for-sale product; then 176 have been provided in second dwelling units. Second dwelling units are an accessory unit that is on a single-family home lot. It can either be attached to the home or it can be HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 3 of 12 over a garage or it can be detached or attached to the house. Apartments, for-sale condos or town homes, or second-dwelling units can be used to meet the inclusionary requirement. We leave it up to the developer to choose how they want to meet their requirement. In the past however, second-dwelling units have been one of those products that we have had a love/hate relationship with them meeting the affordable requirements. There has been talk over the years between both the Planning Commission and the Housing Commission as well as the City Council that they are not really sure if the second-dwelling units meet an affordable housing need or not. In 2000 when we amended the ordinance, we limited how many units in one development can be built as second-dwelling units. Fifty units is the maximum. If you had a 100 unit requirement for your affordable development, you can only meet half of them with second- dwelling units. Otherwise, you will have to build some other type of product. Council was saying, we recognize they do provide some affordable housing, but we want to limit how many of them we actually get. Another handout given to the Housing Commission was the results of a survey that the Housing and Redevelopment office did back in September of 2007 to find out how second-dwelling units were being used. There is a memo to the Planning Director from myself because this question came up at the Planning Commission. The Planning Commission wanted to know of the numbers of second-dwelling units we have, how many are actually being used for housing purposes. At the time we did this, we had 155 surveys returned to us; that was about an 85% return rate, which is good. We actually require certifications annually about how a second-dwelling unit is being used. We decided to combine a survey with the certification to try and find out some information. In the last paragraph it says, "52% of the homeowners with second-dwelling units are using them for housing purposes, either as rentals or for extended family." As a result, they are meeting an affordable housing need. Of those people, however, that said they were not providing it necessarily as a housing opportunity in terms of a family member or rental, they said they were meeting other needs with it, either it was guest accommodations, a recreation room, or an office. That part typically has the most concern, which is it is not being used for affordable housing. We are glad to see the percentage was as high as it was at 52%, because we were quite honestly expecting that number to even be lower than it was. We had a discussion with the City Attorney's office not too long ago on this topic about whether you could force a property owner to actually rent the unit. Under the law, you can't. If they wanted to leave it vacant, even though we have an affordable housing restriction on it, there is not a whole lot we can do about that. The hope is that you would rent it because it would help you to make your mortgage payment. It is a good source of income, but some people just do not want to rent it. We were happy to see there were as many people using it for a rental or for an extended family member like a mother, father, grandmother or college student. All in all, we felt good about the results of that survey, although it does show that not 100% of them are being used for housing purposes. Currently we have 23 units that have been approved and are either under construction or getting close to starting construction. We have 350 that are actually in the planning stages and getting ready to move forward at different levels. We just received the new 2008 income limits today, so I wasn't able to update my chart, but I wanted to give general examples of the type of income group we are typically looking at. These are based on the 2007 income limits. We do get new income limits every year; sometimes they go up a little bit and sometimes they go up significantly. If we are talking about a group that is in the very low income category and they are a two person household, that is around the $28,100 a year; that is their gross household income. We would look at the income of any adults who are 18 years or older. If they are under that amount, than they would fall into this category. It changes according to household size. The two areas that our inclusionary housing ordinance is actually focused on is the low at 70% of area median income and the low at 80% of area median income. If there is a household of four, two adults and maybe two children, then if you had a gross household income under $49,150, you would be in that low income category for the 70% group; a little more, $56,150 for the low income. Our ordinance is written that your income has to be under the 80% of area median income to qualify for these projects, but if it is a low income project that is being proposed in a rental product, we actually make HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 4 of 12 them set the rents at the amount that is affordable to people at the 70% mark. We have one criteria that says the maximum is for setting the rent or the sales price. Board Member Wrisley asked how the rental level is established. Is that from an average of rentals in the county or in the north county? Ms. Fountain said for a rental property to be affordable, it is not supposed to exceed 30% of your gross household income on a monthly basis. We would look at what is 30% at the 70% level and it would reveal the rent you can charge. It would vary depending on bedroom size because that determines your household size. The 30% affordability applies to all income groups. It could be extremely low or upper income. For it to be affordable, you are not supposed