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HomeMy WebLinkAboutMINUTES - 10102000 - D2 D' Contra BOARD OF SUPERVISORS � � Costa FROM: Dennis M. Barry,AICD, Director of Community Development w County DATE: October 10, 2000 SUBJECT: Dougherty Valley Affordable Housing Program SPECIFIC REQUEST(S)OR RECOMMENDATIONS(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS CONSIDER report of the Director of Community Development regarding compliance of Shapell Industries of Northern California with the Dougherty Valley Affordable Housing Program; and CONSIDER action to be taken on the request of Shapell Industries to amend the Dougherty Valley Affordable Housing Program for the Shapell portion of the program. FISCAL IMPACT None. No general funds involved: CONTINUED ON ATTACHMENT: �X SIGNATURE: ECOMMENDATION F COUNTY ADMINISTRATOR RECO M NDATION O BOARD COMMITTEE PPROVE OTHER SIGNATURE(S): r ACTION OF BO ON October 10,2000 APPROV5b AS RECOMMENDED OTHER xx VOTE OF SUP ISORS I HEREBY CERTIFY THAT THIS IS A -x UNANIMOUS(ABSENT rir, ) TRUE AND CORRECT COPY OF AN AYES: NOES: ACTION TAKEN AND ENTERED ON THE ABSENT: ABSTAIN: MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. Source: Jim Kennedy 335-1255 ATTESTED ne t ab ig2po0 PHIL BATCHELOR,CLERK OF THE cc: County Administrator's Office BOARD OF SUPERVISORS AND County Counsel COUNTY ADMINISTRATOR Community Development-Land Development Community Development-Housing AAh B + I DEPUTY W:\Persona!\BOARDORDERSt4.36.doughertyvnttry 3 ADDENDUM TO ITEM Dat October 10,2000 Agenda This is the consideration of the report of the Director of Community Development, Redevelopment Agency,regarding compliance of Shapell Industries of Northern California with the Affordable Housing Program;and to consider action to be take on the request of Shapell Industries to amend the Dougherty Valley Affordable Housing Program for the Shapell portion of the program. (See the attached Berard Order) Jim Kennedy,Redevelopment Agency Deputy Director,presented the staff report.Dennis Barry, Director of Community Development,and Silvano Marchesi,Chief Assistant County Counsel, were also present. The Board discussed the matter. The hearing was opened and the following person appeared to speak: Tom Koch,Shapell Industries, 100 N.Milpitas Blvd.,Milpitas.No others desiring to speak,the Board continued to discuss the issues. Supervisor Uilkema suggested the following information be provided for the Board's future review of the issue: The Ecumenical Housing Memorandum of Understanding;assurances of the 30 year commitment that the rental unit use cannot change,making certain that it stays a rental unit in perpetuity and documentation thereof;exploration of the alternatives A,B,and C presented today;disclosure regarding the mixed income nature and location of rental units within the development;and inclusion in C.C.&Rs;the Board addressing the rental units collectively,as opposed to individually;assurances that sufficient affordable housing units will be built even if subsequent traffic studies determine the total units will be reduced. Following further Board discussion,Supervisor Gerber moved the suggestions proposed by Supervisor Uilkema,and requested staff return to the Board with additional information on the 30 year program,legislative history,Shapell's position,and documentation on low and very low affordable housing.Supervisor Uilkema seconded the motion. Supervisor DeSaulnier clarified if Jim Kennedy had the flexibility needed to go to the next steps and when staff might be prepared to return to the Board. Mr.Kennedy responded they would try to provide the requested information within 60 days. Supervisor Gerber called for the vote,and the vote was unanimous. BACKGROUND The Dougherty Valley Affordable Housing Program was adopted by the Contra Costa County Board of Supervisors on March 22, 1994. The Dougherty Valley Affordable Housing Program (DVAHP) is incorporated by reference into the Development Agreements between Shapell Industries of Northern California and the County, as well as between Windemere Ranch Partners-BLC and the County. The basic requirement of the DVAHP is that 25% of the housing units within Dougherty Valley must be affordable to very low, low and moderate-income households. At least 10% of the affordable units must be affordable to very low-income households; at least 25% of the affordable units must be affordable to low-income households, and no more than 65% of the affordable units are affordable to moderate income households. Defined terms from the DVAHP are included as Attachment A. Compliance with the DVAHP requirements applies to each of the development entities separately. Compliance with the DVAHP is determined on an annual basis by the County Board of Supervisors based on reports submitted by the respective developers. The annual compliance report must provide for a one-year and a three-year strategic plan for the provision for the affordable units. A) Shapell Industries Compliance History The following summarizes the major issues in the following matters: 1. Tenn of affordability for moderate income projects; and 2. Compliance with the very low-income and low-income program. Shapell Industries has submitted compliance reports as of October 1997 and October 1998 that have been determined to be in compliance with the DVAHP. The County staff has been unable to determine that Shapell Industries is in compliance as of October 1999. The following will explain the basis for the inability of the County staff to make such a determination and Shapell's response. 1) Issue 1 --Rents/Term of Affordability From the County's perspective, the major area of non-compliance is in the affordability term in proposed moderate-income rental units. The goals and policies of the Dougherty Valley Specific Plan and the DVAHP emphasize the need to maintain housing affordability over the long run. Policy H-9, in the Specific Plan states "affordable units will be maintained the maximum period feasible. Target period shall be a minimum of 20 years for for-sale units and 30 years for rental units." At the time the DVAHP was approved, it was assumed that the moderate income housing obligation would be met through the provision of home ownership opportunities at market prices without the need for public subsidy. A March 8, 1994 memorandum from Harvey Bragdon, then County Director of Community Development, to the Board of Supervisors reflects this understanding between the parties. It says, "Most of the moderate income units W:\Pemnal\]3mdOrders\BOARD.9.26.doughertyvalley (65% of all affordable units) will be owner occupied." Due to the lack of specific financial benefit to the buyer (e.g.: homes affordable to moderate-income households were approximately the projected market price; no expectation of below market rate financing, etc.), it was not considered feasible or appropriate to require moderate-income households to purchase an essentially market rate unit with an affordability term restriction. Consequently, the adopted DVAHP does not currently specify a required term of affordability for moderate-income units. As we are all aware, the housing market conditions have changed substantially since 1994. Housing prices have increased significantly, therefore Shapell indicates its plans for addressing the moderate-income obligation have changed. Shapell now proposes to address a substantial portion of its moderate-income obligation through a rental program. Shapell has proposed to satisfy over 80% of the moderate-income housing obligation through the production of rental units, The County position is that the switch to a rental program requires a 30-year regulatory period as set forth in the Dougherty Valley Specific Plan. A form of regulatory agreement accomplishing this 30-year term was provided as an appendix to the DVAHP. Shapell Industries does not agree with the County position. (See Shapell letter of July 19, 2000.) From their perspective the DVAHP states that no term for moderate-income affordability is assumed. Furthermore, they reference the Development Agreement, which prohibits changes to terms of the policy set forth including those relating to affordable housing, without the mutual consent of the parties. (See Shapell letter of June 5, 2000.) County staff believes the Dougherty Valley Specific Plan and the legislative history leading up to the adoption of the affordable housing program is inconsistent with Shapell's position. a) Shapell Compromise Proposal Shapell Industries has proposed a compromise approach. Their proposal, which would apply to all of Shapell's obligation under the DVAHP, is set forth in their letter of July 19, 2000. Shapell's compromise proposal is to limit the rents on the studio and I bedroom units to rents set at 110% of monthly median household income, and 2 bedroom and larger units to rents at 120% of monthly median household income. Shapell has proposed an affordability term in perpetuity in exchange for these higher rents. Table I depicts the Falcon Bridge project, Shapell's initial 256-unit moderate-income rental project, and makes an estimate of the change in capitalized value given the two rent schedules. W:\Penonal\]3oardOrders\BOARD.9,26.doughertyvalley Shapell Industries represents they designed the Falcon Bridge project using an erroneous assumption (which they acknowledge as their error) that moderate-income rents Were calculated based on 120% of median income. In fact, the DV"ABP sets forth the moderate-income rental rates at 100% of median income. The Tables 2(a), 2(b), and 2(c) on the following pages reflect the difference between the rents at 100% of median monthly household income and 110% and 120% of median monthly household income. TABLE 1 —FALCON BRIDGE ANNUAL RENT/CAPITALIZED VALUE ANALYSIS Unit Type Number of Units Annual Rents- Annual Rents- #bedrooms DVARP# Sha ell Proposal# 1 104 $1,687,296 $1,855,776 2 128 $2,336,256 $2,803,200 3 24 $4861,720 $584,064 256 Gross Annual Rents $4,5101272 $5,243 040 Minus Vacancy ($225,514) ($262,152) 5% Minus Operating ($1,488,390) ($1,730,203) Expenses 33% Net Income for Debt $2,796,369 $3,250,685 Service Cap Rate 8.0% 8.0% Capitalized Value $34,954,608 $40,633-560 # Monthly Rents currently are: DVAHP 5HAPELL PROPOSAL 1 bedroom units $1,352.00 $1,487,00 2 bedroom units $1,521.00 $1,825.00 3 bedroom units $1,690.00 $2,028.00 W:TersonalUBoardOrders\BOARD,9.26,doughertyvalley TABLE 2(a) MEDIAN INCOME RENT SCHEDULE Monthly Rent* Unit Size at 100% of median income Studio $1183 1 bedroom $1352 2 bedroom $1521 3 bedroom $1690 TABLE 2(b) 110% RENT SCHEDULE Monthly Rent* at Unit Size 110% of median Difference from median rents Studio $1301 $118 1 bedroom $1487 $135 2 bedroom $1673 $152 3 bedroom $1859 $169 TABLE 2(c) 120% RENT SCHEDULE Monthly Rent* at Unit Size 120% of median Difference from median rents Studio $1420 $237 1 bedroom $1622 $270 2 bedroom $1825 $304 3 bedroom $2028 $338 * Does not include a utility allowance that would reduce these rents. W:\Personal\BoardOrders\BOARD.9.26.doughertyvalley b) Alternative policy Approaches for the Board to Consider- Rents/Term of Affordability The policy aspects of this issue have two dimensions: 1) required rent term; and 2) permitted monthly rents. Any consideration of alternatives should bear in mind the relationship between allowable incomes and permitted rents. A variety of alternatives exist along a continuum framed by the positions of Shapell and the DVATV. They are: Alternative A—County position based on adopted DVAHP—30 year term; rents at 30% of 100% of monthly median household income (see Table 2(a)). Alternative B— Shapell proposal of July 19, 2000—term of perpetuity; rents at 30% of 110% and 120% of monthly median household income(see Table 2(b) & 2(c)). Additional alternatives for discussion and consideration, include: Alternative C—Compromise on rents. Fixed Term: permit rents to be computed at 30% of 110% of monthly median household income(see Table 2(b)); 30 year term. Alternative D— Step-down rents: utilize Shapell proposal to permit higher rents on larger units at the outset, but limit their adjusting to inflation so that they do not \ fully use the inflationary increase. This would allow rents to adjust to their desired rents. Attachment B provides an example of this concept; 30 year term, Alternative E-- Apply any change to the DVAHP rents/terms to the Falcon Bridge project only; maintain current definition of permitted rents for moderate-income rentals at 30% of 100% of median monthly household income (see Table 2(a)) for all other units; restate the 30-year term for moderate-income rental projects. Alternative F — Compromise on rents, Falcon Bridge only; Fixed Term: permits rents at Falcon Bridge to be computed at 30% of 110% of monthly median household income (see Table 2 (b)); 30-year term for entire DVAHP. 