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HomeMy WebLinkAbout12/02/2008, B4 - APPROVE ADDITIONAL AFFORDABLE HOUSING FUND ALLOCATION TO ALLOW MODERAT-INCOME, FIRST-TIME HOMEBUYER Cl L M.!71 COUn . j acEnc)a uEpoizt iwmn. � CITY OF SAN LUI S OBIS PO FROM: John Mandeville, Community Development Directo171` Prepared By: Michael Codron, Housing Programs Manager 4 SUBJECT: APPROVE ADDITIONAL AFFORDABLE HOUSING FUND ALLOCATION TO ALLOW MODERATE-INCOME, FIRST-TIME HOMEBUYERS TO PURCHASE UNITS IN THE LAUREL CREEK TOWNHOMES PROJECT. CAO RECOMMENDATION Adopt a resolution approving an additional $300,000 from the Affordable Housing Fund, for a total of $700,000, to be used for down-payment assistance for moderate-income, first-time homebuyers to purchase ten designated BEGIN units in the Laurel Creek Townhomes project. DISCUSSION BEGIN Program Overview On November 15, 2005, the City Council approved Council Resolution No. 9748, approving the Laurel Creek (formerly Tumbling Waters) subdivision and allocating up to $400,000 from the Affordable Housing Fund (AHF) for down payment assistance(Attachment 1). AHF funding for down payment assistance leverages a $300,000 grant from the State of California's Building Equity and Growth in Neighborhoods(BEGIN)program. Under the BEGIN program, the State and City funds are combined and provided to eligible moderate-income, first-time homebuyers to be used as a down payment. This down payment assistance is provided in the form of a 30-year loan, made at 3% simple interest. Periodic payments are not required during the term of the loan to keep monthly payments affordable. The loan is repaid when the homeowner sells the unit. Upon repayment, the City will keep the State's portion of the loan to be reused to support other affordable housing projects in the City. The program is attractive because the State is not making direct loans to buyers. Under the program guidelines, the State money is provided in the form of a grant to the City and will be reused upon repayment of the loan. Therefore, at the conclusion of the program, the City will have recovered all of its original investment from the AHF, along with the $300,000 in State money plus interest. How the BEGIN Program Works Under the original BEGIN program guidelines, eight two-bedroom units were to be sold for $360,000 each, and two three-bedroom units were priced at $440,000. Down payment assistance from the State of California and the City of San Luis Obispo was available in the amount of $65,000 for the two-bedroom units, and $90,000 for the three-bedroom units to households that qualify under moderate-income limits. Therefore, the effective sales prices q—' Laurel Creek Affordable Housing Fund Request Page 2 (the amount that the buyer will have to finance with a private mortgage) were approximately $295,000 and $350,000, respectively. An additional $10,000 per unit was contributed by the developer to cover closing costs and to buy down interest rates to insure that buyers allocate no more than 40% of their annual income towards housing costs (mortgage, taxes, insurance and HOA dues). The proposed base sales prices for these units are consistent with two recent appraisals prepared for units in the City's long-term affordability program. A 2-bedroom condominium unit on Ella Street recently appraised for $360,000, and it is smaller than the Laurel Creek 2- bedroom units. Another recent sale of an attached, three-bedroom unit in the Rancho Obispo subdivision that backs up to the Costco parking lot appraised for $450,000. Even though the base sales prices appear to represent fair market value, the effective sales prices for the units were still too high to allow moderate-income households to qualify for a mortgage. As a result, the lottery application period has closed with only two applicants pre-qualified to purchase one of the ten available units. Lottery Application Process In order to find a pool of eligible buyers, the City opened an application period for a lottery. The lottery application period ran from September 29th to November 14`h. Ads were placed in the Tribune and New Times, information was available through the Housing Authority and the Community Development Department, and the lottery was covered by local media. CDD staff also contacted people who had previously expressed interest in affordable housing units and encouraged them to explore this opportunity. The City has held three similar lotteries in the past, and has always received substantial response from the community. Lower Prices/Additional Down Payment Assistance Needed to Implement the Program The City's agreement with Housing and Community Development (HCD) requires all BEGIN funds to be drawn down by June 30, 2009. As a result, timely action is needed to insure that eligible buyers are ready to move into the units when construction is completed in early 2009. If any of the designate BEGIN units are not sold by the deadline, the unspent grant funds will be lost. In mid-October, the City and project builder anticipated that the lottery period would end without sufficient participation after experiencing a weak response from the outset. Staff is now proposing a way to make the program more attractive to applicants. The City Council is being asked to consider making $300,000 of additional down payment