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HomeMy WebLinkAbout2020-08-13; Housing Commission; Resolution 2020-003RESOLUTION NO. 2020-003 A RESOLUTION OF THE HOUSING COMMISSION OF THE CITY OF CARLSBAD, CALIFORNIA, RECOMMENDING THAT THE CITY COUNCIL APPROVE A COUNCIL POLICY STATEMENT REGARDING THE ADMINISTRATION OF THE CARLSBAD HOUSING TRUST FUND WHEREAS, the city's lnclusionary Housing Ordinance was established in April 1993 and requires that all residential developments greater than six units restrict 15 percent of the total number of homes in a project as affordable to low-income households; and WHEREAS, while this obligation is fulfilled through construction of a variety of rental or ownership units, some developments have the option to satisfy a portion of or all of their affordable housing obligation through payment of inclusionary housing in-lieu fees or affordable housing credit purchases; and WHEREAS,-to ensure that funds for affordable housing are collected and applied appropriately, ~he Carlsbad Housing Trust Fund was established to confirm that fees collected are applied only towards the affordable housing needs of lower-income households, and for reasonable costs of administration, consistent with the purposes of the General Plan Housing Element and lnclusionary Housing Ordinance (Carlsbad Municipal Code Sections 21.85.110 and 21.85.120); and WHEREAS, Housing Trust Fund monies are appropriated through the annual budget process and as-needed at other times of the year; and WHEREAS, at their April 14, 2020 meeting, the City Council directed staff to bring back an agenda item for a policy discussion about the uses of the Carlsbad Housing Trust Fund, with a focus on best practices for using funds for administrative costs and for rental assistance; and WHEREAS, the Council Policy Statement regarding the administration of the Carlsbad Housing Trust, shown in Attachment A to this resolution, was prepared by Community Development Department staff to provide additional guidance in the planning and administration of the Carlsbad Housing Trust Fund. NOW, THEREFORE, BE IT RESOLVED by the Housing Commission of the City of Carlsbad, California, as follows: 1. That the above recitations are true and correct. 2. That, based on information provided in the Housing Commission staff report and considering testimony of all persons desiring to be heard at the Aug. 13, 2020 public meeting, the Housing Commission hereby recommends that the City Council approve the Council Policy Statement -Administration of the Carlsbad Housing Trust Fund, attached hereto as Attachment A. PASSED, APPROVED AND ADOPTED at a regular meeting of the Housing Commission of the City of Carlsbad on the 13th day of August 2020, by the following vote, to wit: AYES: NAYS: ABSENT: COLE, CORTES-TORRES, EVANS AND MANZANO NONE NGUYEN-CLEARY MARISSA CORTES-TORRES, Acting Chairperson CARLSBAD HOUSING COMMISSION ATTEST: ,#~A-~~ DAVID DE CORDOVA Housing Services Manager Attachment A {city of Carlsbad Policy No. Date Issued: Effective Date: DRAFT Council Policy Statement Category: AFFORDABLE HOUISNG Specific Subject: Administration of the Housing Trust Fund PURPOSE: Resolution No. Cancellation Date: Supersedes No. Pursuant to Carlsbad Municipal Code (CMC) §21.85.110 and §21.85.120, all fees collected under the lnclusionary Housing Ordinance shall be deposited into a housing trust fund and expended for the affordable housing needs of lower-income households, consistent with the General Plan Housing Element and the CMC. 21.85.110 In-lieu fees. (D) All in-lieu fees collected hereunder shall be deposited in a housing trust fund. Said fund shall be administered by the city and shall be used only for the purpose of providing funding assistance for the provision of affordable housing and reasonable costs of administration consistent with the policies and programs contained in the housing element of the general plan. 21.85.120 Collection of fees. All fees collected under this chapter shall be deposited into a housing trust fund and shall be expended only for the affordable housing needs of lower-income households, and reasonable costs of administration consistent with the purpose of this chapter. Funding from the fund, which should be leveraged to the extent feasible with state, federal and private sector subsidy capital, is intended to aid in the production, acquisition, rehabilitation and preservation of housing affordable to extremely low-, very low-and low-income households, and those suffering from homelessness. BACKGROUND: The city's lnclusionary Housing Ordinance was established in April 1993 and requires that all residential developments greater than six units restrict 15 percent of the total number