2) Issue 2–Very Low and Low Income Program The DVAHP requires the delivery of very low and low-income units. The information submitted to date on this component by Shapell is very limited. County staff has requested additional information as part of its determination of compliance as of October 1999 to facilitate this component of the DVABP. The information requested would include: W:\Personal\BoardOrders\BOARD.9.26.doughertyvalley • The proposed location with a description of the specific site or sites to be used, including the identification of acreage, configuration, and the identification of significant development and environmental constraints; • The type of housing proposed, i.e. mixed income or 100% affordable multi- family, senior, unit size/number of bedroom; • Range of incomes and household size, target population; and • The relationship to other units in the development; • Identification of involved parties with role and responsibilities delineated; • A schedule for development of the required units with development and financing related benchmarks identified. Shapell has expressed concern that the County staff position may have the effect of requiring Shapell to accelerate the delivery of the very low- and low-income component of the program beyond the terms of that document. Shapell asserts that the DVAHP provides for flexibility in determining when the very low- income and low-income units need to be determined. Staff concurs with Shapell with respect to the DVAHP allowing for flexibility in determining the distribution and timing of very low- and low-income units. However, Shapell has now submitted tentative map applications, or has approved entitlements (vesting tentative maps) or has pending final maps for approximately 75% of their portion of the 8,500 units approved by the Dougherty Valley Specific Plan. Table 3 provides a summary of the planning status of the Shapell portion of the Dougherty Valley development. This suggests the need to identify the elements of very-low and low-income program at this time. On September 28'h staff held a meeting with representatives of Shapell and Ecumenical Association for Housing (EAH) a major non-profit affordable housing builder. An executed letter of intent between Shapell and EAH was presented. A memorandum of understanding outlining the business parameters in greater detail is expected by the end of October. This September 281' meeting was a first show of positive activity in this regard, and hopefully represents the progress needed. W:\PemnalBoardOrders\BOARD.9.26,doughedyvalley TABLE 3—HOUSING UNIT APPROVAL STATUS SHAPELL PORTION, DOUGHERTY VALLEY Percentage of units Percentage of units .Number of Units allowed per Settlement allowed per Specific Agreement-4505 units Plan, subject to traffic studies-5830 units Approved with Tentative Maps Gale I 1216 27% 21% Gale H 1825 41% 31% Requested Tentative Map Gale III 1433 32 25 Total 4474 99% 77% B) Correspondence The following correspondence, which provides more information with respect to these issues as well as other minor issues, is attached. 1. August 17, 1999, letter from Community .Development Department to Shapell Industries; 2. November 22, 1999, letter from Shapell Industries to Contra Costa County; 3. April 18, 2000, letter from Community Development Department to Shapell Industries; 4. June 5, 2000, letter from Shapell Industries to Contra Costa County; 5. July 19, 2000, letter from Shapell Industries to Contra Costa County; 6. July 20, 2000, letter from Community Development Department to Shapell Industries; 7, August 10, 2000, letter from McCutchen, Doyle, Brown & Enerson to Contra Costa County. C) Next Steps Should the Board opt to make any changes in the Dougherty Valley Affordable Housing Program., the staff should be directed to prepare the necessary documentation. It should be noted that any change would apply to the entire Dougherty Valley program, i.e., to both the Shapell and Windemere portions. Consultation with all parties will be needed. An affirmative process to determine compliance with the DVAHP would be triggered by W:\Personal\BoardOrders\BOARD.9.26.doughertyvalley the developers submitting revised compliance reports, and the Community Development Department reviewing and recommending an action to the Board. All aspects of the DVABP -- the very low income, the low income, and moderate income elements — would be subject to review. Any actions necessary to modify legal agreements and policy documents to correspond to DVABP changes will also be identified and recommendations set forth. cc. Debbie Sanderson Kathleen Hamm Shapell industries Letuw/Centex/Brookf field File C4.3(bXI1 6Xa) W:Tersonal\BoardOrderslBOARD.4.26.doughertyvalley C ATTACHMENTS "ATTACIMM A - DEFINED TERMS (FROM DVAHP)" Definitions The terms defined herein for all purposes of this Dougherty Valley Affordable Housing Program shall have the respective meanings specified as follows: "Affordable Units" means any one or more of the units reserved for occupancy by Very Low, Low, or Moderate Income Households in the Dougherty Valley. The Dougherty Valley Specific Plan requires that 25% of the units in the Dougherty Valley be Affordable Units. "First Time Homebuyer" means households who shall not have had a present ownership interest in a principal residence at any time during the three-year period prior to the origination of a mortgage to purchase an Affordable Unit. "Lower Income" means generically all households of Very Low, Low, and Moderate Income. "Low Income Households" means households whose incomes are from 51 to (and including) 80 percent of the Contra Costa County Median Income, as adjusted for family size and published by the California Department of Housing and Community Development pursuant to Health & Safety Code Sections 50079.5 and 50105. "Low Income Rent" means the lesser of (1) the monthly market rate rent, including a Utility Allowance; or (2) a monthly rent which is no greater than one hundred percent (100%) of the Section 8 Existing Program Fair Market Rents, established in accordance with 24 CFR Part 882, effective at the time of occupancy, less the Utility Allowance then in effect. "Low Income Sales Price" means a price determined by taking into account family size, unit size, the Prevailing Interest Rate, and other conventional loan underwriting criteria (example provided as Appendix D). "Medi-Cal Patient" means person determined by the County's Social Service Department's Medi-Cal Eligibility Unit to be eligible for Medi-Cal benefits and a person who holds a valid Medi-Cal number. "Median Income" means the median income for the Contra Costa County, adjusted for family size as published by the California Department of Housing and Community Development pursuant to Health & Safety Code Sections 50079.5 and 50105. "Median Monthly Income" means 1/12 of the Median Income. "Moderate Income Households" means households whose incomes are from 81 to (and including) 120 percent of the Contra Costa County Median Income, as adjusted for family size and published by the California Department of Housing and Community Development pursuant to Health & Safety Code Sections 50079.5 and 50105. "Moderate Income Rent" means the lesser of(1) the monthly market rate rent; or (2) a monthly rent which is no greater than 30% of 100% of the Median Monthly Income, including a Utility Allowance. Rents for studio units shall be calibrated utilizing the one- person Median Income Household income; one-bedroom units shall use a two-person Median Income Household income; two-bedroom units shall use a three-person Median Income Household income, etc. "Moderate Income Sales Price" means the lesser of(1) the market rate sales price; or(2) a price determined by taking into account family size, unit size, the Prevailing Interest Rate, and other conventional loan underwriting criteria (example provided as Appendix E). "Prevailing Interest Rate" means the then current rate for 30-year fixed rate loans insured by the U. S. Department of Housing and Urban Development pursuant to Section 203 (b) and (i) of the National Housing Act of 1934, otherwise known as FHA 203(b) Federal Mortgage Insurance. "Utility Allowance" means the allowance for tenant purchased utilities adopted by the Contra Costa County Housing Authority and approved by the U. S. Department of Housing and Urban Development for the Section 8 Existing Rent Subsidy/Section 8 Voucher Programs. "Very Low Income Households" means households whose incomes do not exceed 50 percent of the Contra Costa County Median Income for Contra Costa County, as adjusted for family size and published by the State Department of Housing and Community Development pursuant to Health & Safety Code Sections 50079.5 and 50105. "Very Low Income Rent" means a monthly rent which is no greater than 30% of 50% of the Median Monthly Income including a Utility Allowance. Rents for studio units shall be calibrated utilizing the one-person Very Low Income Household income; one- bedroom units shall use a two-person Very Low Income Households income, two- bedroom units shall use a three-person Very Low Income Households income, etc. "Very Low Income Sales Price" means a price determined by taking into account family size, unit size, the Prevailing Interest Rate, and other conventional loan underwriting criteria (example provided as Appendix F). Houma e -T-.Yp—es "Co-Housing" means Developments containing homes with common facilities for cooking, child care, recreation, and work, which are managed by the residents themselves. Can be developed and financed as condominiums, limited-equity cooperatives, or rental housing. "Condominium" means a type of ownership in which each individual has fee-simple title to a specific unit in a multi-tenant building. Each unit owner has an individual mortgage and contributes a share of the common area maintenance and operating expenses of the property. "Congregate Housing" means long term housing in a group setting that includes independent living and sleeping accommodations in conjunction with shared dining and recreational facilities. It is usually occupied by seniors. "Cooperative Ownership" means a corporate ownership in which each individual owns shares of stock. Each shareholder then gets a proprietary lease to occupy a unit. "Duplex" means a detached two-family dwelling unit on a single lot. "Factory-Built Housing" means any of the following: (1) Open panel housing which is preassembled with conventionally framed Wall, floor and ceiling structural panels which are joined on site; (2) modular housing is composed of factory assembled three dimensional boxes of wall floor, ceiling and roof elements. Plumbing, electrical, insulation, and finished walls are also installed in the factory; and (3) manufactured housing are factory built mobile homes built to the HUD mobile home standards. "Intermediate Care Housing" means housing for individuals who are not capable of independent living, but do not require 24 hour care. Emphasis is on social services, personal care, and rehabilitation programs. "Mixed Use" means a development that combines residential uses with one or more other uses such as office, retail, public, entertainment, or even manufacturing. Mixed Use developments are characterized by significant physical and functional integration of project components, including uninterrupted pedestrian connections. "Multi-Family Housing" means a residential structure with more than one dwelling unit in the same building. "Second Units" means an attached or detached residential unit on the same parcel or parcels as the primary unit, which provides complete, independent living facilities for one or more persons, including sanitation and food preparation facilities. Second units may also be referred to as "in-law units," "granny flats," or "ECHO units." "Self-Help Housing" (also known as sweat equity) is housing in which the homebuyer is contributing their labor to the construction or renovation. Self-Help saves money both for participants and funding sources because of the labor provided. "Senior Citizen Household" means a household in which the head of household is 62 years of age or older. "Senior Housing" means housing designed or managed for Senior Citizen Households. Senior Housing may be independent living, congregate care, or assisted living. "Shared Living" means people residing together for social contact, mutual support and assistance, and/or to reduce housing expenses. "Single-Family Housing" means a type of residential dwelling designed to house one family. "Shared Living" means people residing together for social contact, mutual support and assistance, and/or to reduce housing expenses. "Single-Family Housing" means a type of residential dwelling designed to house one family. "SROs" means single room occupancy residences with individual or shared sanitary and food preparation facilities. SROs do not include student housing. "Supportive Housing" means housing which includes services designed to assist the target population in their daily living and/or efforts to achieve an independent living status. Examples include assisted housing for the mentally and physically disabled, and transitional housing for homeless individuals and families, battered women, and substance-abusing populations. Senior Housing is not Supportive Housing. "Townhouse" means a type of single family housing built as an attached or semi-detached row house. "Transitional Housing" is housing that is typically provided in combination with supportive services to assist homeless individuals and families in achieving economic independence and moving to permanent housing within 24 months. a BIMINI ON s : s � • r• �! r• r• M • lop 3i r! k• f • i ga. �.. , • - . ,. �, sr S �.