assistance available from the AHF to augment the program for a total allocation of$700,000. All of the City's down payment assistance is made in the form of a low-interest loan, which will be repaid to the City. The additional down payment assistance will be met by a price credit offered by the developer totaling$150,000 or$15,000 per unit on average. Staff has worked with the developer to reduce the effective sales prices of the units (the amount that the buyer will have to finance with a private mortgage) to the price point established by the City's Affordable Housing Program Standards. With City Council approval, the revised program would achieve the target prices of $253,400 for the two-bedroorn units and $292,600 for the Laurel Creek Affordable Housing Fund Request Page three-bedroom units. Staff is confident that there will be a sufficient pool of buyers at these prices to sell the units in a timely manner. Attachment 2 includes a table that illustrates how the various funding sources work to make these units affordable to eligible, moderate-income first-time home buyers. The developers contribution of an additional $150,000 is reflected in a credit provided at the close of escrow. Affordable Housing Fund Criteria In 2001, the City Council adopted Resolution No. 9263 establishing criteria for allocating funds from the AHF. These criteria are eligibility, need, suitability, timing, financial effectiveness and readiness. The resolution that staff is recommending for adoption addresses how the proposed use of the AHF meets each of these criteria(Attachment 3). First-Come/First-Served Process to Allocate Units Fourteen applications were submitted during the lottery application period and two were certified as complete. Complete applications included a pre-qualification letter from a mortgage lender. While the City has had great success allocating affordable units by lottery in the past, SLOMC Section 17.91.130 allows for a first-come, first-served process to be used in this case. If Council approves the proposed program modification, City staff will revise the application and will offer applicants the opportunity to purchase the BEGIN units in this manner. Applicants will still be required to pre-qualify for the mortgage before their applications are considered complete. FISCAL IMPACTS The program will have no fiscal impact on the City's general fund. The Affordable Housing Fund is accumulated from in-lieu fees paid by commercial and residential projects that are subject to the Inclusionary Housing Requirement. Presently, the Fund has a balance of $4.2 million with $3.2 million available to allocate to new projects accounting for funds already committed to the Laurel Creek project, the Housing Authority and the City's First Time Homebuyer Program. The proposed additional allocation of $300,000 to the BEGIN program leverages a $300,000 grant from the State for down payment assistance. Down payment assistance is made in the form of a loan, which will be repaid to the City with interest when the units are sold. At the conclusion of the program, the City has been repaid all of its investment,plus interest, and is also able to keep the State grant to reuse in support of other affordable housing projects. The City will forfeit any portion of the State grant remaining after June 30, 2009. ALTERNATIVES 1. The Council may deny the proposal to use additional funds from the AHF for down payment assistance. This alternative is not recommended because the deadline to use the State's $300,000 grant is June 30,2009. 4-3 Laurel Creek Affordable Housing Fund Request Page 4 2. The Council may continue consideration of the proposed funding request if additional information is needed. Direction should be given to staff regarding additional information needed to make a decision on the request. ATTACHMENTS 1. Council Resolution No. 9748, approving initial AHF down payment assistance 2. Revised BEGIN Program financing overview 3. CAO recommended Council Resolution, approving additional AHF down payment assistance G:\CD-PLAN\MCODRON\Housing\BEG2 AHFRequest(2008).DOC l Attachment RESOLUTION NO. 9748(2005 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO APPROVING A VESTING TENTATIVE TRACT MAP FOR THE TUMBLING WATERS PROJECT AND ALLOCATING UP TO$400,000 OF AFFORDABLE HOUSING FUNDS TO THE PROJECT'S AFFORDABLE HOUSING PROGRAM TR 151-03(861 AND 953 ORCUTT ROAD,TRACT 2707) WHEREAS, the Council of the City of San Luis Obispo conducted a public hearing in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on November 15, 2005, for the purpose of considering Planning Application TR 151-03, a vesting tentative tract map providing for the development of 178 new homes;and WHEREAS, said public hearing was for the purpose of formulating and forwarding recommendations to the City Council of the City of San Luis Obispo regarding the proposed development plan,including modified property development standards; and WHEREAS, notices of said public hearings were made at the time and in the manner required by law;and WHEREAS, the Planning Commission of the City of San Luis Obispo conducted public hearings in the Council Chamber of City Hall, 990 Palm Street, San Luis Obispo, California, on December 3,2003,July 28, 2004, May 25,2005 and October 12,2005 for the varied purposes of directing the scope of the environmental review for the project, reviewing revised plans and malting recommendations to staff and the applicant, and considering a final recommendation to the City Council on the project; and WHEREAS, the City Council has reviewed and considered the Final EIR and has determined that the environmental document represents the independent analysis of the City and adequately addresses the potentially significant environmental impacts of the proposed project; and WHEREAS, the City Council has duly considered all evidence, including the testimony of the applicant, interested parties, and the evaluation and recommendations of the Planning Commission and staff,presented at said hearing. