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HomeMy WebLinkAboutMINUTES - 08042009 - D.2RECOMMENDATION(S): DETERMINE that Shapell Industries, Inc, Braddock and Logan Group II, L.P., and Ponderosa Homes, Inc. are in compliance with the Camino Tassajara Affordable Housing Program; and ACCEPT Report and recommendation from the Director of Conservation and Development regarding the Willow at Alamo Creek Resale restriction Agreement, and consider action to be taken. FISCAL IMPACT: None. No General Funds are involved. BACKGROUND: A. CAMINO TASSAJARA AFFORDABLE HOUSING PROGRAM COMPLIANCE Approved by the Board of Supervisors on July 9, 2002, the Camino Tassajara Affordable Housing Program (CTAHP) sets forth the requirements to be met by the Camino Tassajara developers (Shapell, Braddock and Logan, and Ponderosa Homes). The CTAHP requires the submittal of an annual compliance report by the respective development entities. APPROVE OTHER RECOMMENDATION OF CNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE Action of Board On: 08/04/2009 APPROVED AS RECOMMENDED OTHER Clerks Notes:See Summary VOTE OF SUPERVISORS AYE:John Gioia, District I Supervisor Gayle B. Uilkema, District II Supervisor Mary N. Piepho, District III Supervisor Susan A. Bonilla, District IV Supervisor Federal D. Glover, District V Supervisor Contact: Kara Douglas, 335-7223 I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Board of Supervisors on the date shown. ATTESTED: August 4, 2009 David J. Twa, County Administrator and Clerk of the Board of Supervisors By: Julie Enea, Deputy cc: D. 2 To:Board of Supervisors From:Catherine Kutsuris, Conservation & Development Director Date:August 4, 2009 Contra Costa County Subject:Camino Tassajara Affordable Housing Program Compliance Report STAFF IS RECOMMENDING THAT THE DEVELOPERS BE FOUND IN COMLIANCE BACKGROUND: (CONT'D) WITH THE CTAHP. The following discussion summarizes the compliance status of Shapell Industries, Inc., Braddock and Logan Group II, L.P., and Ponderosa Homes, Inc. A map depicting the location of CTAHP Projects is also attached as Figure 1. 1. Braddock and Logan Affordable Housing Compliance The Intervening Properties/Remaining Intervening Properties (“IP/RIP”) project consists of 474 residential units. Braddock and Logan was required to provide at least 20 percent of the units or 95 units as affordable for occupancy by Very Low, Low or Moderate Income Households. Braddock and Logan has built a 95 unit apartment complex affordable to and occupied by lower income families named Villas at Monterosso. The project is fully occupied as of August 1, 2007. The breakdown of affordability is 10 units of very low income units; 24 units of low income units; and 61 units of moderate income units. 2. Shapell and Ponderosa Homes Affordable Housing Compliance The Alamo Creek and Wendt Ranch projects consist of a total of 1,052 residential units. Shapell and Ponderosa were required to provide at least 23.2 percent of the units or 244 units as affordable to Very Low, Low and Moderate Income Households. The affordability specifications are shown on Exhibit A. a. Willow at Alamo Creek (For-Sale Townhomes) Shapell has constructed 127 townhomes for moderate income homebuyers named Willow at Alamo Creek. As of June 30, 2009, Shapell has constructed and sold all 127 of the homes to moderate income homebuyers. b. Meadowood at Alamo Creek (Senior Housing project) Shapell was required to build a 120 unit apartment complex affordable to and occupied by low income seniors. The project is now referred to as Meadowood at Alamo Creek (Meadowood). Shapell has rough-graded the building pad, installed frontage improvements and stubbed all utilities to the project site at the senior apartment complex. The architect for the project, TVM, is working on the first plan check comments received from the County Building Inspection division. The CTAHP Regulatory Agreement and Declaration of Restrictive Covenants has been fully executed and was recorded in Contra Costa County on January 9, 2006. Shapell has had preliminary discussions with EAH to manage Meadowood for Shapell. The management contract with EAH would be identical to the contractual relationship between them at the Falcon Bridge, Cornerstone and Seville apartment complexes in the Gale Ranch project. Staff of the Redevelopment and Housing Division initiated activity with Shapell in 2008 to finance Meadowood with the proceeds of County issued tax-exempt multi-family housing revenue bonds. Due to the unsettled financial market, the issuance was tabled until financial market conditions improve. A period of 12-24 months from today may be necessary for the issuance of bonds to be viable. On January 13, 2009 the Board of Supervisors considered and approved a three year extension of the CTAHP requirement that the senior housing project proceed to construction by July 8, 2008. The new date for initiating construction is July 8, 2011. B. WILLOW AT ALAMO CREEK RESALE RESTRICTION AGREEMENT As stated previously Shapell built and sold all 127 of the Willow townhomes to moderate income homebuyers. All buyers signed a Buyer’s Resale Restriction Agreement (Resale Restriction Agreement) that restricts the resale price of the Willow townhomes for 20 years. The Willow Collection Owners Association (WCOA) has requested that the County revoke or modify the Resale Restriction. Staff recommends that the Board not revise or revoke the Resale Restriction. Background Shapell fulfilled a portion of their affordable housing obligation under the CTAHP by building and selling 100% of the 127-unit Willow townhome development to