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HomeMy WebLinkAbout2008-12-11; Housing Commission; MinutesMinutes of: HOUSING COMMISSION Time of Meeting: 6:00 P.M. Date of Meeting: December 11, 2008 Place of Meeting: CITY COUNCIL CHAMBERS CALL TO ORDER Chairperson Smith called the Meeting to order at 6:00 p.m. PLEDGE OF ALLEGIANCE Board Member Kirk led with the Pledge of Allegiance. ROLL CALL Present: Commissioners: Craig Kirk Doris Ritchie Bobbie Smith Absent: Emelda Bradwell Hope Wrisley Staff Present: Housing and Redevelopment Director: Debbie Fountain APPROVAL OF MINUTES Minutes of March 13, 2008, were approved as written. VOTE: 3-0 AYES: Kirk, Ritchie and Smith NOES: None ABSTAIN: None ABSENT: Bradwell and Wrisley ITEM NOT ON AGENDA There were no items that were not on the agenda. NEW BUSINESS Debbie Fountain, Director of Housing and Redevelopment, presented the item on the agenda as the La Costa Town Square Project. This is a request by the developer of that project to meet their inclusionary housing requirement through the purchase of housing credits in either the Villa Loma Project or the Cassia Heights Affordable Housing Project. As outlined in the report, this project is proposing 64 single-family homes. The project is located within the southeast quadrant of the city at La Costa Avenue and Rancho Santa Fe Road. On Rancho Santa Fe Road there has been a sign about developing this project. This developer has been in the process for some time developing their plans and starting the process. They worked previously to figure out a solution to their affordable requirement. This is a mixed project that has single-family homes but it also has a large commercial component that is part of it. The commercial component is about 280,000 square feet of commercial and office development. Originally, the project had proposed to build an apartment project within the commercial portion of it near the location where they had a movie theater. Because they were doing a parking structure and a movie theater, it made sense at that time to incorporate an apartment project within it. But with the economy changing, that project has changed and no longer has a theater in it. The project has been redesigned and it doesn't work as well now with an apartment project. It would have been a very small apartment project as it was. They have a 10 unit requirement. If they go off-site, it goes up to 11 units, but they proposed a 13 unit complex with the original design that seemed to work well and integrate into it, but now that the project has changed, it is not as well integrated. Staff took a look at the project. We have a Housing Policy Team that is made up of different staff members: We have our Planning Director, Community Development Director, Assistant City Attorney, Finance Director, Economic Development Manager, and myself that sit on that committee. We review these requests to purchase HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 2 of 8 credits. We look at them closely because whenever possible, we really want to see the units within the development. The only time we are willing to consider an off-site solution is if it looks like it is not feasible for those units to be built on site or we don't have a desirable product. We looked at this one closely and determined the best solution is for the project to purchase credits. We did look at the option of incorporating second-dwelling units into the development so 10 of their single-family homes would have a second-dwelling unit. The second-dwelling units have been somewhat controversial. They are not considered ideal because we don't have as much control over them as we would like. It has been an issue with the Planning Commission and the Housing Commission as well as with the City Council. We do allow them for these smaller projects because they don't have a lot of options unless they partner with other developers to build a larger project. When Villa Loma was built and when Cassia Heights Apartments were built, it was intended, at that time, that we would have additional units we could partner with other developers to help them meet their inclusionary requirement. Villa Loma has about 27 credits left in it and Cassia Heights has all 56 units that are credits within that project because it was actually built outside of an inclusionary requirement. In total we have about 83 unreserved housing credits that can be purchased by developers with a small requirement. Our policy has generally been that we will only let the developer go off-site to meet the affordable requirement if they haven't requested any density increases for the market rate product and there hasn't been any other types of modifications approved for the purposes of affordable housing. The developer also has to provide adequate justification of why it will not work on the site. A lot of times it ends up being that the site just doesn't work well or we are concerned about the product type and the quality of life for those who are living in it. In this particular instance we did decide after quite a bit of discussion on it that we would support the developer's request to purchase credits. If the developer is requesting to purchase credits of 10 credits or more, it has to come to the Housing Commission for a recommendation. The Housing Commission actually hasn't seen a large number of these requests. This is the first one because most of the requests are for a smaller credit purchase, like 2, 4 or 5 units. This isn't a particularly large number, but it was a determination made by the City Council if somebody was requesting credits of 10 or more that it should get some additional review and to make sure there is support from the Housing Commission from a policy standpoint. It is a brief report. The developer representative is here to answer any questions that you might have on their justification. I also would be happy to answer any questions for staff. Commissioner Ritchie asked Ms. Fountain