to be spending more than 30% of your gross household income on housing costs. We know, in the current market, anybody trying to buy a house is probably spending more than 30% of their gross household income on mortgage payments and HOAs and all of that. Board Member Wrisley asked is the HOA included in that. Ms. Fountain said yes. If you had a for-sale product, your housing costs will include your HOA fees, your taxes, and your mortgage payments. It is hard on a for-sale product to make those affordable, which is why you see most of our product in an apartment type of product. If you are in an apartment, it would include your rent and an allowance for utilities. Villa Loma was our first affordable housing project in Carlsbad and built in 1996. It is 344 units; one, two, three and four-bedroom units. In 1999, we built the Rancho Carrillo apartments; one, two and three- bedroom units. When Rancho Carrillo development was built, they met their affordable requirements in three components; they had rental, for-sale and second-dwelling units. They combined all of the product types. Board Member Wrisley asked, are those all included? Ms. Fountain said those are all in the numbers in the chart. Board Member Wrisley asked if it was the 116. Ms. Fountain said right. The 116 is their apartment complex. They also have a for-sale component and they have a second-dwelling unit. Laurel Tree apartments were built back in 2000; 138 units, two, three and four-bedroom. This one actually won an award for its design. Poinsettia Station has 92 apartments; one, two and three-bedrooms. Vista Las Flores is a small project, 28 units; one, two and three-bedrooms. It is a nice, little complex. Board Member Wrisley asked, where is that located? Ms. Fountain said it is off of Aviara Parkway. There is Cherry Tree Walk, Plum Tree Walk, all of those little developments, it is right in that area. It is fairly close to the Laurel Tree Apartments. I will come back to the Housing Commission at a later time to do a separate workshop on pro forma review when we actually have a financial assistance request, because it is one thing the Housing Commission is expected to make a recommendation on. Each project is a little different on how they do their pro formas, which outlines their development costs and their development revenues. I wanted to do that workshop when I have a good example for you to go through when someone is actually providing a request for assistance. This shows you generally how the cost of providing affordable housing has increased over the years. If you look at 1994, when we made the appropriation for the Villa Loma project for example, that was a $33.3 million project, 344 units. The per unit cost worked out to about $96,875. If you go to a more recent project, which is Hunter's Pointe, which just recently completed construction, it is HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 5 of 12 a $46.6 million project, but only a 168 units and the per unit cost is $277,000. Things have changed in the ten year period as to what it costs to build affordable housing. Board Member Wrisley asked if the apartments are pretty comparable. Ms. Fountain answered yes, they are comparable. The issue has been the increase in construction costs over the years. We don't know what will happen with the economy changing, whether that will benefit affordable housing and make it a little more affordable to build, depending on what the construction industry is doing. We find it is not any cheaper to build affordable housing projects. It is the same cost as a market rate product, but our affordable housing projects have a lot of subsidies that go into them and they get a lot of funding from different sources. They cost just as much as a market rate project. It is just a different way they are financed, Ms. Fountain showed a slide of the city subsidies that have gone into projects. They have varied through the years. A lot of it depends on the other financing sources these projects are bringing to the table. Some of them have a variety of sources where they might have ten or eleven different sources, some of them might have four or five. This shows you the variation and what the city has put in to these projects. Board Member Wrisley asked, is there a reason why Cassia Heights is so much more than the rest of them? Ms. Fountain said Cassia Heights was a project that was built outside of an inclusionary requirement so there wasn't a master developer that was involved. All the other projects you see here had a master developer and that master developer had to put cash into the deal. Typically if we have an inclusionary requirement on a project, we require the master developer to provide the site free of charge for the affordable, plus also put cash assistance in. Cassia Heights didn't have that so the city actually purchased the site, we lease it back to the affordable housing developer, and we also had to put cash into the deal. It was almost like the city took the role as the master developer in this case. We do have the deal structured the same as we have all of our deals that they are set up as loans. If we own the property, and we have two projects where we own the property which is Cassia Heights and Villa Loma, we actually get money back through the lease arrangement. Cassia Heights and Villa Loma also can be used for housing credit purchases. I mentioned earlier that if somebody requests to purchase housing credits of 10 units or more, they have to come to the Housing Commission. A housing credit is where we have produced more units than we need to meet an inclusionary obligation. For example, in Villa Loma the developer had a requirement that they had to provide 164 units. We built a 344 unit project so we had 184 credits that could be sold. Those are sold to other developers that have an inclusionary requirement that it is just too difficult for them to build it because it might be a small development; they might have only a two