households of moderate income. The Willow development fulfills approximately 75% of Shapell’s obligation to provide moderate income housing in Alamo Creek. Pursuant to the CTAHP the home sales were subject to a deed restriction which requires an initial affordability term of 20 years. The deed restriction requires that any home sold during the initial 20-year term would have to be resold to another moderate income homebuyer at a restricted price. The subsequent homebuyer would be subject to a similar 20-year deed restriction. If a household owns and occupies the property for more than twenty years the deed restriction extinguishes. The purpose of the Resale Restriction is to keep the townhomes affordable to moderate income households. The buyers were informed of the Resale Restriction during the marketing of the units and signed the Resale Restriction prior to the close of escrow. The County provided a maximum sales price to Shapell that was calculated to be affordable to moderate income buyers. The sales price was not based on market value, or a specific discount from market value. A value of what the homes could have sold for without the Resale Restrictions was not established. However, it was generally understood that the price at which Shapell sold the homes was between $100,000 and $200,000 below the market value. When the current owners decide to sell their homes, the County determines a restricted price using a formula that is based on the change in area median income since the initial sale took place. The restricted price is not based on any reference to market price. Since the Willow development was first marketed, the median sales price of resale homes Since the Willow development was first marketed, the median sales price of resale homes in Contra Costa have dropped approximately 38 percent (Real Estate Research Council of Northern California, First Quarter 2009 Report). However, homes in the South Central Contra Costa County have not lost as much value as homes elsewhere in the County—25% according to the same source cited above. Staff estimates that the market value of the Willow townhomes today is about equal to the restricted resale price now permitted by the County per the formula in the deed restriction. Eight Willow owners have notified the County that they wish to sell their homes. Four have sold and the new buyers have signed new 20 year Resale Restriction Agreements. The others have not sold. The Resale Restriction Agreement allow that if, after a bona fide good faith effort to sell the home, the home has not sold, and the owner may sell the home at any price to any buyer. In this situation the new buyer is not required to sign a Resale Restriction Agreement. The County receives 94% of the difference between the restricted price and the market sales price, if there is a difference. Two owners have taken their home off of the market. The Board has allowed another owner to rent their home. The others are still being offered for sale at a restricted price. Two additional units are in foreclosure. The WCOA has also asserted that homeowners were experiencing difficulty refinancing their mortgages due to the resale restriction. They asserted that the County wants to hold a first lien position on the deed of trust. This is not true. The Resale Restriction Agreement allows the County to subordinate to a new first mortgage so long as the new mortgage does not exceed 90% of the new restricted price. As of mid-April the County had subordinated the Resale Restriction Agreement to 44 mortgage refinancings. Request of the Willow Collection Owners Association The WCOA contacted Supervisor Piepho and County staff and requested that the Resale Restriction Agreement be either revoked or that the term be reduced to five years. They believe that this is appropriate because of the drop in value in the general real estate market. They believe the Resale Restriction Agreement is creating a burden on the homeowners. Staff Recommendation County staff does not recommend granting the request of the WCOA for the following reasons: 1. The County cannot guarantee the value of any home, including the homes in its affordable housing programs. Furthermore, the Willow townhome values have dropped little or not at all when compared to the restricted sales prices the homes were purchased at. Based on appraisals of Willow townhomes that have been on the market in the past six months, the current value is about equal to the initial restricted purchase price; 2. The homeowners ability to refinance has not been impaired to date; and 3. The current Resale Restriction Agreement has a provision that allows the owner to sell at a market price without any restrictions if the home cannot otherwise be sold. Over the past 20 years, the County has assisted over 400 homebuyers. Most of these homeowners have signed Resale Restriction Agreements similar to those used for the Willow at Alamo Creek. Some of these homeowners have from time to time made requests similar to the WCOA request. The Board has not agreed to any of these prior requests. The Board has on occasion allowed a home to be rented because of a specific hardship faced by the owner. The Board has also determined that the market price is so close to the restricted price that the home would not be marketable with the restrictions in place. On those occasions, the Board has released an individual homebuyer from the restrictions. The Willow Resale Restriction includes this provision in the document. Therefore, a modification is not needed. CLERK'S ADDENDUM Jim Kennedy of the Conservation & Development Department