^, • • J J � i • b ATTACHMENT 2 2 BEDROOM RENTS OVER TIME RENTS 2250 00% 2200 nts 2150 2100 20150 110%Rents 2100 stepped 2050 Down Rents 2000 1950 1900 1850 1800 1'750 1700 1650 1600 1550 1500* BASE 1 2 3 4 5 6 7 8 9 10 YEARS Stepped Down 100%Rents Rents-110%to 100%t 10-yrs, 100%Rents Base $1521 1673 1673 1 1588 1731 1747 2 1658 1790 1824 3 1731 1852 1904 4 1807 1915 1988 5 1886 1981 2075 6 1969 2041 2166 7 2056 2118 2262 8 2147 2189 2361 9 2241 2263 2465 10 2340 2340 2574 W:1PersonallBoardOrtiers1BOARD.9.26.doughestyvalley G.A.R.: News Releases Page 1 of 2 j OF � � C.ALIPORNIA ASSOCIATION OF ItHAL'P40190 CAUPOOMIA RUL UTAIN M+1APd A M I 0 CJ41M.MiMMN RUJA MS R1AM.MMMRr'^TR7M *W MAGAME 0 CAN M OWLS US 444 __ a *" C.A.R. News Releases Contact: Mark Giberson (213) 739-8304 E-mail: mark gibersonQcar,org FOR RELEASE AT 10 A.M. PDT Thursday, July 13, 2000 HOUSING AFFORDABILITY FALLS TO 29 PERCENT, C.A.R. REPORTS LOS ANGELES (June 1) - Housing affordability in California fell to 29 percent in May, down 8 percentage points from May 1999, the California Association of REALTORSOD reported today. Nationwide, affordability was 52 percent in May, down from Ski percent a year ago. C.A.R.'s monthly housing affordability index measures the percentage of households that can afford to purchase a median-priced home in California. C.A.R. also reports housing affordability indexes for regions within the state. The tr x tmost furuiamentail measure+�f heus1hg:we1I»bd in the ................... smote:: y ,.� i X17 state, ya "' ir Si# # rrit In Southern California, San Diego County was the least affordable at 22 percent, followed by Orange County at 25 percent. In Los Angeles County, affordability was Ski percent and in den#ura County, it was 31 percent. With housing affordability at 73 percent, the High Desert remains the most affordable region in the state. The California Association of REALTORSO (http://www.car.org) is one of the largest state trade organizations in the United States, with more than 95,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles. C.A.R. releases may also be retrieved by calling the PR Newswire fax-on-demand service at: 1-800- 758-5804, ext. 131489. CALIFORNIA HOUSING AFFORDABILITY INDEX May 00 April 00 May 99 CA - single family 29 31 37 CA - condos 43 44 50 hftp:/A&ww.car.org/newsstand/newsfjul00-2.html 07/20/2000 GAR,: News Releases Page 2 of 2 US - jsingle family 52 53 56 Los Angeles 36 35 39 S.F. Bay Area 16 16 26 ©range County 25 26 36 Santa Clara 16 15 29 San Diego 22 25 34 Sacramento 51 54 59 Riverside/ San Bernardino 46 48 54 Ventura 31 29 41 Central Valley 47 48 54 Palm Springs/ Lower Desert 32 36 43 Monterey 13 15 26 Northern Wine Country 17 20 31 Northern California 34 37 44 Santa Barbara Area 18 26 34 High Desert 73 70 71 San Luis Obispo 25 21 36 * percentage of California households that can afford to purchase a median- priced home, by re ion Source. California Association of REALTORS good avtga e... A6 TOP Copyright @2000 California Association of REALTORS .` http://www.car.org/newsstand/news/julOO-2.html 07/20/2000 New homes now out of reach for 71% in state Page 1 of 3 NOW a 3* own a rfad a Or nFlad a mwas 0411"SykAo wyellow P"" NOME 1 SITE MAP i SEARCH !CUSTOMER SERVICE NM I BUSINESS i 9O—MPUTIN-Q ISPORT S.1,TIME UT j!IEALTH I COLUMNI TS;gOMMILWIX i TRAVEL I WEATHER <ADVERT19PMENT> BIJS jNESS1TECHNPttqGY COLUMNISTSBusiness/Tech Advertising info CEO INC, �LQME : WSM-55LIECtl FAST—BAY BIZ BUZZ Y2K STOCK uL4TINGS Published Friday, July 14, 2000 BUSINESS DATA PERSONAL FINANCE New homes now out of REAL ESTATE reach for 71% in state sTRAN TION 90MEUTING MOTLEY FOOL Fewer are able to afford the median <ADVERTISEMENT> CHAMBERS qF_COM. price house in Alameda County and SPECIAL TOOLS Contra Costa, where values are still %E-MAIL T A FRIEND — L T WT I SECTIONS likely to rise more TRIN M�-FRIN EY NEWS VERSION .ELECTIPN_ZOOO By Kelly Smolen TQqI Trouble? BUSINESS TIMES STAFF WRITER PERSONAL TECH PASSPORT SPORTS Housing affordability keeps descending at a steady TIMEOUT pace in California,with 71 percent of households unable Daily delivery of the major Say Area news, HEALTH to buy a median-priced home in May, according to a business and sports report released Thursday by the California Association headlines from qQL�NISTs of Realtors. ContrarostaTimes.com OPINION .Register for free Coco TALK The trade group's monthly housing affordability index, e-mail dispatches C"M UNITY which reports the percentage of families that can afford AUTO PLUS a median-priced home, dropped 8 percentage points from May 1999, as home prices rose and demand REAL_ESTATE PLUS continues to outpace supply. There was a 2 percentage SPECIAL REPORTS point decline in the statewide index from the prior month TRAVEL of April. The state's median home price was$246,420 in WEATHER May, up only slightly from April's$241,600. TRAFFIC According to Leslie Appleton-Young, the association's SERVICES vice president and chief economist, while the group NEW CLASSIFIEDS doesn't analyze each of the state's 50-plus counties, it CLASSIC CLASSIFIEDS does research the most densely populated areas, accounting for the majority of housing units. IQB-SCRIBE YELLOW_PAGES It's not a shock that the organization pegs San HOME IMPROVEMENT Francisco as the state's least affordable county, where HOMEGAIN a mere 10 percent of buyers can afford a median-priced ONLINE RADIO home, which was$549,157 in May, up from April's median of$538,732. HOMEHUNTER Q0 APARTMgNTJ.CQM 0.0.1-1 G ...0.0 C a A afle N WHOMENETWORK .............. J ........ d 0.00 10-11,e P_&R$.COM ARCHIVES 1Priced a t $485 4M snit$660,714, respectively. lamed County PROMOTIONS wasn't far behind with only 18 percent of families able to hftp://www.contracostatimes.com/biztech/leads/st.../ohousingafford-20000714.ht 07/20/2000 New homes now out of reach for 71% in Mate Page 2 of 3 SPECIAL FEATURES qualify for a$369,383 median-valued home. 9QC�17MIC8 caPEs The Bay Area, which the group defines as Santa Clara, CROS D Marin, San Mateo, Alameda, Contra Costa, Solano and San Francisca counties, is one of the least affordable MOVIE LI41!NG4 regions in the state. TV LISTIN A SEND A POSTCARD According to the report, in May only 16 percent of the FEATURED SITES populace could ho a to purchase a median-priced Bay Area home, valued at$460,927. One year ago, 26 SAYAREA.COM percent of the Bay Area's citizens could invest in a SF BAY TRAVELER median home. JUST GO SILICON VALLEY.COM Median price is not synonymous with average home rices, Median means that half the single family homes xcuRsiONs i a particular region are sold at prices above the median value,while the other half go for below the EKRCR-- median figure. (Type In query and hit enter Looking for a silver lining, Tricia Thomas, executive vice president of the Bay East Association of Realtors, noted Alameda County's affordability ranking is healthy PASSPORT compared with neighboring San Francisco �-; E i5rEr3 OR Lao IN i 3�1 t3I�why tra sta County rentelil8 a:. heusirg:ii$f auk ofeach.#ter rnar}y<i=};tied:.tr�the MANAGE XNR PASSPORT { e`s 16VV .1. I 1��0#1 3I Ek fr #t engine'... EMAIL DISPATCFIES EAQ "in the Tri-Valley, I'm constantly struck by the amount of SHOP ONLINE commercial development I see,"said Thomas. "it seems 3HaPRiNG t3UIt?E new offices are being completed every day. And Contra Costa County is within that commuting distance. That ABOUT us (accounts for) part of the pull on the affordability index. ADVERT!$IIN_Q ONLINE The demand to fill jobs is high, so demand for housing SUBSCRIBE TO THE TIMES is high. May's median home values slipped a bit from the prior month in Contra Costa and Alameda counties. April's median prices were$492,856 and$371,064, respectively.This indicates that more sales are occurring in lower-priced housing segments, said Appleton-Young. Could this be a sign that the Bay Area's ultra-hot market is in for some sobering times ahead? "Over the rest of the year, you'll see a little bit of a downward trend (in housing affordability in the Bay Area), even though there's been a bit of a pause in the market,"said Appleton-Young, "But I believe you'll still see some good home appreciation through the rest of the year." Both Contra Costa and Alameda counties remained flat from April to May in the percentage of buyers that could purchase median homes. However, they have experienced decreases of six and five percentage points, respectively, since February. The association makes several assumptions in calculating its monthly housing affordability index. It presumes that homeowners make a 20 percent down payment and take out a 30-year fixed-rate mortgage at 8.19 percent interest. Regional differences in incomes also come into play. http://www.contracostatimes.com/biztech/leads/st.../ohousingafford_20000714.ht 07/20/2000 New homes now out of reach for 71% in state page 3 of 3 Under this scenario, home buyers in Alameda County would need a minimum annual Income of$1O5,295<<1n ; .{!� 13 ptrary:C� osta,.fafrifts:�would need to,earn atleast .. Industry sources say housing affordability will reverse its downward spiral when the market starts to cool. The Bay Area housing markets is still considered to be in one of its longest-ever recovery periods. "Things tend to be cyclical," said Thomas, "About 10 years ago, the economy slowed down, there were fewer fobs and (housing) inventory increased. Home appreciation slowed down and some people had negative equity in their homes. Then, the affordability index improved. I just don't know where we are in the cycle right now." Appleto€�4,oun.q:t.hiks the Bay Area has not bottomed outet im sans of housing affordabilit i More#people are I.keiyr to,get squ+�rrut of the market fire If OWS up:to a>wider range of buyers. "We've seen the most dramatic declines(in housing affordability), but I wouldn't say they're entirely behind us," she said. €�Itbte tic#aEso proav#tle sortie 'xr#y if �t 0 to i eu>~.h a lliii.4.OAA f4i n �� � € to fir#m ki a. r€t ir€tt e i1b jai . In:the long-,term. the supe demand imbalance>is>going to hurt the Bay Area eco iorny; as fast-growing businesses look for locations where there's access to labor. "It's already happening in the Bay Area,"said Appleton-Young. "Companies will look for expansion opportunities elsewhere. Look at Tracy and the explosion in Salinas. People move where it's more affordable." !telly Smo/en covers commercial and residential real estate. Reach her at 925-847-2129 or at ksmolen a)cctimes com. BACK TO TOP I COPYRIGHT!TERMS OF USE NEWS I BU INESS I COMPUTING I SPORTS I TIME UT I HEALTH i COLUMNI9T5 I COMMUNITY I TRAVEL E WEATHER HOME I SITE MAP I SEARCH 1 CUSTOMER SERVICE contracostaTimesxon, uPbW€Mt Job ■Hind a Hom wyellk w http://www.contracostatimes.com/biztech/leads/st.../ohousingafford_20000714.ht 07/20/2000 CORRESPONDANCE Community Contra Dennis Ni.Barry.AICD Community Development D.