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RESOLUTION NO. 2015-064 OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING AN AFFORDABLE HOUSING REGULATORY AGREEMENT RELATED TO LAKE POINTE BETWEEN THE CITY AND LENNAR HOMES OF CALIFORNIA, INC. AND AUTHORIZING THE CITY MANAGER TO RELEASE THE ATTENDANT SECURITY AGREEMENT AND BOND UPON COMPLETION OF THE RECORDATION OF THE REGULATORY AGREEMENT AND PAYMENT OF THE IN-LIEU FEE TO THE CITY'S INCLUSIONARY FUND AS PROVIDED FOR IN THE REGULATORY AGREEMENT (Continued from March 17, 2015)
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RECOMMENDED ACTION
Recommended Action
Council adopt the resolution.
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SUMMARY
On March 13, 2013 Council approved a Security Agreement for the Lake Pointe (the "Project") in Eastlake III in order to establish methods of compliance for their Affordable Housing Obligation. Tonight's action will approve a Regulatory Agreement between the City and Lennar Homes of California Inc. (the "Developer") in compliance with the Security Agreement.
ENVIRONMENTAL REVIEW
The Development Services Director has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378(b)(5) of the State CEQA Guidelines because it involves only the approval of an agreement for implementation of a development project that has already been approved; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary.
BOARD/COMMISSION RECOMMENDATION
Not Applicable.
DISCUSSION
The City's Balanced Communities Policy ("Inclusionary Housing") requires the provision of housing for all economic groups and distribution of affordable housing throughout the City. The City requires 10 percent of any new subdivision in excess of fifty (50) units to be made affordable for low and moderate-income families (5% low and 5% moderate). The primary objective of this policy is to increase affordable housing opportunities in the new master planned communities in the eastern part of the City.
Lake Pointe Inclusionary Housing Obligation
On March 13, 2013, an Agreement to Post Security ("Security") was approved for the Lake Pointe project located at Olympic Parkway and Wueste Road in eastern Chula Vista. Based on a total of two hundred twenty-one (221) residential housing units, currently allowed for the Project, the developer has a 22.1 unit Affordable Housing Obligation (11.05 units for low and 11.05 moderate-income households). The Agreement to Post Security provided alternative methods of compliance to meet the obligation including Section 1.2.b which the developer is choosing to exercise:
Constructing 11 Affordable Units (11 units of Moderate Income) within the eastern portion of the City of Chula Vista, within or outside of the Lake Pointe Development, subject to City's approval, which shall not be unreasonably withheld, and the payment to the City in the amount of $1,378,842 (11.1 units), which payment shall be placed in the Inclusionary Housing Fund.
Accordingly, City staff is recommending that the City and Lennar Housing of California Inc. enter into the "Affordable Housing Regulatory Agreement" (the "Agreement" see Attachment 1) in fulfillment of Section 2.1.d.1 of the Security, which requires "within two years of posting of the bond, Developer shall enter into a regulatory agreement with the City that identifies specific terms and conditions related to the construction of the Units". Once the Agreement has been recorded on each the eleven designated moderate units and the Developer has paid the in-lieu fee of $1,378,842 for 11.1 units for low-income households, the Security shall be released.
The Security has been entered in to through June 2016 with a potential extension for an additional two years. It is unknown when the in-lieu fee payment of $1,378,842 will be paid by the Developer during this period; however upon payment these funds will be placed into the Inclusionary Housing Fund for future affordable housing production.
For-Sale Housing Policy Waiver
On December 9, 2003, City Council Policy No. 435-02 was approved establishing guidelines for for-sale housing to low- and moderate-income first-time homebuyer households. These guidelines establish the City's Silent Second Loan (gap between the Affordable Sales Price and the Market Rate Price) and the restricting documents to be recorded on the first-time buyer household. Based upon industry standards for financing through the Federal Housing Administration ("FHA") and Department of Veterans Affairs ("VA"), staff is recommending the equity share for this project be altered and based on the percent of the City's Silent Second Loan to the initial Market Rate Price of the home (i.e. if upon initial purchase the market price is $350,000 and City's Silent Second Loan is $50,000, the equity share for the City would be $50,000/$350,000 = 14%), as reflected in substantial form in the Agreement's First-Time Homebuyer documents, Exhibits B-D.
Staff will bring forward proposed changes to reflect updated industry standards for Policy 435-02 in the future.
DECISION-MAKER CONFLICT
Staff has reviewed the property holdings of City Council and has found no property holdings within 500 feet of the boundaries of the property which is the subject of this action. Staff is not independently aware, and has not been informed by any Council member, of any other fact that may constitute a basis for a decision maker conflict of interest in this matter.
LINK TO STRATEGIC GOALS
The City's Strategic Plan has five major goals: Operational Excellence, Economic Vitality, Healthy Community, Strong and Secure Neighborhoods and a Connected Community. The development and provision of quality for-sale affordable housing for moderate income households within master planned communities supports the Economic Vitality goals as it promotes the development of quality neighborhoods that provide a full complement of uses and services in a balanced fashion and the Connected Community goals as it provides housing to meet residents' needs and priorities.
CURRENT YEAR FISCAL IMPACT
The developer has paid all costs associated with the processing of the Affordable Housing Agreement. No financial assistance and or incentives are required from the City of Chula Vista. Staff support costs are budgeted in the personnel portion of the Housing Authority budget.
ONGOING FISCAL IMPACT
There is no ongoing fiscal impact. Staff support costs associated with the ongoing monitoring for compliance with the regulatory restrictions and administration of the Declaration are budgeted in the personnel portion of the Housing Authority budget.
ATTACHMENTS
1. Lake Pointe Affordable Housing Regulatory Agreement
Staff Contact: Stacey Kurz, Senior Project Coordinator
Housing Division, Development Services Department