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Home My WebLink About19D - ADEQUATE SITES PROGRAM REPORT - 703 N LACY REQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: CLERK OF COUNCIL USE ONLY: JUNE 7, 2010 TITLE: APPROVED ? As Recommended ADEQUATE SITES PROGRAM REPORT ? As Amended ? Ordinance on 1S` Reading FOR 703 N. LACY ? Ordinance on 2"d Reading ? Implementing Resolution ? Set Public Hearing For CONTINUED TO FILE NUMBER CITY MANAGER RECOMMENDED ACTION Receive and file the Adequate Sites Program Report for 703 N. Lacy Street. DISCUSSION California Government Code Section 65583 created the State's Adequate Sites Program (Program) which enables cities to meet a portion of their Regional Housing Needs Assessment (RHNA) obligation to produce affordable housing by means other than new construction. One of the approaches allowed by the Program is the acquisition and rehabilitation of existing multifamily projects when that activity results in the conversion of rental units from non-affordable to affordable, and when a number of other conditions are met. During the preparation of the City's recently approved 2006-2014 Housing Element, staff engaged in substantial discussions with the California Department of Housing and Community Development (HCD) regarding which of the City's multifamily acquisition and rehabilitation projects were eligible to receive credit. All but one were rejected by HCD because in its view the timing of the commitment of City funding made them ineligible. Only those activities that were listed as projects in the new Housing Element and that received City or Redevelopment Agency funding between July 2006 and August 2009 were considered eligible for the Program. The 26 unit multifamily project located at 703 N. Lacy Street met this and all other HCD requirements. A report on the project must be made to the legislative body and to HCD by July 1, 2010. The Adequate Sites Program Alternative Checklist (Exhibit 1) was created by HCD for the purpose of determining if activities such as the 703 N. Lacy project meet the requirements of the Program. The checklist indicates that the project qualifies because prior to acquisition, project rents were not affordable to low- or very low-income households. Following the acquisition, rents were made affordable by means of a recorded covenant that will be in place for 55 years. Additionally, all applicable relocation requirements were met; and once the rehabilitation is complete, all units will be decent, safe and sanitary. 19D-1 Adequate Sites Program Report for 703 N. Lacy June 7, 2010 Page 2 FISCAL IMPACT There is no fiscal impact associated with this action. Cynthia J. Nelson Deputy City Manager for Development Services Community Development Agency Exhibit: 1. Adequate Sites Program Alternative Checklist 19D-2 4TATF OF CALIFORNIA BUCINESS,J PORTATION AND HOUSING AGENCY ARNOLD SCHWARZENEGGER Governor DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT ~oOTSdOSreetOSuHou~sing Policy Development p ~'„n P. O. Box 952053 Sacramento, CA 94252-2053 ` (916)323-3177 FAX (916) 327-2643 Adequate Sites Program Alternative Checklist Government Code Section 65583.1(c) (Chapter 796, Statutes of 1998 [AB 438]) As provided for in Government Code Section 65583.1(c), local governments can rely on existing housing units to address up to 25 percent of their adequate sites requirement by counting existing units made available or preserved through the provision of "committed assistance" to low- and very low-income households at affordable housing costs or affordable rents. The following is a checklist intended to provide guidance in determining whether the provisions of Government Code Section 65583.1 (c) can be used to address the adequate sites program requirement. A "yes" answer to the questions below means the alternative site program option(s) may be applicable to your community. HE 703 N. Lac Page # 65583.1(c)(4) Is the local government providing, or will it provide "committed O X Yes assistance" within the first 2 years of the planning period? See the O No definition of "committed assistance" on a e 4. 65583.1(c)(1)(A) Has the local government identified the specific source of "committed O X Yes assistance" funds? O No Specify the amount and date when funds will be dedicated through a (legally enforceable agreement). $ 5,987,742 date: June 1, 2009 65583.1(c)(3) Has at least some portion of the regional share housing need for very O X Yes low-income (VL) or low-income (L) households been met in the current O No or previous planning period? Specify the number of affordable units permitted/constructed in the 103 previous period. Specify the number affordable units permitted/constructed in the current _192 period and document how affordability was established. Please see the attached, Res onse to 65583.1 c 3 65583.1(c)(1)(B) Indicate the total number of units to be assisted with committed 26 assistance funds and specify funding source. HOME, Tax Please see the attached, Response to 65583.1(c)(1)(B) Inc., Bonds 65583.1(c)(1)(B) Will the funds be sufficient to develop the identified units at affordable O X Yes costs or rents? O No 65583.1(c)(1)(C) Do the identified units meet the substantial rehabilitation, conversion, or O X Yes reservation re uirements as defined? Which o tion? Conversion O No Note: If you cannot answer "yes" to all of the general requirements questions listed above, your jurisdiction is not eligible to utilize the alternate adequate sites program rovisions set forth in Government Code Section 65583.1 c . 