+spar Development Costa Department Count. County Administration Building 651 Pine Street • 4th Floor,North Wing Martinez,California 94553-0095 w Phone: (925) 335-1255 August 17, 1999 Mr. Thomas J. Koch Vice President, Shapell Industries P.O. Box 361169 Milpitas, California 95035 Dear Tom: RE: Dougherty Valley Affordable Housing Program The purpose of this letter is to respond to information submitted by Shapell Industries with respect to the Dougherty Valley Affordable Housing Program (DVAHP), including, your June 14, 1999 letter and DVAHP Opportunities Analysis, and a June 2, 1999 letter with attachments from Chris Truebridge to Jennifer Peterson. Based on the information provided, I understand that Shapell is committed to meeting DVAHP requirements for the development of housing affordable to very-low, low and moderate-income households. Although several issues require additional information and discussion, it appears that the overall affordable housing program proposed by Shapell complies with the requirements of the DVAHP as of October 1998. It is anticipated that the outstanding issues will be resolved and additional information provided no later than October of 1999 when the next DVAHP Annual Compliance Report and Opportunities Analysis is due. The following summarizes outstanding issues and additional information needed to implement the Dougherty Valley Affordable Housing Program as proposed by Shapell. AFFORDABILITY—Moderate-income For-sale Units The DVAHP requires that moderate-income homeownership units must be sold to households with incomes at or below 120 percent of the Contra Costa County Area Median Income(AMI) as adjusted for household size. In addition, a minimum of half of the units must be sold to the target population at an affordable price. Moderate-income Homebuyer Income Certification Per your request, I am forwarding to you a form of income certification to be executed by moderate-income homebuyers and submitted to the County as documentation of income eligibility in accordance with DVAHP requirements. Note that the homebuyer must certify the household's income under penalty of perjury. Furthermore, by signing the income certification form, the household also agrees to Office Hours Monday-Frday:6:00 a.m.-5:00 p.m. permit the County to verify the income information through access to the mortgagor's loan file. It is the intent of the County to monitor these files on a periodic basis to ensure compliance. You have also indicated some concern with respect to confidentiality of homebuyer records and income. While County records are public documents, we have never to my knowledge received a request from a member of the public to view individual homebuyer records maintained for purposes of the County's affordable housing programs. The County maintains mortgage assistance records for several thousand homebuyers. used on information previously provided by your office, two moderate-income households have already acquired homes in the Dougherty Valley, As stated in the preceding, documentation is required in order to confirm that the households are eligible in accordance with the definition of a moderate-income household. Since these loans have closed, the County will accept the following as documentation: name and address of qualified household; household size; and the lender's certification as to income eligibility. Please note that this will be acceptable for these two households only. In the future, in order to qualify as a moderate-income household under the DVAHP households acquiring homes will be required to provide income certifications as discussed in the above. • Additional Information Needed to Confirm Compliance The maximum allowable sales price for a moderate-income unit according to the DVAI­IP is the lesser of the current market price and a price taking into account unit and family size, prevailing interest rates, and other conventional loan underwriting criteria. In order to determine the allowable sales price for the price-restricted moderate-income units, additional information is needed concerning proposed unit size/number of bedrooms, target market characteristics (e.g., household size), and assumed underwriting criteria, particularly homeowner association dues. RENTAL UNITS —Moderate and Low-income • Affordability term—Moderate Income Rental Units The DVABP and Dougherty Valley Specific Plan goals and policies emphasize the need to maintain housing affordability over the long run. Policy H-9 in the Specific Plan states that"Affordable units shall be maintained for the maximum period feasible. Target periods shall be a minimum of twenty years for for-sale units and thirty years for rental units." At the time the DVAH? was approved, it was assumed that the moderate-income affordable housing obligation would be met through the provision of affordable homeownership opportunities at market prices without the need for public subsidy. Due to a lack of specific financial benefit to the buyer(e.g., below-market price, low-interest loan), it was not considered feasible to require moderate-income households to purchase an essentially market-rate unit with an 2 affordability restriction. Consequently, the DVAHP does not currently specify a required term of affordability for moderate-income units. In part as a result of substantial changes in housing market conditions, Shapell is now proposing to satisfy over 80 percent of the total moderate income housing obligation through the production of 875 rental units. In order to accommodate the revised program and remain consistent with Specific Plan and DVAHP housing affordability goals and policies, DVAHP requirements for maintained affordability should be modified to state that rental units intended to satisfy the moderate income housing requirement must remain affordable to and occupied by the target population for a minimum of thirty years. In addition, the developer/owner of the rental units should be required to enter into a regulatory agreement with the County to ensure that the units remain in the affordable housing stock for the required period of time. This approach is fully consistent with affordability requirements for very-low and low- income rental units and with Policy H-9 of the Dougherty Valley Specific Plan and DVAHP. A final form of regulatory agreement must be prepared, using Appendix I to the DVAHP as a starting point. • Request for Additional Information and Clarification—Moderate and Low-income Rental Units Maximum allowable rents for the moderate-income units are defined as the lesser of the monthly market rent or a monthly rent including an allowance for utilities which does not exceed 30 percent of the monthly area median income for Contra Costa County. Similarly, maximum allowable rents for the low-income units are defined as the lesser of the monthly market rent or 100 percent of the Section 8 Fair Market Rent (FMR) less an appropriate allowance for utilities. In both cases, rents are adjusted based on the number of bedrooms and assumed household size in a unit. Additional information concerning proposed unit size/number of bedrooms, probable utility configuration and appropriate allowances, and size of target market household is needed in order to determine compliance of the proposed moderate and low-income rents with the requirements of the DVAHP. In a second issue, it appears that the rents for the low-income apartments and rental units have been incorrectly calculated based on 30 percent of the gross monthly income of a household at 80 percent of the area median rather than the FMRs as required by the DVAHP. Depending on the number of bedrooms in a unit, the rents proposed for these units may not comply with the maximum affordable rents for the DVAHP. The rents for these units should be clarified as soon as possible. • Carriage Units —Moderate and Low-income Shapell proposes to meet a portion of the moderate and low-income affordability requirement through the provision of carriage units. In general, carriage units are a separate housing unit located on the same lot and purchased in combination with a single family home. The carriage unit option was not specifically addressed in the 3 DVAHP. Therefore, some clarification in the requirements to be attached to this type of rental housing is appropriate. In order to qualify as an eligible rental unit, the carriage unit must be a separate unit (i.e., separate entrance, kitchen, and bath facilities, separate off street parking), in addition, owners of the carriage units must rent the units to moderate or low-income households at rents including a utility allowance which do not exceed the maximums allowable under the DVAHP for a minimum of 30 years, The specific income group to be targeted for occupancy of the carriage unit(low or moderate income) must be identified at the time the homebuyer enters into a sales agreement. In order to ensure compliance, owners of carriage units will be required to enter into regulatory agreements with the County to be recorded against the property and specifying the affordability requirement. It is not immediately apparent how the DVAHP affordability requirements will affect the demand for and ultimate feasibility of carriage units as affordable rental housing. In addition to the information requested for rental units in general, please provide information concerning the potential market for this type of unit by homeowners and moderate/low income renter households, A second issue with respect to carriage units concerns compliance through the period of required affordability. In general, owners of multifamily rental projects with 20 to 100 or more units each are required to submit periodic reports confirming compliance with County affordability and use restrictions, The County reviews compliance on an ongoing basis, In the event of non-compliance, the County will work with the owner to bring the project back into conformance with the affordability requirements. Absent corrective action, the County will declare the project in default under the terms of the regulatory agreement. While there are obvious administrative costs associated with monitoring compliance of these projects, these costs are provided for in the regulatory agreement. In contrast, the proposal to use over 300 carriage units, each with a separate owner/landlord, to satisfy a portion of the County affordability requirements involves potentially significant compliance and related administrative costs due in part to a lack of apparent economies of scale. Discussions should be initiated between 5hapell and the County to determine an equitable approach to covering these costs. • Low-income Rental Units W Phasing As currently proposed,the majority of low-income units will be produced in Phases II and III of the project; none are produced in Phase I. This is allowable under the current DVAHP subject to the findings of the compliance monitoring program. In the next compliance report, please provide the proposed construction timeline for each phase of the project in order to clarify the anticipated time frame for construction of the low-income units. 