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Section 1. Subdivision Findines. The following findings are hereby made in support of the proposed subdivision. 1. The proposed map is consistent with the General Plan because the project helps meet the City's goal of maintaining a compact urban form(LUE Goal 31). R 9748 I �� Attachment 1 Resolution No. 9748 (2005 Series) Page 2 2. The design of the proposed subdivision is consistent with the General Plan because it will provide for variety in the location, type, size, tenure and style of housing in the City(BE Goal 5.1). 3. The site is physically suited for the proposed type of development because it is an under- developed site adjacent to existing street rights-of-way with complete City services. 4. As conditioned, the site is physically suitable for the proposed density of development because the site is within an existing City block, services are available to serve the development, and utilities have been designed to serve the site per City standards. 5. The design of the subdivision is not likely to cause substantial environmental damage or substantially and unavoidably injure fish or wildlife or their habitat because all biological impacts of the project have been evaluated in the Final EIR for the project and mitigation measures will insure that impacts will be less than significant. 6. The design of the subdivision is not likely to cause serious public health problems because environmental impacts, such as noise, are mitigated by design and buildings in the subdivision will be designed to meet strict building and safety codes. 7. The design of the subdivision will not conflict with easements, acquired by the public at large, for access through or use of, property within the proposed subdivision because the project design has been reviewed to insure compatibility with the limitations established by existing easements for utilities. Section 2. Subdivision. The vesting tentative tract map for Tract 2707 is hereby approved,subject to the following conditions of approval. Public Improvements,Dedications,and Utilities 1. The public improvement plans for Tract 2707 and Tract 2785 shall consider the proposed or required phasing to complete the combined development known as Four Creeks. The public improvement plans for each subdivision shall.include any offsite improvements as necessary to provide a reasonable transition between these two subdivisions in the case that one project is developed before the other. The scope of required improvements shall be approved to the satisfaction of the Public Works Director. A reimbursement agreement may be processed for any off-site improvements required to be constructed by a development where not previously required or proposed. 2. Public improvement plans shall be submitted to the Public Works Department for review and approval. The plans shall be approved prior to building permit issuance. Public improvement plans and specifications shall comply with the City Engineering Standards and Standard Specifications in effect at the time of submittal of the improvement plans. The latest versions are dated January 2005. q-- w Attachment 1 Resolution No. 9748 (2005 Series) Page 3 3. Complete street improvements include but are not limited curbs,gutters,sidewalks, ramps,full width street pavement,bus tum-outs and appurtenances,bridges,signage, striping, barricades,utility extensions, and street lights. 4. A public improvement plan,prepared by a registered civil engineer,shall be submitted to the Public Works Director for review and approval. All grades,layout,staking and cut- sheets necessary for the construction of street paving and frontage improvements shall be the responsibility of the developer. 5. An encroachment permit is required for any work within the public right-of-way or within a public easement. 6. Any existing structures,private water supply, or private waste disposal system shall be abandoned to the satisfaction of the Public Works Director,Building Official,and County Health Department. Existing improvements may remain if specifically approved,are not considered to be a nuisance or health hazard and are shown to not be affected by the proposed location of property lines and/or improvements.. 7. The public improvement plans and subsequent development plans shall recognize that the Historic McMillan residence previously existed at the address known as 861 Orcutt. The codes in effect at the time the residence was moved and accessory structures were demolished would not have required the removal of any septic tank and leach field serving the property. 