19D-3 EXHIBIT 1 Adequate Sites Program Alternative Checklist Page 2 HE Pa e # SUBSTANTIAL REHABILITATION 65583.1 c 2 A Include reference to specific program action in the housing element. Program NIA 65583.1(c)(2)(A) NIA Will the rehabilitation result in a net increase in the number of housing O Yes units available and affordable to very low- and lower-income O No households? # of VLI units If so, how many units? # of LI units _ 65583.1(c)(2)(A)(i) (I) NIA Are units at imminent risk of loss to affordable housing stock? O Yes O No 65583.1(c)(2)(A)(i) (II) N/A Is the local government providing relocation assistance consistent with D Yes Health and Safety Code Section 17975, including rent and moving O No expenses equivalent to four (4) months, to those occupants permanently or tem ora dis laced? 65583.1(c)(2)(A)(i) (III) NIA Will tenants will have the right to reoccupy units? O Yes O No 65583.1(c)(2)(A)(i) (IV) N/A Have the units been determined to be unfit for human habitation due the O Yes at least four (4) of the following violations? O No (a) Termination, extended interruption or serious defects of gas, water or electric utility systems provided such interruptions or termination is not caused by the tenant's failure to pay such gas, water or electric bills. (b) Serious defects or lack of adequate space and water heating. (c) Serious rodent, vermin or insect infestation. (d) Severe deterioration, rendering significant portions of the structure unsafe or unsanitary. (e) Inadequate numbers of garbage receptacles or service. (f) Unsanitary conditions affecting a significant portion of the structure as a result of faulty plumbing or sewage disposal. Ino erable hallwa li htin . 65583.1(c)(2)(A)(ii) N/A Will affordability and occupancy restrictions be maintained for at least O Yes 20 ears? O No 65583.1(c)(2)(A)(iii) Note: Prior to occupancy of the rehabilitated units, the local government must issue a certificate that finds the units comply with all local and State buildin and health and safet re uirements. CONVERSION OF MULTIFAMILY RENTAL UNITS OF 4 OR MORE FROM NON-AFFORDABLE TO AFFORDABLE 65583.1 c 2 B Include reference to specific program description in the housing element. Program 5-23 35 65583.1(c)(2)(B)(i) Will the acquired units be made affordable to low- or very low-income O X Yes households? O No 19D-4 Adequate Sites Program Alternative Checklist Page 3 HE Pa e # 65583.1(c)(2)(B)(ii) Were the units affordable to very low- or low-income households at the O Yes time the were identified for ac uisition? O X No 65583.1(c)(2)(B)(iii) If the acquisition results in the displacement of very low- or low-income O X Yes households, is the local government providing relocation assistance O No consistent with Health and Safety Code Section 17975, including rent and moving expenses equivalent to four (4) months, to those occupants ermanentl or tem ora dis laced? 65583.1(c)(2)(B)(iv) Will units be decent, safe, and sanitary upon occupancy? O X Yes D No 65583.1(c)(2)(B)(v) Will affordability and occupancy restrictions be maintained at least 55 ~ X Yes ears? O No PRESERVATION OF AFFORDABLE UNITS 65583.1 c 2 C Include reference to specific program action in housing element. Program N/A 65583.1(c)(2)(C)(i) NIA Will affordability and occupancy restrictions be maintained for at least O Yes 40 ears? O No 65583.1(c)(2)(C)(ii) N/A Are the units located within an "assisted housing development" as O Yes defined in Government Code Section 65863.10(a)(3)? See definition on O No a e 4. 65583.1(c)(2)(C)(iii) NIA Did the city/county, via the public hearing process, find that the units are O Yes eligible and are reasonably expected to convert to market rate during O No the next 5 years, due to termination of subsidies, prepayment, or ex iration of use? 65583.1(c)(2)(C)(iv) NSA Will units be decent, safe, and sanitary upon occupancy? O Yes ~ No 65583.1(c)(2)(C)(v) NIA Were the units affordable to very low- and low-income households at O Yes the time the units were identified for reservation? O No NOTE: • By no later than July 1St of the third year of the planning period, local governments must report on the status of its program implementation for substantial rehabilitation, conversion, and/or preservation (of affordability) as described above (Government Code 65583.1(c)(7)). • The report must specify and identify those units for which committed assistance has been provided or which have been made available to low- and very low-income households and document how each unit complies with the substantial rehabilitation, conversion, and/or preservation provisions. • If the local government has not entered into an enforceable agreement of committed assistance for all units specified in the identified program(s), by the July 1St due date, it must amend its element to identify additional appropriately zoned and suitable sites, sufficient to accommodate the number of units for which committed assistance was not provided. This follow-up action must be taken no later than July 1St of the fourth year of the planning period. 