4 RENTAL ITfi— Very-low Income • Request for Additional Information - Very-low Income Units The information submitted on Shapell's strategy for producing very-low income units is limited. Additional information needs to be provided prior to the next annual report to facilitate assessing the feasibility of this component of the affordable housing program. This information should include: the proposed location with a description of the specific site or sites to be used for very-low income housing (acreage, configuration, significant development and environmental constraints),the type of housing proposed(mixed-use or all affordable, multifamily, senior, unit size/number of bedrooms), range of incomes and household size of target population, and the relationship of these units to other units in the development. • Development Mechanism and Procedures As one alternative to producing the units themselves, Shapell has proposed meeting the requirement for very-low income housing by dedicating a parcel of land to a non- profit affordable housing developer. This approach is allowable under the DVAEP. Discussions should be initiated to identify proposed procedures and criteria to be employed in selecting a non-profit for this purpose. Given the complexities of affordable housing finance which typically involves multiple funding sources, it is important that this process be initiated early in the development in order to permit adequate time for the nonprofit to design and obtain the necessary financing,and planning approvals for the project. w Phasing As currently proposed, all 146 of the very-low income housing units will be produced at the end of the development in Phase IV. While the DVAHP does not require a specific distribution of very-low, low and moderate-income units by phase, incorporation of the very-low income units in the last phase increases the risk that these units will never be built. For example, pending completion of a new or amended EIR, the Dougherty Valley Settlement Agreement with the City of San Ramon and Town of Danville limits the number of units to be built to 8,500 out of the 11,000 units approved by the Board. On a pro rata basis, this would allow Shapell to build a total of 4,505 units. Phases I through III will result in the development of 4,439 units, leaving only 66 to be produced in Phase IV prior to completion of a new EIR. Discussions should be initiated to develop alternative approaches to be followed by the developer to meet the very-low income housing requirement earlier than Phase IV. These alternatives should include the feasibility of building the very-low income units in an earlier development phase. I anticipate that the majority of the issues identified in this letter will be successfully resolved and the additional requested information provided prior to or coincident with submission of the next annual affordable housing program compliance report and 5 opportunities analysis due in October 1999. My staff and 1 would be happy to meet with you to at your earliest convenience to discuss these issues further. Sincerely, j Kennedy puty Directo(—Redevelopment cc: Board of Supervisors Deiutis Barry Debbie Chamberlain Kathleen Kamm File C.4.3(byl.6Xa) UhAvdata twor1Jd tial ip1 doc 6 NOV-23-98 10,0i F'ROM.LSA ASSOCIATES INC ID.5102363480 PACE 3/8 SHAPELL IN©USMES of NORTHERN CAUFO NIA A Mblon of Shapely Wvstetef.Inc. November 22, 1999 .nor.rum Kennedy Contra Costa County Redevelopment Department 4551 Pions Street Martinez,CA 94553 Dear run: The hollowing is Wended to provide Shapell's Annual Compliance 1t sport for the Dougherty Valley Affordable Housing Program.(DVAHP)for 1999. This report was duo on October 1, 199'9. Please accept otnr apologies for its lateness, Shapell Industries romainsoommittod to aciieving the objectives of the DVAIIP and the; housing goals of the County Gene ml Plan and the DV Specific Plait. The policy of providing;a broad range of housing near expanding job centers continues to make a great dead of sense. It is quite clear that the failure to do this in other areas of the Bay,Area in general and the County speoiftcally has caused much of the traffic nighttnare that we all face_•In this letter`,we will offer: 1)content as to the siltation the mazk of has placed us in,2)responses to your letter ofAugust 170', 1999 and 3)an updated one year and three year forecast. Concerning our overall program,we have left it unchanged from last yearI's report although would appreciate continued discussions with staff concerning a number of issue& A more legible version of the same information presented previously will follow in a matter of days. 1999 saw a continuance of development of homes in the first phase of Dougherty Valley. Sing the first sales in July of 1998,more than 250 units are now occupied in the project. Demand for housing,even the higher-ead housing we are now providing,remaiIIs on a bxxsk pace. Lotteries for homes,waiting lists and the like are noir routine aspects of our sales process; This gong demand has also caused home prices to imorease dramatically.New homes similar to those:sold in the summer of 1995 for$500,000 are now selling:for more than $600,000 These;factors bave shade;the forecasting of exactly how ShapellwM meet the DVAHP all the more difficult to determine. Specifically,it has caused us to look more and more to rental units as the means of meeting affordability. In your letter of August 17, 1999 you reference the aspects of our plan which point to the increased reliance upon rental.units. OIL page 2 of your letter,you disc uss.the issue of affordability term for moderate income rental un" You montion some aspects of the thhddAg that weans into the of the Specific Plann,and the DVABP and.that both concluded d that no term for moderate income;housing would be esstablishexl.We agree with the recounting of the backgrotmd you oft r on this issue. Homes of Quality Sirire 1955 1*.0.Box 361169,100 North Milpitas Cioulevard,Milpitas,California 95035 Phone:408/946-1550 Fax:408/9445-4687 MOV-23-99 I0r052 FROMiLSA ASSOCIATES INC I0863023S348O PAGE 4/6 Novolnba 22, 1999 Mr. Jim;Kennedy Page 2 However,Shapell does not agm with your conclusion that the DVAHP must be amended to require the same 30 year puna affordability term that is In feet required for mals bunt throagh govemment subsidies. Flmdamenttal to the basis for sa no term requirement on moderate income units was the notion that terrni of affordability should track the requirements of the subsidies provided.. In the case of the rmul units that we intend to bring to market as soon as practicable,there is no public subsidy. In..fxcx,any subsidy that may be required to have these=its wed affordability standards will be provided by Shapell. As you are aware,given the duality ofdesiga and amenities provided in thenar,we do believe that we will be required to subsidize these vmits in order to generate credit toward our affordable houmg obligation& Shapell is unaware of any aspect of the approved Specifics Plan or the DVAHP which mandates that we are to bo treated any diffarcutly than any other private party regaarding this moderate income term issue. Until some assistance is provided by the County or other governmental agency to subsidize these units,we cannot agree to the urI ateral assertion that`DVAHP requirements for maintained affordability should be is oclried— " Your letter ofAugust I-A also deals with a number of other issues concerning the DVAHP and Shapell's compliance with it. Firstly,thank you for your assistance in providing us with an income certification form for use by our moderate-iratoome buyers. While we have yet to incorporate this forma into our es r w procedures,we are in the process of doing so. Accordingly, a supplomentary report regarding the number of buyers whose incomes only wed moderates rate affordability will be following in the near filtu><e. Your request for-Additional Information Weeded to Coonf=Compliance on page 2 has o i sed us. Implicit in it is the idea that some affordability is being met through the sales prices of moderate income units- No such units have,been con structedlsold as yam. However,if your request is more of a`meads-up"about future ilnformatto u required,we appreciate tho focus you've provided us. On page 3 of your Idw you discuss the need for more information regarding low-income rents oVocially with regard to distinctm between market rents or JoWo p=ent of Section 8 pair Market Rents. We are unaware of the Ixnethod for determining the FMA levels. Please so advise. Page 4 ofyour-letter discusses the Issues associated with the wont of cr3trr%age units being implemented to meet affordability requirements. In our 1998 compl`anoee repnzt, we indicated our desire,+to develop this form ofhouskg along with similar inn-law units. You've raised a number of is ms that roquirc further discussion between Shapell and the MOV-23-59 10-02 FROM.LSA ASSOCIATE'S INC 10-6102363480 PAGE 6/6 I& Tim Kennedy November 22, 1999 .page 3 County We would look&rwazd to meeting with yotl at your co woul=w to"ozk through these:questions. Page 5 eyot¢lama disc mos the:phasimg.of our very-low income wait re.� tmentts You make the point that the information that Tuve have provided thus far is 16iluisted. We agree. The dcnsity,design,speoif o timing of and even the kocadon.ofthcse units is very Speculative at this time. Your letter evresases the conceim that these units might never be i mpkarnented at all basad on.tuns of the DV Set Twat Agreement t wroth Sarin.Ramon.and Danville. We would hike to note that the DVSA does not require it further ETR at 8,500 units per se:. h does reguke cmigoing,analysis.of the Uaft in tbit The k50Q wait issue;only goivvam in that It is the point at which San Rattio>a and Danville are no longer required to as"in.allowing any ne*ww eaaa nents,mitigations,_etc_in their reVoctwe Jurisdictions to allow for improved traffic flow. While the timing of the very-low income unitss remkin cloudy,we have begun,the prods of'discussing posAle partnership with both Northbay Eopn mical Housing and Ekumenical Assoclates for Housing,both basadin n Martin.County. Roth of thew Organizations are well knovm for their innovative approach to delivering the most deeply a edible units-possible. 'fie hope to be able.M provide more.suhstaadA fix&rmation in next year's report. One Year bare st: AR of Sll apell's housingprovision within.the next year wM occur in.Phase 1.of the Dougherty Valley project(Me Udges at Gale Ralnch). Shapell is sung,building permits to allow us to coact the Faloam Bridge apartimat units, This 236 unit complex will feature,one,two and three bodrenm=its Our plans have a`Lways mchuled#his entire oanVkx.as.part of auz:affxdabiky per- W3#1any luck,these units will be built during the first half of 2000 with,occupancy by the fall of next year. Our market ftecaA ides that the tai s.will,rent vel'quickly Shapell continues to proceed with site work on our 171 unit townhouse project. last year's r''s compliancereport indicated Haat as marry ars 13 of th ase units,.mi&make moderate income:affordability during the 1998-2002 build out of Rase 1. .As menet OUd earlier,Shalsell will Implemnent a trackingsystem fn r modemto income buyers in accord with the:incomo certification form you provided. We will also bring current the facts c(mc mmg thoso Aw have already mad*Douglierty'Valley their home. NOV-23-69 10.02 FROM-LSA ASSOCIATES INC ID-6102383480 FACE S/8 14r.Titm Kmedy November 22, 1999 Past 4 Thrrie'�''exer Forecast: Mring;the newt three years.Shapell,anticipates that all ofthe balance of Phase 1 will be coed and omViexl.. Per the tesrms oflast year's report, this should generatte 276 affordable waits out of 1,191 or 23.4%. This exceeds the 15%per phm DVAUP requinrement and the specific requirements ofDVABP D.2.A regarding moderate income unit phasing. Conmutnt with the build.-.out of Phase 1 will be the site preparation wo*in Phase 2.We expo#this work to begin next year with,possible oompancy occurring as early as the£all of 2001. Many factors might delay this stmt date including physical provision of public utilities. While Phase 2 its expected to build out through 2006 and hence beyond the three year forecast required here,its fall implementation along with.Phase 1 would resukt in a surplus of seven unks of moderate income housing and a shortf&of only 5 unks of low income housing. The very low income homes would occur somewhat later and more southerly in the Dougherty Valley We believe that this excellent approxitawon of the target distribution of affordability demonstrates that the Gale Ranch portion of DV is designed to meet the intent ofthe DVABP. We hope the foregoing has provided the County with the needed information to meet the requirements of'the Dougherty Valley Affordable Housing Wog+ram. it is clear that a number of issues remain to be resolved and that this project will be fitlly realized only after the passes&of many ream We also hope thatit is clear that the goals ri} i ,ed by Contra Costa County both in 1492 and 1994 aro on track for implementatim We look-forward to your response and to the opportunity too work with you fin*"on-this most-worthwhile endeavor. incere , Thomas L Koch Vice President Community Contra Dennis M. Barry,CommunitDeveAICP y lopment Director Development Costa Department County ly County Administration Building 651 Pine Street 4th Floor,North Wing Martinez,California 94553-0095 Phone: sA April 18, 2000 Tom Koch, Vice-President Shapell Industries of Northern California 100 North Milpitas Blvd. Milpitas CA 95035 Dear Tom: RE: Dougherty Valley Affordable Housing Program This is In response to your 1999 Annual Compliance Report for the Dougherty Valley Affordable Housing Program (DVAHP). Your November 22, 1999 letter referenced that your one and three-year program would be forthcoming in a matter of days. We have yet to receive it. Your letter discusses the following issues and sets forth our understanding of the Shapell position, where applicable. This response follows the order of our August 17, 1999 letter. 