introduced the item and outlined the context for the recommendations. He explained that what was at issue was the 20-year deed restriction on the 127-unit moderate income Willow Town Home development project in the Danville/San Ramon area. Some of the property owners at development have asked the County to eliminate the deed restriction. Staff is not recommending changes to or elimination of the deed restriction. Staff indicated that town home values are currently at or above restricted levels. There were four public speakers on the item: Uzair Sattar, Danville, resident, spoke regarding how the deed restriction places the homeowners at a disadvantage in the selling market and how refinancing has been difficult due to the bank’s requirement for 10% equity. He asked the Board to revoke or reduce the deed restriction. Wilson Sun, Danville, resident, spoke regarding promised project amenities that were not delivered, and the difficulty in selling the home in the current market. Jennifer Xie, Danville,resident, spoke about the fair market price of the townhouse at the time of purchase as compared to the current fair market price. Sekar Muthusamy, Danville resident, spoke about the 20-year deed restriction in comparison to other affordable housing developments that had shorter (1-5 year) deed restrictions. Staff explained that the length of the deed restriction on this project was a policy decision by the Board of Supervisors when it rendered its approval of General Plan amendment. This decision was driven largely by the need for the County to achieve credit under state housing element mandates. Staff noted that the deed restrictions on some affordable housing projects are as long as 45 years and that, in previous projects, the deed restrictions may have been shorter because at the time there was less disparity between the fair market and moderate income pricing. Market changes led to modified deed restriction policies. Supervisor Bonilla noted that the policy exists in order to sustain the future viability of program and that the program includes relief provisions if the future viability of program and that the program includes relief provisions if the homeowner is unable to sell the property with the restriction. Staff noted that 71 of the 127 units have refinanced to date, and that homeowners have the option of renting their units as an alternative to selling them. Supervisor Uilkema supported the staff recommendation, noting that real estate programs are long-term investments and that the County cannot guarantee the value of any home, including homes under the affordable housing program. Supervisor Gioia recalled the massive debate when this project was originally approved by the Board. At the time, the Board held firm that the project must include a strong affordable housing component. He cautioned the Board about the possible consequences if program participants, particularly in this high cost area of the county, were excused from their original commitments. Supervisor Gioia moved to approve the staff recommendation and the motion was seconded by Supervisor Glover. 5-0 vote: ADOPTED staff recommendations to make no changes to the deed restrictions; and REFERRED to the Finance Committee to report back to the Board on ways that the County may better facilitate refinancing for future affordable housing projects. ATTACHMENTS Figure 1 Exhibit A Exhibit A - Camino Tassajara Affordable Housing Program Alamo Creek and Wendt Ranch Affordability Specifications Income Targeting Percent Number Very Low Income 10%21 Low Income 25%53 Moderate Income 65%170 100%244 100%95 Willow Townhome Meadowood at Alamo Creek (Senior) Villas at Monterosso Camino Tassajara Lusitano StC h arbra y StMonterosso StCreekview PlAriel DrKarelian StCasablanca St Blackh a w k Dr Knollview Dr Cashmere StMartingale DrV a n e s s a W a y C otto n w o o d Dr Knolls Creek DrGriffon CtKingswood DrBl ue Spur CirR io ja C tR io ja S t Casa Blanca St Rockcreek Dr Co l m a r S t Ca r m e n W a y Damani StShadow Creek DrMadeline LnC h a n n i C t Crystal Springs Ct Nanterre StM a n t o v a S t C h a n n i L o o p Mo nt e Al b e r s W a y C o lm a r C t Martingale CtPreakness St M a n to v a C tKingswood Cir C oolspring Ct Westbrook Ct Griff o n S tMastino CtS a ddlehorn Ct C o ttsw a ld C tPreakness Ct Friesian CtEastbrook Ct Cottonw o o d L n Rockcreek Ct Casa Blanca St C h a r b r a y St Camino Tassajara Affordable Housing Program ®Map created 07/13/2009by Contra Costa County Department of Conservation and Development GIS Group 651 Pine Street, 4th Floor North Wing, Martinez, CA 94553-009537:59:48.455N 122:06:35.384W This map or dataset was created by the Contra Costa County Conservation and Development Department with data from the Contra Costa County GIS Program. Some base data, primarily City Limits, is derived from the CA State Board of Equalization'stax rate areas. While obligated to use this data the County assumes no responsibility forits accuracy. This map contains copyrighted information and may not be altered. It may be reproduced in its current state if the source is cited. Users of this map agree to read and accept the County of Contra Costa disclaimer of liability for geographic information. 0 0.25 0.50.125 Miles Legend Future ProjectsVery Low Income -RentalLow Income - RentalModerate - RentalModerate - Ownership Project Name Type Status (as of 06/30/2009)Moderate Income Low Income Very Low Income Total Willow Townhome Ownership Built and Sold 127 127Villas at Monterosso Rental Built 61 24 10 95Meadowood at Alamo Creek (Senior)Rental Financing Phase 46 53 21 120 Affordable Units for