8. Any easements including but not limited to provisions for all public and private utilities, access,drainage,common driveways, and maintenance of the same shall be shown on the final map or recorded separately prior to map recordation if applicable. 9. Additional public right-of-way or public pedestrian easements may be necessary to accommodate improvements required for Americans with Disabilities Act(ADA) compliance,to the satisfaction of the Public Works Director. 10. The extinguishment or quitclaim of any existing easements shall be clearly identified on the final map or shall be completed separately prior to map recordation if applicable. 11. Access rights along Orcutt Road,except at approved driveway locations shown on the tentative map, shall be dedicated to the City. 12. The subdivider shall dedicate a 4.6m wide public utility easement and a 3m wide street tree easement across the frontage of each lot. Said easements shall be adjacent to and contiguous with all public right-of-way lines bordering each lot. 13. The subdivider shall dedicate the additional right-of-way necessary to accommodate a bus tum-out, shelter and appurtenances proposed and conditioned for the adjoining Tract 2785. A separate construction easement, slope bank, and/or grading easement may be necessary to facilitate construction of the bus stop improvements. Attachment Resolution No. 9748 (2005 Series) Page 4 14. The public improvement plans shall clearly show and label all existing and proposed public and private utilities. Private utilities shall be installed in accordance with the Engineering Standards and adopted codes and ordinances and shall be maintained by the Homeowners Association(HOA). 15. Alternate paving materials shall be approved to the satisfaction of the Public Works Department, Utilities Department, and Community Development Department where proposed within the public street. A separate temporary encroachment agreement.andlor maintenance agreement may be required to clarify that the HOA will be responsible for pavement maintenance and upgrades where occurring within the Sacramento Drive right- of-way. 16. The extent of alternate paving shown on the public improvement plans and subsequent development plans shall be approved by the city's Traffic Engineer. 17. Complete details shall be included with the public improvement plans for the pedestrian bridge connecting Tracts 2707 and 2785. A private pedestrian easement shall be recorded with each map to recognize this link between developments. 18. Stmt trees shall be planted along all public and private street.frontages per city standards. The number;location,species,and planting details shall be approved by the City Arborist in conjunction with the public improvement plans and/or development plans. The planting of street trees may be deferred until development for all or a portion of the development to the satisfaction of the Public Works Director. 19. Final grades and alignments of all public and/or private water,sewer and storm drains shall be approved to the satisfaction of the Public Works Director and Utilities Engineer. The final location,configuration, and sizing of service laterals and meters shall be approved in conjunction with the review of the public improvement plans. 20. The subdivider shall install street lighting and all associated facilities including but not limited to conduits,sidewalk vaults, fusing, wiring,and luminaries per City standards. Off-site street lighting improvements,alterations,or upgrades may be required along roadways leading to and from the proposed development to complete the necessary public improvements. 21. Street lighting shall be provided along the private streets or paths in accordance with the approved development and/or ARC plans. Any private street or pathway lighting shall be maintained by the HOA. 22. Separate utilities,including water,sewer,gas,electricity, telephone,and cable TV shall be served to each lot to the satisfaction of the Public Works Director and serving utility companies. Attachment 1 Resolution No.9748 (2005 Series) Page 5 23. The subdivider shall place underground,all existing overhead utilities along the public street frontage(s),to the satisfaction of the Public Works Director and utility companies. 24. The applicant shall work with the Public Works,Fire and Community Development Departments when finalizing on-site drive aisle widths to provide uniformity and minimize paved surfaces where possible. 25. No garage doors shall be located within.20 feet of the back of sidewalk with direct access to public street. 26. The applicant shall be responsible for providing a physical connection on Sacramento Drive between the existing sidewalk and the project's proposed detached sidewalk. Grading and Drainage 1 All bridging,culverting and modifications to the existing creek channels must be in compliance with city standards and policies,the Waterways Management Plan and be approved by the Public Works Director,Army Corp of Engineers,the Regional Water Quality Control Board,and Fish&Game. 2. Any necessary clearing of existing creek and drainage channels,including tree pruning or removals,and any necessary erosion repairs shall be approved to the satisfaction of the Public Works Director,the City's Natural Resources Manager,the Department of Fish and Game,the Regional Water Quality Control Board,and the Army Corp of Engineers if applicable. 