1. Moderate Income "Purchasers Income Certification" form We have yet to receive a Purchaser Income Certification for any homebuyer. You have previously Indicated to us that a few of the homebuyers qualified as moderate-Income. For buyers who have already closed we need a certification from the lender. Without such a certification no'credit for this can be provided. We have received nothing to date. Future purchasers by moderate Income homebuyers after our August 17 letter must include the "Purchaser's Income Certification". 2. Moderate Income For-Sale Price Calculation Up to half of the DVAHP Moderate Income obligation that Is addressed via home ownership may be done solely on the basis of the buyers income without respect to home price. The remaining half must be subject to income and price restrictions. Paragraph 4 on page 2 of my August 17, 1999 letter is intended to D:\Redev-tenip\Letters\KochDVAHPttr.doc Office Hours Monday-Frday:8:00 a.m.-5:00 p.m. Office is closed the 1 st, 3rd&5th Fridays of each month provide you with an understanding of how that moderate Income sales price Is calculated. You can be of assistance In making sure our model for calculating the Moderate Income Sales Price Is accurate by providing current data as requested. 3. Affordability Term-Moderate Income Rental Units Your November 22, 1999 letter Incorrectly asserts that both "the Specific Plan and the DVAHP both concluded that no term for moderate Income housing would be established". This Is Incorrect. Policy H-9 in the Dougherty Valley Specific Plan states that "Affordable Units shall be maintained for the maximum period feasible. Target periods shall be a minimum of twenty years for for-sale units and thirty years for rental units". My August 17, 1999 letter recounts the operative expectation back In 1993/1994 when the DVAHP was created, i.e. that for-sale units priced at the market would be the primary, if not exclusive, manner of complying with the moderate Income requirements. Given the altered market conditions this operative expectation has changed. Therefore the DVAHP and its Implementation needs to change to comply with the Specific Plan. My letter of August 17, 1999 suggested the methodology for accomplishing the required changes clarify the DVAHP and reach closure on a form of Regulatory Agreement that would provide for continuing affordability for the required term. Your November 22, 1999 suggests your firm does not agree with this position. The venue for discussing this difference is the Dougherty Valley Oversight Committee (DVOC), and ultimately the Board of Supervisors. If that is your desire, you should formally set forth your request and the basis for It so that these bodies will have the benefit of your position. 4. Low Income Rents The DVAHP defines the above term. We can provide the Section 8 Fair Market Rent (FMR) levels. The current FMR's are attached, with the current utility allowances permitted. The Low Income Rents are the lesser of: a.) the market rents (less an allowance for tenant-paid utilities); or b.) the FMWs (less an allowance for tenant-paid utilities). 5. Carriage Units issues. These issues need to be discussed and resolved as stated in our August 17, 1999 letter. 6. Phasing of Very Low Income Units The essential point of our August 17, 1999 letter was that the incorporation of approaches to deliver very low income In earlier phases must be fully explored. I appreciate your clarification of the Dougherty Valley Settlement Agreement, but the fact remains the final phases are more risky than earlier phases. A 0.\Redev-temp\Leiters\KochDVAHPltr.doc development scenario that does not realize very-low Income production Is not acceptable, and the DVAHP Compliance Reports need to begin to reflect alternative approaches. Please be advised that any deferral of the affordable housing obligation Is subject to the review and approval of the County. We look forward to the additional Information you suggest Is forthcoming this year. I am available to respond to questions you may have on the above matters. I can be reached at (925) 335-1255. Sincerely,, 10, M Kennedy JDputy Direct r - Redevelopment Cc: Board or Supervisors Dennis Barry Debbie Sanderson Debbie Chamberlain Kathleen Hamm Dan Hancock, Shapell Chris Truebridge, Shapell Dan Coleman, Lennart Homes File C4.3(b)(1.6)(a) JK/jr D:\Redev-temp\Letters\KochDVAHPItr.doc Jury a8 00 C13;c 7m "tom/Katie Koch 510/527-8774 P. 1 SHAPELL INDUSCR1ES of NORTHEPN CAUFOO" A Division o€Shapell industrics.Inc. .lune 5,2000 Mr. Jim Kennedy Deputy Director_Redevelopment Community Development Department Contra Costs County 651 Rine Street Martinez, CA 94553 Dear Jim: RE: Dougherty Valley Affordable Housing Program Thank you for your letter of April 19, 2004 responding to our 1999 Annual Compliance Report. While your correspondence is helpful, it appears that Shapell and the County continue to disagree on some fundamental aspects of the DVAHP, its terms and timing. It is our hope that through this letter and our planned subsequent meeting,that a true furtherance of our mutual objectives of providing affordable housing in Dougherty Valley can be achieved. However,we feel that some core issues still need to be addressed. We will try to be responsive to your letter of April Ie on a point-by-point basis. in setting the context ofour response, please consider the following points of view. 1) Shapell can not agree your suggested unilateral change in the DVAHP regarding term of moderate rate units. The DVAHP clearly states that no term for moderate rate affordability is assumed. Noting from.page 22 ofthe DVAHP `°The length of time Moderate Income Units must remain affordable is governed solely by requirements of any subsidy source...there is no expectation of public subsidy....the Moderate Income Units are not generally expected to have an affordability term."We tried to make this point in our letter of November 22, 1999. Further, Shapell and the County have entered into a Development Agreement which prohibits changes to terms of the policies set forth, including those relating to affordable housing, without the mutual consent of the parties. 2) Shapell is faced with a difficult situation regarding the implementation of affordability in the Falcon Bridge apartment complex currently under construction. These units were designed assuming a 120%of median income threshold. We have indicated to you at previous meetings a possible Romes of Quality Sint:1455 P.O.Box 36'1169,100 North Milpitas Eiouicvard,Milpitas,California 9.5035 Pluuw:408/946-1550 Fax 408/946-%87 Jun 00 00 09:278 7om/Katie Koch 510./527-8774 F. 2 Mr. Jim Kennedy June S, 2000 Page 2 amend mat to the IJVAHP which would provide both the solution to our current challenge at Falcon Bridge and assure the ongoing moderate rate affordability that your letters call for. We loop Forward to your thoughts on this matter at our meeting on Jane e. 3} We are concerned that your sincere desire to help realize affordability as soon as possible may be hawing the effect of requiring Shapell to accelerate certain aspects of the DVAHP beyond the teams of that policy document. Specifically,the timing and location of Very Low Income Units appears, from reading your letters,to need determination.now. It was not our understanding that such a determination was to be made as soon as two years into the build- out of Dougherty Valley. 4} Shapell remains interested in understanding the specific subsidies and funding/financing options that the County anticipates may be made available to assist with theimplementation of the DVAHP. This is especially true of the Loco and Very Low Income Units. We appreciate.your consideration.of the paint of view that Shapell brings to these discussions. Although we know it dues not match yours, and by implication, that of the County,we hope that it is seen as an attempt to reach consensus with the County in an open and straightforward manner. The following a"ts to track your letter of April l I} Your letter mentions the need for Income Certification verification forms. Thank you for reminding us of the need to demonstrate the income of buyers who's previous purchases may qualify based solely on their income,not the price of the unit. Given the time of year,we would ask that we be allowed to retroactively Provide your office with this infomution in the October, 2004 Annual Compliance Report. 2}. Your letter asks for Income.for Sale.Price Calculation data. Shapell does not anticipate meeting moderate rate affordability thresholds through prices on for sale units in the near future Current market conditions,the densities called for in the approved Bridges at Gale Ranch"Tentative Map and other factors contribute to our inability to do so within the next three years. Accordingly,we ask that your consider that your request may not be timely. However,we cast confirm that current HOA dues for single-family units in the Bridges area are F Jun 08 ad 09:28a Tom/Katie Koch 510/527-8774 P.3 Mr.Jim Kennedy June 5,2000 Page 3 Your letter argues that the DVABP must be changed to require Moderate Income affordability terms of up to 30 years. Shapells thoughts on this issue have be=partially expressed earlier In this letter- Your conclusion at the end of the first paragraph"Merefore the DVAHP and its implementation needs to change to comply with the Specific Plan."is understood,but nota to. You point out that the original assumption that much ofthe moderate rate affordability would be handled through for sale units has,for the time being, changed- This is true. However,we do not see how this fact is germane to the question of how long our Falcon Bridge Apartments must remain affordable? As with the anticipated moderate for sale units,no subsidy has been provided for these apartments. therefore, given the language ofthe DVABP re: affordability term for moderate units,why should these apartments be treated differently than any other private property? You make the point that the Specific Plan Called for"'Affordable Units shall be maintained for the maximum period feasible." The DVABP was established 16 months after the adoption ofthe Specific Plan and was cognizant ofthe goals of that document. The DVABP in fact states in its introductory paragraph on Page I that is"designed to provide an implementation structure to the affordable housing requirements and policies ofthe County General Plan and the Dougherty Valley Specific Plan." Given this language,how can you now assert that the broad goals ofthe Specific Plan should govern rather than the established detailed policies ofthe DVABP? In the DVAFIP,The County strikes a balance which related afford-ability term to the quantity and quality of subsidy provided by itself or other government agencies. Again,at the risk of being repetitive, no such subsidy has been forthcoming. You acknowledge that moderate for sale units are not required to have an affordability term We agree. However,is it your position that Shapell as a private property owner of the Falcon Bridge apartments has a different set of obligations/rights than the anticipated buyer of a for-sale, moderate rate home? If so,please explain why. Also, Shapell believes that the Specific Plan's concept of"feasibility"was reflected in the DVAFIP's limits on the term of affordability for moderate income units_ Finally,the approach that you're suggesting war,included in the circulation draft of September 7, 1993. This draft expressly called for the idea that 20 and 30 year affordability terms be imposed on all affordable units. The final DVARP,established March 22, 1994, amended the draft to reflect the ultimate policy directive ofthe County which eliminated the concept that you're now suggesting should be imposed- I ` Jun o8' Oil as:28a Tom/Katie Koch ,tp1527-9774 p.4 Mr. Jim Kennedy June 5,2000 Page 4 Absent a resolution on this item with you and your staff on the 91, Shapell does desire to move this issue forward to further deliberation with the appropriate government entities such as DVOC(the Board of Supervisors. We would like to reserve the right to express our position more fully to them when the issue is placed on an agenda. 