how many units are available at Cassia Heights. Ms. Fountain said Cassia Heights has 56 credits available. That is the whole project. Commissioner Kirk asked what specifically changed in terms of going for credits versus continuing with the plan. What was it that changed? Ms. Fountain said the developer can come and speak to that. My name is Pat O'Day and I have been the project manager on this project for about a year. The main change was that the developer died in February and his family has continued with the project and they asked me to get it to the point of getting it approved. Halfway through the process in the first four months, they did some cost analysis and they also discovered as part of the original project there was a movie theater complex along with a parking structure and another parking structure, but the movie industry is not doing very well. There are a lot of vacancies. When you build a movie theater and it vacates, there isn't another use you can stick in there. So we did a little investigation to see if we could change the uses and eliminate that. Not only did we eliminate that, we eliminated both parking structures. We did go to the Planning Department to make sure we were not going in the wrong direction and they agreed with us. They also knocked off about $22 million dollars worth of cost in the project. That is basically what the change was. The other initial design had a little space for some units in one of the parking structures next to it. When that left, it really didn't make anymore sense. Instead of the theater, we now have an office complex. We didn't think it was safe or appropriate to have units in that retail center where there is almost 300,000 square feet of retail and an office. HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 3 of 8 Commissioner Kirk asked Mr. O'Day if the units were originally intended to be within the parking structure. Mr. O'Day said, yes it was supposed to be part of the parking structure. Chairperson Smith asked when it is proposed the units will be completed. Mr. O'Day asked if she meant the project. Chairperson Smith, yes the project. Mr. O'Day said they are going as fast as they can. They anticipate the environmental review going to a public review in eight weeks and a Planning Commission hearing in June. Then we would hope to go to the City Council in July. This project has been going on for seven years. Commissioner Kirk said beyond the change of the theater and the parking structures were there any other significant changes with the project. Mr. O'Day answered no. It is basically the same French, Tuscany style with a clock tower. It is going to be a very nice project with two anchors; a department store and a grocery store. The main issue is simply taking out the cost of the movie theater and putting in offices in place of it. We have the same architecture and the same theme as the rest of the retail. Chairperson Smith asked will this complex be close to public transportation. Mr. O'Day said it is on the corner of La Costa and Rancho Santa Fe, and actually we are building three bus stops as part of the project. That is as close as it gets to any public transportation. There is a lot of density, single-family and multifamily, around it. It will be a walkable project. Chairperson Smith asked how many affordable homes will there be. Ms. Fountain answered the La Costa Town Square Project won't have any other affordable units in it. They are requesting to purchase credits off-site rather than meet their affordable housing requirement on site they would purchase credits. If they are allowed to purchase credits, they would have no affordable housing units on site. They would have 64 single-family homes that would sell at market rate. Commissioner Kirk commented then originally it was planned for 13. Ms. Fountain agreed, yes they had a 13 unit apartment complex. Commissioner Kirk said then now the request is for 11 credits. Ms. Fountain said the requirement was only for 10 affordable units. If they go off site, the requirement goes up by one because of the calculation and what happens when you take them off site. They would have to buy 11 credits. If they built on site, they would only have to build 10 units, but their original proposal was to do a slightly larger apartment complex. Commissioner Ritchie asked if Ms. Fountain had determined the cost of these 11 units. Ms. Fountain said currently the Villa Loma credits sell for $49,000 a credit. The price for Cassia Heights has not been set yet, but we generally set it at what our subsidy is into the project, and Cassia Heights was about $50,000 per unit. They are comparable as to which project they purchase credits. They actually don't purchase the credits until they pull building permits so they pay whatever credit price that is in place at that time. Ms. Fountain told the Commission if they are supportive of the recommendation, then we have set that forth on the first page as to the approval of the Resolution 2008-002. This would recommend approval to the City Council to allow the developer to purchase the 11 affordable housing credits in either Villa Loma HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 4 of 8 or Cassia Heights. The reason we put both projects was because the credits are not purchased until the building permit. We don't reserve those credits. It is a first come, first served basis. If for some reason we sold all the credits in Villa Loma, then they would buy in the Cassia Heights project. So it would be either at the time they pull the building permits. You would be recommending that to the City Council, and the Council must ultimately approve the purchase before it is final. Chairperson Smith asked if someone would make a motion to adopt the resolution. Commissioner Kirk made a motion that the Housing Commission adopt Resolution 2008-002 recommending approval to the City Council to allow the developer builder of the La Costa Town Square Project to