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Home My WebLink AboutMINUTES - 12201988 - 1.102 I I®N HOUSING AUTHORITY OF THE COUNTY OF CONTRA COSTA TO: BOARD OF COMMISSIONERS DATE: December 20, 1988 FROM: Perfecto Villarreal , Executive Director cc: SUBJECT: REPORT ON CONCORD GREEN I. RECOMMENDED ACTION: ACCEPT information report on Concord Green, updating the Board of Commissioners on issues concerning the possible loss of affordable rental units in Contra Costa County. II . FINANCIAL IMPACT: None. III. BACKGROUND AND UPDATE: Concord Green Apartments is a 130 unit housing complex located on Mohr Lane in Concord. This apartment development is partially financed under the United States Department of Housing and Urban Development (HUD) Section 221(d) (3) program. Concord Green Apartments is owned by Concord Green Associates, a California limited partnership in which Landon Properties, Inc. and Dale C. Landon are general partners. Landon Properties has its office in Walnut Creek. Because of the HUD 221(d)(3) financing, the rent levels for the 54 two-bedroom units and 76 three-bedroom units are controlled by HUD to keep the rent levels affordable for very low and low income families. For example, the current rents at Concord Green are $347 for a two. bedroom unit and $410 for a three bedroom unit. If the owner is permitted, by •HUD, to prepay the HUD mortgage and all rent restrictions are removed, the owner plans to increase the rents to market rate levels. This would result in substantial rent increases and many of the very low income families who live in Concord Green would not be able to pay the increased rents. Eventually, these very low income families would be forced to move unless they were to receive some form of rent assistance. In accordance with the Regulatory Agreements, on June 3, 1988 the Concord Green owners notified HUD of their intent to prepay the HUD mortgage on November 1, 1988. In order to comply with the legislative provisions set forth in the Emergency Low Income Housing Preservation Act of 1987, the Concord Green owners filed a Plan of Action with HUD on September 3, 1988. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S) ACTION OF BOARD ON 9 APPROVED AS RECOMMENDED OTHER VOTE OF COMMISSIONERS x.. UNANIMOUS (ABSENT ) I HEREBY CERTIFY THAT THIS A TRUE AND AYES: NOES: CORRECT COPY OF AN ACTION TAKEN AND ABSENT: ABSTAIN: ENTERED ON THE MINUTES OF THE BOARD OF COMMISSIONERS ON THE DATE SHOWN. DEC 2 0 1988 CC: County Administrator ATTESTED County Counsel Phil Batchelor, Clerk of the Housing Authority Board of Commissioners M382/7-98 BY �j , DEPUTY Board of Commissioners December 20, 1988 Page -2- This Plan of Action has been formally reviewed by HUD. In its letter of November 15, 1988, HUD found the Plan of Action to be deficient in various areas. At this point, the Concord Green owners must submit a revised Plan of Action which addresses the HUD concerns outlined in the November 15, 1988 letter. In the interim, the Advisory Housing Commission and the Housing Authority staff met with Mr. Dale Landon, general partner of Concord Green, on November 21, 1988 to discuss the Concord Green prepayment situation and to stress the importance of keeping some units at Concord Green at affordable rent levels for the very low income families who presently live there. In addition, staff has met with City of Concord officials, the Concord Green owner, and HUD officials to explore various options which would result in preserving affordable rental units at Concord Green. Presently, no mutually satisfactory solution has been reached, but Housing Authority staff will continue to meet with the property owner and interested parties in an attempt to reach a solution which will preserve some affordable rental units for very low income families at Concord Green. IV. CONSEQUENCES OF NEGATIVE ACTION: None. U.S. Department of Housing and Urban Development San Francisco Regional Office,Region IX 450 Golden Gate Avenue "o San Francisco,California 94102-3448 NOV 1 5 1989 RECEIVED NOV 1 7 1988 Mr. Dale Landon Landon Properties Incorporated 1475 North Broadway, Suite 440 Walnut Creek, California 94596 Dear Mr. Landon: Subject: Request or Prepayment - Deficiency Notice Project No. 121-55019-LD Concord Green Concord, California The plan of action submitted on September 3, 1988, has been reviewed. Our analysis indicated that your Plan of Action requesting Termination of Low Income Affordability Restrictions .was deficient in the following areas : a.. The Plan of Action as submitted does not demonstrate that comparable vacant and affordable replacement housing is available. Our analysis indicates the followift4: 1 . Limited supply of units for very low and low income units in Concord have been rented up. 2 . The overall vacancy rate for apartments is tight at about 4% , severely limiting the ability of families to obtain comparable and affordable replacement housing. 