4) Your tetter indicates that the current Fair Market Rents are attached. Perhaps a tecbaicalAogistics error took place in sending your letter to us as we did not see the attached FWs you referenced_ We would look forward to reviewing them with you at our meeting ofthe ll . 5) Your totter reiterates the need for fztrther discussion of carriage units. Shapell has been pleased with the market response to the units in the Bridges at Gale Ranch project which have a form of carriage units. Specifically, our largest home in the project provides for an attached unit with a separate entrance,parking, cooking,bathroom and storage facilities. In other words, they may comply with the standards you expressed in your August 17, 1999 letter. The issues concerning term of these units' affordability relate to the discussion in point 3 of this letter. However, as they are a new cotwelat that we would like to explore with the County,we would litre to continue the discussion of the potential of these units to help achieve the DVAHP goals and any costs associated with them, b) Your letter discusses the potential problem.of Very Low Income'[hits occurring later in the project or perhaps not at alL The Dougherty Valley Specific Plant calls for the densest portion ofthe Shapell portion ofthe plan to be bull,at the Village Center. Both the DVAHP and the Specific flan were drafted at a time when it was assumed that this portion ofthe Shapell project would occur toward the end of the build out of Gale Manch. That assertion is valid today. In fact,the proposals for the Phase 11(approved)and Phase III (proposed)portions of Gale Manch have yet to reach the Village(;enter area. This phasing program is similar to the approach anticipated when DV was approved.. We felt then and we still feet that the Very Low Income units are most likely to be realized in the densest part of Dougherty Valley. White not specific site has been determined,we ask why is this planning concept`hot acceptable"as your letter of April Ie states? Jun 08 00 (:19:288 Tom/Katie Koch 510/527-8774 p. 5 M. Kennedy June 5,2000 pages Your letter continues that"Please be advised dhat any defaul of the affordable housing obligation is subject to review and approval of the County.' This statement can easily be read to imply that the County is choosing to alter the intended timing of the very low component of the DVAkip and will review our annual compliance reports with this in mind, threatening to withhold their approval unless we comply with the new timing. Is this the County's intention with this language? On the more basic question of implementation of the Very Low income units, Shapell has continued discussions with Ecumenical Associates for Housing (F.AK)on this subject and hope to provide more detailed progress by our October,2000 annual compliance.report. Our discussions are focused on identifying a suitable site in the latter phases of the project to accommodate these units with an eye to possibly dedicating that site to EAR Shapell certainly agrees with your characterization than further development of Dougherty Valley,or any other project for that matter in this era,is"risky" `Z"he regulatory environment that we are working in has caused extraordinary changes to plans that were otherwise settled as far as the local land use agency was concerned. While we understand your desire to eliminate as much of the `tisk"as possible from your objectives,we can not agree to a disproportionate shifting of the`5rislc"to us as a romans of achieving your cards_ Finally,your introductory paragraph questions where our one and three year forecasts are for the 1999 report. Both were included in my letter of November 22''. What i wanted to provide you with was a more legible copy of our analysis for 1999. 1 apologize that I simply overlooked the need to do so_ My assistant Linda Fluken is preparing that document now. It would we helpful if you could provide us with a disc which has your desired format for that information,on it. Recreating that chart has proven to easily exceed my technical prowess! Hence, my method of handwritten responses. I hope the preceding is at least helpful in furthering the needed discussions we must undertake to successfully implement the DVAHP. We recognize that a number of issues present challenges. We intend to undertake an effort to overcome these challenges in a spirit of cooperation with the County, an open mind, an acknowledgement of our cormaitmeat and requirements under the DVA1lP and with an"eye on the prize"of helping to provide a broad range of housing within.Dougherty Valley for the entire community. f Jun 0d 00 69.28a Tom/Katie Koch 510/527-8774 p.6 W Jinn K=edy June,5,2000 Page G Oa behalf of ShapeU lxadustries of Northern,California,l look forward to our dicussions on these important matters. Surer Z-�� az�s Vice President c r � ,v�1 1•i� �*r"i f � f SHAPELL INDUSTRIES of NORTHERN CALIFORNIA A Division of Shapell Industries, Inc. 80 AUG _3 Py 3: 34 July 19, 2000 _ `# Nft. Tim Kennedy Community Development Department Contra Costa County 651 fine Street Martinez, CA 94513 .Dear Jim: This letter is sent to propose to the County a potential change to the Dougherty Valley Affordable Housing Program. Our purpose here is to make formal the concepts that we have discussed informally on numerous occasions. These ideas were also reviewed last week at the Dougherty Valley Oversight Committee. We would request your assistance in putting this matter before the Board of Supervisors for their earliest conveniept consideration. The costs of housing in the Bay Area continue to climb at a rapid pace, exceeding evgn the most aggressive projections. Prices in the San Ramon area often exceed$250 per square foot. Homes are sold for more than their listing price and the inventory of available product is near an all-time low. Proximity to excellent employment opportunities,terrific schools and a safe place to raise a family continues to define San Ramon. There is no indication that any of these trends are going to worsen. Accordingly, the probability is strong for continued increases In housing costs in the area around Dougherty Valley. At the same time, Shapell intends to persist in building the highest quality home that-'Ye can. As directed by the Dougherty Valley Specific Plan, our goal is to build affordable and market rate units as indistinguishable from each other as possible. These factors further minimize our ability to readily provide affordable housing as called for in the Affordable Housing Program. When the DVAHP was adopted in 1994, it seemed possible to meet some of the moderate rate affordability through ownership product. In fact,without any public policy requirement,we sold townhouses at the intersection of Dougherty Road and Crow Canyon shortly afterward at prices which then met moderate income standards. These same townhouses which sold in the mid 90's for$225,000 now are routinely re-sold fqr more than $404,000. Homes of Quality Since 1955 P.O. Box 361169,100 North Milpitas Boulevard,Milpitas,California 95035 Phone:408/946-1550 Fax:408/946-9687 r r Mr.Tim Kennedy July 19, 2000 Page 2 In light of these factors, Shapell now plans to meet most of its moderate rate affordable housing requirements through rental units. Herein is the issue that we would like to bring to:the attention of the i�� Currently,the DVAIH P requires that moderate recital units rent for no more than. IUC}%9f median.income. However,the same program also makes clear that no term of affordability is required for moderate rate units,with no distinction made between rent d and ownership units. We propose changes in these two components of the pian. These proposed changes would apply to all of Shapell's portion of Dougherty Valley, First, Shapell requests that.for rental units which would meet moderate rate income affordability that a 110%of median income threshold be applied to studio and 1 bedroopi units,while a 1200 of median threshold for 2 bedroom and larger units. As you are aware;the 1200/a standard is applicable to ownership units and is the same standard usgd by the state in determining housing element compliance. During our discussions on the topic, you informed me that the 1 GO%concept for rental units is found elsewhere in t�e County but only in redevelopment areas with concomitant housing set-aside funds. In an effort to permanently provide affordability within the moderate rate rental units, Shapell would agree to a perpetual.affordability term. We would implement this unique approach with a deed restriction or other comparable device to insure its continuance �f adapted,this concept would do more to tackle the challenge_of ever-decreasing . affordability than perhaps any other provision of the DVAHP. Further,we are unaware ofany existing project in Contra Costa with a perpetual,affordability component. The longest term that we are familiar with runs 30 years and carries with it public subsidy. .In. this case,no subsidy would be required and the term would not lapse. Should any of the foregoing require clarification,I would be happy to meet with you agd explore the matter further. However,we would request that the matter be placed on the Hoard's agenda as soon as passible as the proposal we are bringing forth would apply p our 256 unit Falcon Bridge apartments in Phase I of Dougherty Valley. These units are nearing completion. Thank you for your assistance with this matter and for you continued help in worldU with Shapell to affirmatively achieve the goals of affordable housing in the Dougherty Valley. Sin Vice President lCP Community Contra Dennis it Development pme Community Development Director Development Costa Department County County Administration Building 651 Pine Street 4th Floor,North Wing Martinez,California 94553-0095 *" Phone: 335-1208 s, July 20, 2000 Mr. Chris Truebridge Shapell Industries of Northern California P. O. Box 361169 Milpitas, CA 95035 Re: Gale III FDP Application, DP998306 / Dear Mr. T� This letter responds to your June 20, 2000 submittal, on behalf of Shapell Industries, of a revised project description for the above referenced proposed project. The Department finds the project application incomplete at this time, since Shapell has not yet demonstrated compliance with the Dougherty Valley Affordable Housing Program. The following paragraphs summarize the basis for this determination. Affordable Housing Program: As background, recall that the Dougherty Valley,Specific flan, Policy H-3 and H- 4, specify a broad range of housing types for a wide range of household income levels,with at least 25%of the units meeting the County's definitions of low, very low and moderate income households. Similarly, the Dougherty Valley Affordable Mousing Program, (DVAHP)(Item D,page 23)requires phasing of affordable units as Dougherty Valley is developed. The DVAHP(Item D.l.a) also allows some flexibility in determining the distribution of Very Low and Low Income Units across the various phases, "subject to the findings of the Compliance Monitoring Report." Item D.3 on that page of the DVAHP further specifies, "Failure to perform with respect to the provision of Affordable Units shall permit the County to find applications incomplete or to otherwise deny applications for future entitlements (including but not limited to Preliminary Development Plans, Final Development Plans,Tentative Subdivision Maps, and Land Use Permits)." Office Hours Monday-Frday:8:00 a.m.