or three unit requirement and rather than build second-dwelling units, they will pay us for the housing credits. Board Member Wrisley asked, can they meet their requirement all with purchasing credits, or do they have to have some units? Ms. Fountain said it depends on the size of the project. Typically we have only allowed projects to buy credits that are very small, like they have usually less than a ten unit requirement. If they have a large requirement like 25 units or more, we are usually going to tell them they have to build the units. Unless there is an unusual circumstance like they have a lot of habitat on their site and they just physically can't build enough units or they have big infrastructure improvements or there is something that is causing it to really be financially unfeasible to build the units on site. Typically most of our units that are allowed to buy credits are those small developers. Actually we haven't even sold all of the credits for Villa Loma yet. I think we have about 20 credits left in that project. Cassia Heights has 56 credits that haven't been sold yet. We still have a number of developers that could buy credits, but for Villa Loma and Cassia Heights it is only developers in the southeast or the southwest quadrant that can buy credits. Any developer in the northeast or the northwest quadrant cannot buy credits in that project. HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 6 of 12 Board Member Wrisley commented then Robertson Ranch is on the line. Ms. Fountain said right. If you are going to buy credits, the project has to be within your quadrant or it has to be on the boundaries, which Cassia Heights and Villa Loma are on the boundary of the southeast and the southwest. Ms. Fountain continued that she wanted to share a little bit about the home buyer restrictions. This is a common question about how it actually works and how we protect those homebuyer units so they don't get lost and resold to a non-low income person. When we originally started the program, we actually didn't have a lot of these restrictions in place because our assumption was if the people got this really good deal buying this house, why would they sell it. Because you aren't going to be able to take the money you get from it, even if it is a significant amount of money, and go buy another unit in Carlsbad. Now if someone was moving because they got a job transfer or something like that, it might make sense for them. What we found was because the market was what it was and people were making huge amounts of money on selling their units, we were actually starting to lose our units fairly quickly so we decided to put more restrictions on them. Our restrictions include having to live in your home as your principal residence so we don't allow people to purchase these and rent them out so they have income property, they don't get to be a vacation home. We want them to live in the unit. We have a 30 year deed restriction on them. During the first 15 years of the restriction, they have to sell it to another low income person at the restricted price. So for the first 15 years of the restriction, we are pretty safe it will go to another low income person. Then in year 16 to 30 we actually allow them to sell it to a non-low income person at a non-restricted price, but at that point, the city recaptures its full loan it has on the property and any subsidies such as down payment assistance or something like that. We also recapture the contingent interest and I have a chart to show you how this works. In terms of refinancing, we only allow refinancing if it is to lower the payments. We actually don't allow refinancing to take out any money of the project. That may seem a little unfair, but what happens if they take out money, they increase their housing cost. Our whole goal is to keep the unit affordable. In the first 15 years, you cannot refinance and take out any money, you can't sell it and make a lot of money, and you have to sell it to another low income person, because we are really trying to keep the incentive there, keep this unit affordable. In year 16 through 30 you can refinance and take out funds, but then you have to pay back the city loan as part of that. We don't let the person keep the city's money in the deal. The final condition is the city has the first option to purchase the home at a restricted price during the entire 30 years. So in year 16 if that homeowner goes to sell the unit, they have to offer it to us first at the restricted price. Then we can choose to buy it and resell it to a low income person. If we decide not to buy it, then they can sell it at market rate to a non-low income person, we recapture our subsidy, and then we use that money to make another unit affordable. Board Member Wrisley asked, has that happened? Ms. Fountain answered, since we have put these restrictions on, no one has gotten to that 16th year. We still have to be notified when somebody is going to sell, but if it is during the first 15 years, we just tell them we are not interested, just sell it to another low income person. When we get to that 16th year, it will be interesting to see what happens. Cherry Tree Walk was our first for-sale town home product. When we had this one built, we had an incredible waiting list to purchase these units. We had over 1,000 people for 42 units so the developer decided to do a lottery. They put everybody on a list and then did a random lottery and 42 people were able to buy their homes. They got the notice right before Christmas that year. HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 7 of 12 There were also some homes built in Calavera Hills. This was a very early project and most people probably have no idea these units are actually in Calavera Hills. They were constructed as single-family homes; four-bedroom units. There were five disbursed throughout the Calavera Hills project. Rancho Carrillo was the second component I talked about earlier. Their first