19D-5 Adequate Sites Program Alternative Checklist Page 4 • If a local government fails to amend its element to identify adequate sites to address any shortfall, or fails to complete the rehabilitation, acquisition, purchase of affordability covenants, or the preservation of any housing unit within two years after committed assistance was provided to that unit, the local government cannot use the alternate adequate sites program provisions of Government Code Section 65583.1(c)(1) in it next housing element update, beyond the number of units actually provided or preserved due to committed assistance. DEFINITIONS: Committed Assistance: When a local government has entered into a legally enforceable agreement during the first two years of the housing element planning period obligating funds for affordable units available for occupancy within two years of the agreement. Assisted Housing Development: A multifamily rental housing development that receives governmental assistance under any of the following programs: (A) New construction, substantial rehabilitation, moderate rehabilitation, property disposition, and loan management set-aside programs, or any other program providing project-based assistance, under Section 8 of the United States Housing Act of 1937, as amended (42 U.S.C. Sec. 1437f). (B) The following federal programs: (i) The Below-Market-Interest-Rate Program under Section 221(d)(3) of the National Housing Act (12 U.S.C. Sec. 17151(d)(3) and (5)). (ii) Section 236 of the National Housing Act (12 U.S.C. Sec.1715z-1 (iii) Section 202 of the Housing Act of 1959 (12 U.S.C. Sec. 1701 q). (C) Programs for rent supplement assistance under Section 101 of the Housing and Urban Development Act of 1965, as amended (12 U.S.C. Sec. 1701s). (D) Programs under Sections 514, 515, 516, 533, and 538 of the Housing Act of 1949, as amended (42 U.S.C. Sec. 1485). (E) Section 42 of the Internal Revenue Code. (F) Section 142(d) of the Internal Revenue Code (tax-exempt private activity mortgage revenue bonds). (G) Section 147 of the Internal Revenue Code (Section 501(c)(3) bonds). (H) Title I of the Housing and Community Development Act of 1974, as amended (Community Development Block Grant Program). (I) Title II of the Cranston-Gonzales National Affordable Housing Act of 1990, as amended (HOME Investment Partnership Program). (J) Titles IV and V of the McKinney-Vento Homeless Assistance Act of 1987, as amended, including the Department of Housing and Urban Development's Supportive Housing Program, Shelter Plus Care program, and surplus federal property disposition program. (K) Grants and loans made by the Department of Housing and Community Development, including the Rental Housing Construction Program, CHRP-R, and other rental housing finance programs. (L) Chapter 1138 of the Statutes of 1987. 19D-6 Adequate Sites Program Alternative Checklist Page 5 DEFINITIONS (continued): (M) The following assistance provided by counties or cities in exchange for restrictions on the maximum rents that may be charged for units within a multifamily rental housing development and on the maximum tenant income as a condition of eligibility for occupancy of the unit subject to the rent restriction, as reflected by a recorded agreement with a county or city: (i) Loans or grants provided using tax increment financing pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code). (ii) Local housing trust funds, as referred to in paragraph (3) of subdivision (a) of Section 50843 of the Health and Safety Code. (iii) The sale or lease of public property at or below market rates. (iv) The granting of density bonuses, or concessions or incentives, including fee waivers, parking variances, or amendments to general plans, zoning, or redevelopment project area plans, pursuant to Chapter 4.3 (commencing with Section 65915). Assistance pursuant to this subparagraph shall not include the use of tenant-based Housing Choice Vouchers (Section 8(0)) of the United States Housing Act of 1937, 42 U.S.C. Sec. 1437f(o), excluding subparagraph (13) relating to project-based assistance). Restrictions shall not include any rent control or rent stabilization ordinance imposed by a county, city, or city and county. 19D-7 Response to Question 65583.1(c)(3) 1. Specify the number of affordable units permitted/constructed in the previous period. Previous Planning Period: 2000 - 2005 (Months not specified). Number of affordable units permitted/constructed during this time: 8 new construction units at various addresses. Built by Habitat for Humanity. 89 converted motel units (Santiago Villas). All units carry recorded affordability restrictions. 6 new construction units built by Mercy House Transitional Living Centers at 814-818 N. Garfield. 2. Specify the number of affordable units permitted/constructed in the current period and document how affordability was established. Number of affordable units permitted/constructed in the current period: Three new construction units were built by Orange County Community n w construction units were built b RSI Housing Corporation. Two e y Development LLC. In both cases, affordability was established by the terms of the DDA and by 45 year covenants to be recorded at the time the finished properties are sold. The City recently issued a conditional use permit to convert a motel, California Palms, to a transient/residential hotel offering 189 affordable units. Affordability was established by reviewing the rents to be offered and making certain assumptions about likely household sizes. See page 3-3 of the Draft Housing Element. 19D-8 Response to Question 65583.1(c)(1)(B) 1. Indicate the total number of units to be assisted with committed assistance funds. 26 Very Low Income Units. 2. Specify the funding source. HOME Investment Partnership Act Funds (51,330,643), Redevelopment Agency Tax Increment Setaside Funds (51,556,217), Tax Exempt Mortgage Revenue Bonds (S3,100,882). 19D-9 I 19D-10