of homes in a project as affordable to lower income households. This obligation is fulfilled through construction of a variety of rental or ownership units, both on and off-site. Some developments have the option to satisfy a portion or all of their affordable housing obligation through payment of inclusionary housing in-lieu fees or by purchasing affordable housing credits, when available. For the city to receive and use these fee payments, an implementation mechanism was needed to ensure that the funds collected were applied appropriately. As a result, the housing trust fund was established to confirm that fees collected were applied only towards the affordable housing needs of lower income households, and for reasonable costs of administration consistent with the purposes of the General Plan Housing Element and lnclusionary Housing Ordinance (Carlsbad Municipal Code Sections 21.85.110 and 21.85.120). The housing trust fund receives revenue from other sources, including interest from loans, housing credit purchases, housing impact fees, and interest earned on the fund balance. Page 1 of 4 Policy No. Over the past 20-years, the housing trust fund has been used to support a variety of affordable housing development and services for lower income and homeless individuals and families. As a local fund, the City Council determines how housing trust fund money can be spent, provided expenditures are consistent with the purposes of the lnclusionary Housing Ordinance and the policies and programs in the General Plan Housing Element. POLICY: It is the policy of the City Council that the housing trust fund shall be administered as follows: 1. Use of the Funds a. "Affordable housing" as used in this policy shall have the same meaning as in CMC §21.85.020(A). b. Housing Trust Fund dollars may be used for new construction, acquisition and/or rehabilitation, subsidy or other means to assist other governmental agencies, nonprofit groups and private organizations or individuals in creating or maintaining affordable housing. c. For new construction, acquisition/rehabilitation projects, Housing Trust Fund dollars are intended to offer "gap" financing. The subsidy required should be the minimum amount necessary to both ensure the feasibility of a project and the affordability of the units. Projects are expected to support as much debt as feasible and to attract as much equity investment as is typical for similar projects. d. Low interest loans are the generally preferred form for distributing Housing Trust Fund dollars for work in all stages of housing development. However, grants may also be considered. e. Housing Trust Fund dollars may be used to provide new affordable rental or ownership housing units. f. Fipancial Assistance requests Housing Trust Fund dollars shall not be used to satisfy a development's inclusionary housing requirement but may be used to assist in exceeding the requirement by increasing the number of affordable units and/or expanding affordability to very low or extremely low income households, or to encourage a preferable product type. g. Financial assistance requests will be evaluated by the Affordable Housing Policy Team and presented to the Housing Commission for review and recommendation to the City Council. The City Council is the final decision-maker for financial assistance requests. h. Housing Trust Fund dollars may be used to cover reasonable costs to administer the fund. Such allowable administrative costs include personnel expenses and maintenance and operations (M&O) costs such as office equipment and supplies, utilities, noticing, dues and subscriptions, travel and training, miscellaneous studies, audit, legal support, information technology support, interdepartmental charges, and supplemental administrative support to the Section 8 rental assistance program. Contributions to service providers who provide direct assistance to low income and homeless persons, while budgeted as M&O expenses, are not considered administrative costs for purposes of this policy. The level of administrative expenses will be determined by the City Council as part of the annual budget. As a general guide however, administrative expenses should not exceed three to five percent of the available HTF balance as of the end of the prior fiscal year. Page 2 of 4 Policy No. i. The annual budget process for the housing trust fund shall be guided by Housing Element policies and programs, the lnclusionary Housing Ordinance, and the following general affordable housing priorities, in descending order: 1. Construction of new affordable housing; 2. Preservation of housing at-risk of conversion to market rate; 3. Conversion of market rate units to affordable housing; 4. Acquisition/rehabilitation of distressed/at-risk affordable housing; and/or, 5. Land acquisition for future affordable units. 