3. General Construction Activity Storm Water Permits are required for all storm water discharges associated with a construction activity where clearing,grading and excavation results in land disturbance of one or more acre. Permits are required until the construction is complete. To be covered by a General Construction Activity Permit,the owner(s)of land where construction activity occurs must submit a completed"Notice of Intent" (NOI)form,with the appropriate fee, to the State Water Resources Control Board. 4. A copy of the Stormwater Pollution Prevention Plan required by the SWRCB shall be included in the public improvement plan set for reference. The public improvement plans shall include reference to the WDID number. 5. This development is subject to the city's Waterways Management Plan and Drainage Design Manual. Development shall also be shown to comply with the Flood Damage Prevention Regulations. The public improvement plan submittal shall include a complete drainage study. 6. Post-development stormwater runoff shall be shown to comply with Engineering Standard 1010.B. For purposes of this section,private streets and private parking areas shall be considered as impervious development. r. Attachment 1 Resolution No. 9748 (2005 Series) Page 6 7. Detention basins have,been proposed or are required-for this subdivision. As such,a vector control plan shall be submitted and approved to the satisfaction of the city in conjunction with the public improvement plans. The HOA shall be responsible for any detention basin maintenance and/or nuisance abatement created by the maintenance of said basins. Mapping Requirements 1. The subdivider shall submit a final map to the city for review, approval,and recordation. The map shall be prepared by, or under the supervision of a registered civil engineer or licensed land surveyor in accordance with the Professional Land Surveyors Act, the Subdivision Map Act and the Subdivision City's Regulations. 2, The map shall be tied to at least two points of the City's horizontal control network, California State Plane Coordinate System, Zone 5 (1991.35 epoch adjustment of the North American Datum of 1983 also referred to as "NAD 83" - meters)for direct import into the Geographic Information System (GIS) database. Submit this data either via email, CD or a 3-1/2" floppy disc containing the appropriate data for use with AutoCAD, version 2000 or earlier (model space in real world coordinates, NAD 83 - m). If you have any questions regarding format,please call prior to submitting electronic data. 3. The final map shall use the International System of Units(metric system). The English System of Units may be used on the final map where necessary(e.g. -all record data shall be entered on the map in the record units,metric translations should be in parenthesis),to the approval of the City Engineer. 4. Electronic files and stamped and signed drawings shall be submitted for all public improvement plans prior to map recordation or commencing with improvements, whichever occurs first. Submittal documents shall include the AutoCAD compatible drawing files and any associated plot files along with one original,stamped and signed, ink on mylar set of plans. 5. Prior to acceptance by the City of public improvements,the developer's engineer shall submit a digital version of all public improvement plans and record drawings,compatible with AutoCAD for Geographic Information System(GIS)purposes,in accordance with the City's Engineering Standards,to the satisfaction of the Public Works Director. 6. The map shall be recorded prior to the occupancy or final inspection approval of any of the units. Otherwise, the map shall be processed as a condo conversion per Municipal Code Chapter 17.82. �� Id Attachment 1 Resolution No. 9748 (2005 Series) Page 7 Utilities Conditions and Code Requirements 1. The water main that loops through the project between the main in Orcutt Road and the main in Broad Street appears to serve both the domestic and the fire sprinkler uses within the project. The Fire Department will determine which buildings will have a common fire sprinkler system (serving more than one unit) and which will serve individual units. Each fire lateral must have a USC approved backflow prevention device. Often, planned developments such as this have a separate dedicated private fire main that runs through the site serving fire sprinklers and fire hydrants, which would require only two backflow devices (one at each end). The engineer will need to determine which approach is best suited for the proposed development. 2. The sewer system shall be clearly labeled as private on the plans. Since the City owns and operates the water system up to, and including, the water meter, much of the onsite water system will be required to be public. The amount of public water system outside of the public right-of-way shall be minimized to the extent possible. Water meters shall be manifolded in groups of two to six meters. As many as four 1" meters or six 3/4" meters can be placed on each 2" water service manifold. 