component was the 116 apartment units. This is 90 town homes. It is actually one we had quite a few units sold because we didn't have that 15 year restriction. They were selling fast for a while. That has slowed down considerably now because of the market. Currently there has been a home on the market in Rancho Carrillo that has been for sale for a year. In the Village By The Sea project there are eleven condominiums, which is downtown next to the transit center. They did stacked flat condos within their development; two, three and four-bedroom units. I wanted to share with you how we establish the price for these affordable units. Some assumptions that are made are the maximum income is $49,700 at the 80% of the AMI so if they had an income of $46,594, we have a maximum purchase price. Generally that maximum purchase price is going to be about three times whatever the income of that group is. On a for-sale product, we allow them to go up to 35% affordability so if you assume they have a buyer down payment of $11,600, they have a city down payment of $20,000, and then that purchase price turns out to be about $152,000. When you are looking at the purchase price, however, you also have to look at the HOA fees, utilities, property taxes, and special assessments on the property. Those all figure in and will give you a maximum amount you will be able to pay for your mortgage and your interest. That works backwards into the maximum number you can sell that unit for. We make assumptions on the down payment, the interest rate, and all things at the time the unit will be sold. Board Member Wrisley asked, how does someone who has a low income come up with an $11,000 down payment? Ms. Fountain said that is always the difficulty because when the maximum price is being set, it is basically being set at the maximum household income. A lot of times the actual household income is much less than the maximum we say it can be. Sometimes they even have to come up with more than the $11,600 to make sure their housing payment is not more than the affordable number. The for-sale product is really difficult to do. We allow the developers to do it because obviously it is a great thing to be able to buy a house in Carlsbad, but it is difficult to find that family that can provide the down payment and have adequate credit to qualify for a private mortgage. What we found is the developer has to go through a large number of people to find the small group that actually qualifies for these units. Board Member Wrisley asked, does the developer ever come up with the $11,000 for the down payment? Ms. Fountain answered, we have had some developers that have done that. They have come up with a larger amount for the subsidy or they have reduced the price. It is one of the reasons we put in the $20,000 to help as well. Most of our for-sale product has had to have assistance from the city. Board Member Wrisley asked, on the $20,000, do we get any kind of federal funds or state funds or is that just out of our general fund? Ms. Fountain said we have a housing trust fund, which is made up of fees that are paid by developers so if they don't have to build the units and they can pay a fee, it is made up of that, and it is made up of any grant monies we might get from the state or the federal government; it is the housing credits we get for developments like Villa Loma or Cassia Heights. It is also made up of any of the loan repayments we get from the developers. Right now our housing trust fund has about $10,000,000 in it, and it has rotating funds because of the loans so it has stayed pretty consistent at about that $10,000,000 mark for several years. We also can use federal monies we get; HOME monies. We can also use some of our redevelopment agency money. HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 8 of 12 Board Member Bradwell asked, why was the Family Self-Sufficiency Program discontinued and will there be a similar program in the future? Ms. Fountain said when Ms. Nunn does her presentation on the Rental Assistance Program, she can answer that since it is connected to that program. Chairperson Smith asked Ms. Fountain if she is saying a family of seven, five children and a husband and wife with an income of $125,000, would that be considered low income or moderate income. Ms. Fountain said if you look at the income charts, they go from one to eight. If you are looking at 80% of the area median income, which is considered low, under the 2007 limit, that family would not be able to make more than $74,100 to be low income. If they had closer to $125,000, they would be in the moderate income category. You have to look at what their household size is and then at the income group you are trying to assist. You then determine if they are eligible or not for it. I looked at the 2008 income limits and they didn't go up substantially. Usually they go up from 2 to 3% each year. Board Member Wrisley said, then the largest household size you deal with is eight persons because the largest units you have are four bedroom. Ms. Fountain answered, yes typically. Most of our units, even if they are three or four bedrooms, they don't have those large family sizes. We might see four or five people in them, but very seldom do you see those really large family sizes in them. We have a fairly complex calculation we go through to resell a unit. The important part is to show that when a unit is sold and it is sold at market rate, there is a return back to the city. The city loan is made up of both our subsidy plus the developer's subsidy. In this particular case, if the original market value on a unit was $440,000, but we made them sell it for $183,600, there is a paper loan of $276,400. That is considered the developer subsidy as well as the city subsidy. The developer actually assigns that loan to the city so when the unit is sold, we recapture the developer loan as well as our loan but it doesn't go back to the developer, it comes to the city. That