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HomeMy WebLinkAbout7.3 FairwayRnch AffordProj CITY CLERK File # 430-80 AGENDA STATEMENT CITY COUNCIL MEETING DATE: June 17, 2003 SUBJECT: Fairway Ranch Affordable Project Report Prepared by: Eddie Peabody, Jr., Community Development Director and Elizabeth H. Silver, City Attorney ATTACHMENTS: 1. Staff Report dated April 1, 2003 on Fairway Ranch 2. June 9, 2003 Letter from City Attorney to Masood Sohaili (attorney for Fannie Mae) and Steven Fayne (GMAC Commercial Corporation) RECOMMENDATION:~ Receive report or provide direction. FINANCIAL STATEMENT: See Below BACKGROUND: At the February 18, March 4, and April 1 City Council meetings, the City Council conceptually considered a proposal by the Lin Family to construct a three-phase, 930-unit project in Dublin Ranch Area B consisting of senior, multi-family and condominium developments with an aggregate total of 589 affordable units designed to satisfy the inclusionary zoning obligation for the Fairway Ranch project site for the development of up to 2,655 units in the remainder of Dublin Ranch. The Council discussed the issue of subordination of the City's Affordable Housing Regulatory Agreement at the April 1, 2003 Council meeting (see page 10 of the April 1 agenda statement (Attachment 1). The purpose of this agenda item is to update the Council on discussions staff has had with the Lin Family's representatives and representatives of potential lenders related to the issue of subordination. Proposed Multi-Family, Senior, and Condominium Housing Projects It is staff's understanding that the Lin Family proposes to ground lease their land to two limited partnerships ("Limited Partnerships") which will, respectively, be the developers of the proposed multi- family project and the proposed senior housing project. The Lin Family has proposed to construct 304 multi-family rental units, which would include 243 units available at affordable rents to households of very low, low and moderate income and 322 senior rental units which would include 294 affordable units. In addition, the third element in a condominium project which will have 304 for sale units which 52 will be for moderate-income households. To facilitate the COPIES TO: In-House Distribution Dublin Ranch CiDocuments and Settings\jonip~ly Documents~ssistant City Manager\Council Agenda Stuffi(v2) SEB comments subord.june 16.DOC ITEM NO. development, the Lin Family has requested a $4.5 million deferred loan at 3% interest and a waiver of future commercial linkage fees. In addition, the Lin Family has asked the City to approve a "density bonus" to increase the density on the entire site from 744 units, which is the maximum permitted by the zoning, to 930 units. State law and the City's Density Bonus Ordinance (DMC chapter 8.52) require that 20% of the units be affordable for 30 years to low income households and 10% of the units be available for 30 years to very low income households. In addition, the City's Inclusionary Zoning Regulations require that 12.5% of the units must remain affordable for 55 years with 50% of the units affordable to households of moderate income (80% to 120% of median income), 20% of the units affordable to low- income households (50-80% of median income) and 30% of the units affordable to households of very- low income (below 50%). The Lin Family has proposed deeper targeting than that required by the ordinance by offering to restrict the low-income units in the project to households earning no more than 60% of the adjusted median income, and the Council has preliminarily indicated this would be a factor in waiving some of the requirements of the Inclusionary Zoning Regulations (e.g. allowing the affordable units to be clustered on the Fairway Ranch site instead of being dispersed throughout Dublin Ranch). The breakdown of affordable units within each project is shown below: MULTI FAMILY SENIOR HOUSING CONDOMINIUM PROJECT PROJECT HOUSING PROJECT Moderate 90 units 131 units 52 units Very Low 63 units 64 units 0 units Low 90 units 99 units 0 units City's Inclusionary Zoning Regulations and Density Bonus Ordinance Under the City's inclusionary zoning ordinance and its density bonus ordinance, the affordable units must remain restricted for 55 years and 30 years, respectively. Both ordinances require the developer to enter into a regulatory agreement which provides that the project will be operated in accordance with the specified rent and occupancy requirements for the full term. The ordinances each require a regulatory agreement to be recorded against the land in order to bind the developer's successors in interest for the full 55 years (for inclusionary units) or 30 years (for density bonus units). Proposed Financing The multi-family project and the senior housing project would be separately owned and separately financed. The Lin Family has indicated that the Limited Partnerships will ask the California Statewide Communities Development Authority (CSCDA) to submit an application to the California Debt Limit Allocation Committee (CDLAC) for an allocation of tax-exempt private-activity bonds for each of the two projects. The Limited Partnerships will also request an allocation of 4% low-income housing tax credits. Both the bonds and tax credits have their own regulatory agreements to assure continued affordability. These regulatorY agreements will include affordability restrictions, but they will be somewhat different from the restrictions in the City's regulatory agreements, and most importantly, the affordability restrictions in these agreements