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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 PC 1- 1 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: PC 1- 2 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 PC 1- 3 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 PC 1- 4 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 PC 1- 5 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 PC 1- 6