3. All public water and sewer facilities shall be located within easements or property deeded to the City. 4. A water allocation is required,due to the additional demand on the City's water supplies. The City currently has water to allocate, and does so on a"first-come,fust-served"basis. Water is allocated at the time building permits are issued and the Water Impact Fee is paid. Both the Water and the Wastewater Impact Fees are charged on a per unit basis for the residential portion of the project and based on the size of the water meter(s) serving the non-residential portions. 5. If any well exists that has not been properly destroyed in accordance with the standards of the County Department of Environmental Health,additional requirements will apply. 6. The owner's engineer shall submit water demand.and wastewater generation calculations so that the City can make a determination as to the adequacy of the supporting infrastructure. If it is discovered that an offsite deficiency exists, the owner will be required to mitigate the deficiency as a part of the overall project. 7. The project is tributary to the Tank Farm/Rockview Lift Station system, which is very near maximum capacity and is scheduled for replacement. The City is pursuing a regional project to construct a large sewage lift station on Tank Farm Road to replace the existing lift stations and provide the needed capacity for build-out of the Airport, Margarita, and Orcutt Specific Plan Areas. This sewer project is scheduled to be complete by Spring of 2007. Currently, there is approximately 108 gpm of available capacity in the lift station system. City crews are pursuing a minor upgrade that will provide an additional 110 gpm of capacity. There are several developments proposed for the area served by this lift station system. Available capacity will be assigned to a Attachment 1 Resolution No. 9748 (2005 Series) Page 8 particular development at the time building permits are issued.on a "first come, first served" basis. If available capacity is gone before the regional lift station project is complete,building permits may be delayed. 8. Each fire service lateral shall include a USC approved backflow preventer appropriate for the proposed use. The backflow preventer shall be located as close to the public water main as possible, in direct alignment with the backflow device. The backflow preventer can be located no further than 25 feet from the right-of-way line without prior written approval of the Utilities Engineer. If the fire service supports one or more fire hydrants, the USC approved backflow preventer(s) shall also include detector capabilities (double detector check assembly). The FDC may be located behind the backflow prevention assembly, in accordance with manufacturer's recommendations. The location and orientation of the FDC shall be approved by the Fire Department. 9. By ordinance, the applicant is required to prepare a recycling plan for approval by the City to address the recycling of construction waste for projects valued at over$50,000 or demolition of structures over 1000 square feet. The recycling plan shall be submitted to the Building Department with the building plans. The City's Solid Waste Coordinator can provide some guidance in the preparation of an appropriate recycling plan. 10. The redevelopment of the site triggers the Utilities Department Sewer Lateral Abandonment Policy. This policy states that any existing sewer lateral stubbed to the property must be abandoned at the main as part of the overall project, unless the lateral is intended for reuse and it passes a video inspection. If any existing sewer lateral is intended for reuse, the owner shall submit a VHS videotape documenting the internal condition of the pipe to the Utilities Department for approval. 11. The irrigation systems for common areas, parks, detention basins, and other large landscape areas shall be designed and constructed in accordance with the standards for reclaimed water use. If reclaimed water is not yet available,the system shall be designed and constructed to reclaimed water standards, and temporarily connected to the City's potable water system in the area of the anticipated connection to the reclaimed water system. Appropriate backflow protection shall be installed with this connection to the satisfaction of the County Cross Connection Inspector, Henry Ruiz, who can be reached at 781-5557. 12. Existing high speed data.infrastructure located within the Sacramento Drive right-of-way shall be relocated to the edge of the right-of-way with construction of the improvements required for Sacramento Drive,to the approval of the City's Public Works Director. - ` - ' Attachment 1 Resolution No. 9748 (2005 Series) Page 9 Conditions, Covenants and Restrictions 1. The final map and project CC&R's shall include disclosure statements and notifications regarding the potential for a grade separation to occur across the project frontage that may impact views in the future. 2. The project CC&R's shall include disclosure and notification that the project is in an urban area and adjacent to an industrial zone,which includes uses that may cause noise, odors, and traffic that are not typical in rural and suburban neighborhoods. Section 3.Affordable Housing Fund. The City Council does hereby approve allocation of Affordable Housing Funds in an amount not to exceed$400,000,based on the following findings. 