3 . There is a limited supply of three bedroom units available for those families that would be impacted. 4 . Based on the waiting lists for Section 8 certificates and vouchers in Concord there would be an extended wait to obtain certificates or vouchers . The families are further impacted by the lack of availability of comparable and affordable replacement housing. b. Material increases in economic hardship would occur to those families that are very low income and low income. Based on the statutory requirements, our analysis indicates that 22 families would suffer economic hardship if the loan was terminated. c . The Plan did not demonstrate the ability of lower income and very low income families to find decent, safe and sanitary housing near employment opportunities . Because of the growing need for increased affordable housing in the Concord area , the loss of these units will seriously impact the ability of lower income and very low income families to locate affordable housing near employment . d. The housing opportunities of minorities in the community will be impacted,. Because of the extended waiting period for public housing and Section 8 housing depending on preferences, priorities, and size of unit needed, the loss of existing units built for low and very low income families will have an adverse effect on the opportunities of minorities in ,the community. In order for the Department to approve prepayment with the termination of low to moderate income affordability restrictions, you must provide information which will allow the Department to make the findings required by law. Our analysis above prevents the Department from making .such findings . You may also prepay with a continuation of the low and moderate income affordability restrictions . In order for the Department t6approve such a latter Plan of Action, you would have to agree to the recordation of a use agreement to keep the affordability restrictions in place. This agreement would include: a. Maintaining the property as a low and moderate income housing resource under the terms and conditions of the original mortgage for the remaining term of the original mortgage; b. Maintaining the following percentage of very low, low and moderate income units . 1 . Very Low - 40 . 80 2 . Low - 11 . 5% 3 . Moderate - 37 . 7% C . Current residents that are very low, low and moderate rents may not exceed the lower of 30% of adjusted income or the Section 8 Existing Fair Market Rent . d. Rents for new tenants may not exceed: 1 Very low income families - 30% of income or 30% of 50% of median income level adjusted for family size which ever is lower. • e .T 2 . Low income families - 30% of income or 30% of 80% of median income level adjusted for family size or market rent whichever is lower. 3 . Moderate income families - 30% of income or 30% of 95% of median income level adjusted for family size or market rent whichever is lower. An approvable Plan of Action without termination of the low and moderate income affordability restrictions, whether or not you prepay, may include incentives . The incentives proposed in your Plan of Action warrant further consideration. However, it is not possible for this office to determine their feasibility at this time . With the objective of meeting agreement on the nature, extent, cost and effective rents as a result of providing incentives, we propose to meet with you to discuss the requested incentives . Please be advised in advance of such a .meeting that Flexible Subsidy is currently unavailable as an incentive. Section 8 Loan Management Set Aside subsidy has only a 5-year budget authority. Please be informed that it is the Department ' s objective to reach agreement on an approvable Plan of Action for Concord Green. We are well aware of the tight time frames involved with this project because of the payments soon due under the second deed of trust note. We must inform you, also, that the ' 180-day approval •clock ' stops as of the date of this letter until such time as you submit a revised Plan of Action. Your prompt response to this letter is encouraged. If you have any questions please, contact Ken Nisewaner at ( 415 ) 556-6330 . Very sincerely yours, Henry Dishroom Director Housing Management Division . cc : Ken Levy