HomeMy WebLinkAbout10-12-2016 Item 1 - GENP-3873-2016 (867 Humbert)PLANNING COMMISSION AGENDA REPORT
SUBJECT: General Plan Conformity Report for the purchase and sale of a deed-restricted moderate
income affordable housing unit located at 867 Humbert Ave.
PROJECT ADDRESS: 867 Humbert Ave. BY: Jenny Wiseman, Acting Housing Programs
Manager
Phone Number: (805) 781-7010
E-mail: jwiseman@slocity.org
FILE NUMBER: GENP-3873-2016 FROM: Xzandrea Fowler, Deputy Director of
Long Range Planning
RECOMMENDATION: Determine, and report to the City Council, that the proposed affordable
housing property purchase and sale are in conformance with the General Plan.
SITE DATA
Applicant City of San Luis Obispo
Address 867 Humbert Ave.
Zoning R-3-S-PD
General Plan Medium-High Density
Residential
Site Area 0.02 Acres
Environmental
Status
Exempt from CEQA under
Section 15061(b)(3) The General
Rule.
SUMMARY
On October 4, 2016, the City Council authorized staff to move forward with a settlement agreement
to purchase an affordable housing unit which is in default of the City’s Equity Share Affordable
Housing Program. By entering into the settlement agreement with the owner, the City can maintain
the affordability of the unit by purchasing and reselling the unit to a certified moderate-income
household. Planning Commission review is required to confirm that the proposed purchase and resale
of the units is in conformance with the General Plan.
1.0 COMMISSION’S PURVIEW
Section 65402 of the California Government Code requires the local agency to make a finding of General
Plan conformance whenever a governmental entity proposes to acquire or dispose of property. It is in the
purview of the Planning Commission to review the proposed acquisition and disposal of property located
at 867 Humbert Ave. for a determination of conformity with the General Plan, and to reports its findings
Meeting Date: October 12, 2016
Item Number: 1
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to the City Council.
2.0 BACKGROUND
Reason for City Involvement
The settlement agreement to purchase 867 Humbert Ave. is the result of the owner being in default
under the Equity Share Agreement, the Note, and Deed of Trust for failing to occupy the Property as
his sole principal place of residence and for renting the property to a third party.
Various complaints about the unit were received by the City in August 2016. The City worked closely
with the Housing Authority of San Luis Obispo (HASLO) to determine if the unit was in compliance
with the City’s Affordable Housing Program. Once sufficient evidence was accessed and available,
the owner was given a 30-day notice to cure all violations. Due to the homeowner residing in a foreign
country and being unable to cure, a decision was reached with the property owner to enter into a
settlement agreement to avoid the City foreclosing on the unit.
If the owner had not agreed to enter into the settlement agreement and instead chose to sell the unit
at market rate, or if the City proceeded with foreclosure, the unit’s deed restriction would have been
removed and the City would not have the opportunity to maintain the unit’s affordability. This unit
has only been in the Equity Share Program for one year and it is staff’s goal to keep this unit affordable
for the long term, because the intent of the Equity Share Program is to encourage, and award with
equity, long term affordable homeownership.
Property Acquisition Cost
The property was purchased by the current owner for $291,375 in September 2015, with a first
mortgage in the amount of $286,000. The unit appraised for $401,000 at that time, with similar units
now selling for over $450,000. The property will be purchased by the City for the amount owed on
the first mortgage, an amount not to exceed $283,302.45. The current owner shall be responsible for
closing costs associated with this transaction, including, but not limited to, the following: the escrow
fee; all documentary tax, sales tax, or real property transfer tax, if applicable; and the premium for
the Title Policy.
The unit will then be re-sold to an eligible moderate-income household for $291,375, the maximum
sales price allowed for a two-bedroom moderate income unit. Closing costs for this transaction are
expected to be approximately $15,000, if the City chooses to use a Real Estate Broker, and will be
partially recovered through the profit generated from resale of unit by the City. The entire process is
expected to cost the City less than $7,000 in Affordable Housing Funds after all closing costs and
remaining fees are accounted for.
3.0 PROJECT ANALYSIS
3.1 Consistency with the General Plan
Purchase and sale of the affordable housing unit is consistent with General Plan policies and
programs related to affordable housing. Once the unit is purchased and resold, the City will enter
into a new Equity Share Agreement with the new certified moderate income household. T he
following General Plan Housing Element (HE) policies and programs support the purchase and
sale of this unit:
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HE Policy 3.2 – “Discourage the removal or replacement of housing affordable to extremely low,
very-low, low- and moderate income households by higher-cost housing, and avoid permit
approvals, municipal actions or public projects that remove or adversely impact such housing…”
Purchase and resale of 867 Humbert Ave. will prevent the affordable housing unit’s deed
restriction from being removed due to sale of the unit at market rate, in accordance with the City’s
Equity Share Program. Once the unit is sold to a new eligible moderate income household, a new
Equity Share Agreement will be prepared.