6. Short-term rental assistance programs to prevent and reduce homelessness. 2. Housing Trust Fund Annual Report a. Staff shall provide a-Housing Trust Fund Annual Report to the City Council. The report shall include the following: 1. Summary of the use of the funds consistent with this policy. 2. Summary of the projects assisted with Housing Trust Fund dollars over the past year. 3. Financial status of the Housing Trust Fund. 4. A summary of administrative and non-project expenses made in the prior year. 5. Review of prior year funding priorities and accomplishments. 6. Summary of pending assistance requests and confirmation of upcoming year funding priorities. 7. Summary of denied assistance requests, if any, and brief statement of reasons for the denial. b. The Housing Trust Fund Annual Report shall be reviewed by the Affordable Housing Policy Team and the Housing Commission. The Housing Commission shall make a recommendation to the City Council. 3. Affordable Housing Project Evaluation a. In addition to the review requirements and evaluation criteria specified under CMC ~21.85.130, §21.85.140 and City Council Policy 57 -Off-site and Combined lnclusionary Housing Projects, projects that provide the following will be given additional consideration when ranked against other projects. 1. Projects that provide the greatest benefit per dollar of funds spent. 2. Projects that demonstrate higher equity in the project. 3. Projects that demonstrate a lower loan to value ratio. 4. Projects that have other funding sources identified and committed. 5. Projects which benefit the highest percentage of lower income families, provide the lowest affordability, include the greater percentage of affordable units or will maintain longer periods of affordability. 6. Projects that use Housing Trust Fund dollars as a match or to leverage other conventual and below-market resources, including tax credits, state and federal funding programs and other funding sources. Page 3 of 4 Policy No. 7. Projects proposed by an applicant with a successful history of project development and/or property management, as appropriate. 4. Affordability Covenant & Form of Financial Assistance a. Whenever Housing Trust Fund dollars are used for the creation, acquisition, and/or rehabilitation of affordable housing, the city shall impose enforceable requirements on the owner of the housing units that the units remain affordable for a period of not less than 55 years for rental units, or 30 years for ownership units, in accordance with CMC Chapter 21.85. 1. When Housing Trust Fund dollars are used to create affordable rental housing, long- term affordability shall be enforced by restricting rents that may be charged to tenants. 2. When Housing Trust Fund dollars are used to create affordable housing for-sale, long- term affordability shall be enforced by imposing re-sale restrictions that maintain an equitable balance between the interests of the owner-occupant and the city. 3. When Housing Trust Fund dollars as used to fund programs which are not described above, the city shall develop appropriate mechanisms to ensure ongoing affordability. b. The affordability restriction requirements described in this section shall be enforced by a covenant running with the land. c. The financial assistance structure may take several forms and are tailored to the financial needs of the individual projects and are negotiated on an individual basis depending upon project cash-flow and the senior lender's underwriting guidelines. Example forms of assistance may include but are not limited to: fixed interest rate loans, interest-only, deferred payment and/or residual receipts loans, land acquisition and ground lease-back. 5. Administration a. The annual Housing Trust Fund budget shall be administered by the Community Development Director, or designee who shall have the authority to govern the fund consistent with housing element policies and programs, CMC 21.85, and this policy. b. Housing Trust Fund dollars are held in a separate account until disbursed consistent with this policy. c. The Community Development Director, in coordination with the Finance Director, shall ensure that Housing Trust Fund dollars are awarded, encumbered or otherwise obligated for uses consistent with housing element policies and programs, CMC 21.85, and this policy, and in a manner consistent with the city's financial policies and ordinances. 6. Related Policies a. City Council Policy No. 57 -Off-site and Combined lnclusionary Housing Projects b. City Council Policy No. 73 -City Option to Purchase Resale Affordable Housing Page 4 of 4