-5:00 p.m. Office is closed the 1 st, 3rd&5th Fridays of each month Page 2 Item D.2.c. specifies that, for Moderate Income Units, "one phase may omit Moderate Income Units upon a finding of the Director of Community Development that a feasible plan exists for the provision of Moderate Income Units in the next phase." The attached letter from Mr. Jim Kennedy to Mr. Tom Koch presents the Department's analysis of Shapell's Compliance Monitoring Report for the 1999 Project Year, and concludes that Shapell has not yet demonstrated compliance with the DV.AHP. Other County Requirements for Affordable Housings Both the Gale I(DP923010, 1994) and Gale II(DP958086, 1996) Final Development Plans require compliance with the Dougherty Valley Affordable Housing Program. Gale I Conditions of Approval 108 requires: Gale 1, COA 108: The applicant shall provide affordable housing consistent with the Dougherty Valley Affordable Housing Program, adopted by the Board of Supervisors on March 22, 1994(or as may be amended). Gale II, COA 18 The applicant shall provide affordable housing consistent with the Dougherty Valley Affordable.Housing Program, adopted by the Board of Supervisors on March 22, 1994(or as may be amended). Prior to filing each final map, the applicant shall indicate the status of affordable housing provided; and the schedule for future provisions consistent with the affordable housing requirement. In addition,both Development Agreements for the Gale Ranch properties require compliance with the DVAHP--Development Agreement for Country Club at Gale Ranch(Gale I), January 24, 1995, Item 3.1(e); Development Agreement for Gale Ranch(the remaining phases),April 8, 1996, Item 3.3(c): 3.l(e)Gale I Affordable Housing. Developer shall, in connection with its development of Country Club at Gale Ranch, implement the terms and provisions of the Affordable Mousing Program adopted by the Board on March 22, 1994, as such Affordable .Housing Program, notwithstanding any County regulations to the contrary, may be amended from time to time, by mutual agreement of the Parties, regarding its application to the Country Club at Gale Ranch Site (the"Affordable Housing Program"). 3.3(c)Gale Ranch Call remaining:phases)Affordable Housing: Developer shall, in connection with its development of the Gale Ranch, implement the terms and provisions of the Affordable Housing Program adopted by the Board on March 22, 1994 pursuant to Board Order, (the"Affordable Housing Program"),which requires that a minimum of twenty-five Incomplete Letter July 20 00,doc, Page 3 percent(25%)of all dwelling units be developed as affordable to low,very low and moderate income households. Gale III Project Background On April 29, 1999,this Department notified Shapell that its Gale III application was incomplete, in part due to the Department's finding that Shapell had not demonstrated compliance with the Affordable Housing Program. In a letter dated May 31, 1999, Shapell responded to the affordable housing issues raised in the incomplete letter. In addition, Shapell submitted its Affordable Housing Compliance Report for the Project Year 1998. With receipt of that report, the Department treated Shapell's compliance with affordable housing requirements as "under review"and notified Shapell on July 9, 1999 that the dale III application was considered complete. Staff then proceeded with the CEQA analysis. Can June 20, 2000, Shapell submitted a revised project description,which initiated another 30-day review period in which the Department must determine if the application is complete. This review period ends today, July 20, 2000. Finding Application Incomplete Since July 9, 1999, the Department has received Shapell's 1999 Affordable Housing Compliance Report,with numerous letters back and forth between Shapell and the Department. As explained in the attached letter(dated July 19, 2000 from Jim Kennedy to Tom Koch), and as discussed at the July 12, 2000 meeting of the Dougherty Valley Oversight Committee, the Department currently concludes that Shapell has not yet demonstrated compliance with the requirements of the Affordable Housing Program. As a result, the Department is notifying Shapell Industries, through this letter, that Shapell's Gale III application is incomplete. This incomplete notice is made pursuant to the provision found in Item D.3 (Page 23) of the Dougherty Valley Affordable Housing Program,which allows the County to deny an application or find it incomplete if developer demonstrates failure to perform with respect to the provisions of the Affordable Units. At this time, the Department has taken no other action concerning other applications under County review -- for either Gale I or Gale II-- as would be allowed by either of the Development Agreements, the DVA.HP,or Section 84-66.404,}, of the County Code. By finding the application incomplete, the County and Shapell' will have an opportunity to resolve the issues concerning the provision of affordable housing units before the County evaluates and draws conclusions about the Gale III proposal. Incomplete Letter_July 20 00.doc, Page 4 The Department recognizes that Shapell Industries has long supported the concept of Affordable Housing in Dougherty Valley, so we look forward to a prompt resolution of this problem. Sincerely, Debra R. Sanderson, Special Projects Manager cc: Dennis Barry Jim Kennedy Kathleen Hamm Project File 99-8306 Incomplete Letter—July 20 00.doc, MCCUTCHEN L A4 MCC[TrCHEN,DOYLE,BRowN&ENERSEN,LLP �0 AUG/1 PH 36 August 10, 2000 direct.(92�)975-5339 ctalbert@mdbe.com VIA FACSIMILE AND MAIL Debra R. Sanderson Special Projects Manager Community Development Department County of Contra Costa 651 Pine Street 4th Floor, North Wing Martinez, CA 94553 Gale Ranch III FDP Application, DP998306 Dear Ms Sanderson: This letter responds to your letter of July 20, 2000, concerning the County's determination that Shapell's Gale Ranch III application is incomplete, based solely upon the County's unfounded and erroneous conclusion that-Shapell is not in compliance with the Dougherty Valley Affordable Housing Program ("Program"). As is further explained below, not only does Shapell's phase one development fully comply with the Program, but the County's recent conclusion completely contravenes the County's earlier findings in the 1998 and 1999 Compliance Monitoring Reports that Shapell was in compliance with the Program. As you are aware, Shapell is now in year two of what is expected to be a 20 year build-out of Gale Ranch. The first phase of that build-out, Gale Ranch I, includes 1216 units that will be constructed and sold over an approximate five year period. Included in this phase are the 256 Falcon Bridge apartments, which are currently under construction. In order to satisfy the Specific Plan's policy of providing a minimum of 15% affordable housing in each phase of development, Shapell repeatedly has told the County that at least 182 of these apartments (representing 15% of the units in phase one) will be Moderate Income Units.' That is, at least 182 of these units will be rented by Shapell at Moderate Income Rents to Moderate Income Families at the time of initial occupancy.2 Shapell also has sold units in phase one to families with Moderate Incomes, thereby further increasing the 1 Capitalized terms are to have the meanings given to them in the Program. 2 Shapell has agreed with the County for sometime now that such Moderate Income Rents cannot exceed 30%of 100%(as opposed to 120%) of the Mediate Monthly Income, including a utility allowance and depending upon the number of bedrooms in the apartment. A T T 0 R N E Y S A T L A W 1333 N. California Blvd., Suite 210 San Francisco Palo Alto PO.Box V Los Angeles Taipei Walnut Creek, CA 94556-1270 Walnut Creek Tel. (925) 937-8000 Fax (925) 575-5350 www.mccutchen.com D9bra1R.. Sanderson August 10, 2000 Page 2 provision of affordable housing in phase one. Shapell is currently gathering and assembling that information for submission to the County. The foregoing plan for providing affordable housing meets exactly what is required by the Program and is exactly what the County determined satisfied the requirements of the Program for the past two years. None of the facts have changed and the County has absolutely no basis for asserting now that Shapell is not in compliance with the Program. Accordingly, Shapell's application is complete. Shapell has proposed a modification to the Program to include restrictions on Moderate Income Units, and recently made such a proposal to the Board of Supervisors. Shapell has asked that the matter be placed on the Board's agenda as soon as possible so that a modified program could be applied to the Falcon Bridge apartments (see Tom Koch's attached letter dated July 19, 2000). However,until such time as the Board and Shapell jointly agree to modify the program, Shapell remains in full compliance with the existing program and the County has no basis upon which to conclude otherwise. Shapell hopes that the foregoing expression of its continued commitment to meet its obligations under the Affordable Housing Program will lead the County to conclude that the Gale Ranch III application is complete. Accordingly, Shapell looks forward to having the application processed and forwarded to DVOC for its review at your earliest opportunity. Sincerely yours, CecTTalbert cc: Dennis Barry Jim Kennedy Kathleen Hamm Vic Westman Daniel Hancock Chris Truebridge Tom Koch 301296761 3 Policy H-ti of the Program states that"accompanying the initial final development plan/tentative map submittal, there shall be a phasing plan to indicate the delivery of affordable housing." Shapell included that phasing plan with its phase one submittal. OCT, Y 00 TUE1 ,11;22 SHAPELL-LAND DEPT. TEL c 408 946 4657 P� 002/002 October 3,2000 SHAPELL INDUSTRIES of NORTHERN CALIFORNIA A Division of Shapell Industries,Inc. Mr. James Kennedy Community Development Department Contra Costa County 651 Pine Street Martinez, CA 94553 Dear Jim; Thank you for your assistance in the ongoing discussions between Shapell and the County regarding the Daugherty'Valley Affordable Dousing Program. From our point of view, the dialogue has been both illuminating and productive. 1n our letter of July of this year,Shapell proposed an amendment to the DVAHP. Specifically, we offered support for a series of changes which would both provide long term affordability through moderate income rental units while changing the allowable rents from 100% for all units to 110% for studios and 1 bedroom units and 120% for 2 and.3 bedroom housing. In the series of phone calls and meetings that have followed since then, it is evident to us that the County's desires, as expressed by staff,include deeper affordability than the amendment that we have brought forth. Accordingly, this letter is seat to inform you that Shape]I would support a change to the DVAHP whereby a 30 year tarn would be in place for all moderate income rental units. All rental units, including 2 and 3 bedroom homes, would be pegged to a maximum of 110% of the median income level by family size. Should the Board of Supervisors support this amendment, two important goals would be achieved, first, a 30 year term would be provided, resolving the dispute concerning the pertinent aspects of the DVAHP. Second, affordable rents targeted to families whose incomes qualify, would be made available. As an example, new 3 bedroom units in .Dublin currently rent in excess of$2,700 and are fully leased. In Dougherty Valley, comparable units will rent for approximately$1,8010. This provides for nearly an $11,000 per year subsidy per 3 bedroom unit. We look forward to the meeting of the 10`i'of October for deliberations with the Board on this important issue. Our annual compliance report as mandated by the Daugherty Valley Development Agreement will follow shortly thereafter. Should you have any questions,please don't hesitate to call me at(40$)946-1550. rins.q , , Koch Vice President Shapell Industries of Northern California Homes of Quality Since 1955 P,0,Box 363169,100 North Milpitas ijouievard,Miipitm,California 95045 Phnrtw 408/936.1550 Fax;408/94(e9687, �r Interfaith ► Council of Contra Costa County October 9,2400 Deu Supervisors, I regret that I cannot attend this important discussion since I am out of town.. The issue of affordable housing has become crucial in Contra Costa County and throughout the Bay Area. Our excellent agreement was reached with Shapell regarding the I)ougherty development and along with many members of the religious community throughout Contra Costa we wholeheartedly support adhering to the decision already reached. Reneging on your significant commitment to those who need affordable housing now sends a bad message of betrayal to all who are working so hard to address the desperate need for housing among us. If the benefits of our booming economy are utilized only for an exclusive few, then that will sow trouble for all of us. Stand by the good choice you already made. Provide homes and opportunities for those closer to the edge. Strengthen the development of our whale community by encouraging access to home ownership among our citizens. Sincerely, Steve Harms, President Interfaith Council of Contra Costa County 1543 Sunnyvak Avenue Walnut Creek.California 94596 (925)933-6030 Fax(925) 952-4554