purchase eleven affordable housing credits in the Villa Loma and/or Cassia Heights Affordable Housing Project in order to satisfy the requirements of the inclusionary housing ordinance for the La Costa Town Square Project. Commissioner Ritchie seconded the motion. VOTE: 3-0 AYES: Kirk, Ritchie, and Smith NOES: None ABSTAIN: None ABSENT: Bradwell and Wrisley DIRECTOR'S REPORT Ms. Fountain continued with the next item, a report on affordable housing projects. This is an update status report that does not require an action. The handouts I gave you are for informational purposes. We also gave you a copy of our new Affordable Housing brochure. We did this brochure to tell the story about affordable housing and the types of people that are benefiting from it. A lot of times people don't even know where our projects are or how many of them we have. They may have one next to them they are familiar with, but they don't know there are a number of them in Carlsbad. That is why we put this brochure together for an informational tool as we speak to organizations or as we go to conferences to tell the story about inclusionary housing. The best thing about the brochure is the personal stories that are in it. Another item I passed out to you is a chart that has a number of projects on it. We do this as part of our Housing Element to figure out where we are and to see how many units we have provided in any given year. As you can see, we started with our first project in 1996, which was Villa Loma, and then we had quite a few during the period from 1999 to 2004. There were a lot of market rate developments built in Carlsbad during those years. Since they all had the requirement to build affordable housing, we received a number of projects that were completed during that time. On this list is the product name, what type of product it was, the bedroom sizes, who the beneficiaries are such as extremely low, very low and low income, and then the dollar amount that went into each of those projects as a city subsidy. That wasn't the total cost for the project, but that was a city subsidy portion. You can see overall there has been quite a bit of money that has been spent by the city on affordable housing. Commissioner Kirk asked Ms. Fountain, is there a way to know how many credits are available? Ms. Fountain answered the only projects we have credits available are Villa Loma and Cassia Heights. I will send you a separate chart that shows you who has bought into that so far. We do have a chart that shows which projects purchased credits, how many they purchased, and then what we have as a balance. Those have all been purchases in Villa Loma. We haven't done any in Cassia Heights yet. Commissioner Kirk asked, is there a threshold that says once we have "X" number of credits remaining, that we move forward with some of the other projects on the list? Is there a trigger that says it is time to build more? Ms. Fountain said the only trigger there would be is when we run out of those credits, developers wouldn't be able to satisfy their inclusionary off-site in those projects. They would actually have to build them or HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 5 of 8 they would have to help us build another project that had extra credits. The rest of the projects on here were just built to meet their inclusionary requirement so we don't have any extra credits. We would have to look at another site. For example, in Villa Loma and Cassia Heights, developers buying into those projects must be located in the southeast or the southwest quadrant. If you are in the northeast or the northwest quadrant, you can't buy credits in those projects because the ordinance specifically says it has to be in your quadrant or it has to be on the border. Villa Loma and Cassia Heights are right on the border of those two. But we don't have a project in the northeast quadrant that a developer can buy into. We have a small one in the northwest, which is our Roosevelt Street Habitat Project, which has eleven credits. Those have mostly already been spoken for. In the northwest quadrant it is much harder because the projects are much smaller to try and figure out how they are going to meet their affordable housing on site. We still have a need because when the economy improves, we know there will be more developments coming forward and we will have to adjust at that time. Right now for the southeast and the southwest we have done an analysis of the projects that are still left to build and we think we still have enough credits in those two if all of them needed to purchase credits. Commissioner Kirk said he is assuming that given the state of the economy and the recession that we are seeing more and more credits requested so they can optimize their investment. Ms. Fountain said that is correct. Most of the remaining projects are small projects so they are going to be two and three unit requests. If you look at the bottom of this chart, we show the projects that are pending or under construction, such as Roosevelt Gardens, which is the Habitat project I mentioned, Poinsettia Commons, which is by the Poinsettia Commuter Rail Station and under construction right now and they are close to be completed with the affordable component, and Robertson Ranch the Glen Ridge Project is currently under construction. They are accepting applications for lease ups. Those three projects are currently under construction. Below that, where it says "future," those are projects that have received approvals through the Planning process but they are not under construction and we don't know when they will be under construction. They are projects that have affordable requirements and they have already been through the process or are in the process right now telling us how they are going to meet their affordable requirement. There are still a number of projects to come in the future if the economy improves enough. Ms. Fountain continued, there is one project that