is considered a subsidy because of the city program we recapture when a unit is sold. We also get contingent interest, which is actually an interest payment that is calculated a little different than your normal loan. Board Member Wrisley said, then he would have enough money for a down payment on another home. Ms. Fountain said yes, it might help him to make a down payment. Actually, Bobbi has a nice story where we had someone start out in a rental product in our affordable housing program, bought one of the affordable for-sale units, sold it and then bought a market rate unit. That is a good success story because that is what we are hoping to accomplish is that move-up housing and as people improve their situation, they can go to the next level. If they sell their unit at a non-restrictive value, they definitely would make a lot more money after they pay off their mortgage and the city, they could still potentially get over $100,000. That is probably going to change with the current market the way it is. This is what we were seeing when the market was crazy. Now that the market is adjusting, we probably won't see these type of windfalls, for lack of a better term. The Council does not like windfalls. Now I would like to go into where we are at on the Housing Element. For those of you who have not seen a Housing Element before, the Housing Element is part of the City's General Plan. The City's General Plan is the overall vision for the City of Carlsbad and it has a number of different elements, the land use element is one. The Housing Element is specifically required by state law and it is the only element the state actually gets to review and certify. All the other elements the city just creates and gets to approve. This one actually has to go through a process for state approval. We are currently working on our 2005- 2010 Housing Element, which is strange since we are in year 2008 and we still don't have a Housing Element and it only has two years left on it. We have had some difficulty creating this Housing Element HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 9 of 12 this term because of some changes in state law where you have to specifically designate enough sites within the city to meet your entire need for affordable housing. Because we are starting to get to more of a built out stage and we still have a need according to the state of over 6,000 units, we are having difficulty finding the sites for all of those units. Board Member Wrisley asked, if we go to a Charter City, would that change? Ms. Fountain answered, no, we still have to comply. At one point we were delaying to see if we formed a Charter City, maybe we wouldn't have to do one but we found out we do still have to do a Housing Element. We have held a number of workshops. Some of those have been held with the Housing Commission. The Housing Commission and the City Council has already reviewed the draft document and made comments on it. It has had its initial review by the Housing and Community Development Department by the state which is referred to as HCD. Staff has met with HCD and is in the process of responding to their various issues and concerns they raised on the project. At this point as soon as we have rewritten the Housing Element to address the HCD concerns and the other comments that came up from the Housing Commission and the City Council, it will be returning to the Housing Commission. At this point, we are thinking that will probably in March or April timeframe, maybe more like April. It will be coming back in its full form for the Housing Commission to review and to make comments on. It is hard because it has taken so long to get here and now we have had a change in the Housing Commission so there may be new things that come up. That is the reality because there have been changes on the Planning Commission too. There may be changes on the City Council before this is finished. At that point, the Housing Commission and the Planning Commission will have to review it as well as the City Council. Once the City Council adopts it, then it will be forwarded again to HCD for certification. We hope, if we have addressed all of their issues, we should get a quick certification of it. The problem with not having a Housing Element is we are not eligible for various funding through the state. We have already lost a couple of workforce housing grant opportunities because we haven't had a certified Housing Element. They are also now tying certification of your Housing Element to transportation funds so we are not eligible for certain state transportation funds until we get a certified Housing Element. It is getting critical we need to get this done. That completes my presentation. I would like to have Ms. Bobbi Nunn, Housing Program Manager, share some information on the Rental Assistance Program. Ms. Nunn said the Housing Commission will actually be meeting next month. As part of the Section 8 Rental Assistance Program, one of the requirements in order to receive funding to operate that program and to pay the subsidy is we have to do what they call a Public Housing Agency Plan. It is a five-year plan and it is an annual plan thereafter, and we will be submitting our annual plan for fiscal year 2008-2009. We will actually be coming back next month and going through the PHA plan and at that time, I was planning on giving more information about the program. I wanted to come tonight to meet the new members and also talk a little bit about the Section 8 Rental Assistance Program for those who are not familiar with it. The Section 8 Rental Assistance Program is a federally-funded program that assists people to pay their rent. It is the same concept as the affordable housing where the goal is a person pays approximately 30% of their income towards their rent. However, the program does allow for them to pay up to 40%. Once they are in a unit, they can end up paying more than that if an owner raises the rent and the family