1. Eligibility. Use of the Affordable Housing Fund will increase or improve affordable housing inventory and promote General Plan policies regarding housing and related community goals because the project will increase the City's affordable housing inventory by 10 moderate-income units and promote General Plan policies,among them: "Assist with the issuance of bonds, tax credit financing, loan underwriting, or other financial tools to help develop or preserve affordable units through various programs, including, but not limited to: (1) below-market financing and (2) subsidized mortgages for very-low,low-and moderate income persons and first-time home buyers,and(3)self- help or"sweat equity"homeowner housing." (Housing Element Program 2.3.9) 2. Need. There exists a substantial or overarching need for the type of housing to be assisted because with a median home sales price of well over $600,000 and an affordability index of 10% (the percentage of households in the City based on income who can afford to purchase a median-priced home),the need for more affordable housing in San Luis Obispo is unquestioned. 3. Suitability. The project to be assisted is appropriate for its location,both in terms of land use and design because the site is appropriate for a higher density residential project; in fact, the City initiated the General Plan Amendment to enable development of such a project. Since adoption of the Housing Element, Tumbling Waters is the best examples of"affordable-by-design." The project embodies the concept of higher density, compact development on an infill site. 4. Tithing. The project would better serve the City's needs if it were built immediately as opposed to later because the need is urgent— affordable housing opportunities should be taken advantage of quickly. Construction is scheduled to begin in summer, 2006. Also, it is important to secure the BEGIN grant by the end of 2005 to ensure availability of funding. Attachment Resolution No. 4748 (2005 Series) Page 10 5. Financial Effectiveness. AHF funding "leverages" significant additional funding from other sources. The AHF funds provide significant leverage with State and private funding sources. This financing package is a great example of the City's funding sources in action. — Proposition 46 funding and developer contribution, supplemented by the City's AHF, filling the gap in financing and allowing provision of 10 additional affordable housing units. The developer is contributing one dollar for every three dollars the City dedicates to the financing of these additional 10 units. This is a critical component of the package to close the financing gap. Furthermore,the developer is contributing to affordable housing in another way—by locking in the sales price about one year ago. The median sales price in San Luis Obispo has increased approximately 25%over the last year. 6. Readiness. The project has all necessary City approvals and is ready to proceed. Upon receiving land use approval from the Council, Tumbling Waters will have received its discretionary land use entitlements. By including the regulatory relief measures, the project becomes approved for BEGIN grant funds.. On motion of Council Member Settle, seconded by Vice Mayor Ewan and on the following roll call vote: AYES: Council Members Brown and Settle, Vice Mayor Ewan and Mayor Romero NOES: Council Member Mulholland ABSENT: None The foregoing resolution was passed and adopted this 15'h day of November 2005. 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Y 0 m e U U IM i c «° 0 o 0 S° J Q a_ mt)z' i � 0 y � o HFH ATTACH!JF�!T 3 Council Resolution No. (2008 Series) A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO ALLOCATING AN ADDITIONAL $300,000 FOR A TOTAL OF$700,000 OF AFFORDABLE HOUSING FUNDS FOR DOWN PAYMENT ASSISTANCE FOR TEN BEGIN UNITS IN THE LAUREL CREEK PROJECT WHEREAS, the Council of the City of San Luis Obispo adopted Resolution No. 9748 allocating $300,000 from the Affordable Housing Fund for ten BEGIN units in the Laurel Creek (formerly Tumbling Waters)project; and WHEREAS, the BEGIN program provides low-interest loans for moderate-income households to purchase units in the project; and WHEREAS, the City of San Luis Obispo, Community Development Department, opened a lottery application period between September 29, 2008, and November 14, 2008, to identify eligible households to purchase these 10 units and, as of the close of the application period, only two applications were certified as complete; and WHEREAS, the City's participation in the BEGIN program leverages a $300,000 State grant that the City will be able to use to support other affordable housing projects at the conclusion of the BEGIN program; and WHEREAS, the City Council has reviewed the criteria for making awards from the Affordable Housing Fund and determined that the BEGIN project is consistent with the criteria. NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: Section 1. Affordable Housing Fund. The City Council does hereby approve allocation of an additional $300,000 of Affordable Housing Funds, for a total of$700,000,to the BEGIN program at Laurel Creek based on the following findings. 