says "future Robertson Ranch West Mod." In our inclusionary requirement they have to provide low-income affordable housing. But in some cases where they have requested additional density, we have actually negotiated for moderate income, because we don't have a requirement for moderate. They do have to meet their 15% inclusionary low and then we have also negotiated the additional moderate income units. In that project it would be 56 units, and they are proposing a for-sale product for moderate. That would be the first of its kind if it gets built because we have not built any moderate affordable housing to date. As you can see from the project totals, from 1993 to 2007 we were able to build 1,981 units. We have about 100 under construction right now, and then 355 on the planning table. If all of those units gets constructed in future years, we will have a little over 2,400 units total in Carlsbad. It is one of the most successful inclusionary programs in the state. Commissioner Ritchie commented the one builder bought a couple of the condos on El Camino Real in the Grove. Ms. Fountain said yes. We have tried to be creative. There is a small project on Las Flores, which is actually for sale. That was an eleven-unit project and they needed to meet their inclusionary requirement and since they did townhomes, they couldn't do second-dwelling units because those are for single-family homes. We didn't have a combined project they could purchase credits in the northwest so they explored their options. As an option, I told them they could buy some condos and then resell them at the low- income price. That was what they chose to do. They actually bought those units and sold them before they even started construction on their market rate. We do try and be creative. In the northwest quadrant, a condo project was also allowed to purchase a ten-unit apartment complex on Roosevelt Street and restrict six of the units to low-income. That way we get the affordable restricted units and we also get a deteriorated building substantially rehabilitated. It helps with blight removal and also with providing HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 6 of 8 affordable housing. We do try and be creative and that is one of the things I share with people who call and ask why we are successful. Part of it is trying to work with the developer and come up with creative solutions but still get the housing. The developers do not necessarily like the requirement, but it s huge benefit to Carlsbad when you look at diversity and the product types that are needed to provide the affordable housing. It has been successful and we are continuing to look for new projects. It is getting harder. We are not seeing the financing available as much as it was before. When the economy turns, however, we will be ready again. Another handout I have given you is "Affordable Housing in Carlsbad General Information." I put this list together because we get a lot of questions about why we need to do affordable housing, what does it really mean, does somebody make us do it, what kind of programs do we have, who owns and operates them. It is a fact sheet. We have a number of reasons laid out in the brochure; first and foremost, it is required by state law, we must provide affordable housing in the community. From a legal standpoint we must do it, but I think there are a lot of other really good reasons for why we should provide affordable housing within our community. I think it helps the local economy because generally people shop where they live, even if they are low income. If they have affordable housing, they will have more discretionary income than they would if they don't. It does help reduce traffic on local highways and freeways because we are not having people driving in from other areas. It helps with a diverse community and homelessness. We also listed the different programs we have: inclusionary housing, rental assistance, a new down-payment and closing cost assistance program. We are implementing a minor home repair program where we are providing up to $5,000 in grant funds to help make repairs on homes. The main use of the money is to help with safety, such as an electrical issue that is causing a safety problem. It might be to help people age in place and get their home improved. Commissioner Kirk asked on the down payment closing cost assistance for the moderate, is that something that would like to be pursued this year? Ms. Fountain said we are not sure since we are having a little bit of an issue with the funding source, we don't know when we will be able to find an appropriate funding source to be able to do the moderate. Commissioner Kirk asked if it would be another federal funding source. Ms. Fountain said we will have to see if we can find some other funding source or if we make some revisions to the inclusionary ordinance and to the fees that are received through that, then they could be used through moderate income. We haven't received that direction yet from the City Council so I don't know what will happen with that. We decided to implement the program right now with low income and then we will work through some of the other funding issues for moderate. Commissioner Kirk said that it seems that a community as a whole, there is going to be a really driving need to focus in that area. Ms. Fountain agreed. That is why we originally set it up that way. We were thinking we could use our housing trust fund, but then we realized the housing trust fund specifically says for low income so we can't use it on moderate income. We will continue working on that. We know there is a need out there. With the prices coming down on homes, it might be more possible for some of these people to purchase even with some assistance. Commissioner Kirk asked, has Carlsbad been affected substantially by comparison to other areas? Ms. Fountain said you mean by foreclosures? We haven't had a high number in relationship to some of the cities