may terminate in the event of a foreclosure and redemption of the bonds, and they will be enforceable by entities other than the City. Thus, the City cannot rely on the affordability restrictions of the bond and tax credit regulatory agreements to ensure affordability or to enforce the requirements for the full 55-year term required by the City's inclusionary zoning ordinance. In order to obtain a lower interest rate on the bonds, and thus reduce the debt service for the project, the Limited Partnerships will seek a "credit enhancement" for the bonds. Given the size of the project and its development cost, the Lin Family representatives have indicated that credit enhancement will '$nl~ be. available if the debt instrument (which will likely be a letter of credit) can be sold on the secondary 633505-2 2 market, and that it will be necessary to either obtain credit enhancement directly from Farmie Mae or to otherwise make the financing conform to the standards that Fannie Mae requires. Staff has been informed that Fannie Mae's practice with respect to the provision of credit enhancement for bond issuances of the size anticipated for these projects has been to require subordination of regulatory agreements that restrict rents unless state or federal law mandates such restrictions. What is Subordination and what would its Impact be on the Proposed Fairway Ranch Project? Under the City's Inclusionary Zoning Regulations and the Density Bonus Ordinance, building permits for the projects cannot be issued unless and until the regulatory agreements required by both ordinances are recorded against the land. To ensure compliance with the 55-year affordability requirement, staff has indicated to the Lin Family that the regulatory agreements must be recorded prior to the ground lease and any deed of trust for construction or permanent financing for the projects. Both the construction lender and the permanent lender will require the recordation of a deed of trust against the property to secure the repayment of their loans. If the City's regulatory agreement is recorded first, the lenders' interests will be "subordinate" to the regulatory agreement, and in the event of foreclosure, the lender and any subsequent purchaser would take possession of the property subject to the restrictions imposed by the regulatory agreements. However, if the lender wants the option, upon foreclosure, to sell the property without the a_[£ordabili~ restrictions, the lender will ask the City to execute and record an agreement subordinating the City's regulatory agreement to the lender's deed of trust. The effect would be that in the event of foreclosure and redemption of the bonds, the regulatory agreement would be eliminated. As a result, at a foreclosure sale, the lender would be able to sell the property for a higher price (and thus recoup its losses on a loan default) because the purchaser would be able to operate the project at unrestricted market-rate rents. If the City's affordability restrictions are not subordinate to the lenders, the lenders will still be able to foreclose and sell the property, but the property will remain subject to the affordability restrictions. If Fannie Mae concludes that it will provide credit enhancement for the project without requiring subordination of the City's affordability restrictions, it may want to protect itself from the possibility of a foreclosure by decreasing the size of the loan it will support. As a result, the developer may incur increased financing costs or may be required to invest additional equity into the project. Status of Discussions Between Lin Family and Staff Staff has had several meetings with the Lin Family's representatives to discuss a number of issues related to the proposed Fairway Ranch project. In addition, at the request of the Lins' representatives, staff met with representatives of Fannie Mae and GMAC Commercial Mortgage. It is our understanding that GMAC is considering providing permanent financing for the project together with Fannie Mae credit enhancement if the Limited Partnerships receive an allocation of bonds. Staff has been informed that Fannie Mae will waive its subordination policy if the affordability restrictions' are required by state law and cannot be waived. The City Attorney has sent an opinion letter to Fannie Mae and GMAC explaining why the City' s affordability restrictions cannot be waived (Attachment 2). Recommendation This report is presented for informational purposes. Staff and the City's consultant, CSG Advisors, are available to respond to any questions related to this issue. Staff recommends that the Council receive the report or provide direction, as appropriate. 633505-2 3 ~ D CITY C. LERK AGENDA STATEMENT CITY COUNCIL MEETING DATE: April 1, 2003 SUBJECT: PA 03-010 Fairway Ranch Affordable Housing Project Report Prepared by: Eddie Peabody, Jr., Community Development Director, Libby Silver, City Attorney and Jeri Ram, Planning Manager ATTACHMENTS: I. Staff Report dated March 4, 2003 on Fairway Ranch 2. Memorandum from Dublin Ranch dated 3-25-03 3. Resume of Robert Klein 4. Dublin Ranch Zoning and Inclusionary Requirements RECOMMENDATION: 1. Receive Staff Report ,~~~ .... 