elects to stay in that unit. I provided you some informational material that is given to owners. It explains to an owner that the funds are federal funds, the owner maintains the same rights as they do with a market tenant, they are responsible for the tenant selection and responsible to do the credit report screening and any other screening to make sure the client they are looking at, or our program participant, is someone they want to rent to in their rental unit. We have approximately 70 different owners we do business with. We have approximately 620 families that are being assisted in Carlsbad. We also have an additional 60 families that are being assisted in Oceanside with Carlsbad funds. Those are families that have elected to take their voucher and transfer to another jurisdiction, which is a feature that this program offers. Once HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 10 of 12 they have a voucher to receive rental assistance through the Section 8 Program, they can actually transfer anywhere within the United States to another jurisdiction that has a housing agency. Board Member Wrisley asked, do we still have to pay that? Ms. Nunn answered yes. The receiving agency can elect whether or not they absorb that family into their own program, therefore giving up the client for the initial agency that sent them, or to bill the initial agency. It depends on the housing agency, if they have money to spend and they need to increase their lease numbers. We are required to keep our lease numbers at a certain rate or our utilization of funds at a certain rate. Preferably a minimum of 95% and 98% is ideally what HUD would like to see; either utilizing our units or utilizing our funds. Whether the agency absorbs or bills depends on the housing agency where they transfer to. The family finds a place to live on their own. Any owner who is willing to accept the program and is willing to sign a contract with the Housing Agency we are able to do business with. It is a good situation for owners because: 1. They can be guaranteed they will be getting their rent each month; 2. The clients are typically paying 30% of their income towards their rent so their share of the rent should be very affordable; and 3. Our payments are mailed out on the last working day of the prior month so often our owners will get their checks before the 1 * of the month. Board Member Wrisley asked, are these pretty much spread out all over the city or are they mainly in one area? Ms. Nunn answered no, actually our units are spread throughout the City of Carlsbad. We do actually track by census tracts so if that is something you are interested in seeing, I can provide statistics. I usually provide statistical information to go with the Public Housing Agency Plan. I can make sure I include them in the presentation next month. Ms. Nunn acknowledged Board Member Bradwell's question earlier about the Family Self-Sufficiency Program. For those who are not familiar with that program, the Family Self-Sufficiency Program is a program that was implemented by the Housing and Urban Development (HUD) in the early 1990's. The goal of the program is to offer families that are working an incentive. When their share of rent increases or when their working income goes up, the amount that their share of rent increases, the housing matches that amount and deposits it in an "escrow account." We have actually had some families that have been able to build quite a large escrow account, it is a really good savings program for them. The housing department, through federal funds, actually pays into the account. We have had a couple of families that were able to purchase homes with the money. In fact, the Calavera Hills, the one Ms. Fountain mentioned that isn't talked about much, the five homes that were done in Calavera Hills, one of the homes was sold to one of our families who was on the Family Self-Sufficiency Program and they did take their escrow account money for a deposit to purchase that home. Without the Family Self-Sufficiency Program, they would not have had the down payment, more than likely, to be able to do that. That was a big benefit for that family. The problem with the Family Self-Sufficiency Program is in the past HUD has funded us administratively to run that program, and for the last four years they have eliminated those funds. We still have a Family Self-Sufficiency Program that is operating. We have about twenty-three people that are on the program. Some of them are building escrow accounts. Some of them have recently graduated in the last year and did receive their escrow money. Because we are not being supported administratively, it is a very labor intensive program so we couldn't afford to continue to operate it. We are keeping the program going as long as we have people who are on the program, but eventually when those people either graduate or their contracts are up, then the program will slowly dwindle down and be eliminated. That is unless HUD decides to resurrect the program. Right now there are some funds that are going for the Family Self-Sufficiency Program, but it is mostly targeted to the larger housing agencies. HUD is moving more towards a "Move to Work" program, which is special funds that have been allocated to 30 housing HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 11 of 12 agencies in the nation in order to do a special program to assist people to move from a non-working status into a working status. The Family Self-Sufficiency goal is to help people determine what their goals are and to provide support services and establish stepping stones along the way in order to get the family to meet their goal in five years. I hope that answers your question, Board Member Bradwell. The program is still there. We are just not receiving any new funds so we are not really adding any new families to it. However, we still do have some families on that program. Ms. Fountain had mentioned a family that was able to