around us. We have seen it increasing, the number of foreclosures, but we still haven't seen it as bad as some of the other cities have been. Ms. Fountain continued with the handouts. She gave the Commission Members the income charts for 2008. Another chart was given to the Commission Members that shows how it plays out in terms of rent. If somebody is meeting our inclusionary requirement at 70% of the area median income, if they had a one- bedroom, two-bedroom or three-bedroom. The highlighted ones on that chart is what we use as the HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 7 of 8 average household size for setting the rent. For a one-bedroom unit, we actually use a 1.5 household size to determine the appropriate rent and for a two-bedroom, it is 3 persons, for a three-bedroom it is 5 persons. That would show the maximum rent able to be charged for that size unit. We also deduct utility allowances so the final column tells you for a one-bedroom unit we would allow somebody to charge a maximum of $937 for that unit as an example. Chairperson Smith said it was brought to her attention that the homeowners can raise the rent for a person receiving housing assistance and that individual has to pay the raise. Ms. Fountain asked if she was talking about the rental assistance. Chairperson Smith said yes. Ms. Fountain said under rental assistance there is a formula we follow and we have a maximum fair market rent that can be charged for a unit that we can agree on with the property owner. With rental assistance, the renter pays at least 30% of their gross household income on rent, then we pick up the difference on the voucher side up to the fair market rent. If someone wants to rent a unit that is actually over the fair market rent, then they would have to pick up the difference between that and the fair market rent. If they are still within their voucher limit and their rent goes up, then the tenant has to pay 30% of their income and then we would pay the difference. If it is over the fair market rent, the renter can chose to stay in the unit but then they have to pay the difference. In that case they may have to pay more than 30%, but that is their choice. Commissioner Ritchie asked when you say "we pay the difference," where do those funds come from? Ms. Fountain said the federal government actually provides us rental assistance funding, but the City of Carlsbad has a Housing Authority and the Housing Authority implements the program. The money is coming from our Housing Authority via the federal government. Chairperson Smith asked what happens if you don't use all of the money that is allocated for the year 2008, where does that money go. Ms. Fountain asked for rental assistance? Chairperson Smith said yes. Ms. Fountain said we usually don't have that problem. We use most of the money we have. We do have the ability that some money can go into reserves if we don't use it all and it can be used for other appropriate purposes later. For the most part we are spending most of the money we are getting. Commissioner Kirk asked, does the reserve ever expire? Ms. Fountain answered there is always a possibility with a reserve that the federal government can come back in and take that reserve at any time. They don't really want us to have a reserve. Typically, we can only get the money we spend. Ms. Fountain said we will probably be presenting the Housing Element to the Housing Commission in January at our meeting on January 8, 2009. We are still working on that. We believe we have a draft that the Housing and Community Development (HCD) Department for the state has tentatively approved and we can start our process. We are working through our environmental review right now. Our hope is that if we are going to do that, then I will try to get the Housing Element to everybody by the end of this month so you will have it at least a couple of weeks before the meeting. We do expect that meeting probably to have a lot of people in attendance. There are some projects listed in our Housing Element that has some opposition. I am sure people have heard about the Quarry Creek Project, and that is in our Housing Element as a site for residential with affordable housing in it and there is a lot of community opposition. Not all of it is coming from Carlsbad residents. There are Oceanside residents as well so we expect that HOUSING COMMISSION MINUTES DECEMBER 11, 2008 PAGE 8 of 8 meeting to have a lot of attendance. You don't normally have a lot of attendance, so that will be unique for the Housing Commission. Commissioner Kirk asked if that meeting will be a review meeting and not to vote on anything? Ms. Fountain said we haven't decided exactly yet what staff will ask the Commission to do. If the Housing Commission feels they would be more comfortable with reviewing it at one meeting and then taking action on it at the next meeting, we could set it up that way. Commissioner Kirk said given the nature and magnitude of what you are talking about, I personally would feel more comfortable with that. Ms. Fountain said she will share that with the Planners. Sometimes it depends on if you get a lot of people, then you might want time to think about what they said. If you don't get anybody to show up, then it is an easier discussion. That is typically what happens with the City Council. If they get a lot of people at a meeting, they will defer their decision to another meeting to give themselves more time. Commissioner Kirk commented, yes to give themselves more time to digest what happened. Ms. Fountain agreed. Chairperson Smith commented it can get quite emotional. Ms. Fountain commented that was all she had other than wishing everyone a Happy Holiday. ADJOURNMENT By proper motion, the meeting of December 11, 2008, was adjourned. Respectfully submitted, Deborah Fountain Housing and Redevelopment Director PATRICIA CRESCENT! Minutes Clerk MINUTES ARE ALSO TAPED AND KEPT ON FILE UNTIL THE WRITTEN MINUTES ARE APPROVED.