2. Take Testimony from Staff and Applicant 3. Provide direction to Staff on whether to continue processing the Application. If yes, provide direction on whether to: Proceed to complete the financial terms of this proposal as recommended by Staff that consists of: a. Financial assistance (loan) not to exceed $4.5 million for Phases I & II in equal increments b. A 3 percent compounded interest rate c. No waiver of future commercial linkage fees for Dublin Ranch commercial areas d. Other issues that have been agreed to by the Staff and Applicants (Attachment 4) e. Review and resolve whether to provide a loan for the project which will assist the applicant to construct the project without paying prevailing wage rates. f. ReView and comment on Applicant's proposal for construction, management and long-term operation of the proposed project. FINANCIAL STATEMENT: See Below COPIES TO: In-House Distribution Dublin Ranch G:~PAfA2003\03-010Xfairway ranch staffrpt4-l-03final. DOC ITEM NO. ATTACHMENT At the February 18 and March 4 City.Council meetings, the City Council conceptually considered a Proposal by the Lin Family to consln'uct a 928-unit project in Dublin Ranch Area B with 629 affordable units designed to satisfy the inclusionary zoning obligation for the remainder of Dublin Ranch. The Dublin Ranch representative indicated that in order for this project to be financially feasible the City would need to contribute the equivalent of 6.786 million dollars to the project and complete the project entitlement process prior to the deadline of July 16, 2003 for applying for a State Housing Bond Allocation. In addition, the Applicant requested that the City waive any further inclusionary zoning and future possible commercial linkage requirements for the balance of Dublin Ranch and Wallis Ranch properties. At the February 18th meeting, the City Council directed Staff to prepare a report that would evaluate the financing request, the impact of paying prevailing wage on the project, the issue of affordable housing credits, the potential for the development of affordable housing outside of the Dublin Ranch holdings, the potential for for-sale units, the feasibility of processing the project within the' timeline requested by Dublin Ranch and the impact of the timeline of the proposed project on other City projects. At the March 4, 2003 City Council meeting Staff presented a report (Attachment 1)-that included (1) the Entitlement Process and approximate timeframes; and (2) the current Community Development Department (Planning & Housing Divisions) project list as well as impacts to workload on other City Departments. The City Council directed Staff to continue working on the project, deferred work on some other high priority projects until August, 2003. The City Council also directed Staff to return with analysis on several issues as soon as possible as follows: - Preliminary evaluation of the Applicant's financing request (including loan vs. grant) and feasibility of fee deferral; The impact of paying prevailing wage on the project; · The issue of affordable housing credits; · The potential for the development of affordable housing outside of the Dublin Ranch holdings; and · The potential for for-sate units. The analysis of these issues directly relates to the financial feasibility of the project and could result in the project being modified. Therefore, although there are other important issues that will be brought before the City Council within the next few months, this Staff Report provides the preliminary information on the issues identified above as well as other issUes relating to the financing package. If the City Council has concerns about the project at the conclusion of the meeting of April 1st, it is important that the Council · identify the concerns to Staff and the Applicant and also indicate whether processing of the project should continue as 'this is an expedited project Since the March 4, 2003 City Council meeting Staffhas met with the Applicant to clarify the information needed to complete the City's preliminary evaluation of the proposal. Staff has secured the services ora specialist in Housing Finance, CSG Advisors. CSG Advisors has been working with Staffin the meetings with the Applicant and in the preparation of this Staff Report. This Staff Report will contain: · A brief overview of State and City applicable requirements · A summary of the Current proposal from Dublin Ranch ComParison information of the Proposal and minimum City of Dublin requirements and the benefits/impacts to the City · Analysis °fthe following issues relating to the Dublin Ranch Proposal: > Preliminary evaluation of the Applicant's financing request; > The Applicant's proposal for construction, management and long-term operation of the project; >Subordination of financing; ~Affordable Housing Agreement; >Feasibility of Fee Deferral; and ~The potential, for for-sale units. · The potential for affordable housing development outside of DublinfWallis Ranch holdings The Impact of Paying Prevailing Wage on the Project · Update on Status of Site Development Review Application Progress · Future Meeting Issues REVIEW OF APPLICABLE REQUIREMENTS: In order to put the applicant's proposal in context, it is important to understand the State and City regulations relevant to the proposal. This requires a careful review of the zoning, the Inclusionary Zoning Regulations, and the Density Bonus Regulations and statute. 