use the affordable program successfully. This gentleman actually works for one of our affordable housing complexes now. He started at Villa Loma and actually rented there in 1996 when they first opened. He was not on the Section 8 Rental Assistance Program but he was able to purchase one of the Rancho Carrillo town houses and then he took advantage of the equity share and sold his town house and was able to take his equity and use it to purchase a single-family home. He now has a single-family home in the Calaveras area. His son was able to continue to go to Carlsbad High School. In fact, we are in the process of putting together a brochure or a marketing piece to educate people of what the affordable housing programs are and what they have to offer; especially the apartment developments and the for-sale units. He will be one of the families that will be featured. I've provided some general information and my business card. If between now and next month you read some of the information and it triggers .interest in some statistics or some additional information. Feel free to call me or e-mail me and I will make sure those questions get addressed at our March meeting. Ms. Fountain said that completes staffs presentation tonight. As Bobbi mentioned, we will be having a meeting in March and I expect we will either have the Housing Element in March or April. You can expect a meeting for the next couple of months. As I've mentioned to all of you in our briefings, the Housing Commission usually only meet when we have something for you to talk about. We don't generally call you together just to meet. Sometimes it goes go for a long stretch before you meet again. If we do start seeing those long stretches, we will at least try to have an informational meeting to keep you up to speed on what is happening with the affordable housing. We appreciate your willingness to be on the Commission. It is very helpful to the City Council when they get recommendations from the different commissions and boards. One of the programs we are trying to figure out is what we can do to assist the moderate income group. We do have our inclusionary for the low income group, but what we have found over time is we are doing really well in the upper income category and we are doing fairly well in the lower income category, but we are missing this whole group in the moderate income. We haven't found a good, effective program to help with that moderate income group. It is something we have on our list of desired programs and just to try and figure out what it is that will help that group. We had a down payment assistance program for a while, but it wasn't really helpful just because of the high prices for housing. We just couldn't give them enough to really make that unit affordable. We are still working on that; trying to figure out what we can do. We are starting to work with some developers and actually providing moderate within their projects so if they ask for a considerable amount of additional density on a project, we might negotiate with them to have their 15% low and then to do some for moderate. We actually did that in the Robertson Ranch project. They are going to have about 50 units of moderate income affordable housing. We have done some things in a negotiated position, but we don't have a formal program if they aren't asking us for anything specific. Or we may look at buying a piece of property and developing moderate income housing, but that is probably one of our weakest links. If you have any ideas, we are taking suggestions on what would help with that group. Board Member Ritchie asked if there was any possibility of senior housing? Ms. Fountain said senior housing is something we are struggling with. We actually have a few developers we are working with that want to do senior restricted housing. We have one down in the Village area on HOUSING COMMISSION MINUTES FEBRUARY 14, 2008 PAGE 12 of 12 Harding that has been working its way through the process. It is going to be a for-sale product for seniors only. Board Member Ritchie asked where is that going to be? Ms. Fountain answered, it is on Harding, across from Pine Park, up against the freeway. Board Member Wrisley asked, it's going to be a new project? Ms. Fountain said it will be a new project. There is the Harding Retirement Home, not sure of the name of it. Board Member Wrisley asked is there any place to build along there? Ms. Fountain said they actually bought an existing care facility, a senior care facility on Harding. Whether that project will end up penciling out, I am not sure. They are asking for a pretty substantial increase in density on that site so we negotiated some moderate income units from that as well. One of the things that has caused us a little bit of a problem on the senior-only projects is by state law to qualify as a senior- only project, you have to be 35 units or more. Some people have wanted to do 10, 11 or 12 units for senior-only, but they don't qualify under state law. Board Member Wrisley asked is there a logical reason for that? Ms. Fountain said we have been trying to figure this out. We had to amend our senior ordinances in 2003 to incorporate state law. At that time, they implemented this 35 unit requirement. There isn't anywhere in the state law explaining what the reasoning was for 35 units. I think it was an arbitrary number that seemed like a good sized project. We are not really sure why that was selected. Since it is state law, we must follow it. We are aware that is something the community would like to see. We see more interest in actually building assisted care facilities than we do senior restricted housing. If you think of anything you would like on a future agenda, please let us know. ADJOURNMENT By proper motion, the meeting of February 14, 2008, was adjourned at 7:15 p.m. Respectfully submitted, Debbie Fountain Housing and Redevelopment Director PATRICIA CRESCENTI Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.