1. Eligibility. Use of the Affordable Housing Fund will increase or improve affordable housing inventory and promote General Plan policies regarding housing and related community goals because the project will increase the City's affordable housing inventory by 10 moderate-income units and will promote General Plan policies, among them: "Assist with the issuance of bonds, tax credit financing, loan underwriting, or other financial tools to help develop or preserve affordable units through various programs, including, but not limited to: (1) below-market financing and (2) subsidized mortgages for very-low, low- and moderate income persons and first-time home buyers, and(3) self- help or"sweat equity"homeowner housing." (Housing Element Program 2.3.9) 2. Need. There exists a substantial or overarching need for the type of housing to be assisted because with a median home sales price of well over $600,000 and an affordability index of 10% (the percentage of households in the City based on income o - ATTACH±IEk'T 3 Council Resolution No. (2008 Series) Page 2 BEGIN/Laurel Creek Affordable Housing Fund Allocation who can afford to purchase a median-priced home), the need for more affordable housing in San Luis Obispo is self-evident. 3. Suitability. The project to be assisted is appropriate for its location,both in terms of land use and design because the site is appropriate for a higher density residential project; in fact,the City initiated the General Plan Amendment to enable development of the project. Since adoption of the Housing Element, the Laurel Creek project serves as an example of "affordable-by-design." The project embodies the concept of higher density and compact development on an infill site. 4. Timing. The project would better serve the City's needs if it were built immediately as opposed to later because the need is urgent— affordable housing opportunities should be taken advantage of quickly. In addition, the State BEGIN grant expires on June 30, 2009 and any funds not expended by that time will be lost. 5. Financial Effectiveness. AHF funding "leverages" significant additional funding from other sources. The AHF funds provide significant leverage with State and private funding sources. This financing package includes City's funding sources, Proposition 46 funding and a developer contribution filling the gap in financing and allowing provision of 10 additional affordable housing units. The developer is contributing $100,000 to cover closing costs and buy down interest rates to make the units more affordable to the purchasers. This is a critical component of the package to close the financing gap. 6. Readiness. The project is under construction and the units available under the BEGIN program should be ready for occupancy by the end of January 2009. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: The foregoing resolution was passed and adopted this day of , 2008. Attachment 3 Council Resolution No. (2008 Series) Page 3 BEGIN/Laurel Creek Affordable Housing Fund Allocation Mayor David F. Romero ATTEST: Audrey Hooper, City Clerk APPROVED AS TO FORM: Hath owell, City Attorney Page 1 of I Council, SloCity From: Terry Mohan [cabdad@sbcglobal.net] Sent: Mon 12/1/2008 11:25 PM To: Council,SloCity; Council, SloCity Cc: Subject: Business Item 4,Affordable Housing Allocation Attachments: Mayor & Council, I am voicing my objection to the staff recommendation to allot an additional $300,000 toward the purchase of units at the Laurel Creek projects. Using appraisals on units in different neighborhoods to justify the retail prices being charged for the Laurel projects is but one of the misleading reasons. You should be asking what are comparable units in this area actually selling for? How many unsold condominiums are there in the city? What about the condos on Laurel and Southwood whose prices have dropped 15% from the original asking price? Will the Laurel Creek developer refund the difference to the city between the average selling price of comparable units sold at Laurel Creek in the next two years and the retail prices being charged for the BEGIN funding? The taxpayers should not be asked to pay a higher price for these units than they are worth. Isn't that why the real estate meltdown occurred? If the developer reduces their asking price by 15% bringing them in line with the current market value there would be no need for these additional funds. Just because there is over $4 million dollars in Affordable Housing Fund does not mean it should be squandered on buoying troubled investments The AHF money would be better spent on the original George Moyland limited equity project on Humbert Street that was rejected by the previous majority on this council. This is a poor way to fund affordable workforce housing. The city will be starting out in an upside down position at the bottom of the credit totem pole with no way to recoup our losses in the event of a default. Which is highly likely using the 40% income available for housing cost figure. With the economy finally, admittedly in a recession it.would be a fool hardy move to qualify borderline candidates for these loans. Let the developer readjust their price to sell their units. Terry Mohan 2416 Santa ClaraD San Luis Obispo, CA 93401 alCOUNCIL L'CDD DIR 21`44cG crry&62 FIN DIR 2rAGAeAs5sc'ffvm -21-FIRE CHIEF 2'ATTORNEY In-PW DIR RED FILE ErCLERK/ORIG `POLICE CHF MEETING AGENDA 0 DEPT HEADS aREC DIR p/dTUTIL DIR DATE r 8' ITEAA cf HR DIR i CCU IJC[L Gc�frnc2_ https://mail.slocity.org/exchange/slocitycouncil/Inbox/B us iness%20Item%204,%20Afford... 12/2/2008