HE Program 3.12 – “Continue to monitor and track affordable housing units at-risk of being
converted to market rate housing annually. Provide resources to support the Housing Authority,
and local housing agencies, purchase and manage at-risk units.”
Because the owner of 867 Humbert was found to be in default of the City’s Equity Share Program,
the unit could easily have been sold at market rate and the affordability would have been lost.
With the assistance of the Housing Authority monitoring this unit, the City was able to enter into
a settlement agreement that will keep the unit affordable.
HE Program 2.12 – “Help coordinate public and private sector actions to encourage the
development of housing that meets the City’s housing needs.”
City acquisition and sale of this affordable housing unit is a good example of coordination with
other organizations, primarily the Housing Authority, to preserve and protect affordable housing
to meet the City’s housing needs.
4.0 NEXT STEPS
At the end of the forty-five (45) day escrow, title to 867 Humbert will be transferred to the City of
San Luis Obispo. The City will then proceed with the sale of the unit to a certified moderate income
household. Once a purchase agreement has been signed, the City will prepare a new Equity Share
Agreement for the homebuyer.
An Equity Share Agreement is preferred over a Long Term Affordable Housing Agreement as lenders
find it difficult to, or are no longer willing to finance units under a long term deed restriction similar
to the City’s Long Term Affordable Housing Program. The Equity Share Program allows the
homeowner flexibility in sale and allows them to earn equity in the home based on the length of time
they live in the unit.
5.0 ENVIRONMENTAL REVIEW
The project is categorically exempt under Section 15061(b)(3) which states a project is exempt from
CEQA if the activity is covered by the general rule that CEQA applies only to projects which have
the potential for causing a significant effect on the environment. Where it can be seen with certain ty
that there is no possibility that the activity in question may have a significant effect on the
environment, the activity is not subject to CEQA. The determination of general plan conformity for
the purchase and sale of an existing affordable housing unit will not have a significant effect on the
environment since it is a policy review and since no change in land use or type of use will occur as
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the unit is an existing affordable dwelling unit.
ALTERNATIVES
1. The Commission may determine the proposal does not conform to the General Plan.
2. The Commission may continue action, if additional information is needed. Direction should be
given to staff.
ATTACHMENTS:
1. Draft Planning Commission Resolution
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RESOLUTION NO. PC-XXXX-16
A RESOLUTION OF THE PLANNING COMMISSION OF THE CITY OF
SAN LUIS OBISPO, CALIFORNIA, DETERMINING GENERAL PLAN
CONFORMANCE FOR THE PURCHASE AND RESALE OF AN
AFFORDABLE HOUSING UNIT LOCATED AT 867 HUMBERT AVENUE
WITH A CATEGORICAL EXEMPTION FROM ENVIRONMENTAL
REVIEW, AS REPRESENTED IN THE STAFF REPORT AND
ATTACHMENTS DATED OCTOBER 12, 2016
(867 HUMBERT, GENP-3873-2016)
WHEREAS, the Planning Commission 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 October 12, 2016, for the purpose of considering application GENP-3873-2016, a
request to purchase and sell one affordable housing unit; and
WHEREAS, Section 65402 of the California Government Code required the local
agency to make a finding of General Plan conformance whenever a governmental entity
proposed to acquire or dispose of property; and
WHEREAS, notices of said public hearing were made at the time and in the manner
required by law; and
WHEREAS, the Planning Commission has duly considered all evidence, including the
testimony of the applicant, interested parties, and the evaluation and recommendations by staff,
presented at said hearing.
NOW, THEREFORE, BE IT RESOLVED by the Planning Commission of the City of
San Luis Obispo as follows:
SECTION. Findings. Based upon all the evidence, the Commission makes the
following findings:
1. The purchase and resale of 867 Humbert will not harm the general health, safety, and
welfare of people living or working in the vicinity because the purchase and sale is
consistent with the General Plan and the existing neighborhood.
2. The proposed purchase and resale is consistent with Housing Element Policies and
Programs: 3.3, 3.12, and 2.12 which discourages the removal of affordable housing, and
promotes tracking and managing at-risk units.
SECTION 2. Environmental Review. Section 15061(b)(3) states a project is exempt
from CEQA if the activity is covered by the general rule that CEQA applies only to projects
which have the potential for causing a significant effect on the environment. Where it can be
seen with certainty that there is no possibility that the activity in question may have a significant
effect on the environment, the activity is not subject to CEQA. The determination of general plan
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conformity for the purchase and sale of an existing affordable housing unit will not have a
significant effect on the environment since it is a policy review and since no change in lan d use
or type of use will occur as the unit is an existing affordable dwelling unit.
SECTION 3. Action. The Planning Commission does hereby determine that the
purchase and sale of the affordable housing unit located at 867 Humbert Ave. is consistent with
the General Plan.
Upon motion of Commissioner _________________, seconded by Commissioner
___________________, and on the following roll call vote:
AYES:
NOES:
REFRAIN:
ABSENT:
The foregoing resolution was adopted this 12th day of October, 2016.
_____________________________
Xzandrea Fowler, Secretary
Planning Commission
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