1. Zoning and General and Specific Plan Designations The property on which the project is proposed is designated high-density residential in the General Plan and Eastern Dublin Specific Plan. This designation allows 25 units per acre and above, and the site is 23.6 acres. However, the property is subject to a Planned Development zoning ("the PD") and Land Use and Development Plan/District Planned Development Plan ("LUDP/DPDP"), approved in t 997, which limits the number of dwelling units to 744 units, except in certain circumstances. The PD applies to Areas B-E and limits the total number of units in the entire area to 1875, except in certain circumstances. (See Reso. 141-97, '§ 2.) The LUDP/DPDP breaks down the individual land-use designations by unit counts. The project site is zoned for a total of 744 units. The unit counts shown in the LUDP/DPDP may be increased by way of a site development review approval so long as the total number of units Within Areas B-E does not increase. In addition, an increase for a specific project beyond the maximum number of units approved in Area B may be granted as part of a conditional use permit approval "if unique development concepts, project design and/or amenities justify an increase." The PD also notes that a density bonus may increase the unit count on particular sites without at'fecting the maximum number of units permitted in the entire area. Thus, pursuant to the existing zoning and general and specific plan designations, the applicant has a right to build 744 units on the project site, and the Applicant may increase the mount of units pursuant to an SDR, CUP, or density bonus. 2. Inclusionary Zoning Regulations. Chapter 8.68 of the Dublin Municipal Code requires that at least 12.5% of the units constructed in any residential project of 20 units or more be affordable units. (Although significant revisions to the Inclusionary Zoning Regulations were enacted after the adoption of the Master Development Agreement for Dublin Ranch, the City Attorney's opinion is that the revised Inclusionary Zoning Regulations apply to Area B, where the proposed project would be built.) Of these units, the units must be allocated to three income levels as follows: (a) 30% very low income 3 (b) 20% tow income; and (c) 50% moderate income (§ 8.68.030.B.) The Applicant may satisfy a portion of the inclusionary-unit requirement (5% of the total units in the project) by paying a fee in lieu of constructing the units. The remainder, 7.5% of the total units in the project, is a "must-build" requirement. Thus, the property's affordable housing obligation (assuming the 744 units which is the maximum units in the SDR without further approvals) would be one of the scenarios shown on the Chart below: CHART I DUBLIN RANCH AFFORDABLE HOUSING OBLIGATION Assuming 12.5% Build - no fee payment (93 Assuming 7.5% Build - payment of 5% fee (56 units) units) A. 28 very low-income units (93 X 0.30 = 27.9); A. 17 very tow-income units (56 X 0.30 = 16.8) B. 19 low-income units (93 X 0.20 = 18.6); and B. 11 Iow-income units (56 X 0.20 = I 1.2) ' C. 46 moderate income units (93X 0.50 = 46.5~) C. 28 moderate income units (28 X 0.50 = 28) Under the Inclusionary Zoning Regulations, the applicant is entitled to credit for all inclusionary units constructed above 12.5%, the percentage required. (§ 8.68.060.) Credits are based on income Category and number of bedrooms. The Inclusionary Zoning Regulations do not provide for any financial assistance, such as loans or fee waivers, from the City for the required inclusionary units. Section 8.68.040.E allows the Council to waive, wholly or partially, the requirements of the ordinance and approve alternate methods of compliance if the applicant demonstrates and the Council finds that such alternate methods meet the purposes of the Inclusionary Zoning Regulations. The purposes are to enhance the public welfare, ensure that further housing contributes to the attainment of the City's housing goals, and assure that the limited land is utilized in a manner consistent with'the City's housing policies. The Applicant proposes the Council apply Section 8.68.040.E and partially waive the requirements of the Inclusionary Zoning Regulations for all of Dublin Ranch. The requirements that would be waived are discussed below and shown on Attachment 4. 3. Density Bonus Regulations and Statute (Government Code section 65915 and Dublin Municipal Code chapter 8.52.) Under the Density Bonus Statute and Regulations, a Applicant meeting the statute's requirements has a right to a density bonus of 30% of the number of units otherwise permitted under the city's regulations and "one other concession or incentive." However, in order to be eligible for the density bonus, the applicant must "agree or propose to construct" either: ~ Under the ordinance, when calculating the inclusionary unit requirements, decimal fractions equal to or less than 0.50 are disregarded. (8.68.030.A.) 4 (a) 20 percent of the total units for lower income households; ~ ~ ~ (b) 10 percent of the total units for very low income households; or (c) 50 percent of the total units for seniors. (See § 8.52.040; Gov. Code, § 65915, subd. Co).) In addition, if an applicant agrees to construct both 20 percent lower-income units and 10 percent very low-income units, the applicant is entitled to one additional concession or incentive or, at the discretion of the City, may receive an additional density bonus. (§ 8.52.040.B-C.) Under the regulations and statute, "concessions or incentives" are the following: · Reduction in site development standards, such as a reduction in set back and square footage requirements and a reduction in on-site parking requirements. (8.52.050.A.) The Statute also specifically lists these development standards "minimum lot size, side yard setback, and placement ofpublic works improvements." (Gov. Code, § 65915, sub& (d).) ·Approval of mixed use zoning if the inclusion of nonresidential land uses will reduce the cost of the housing development (8.52.050.B.) · Other regulatoH incentives or concessions proposed by the Applicant that result in identifiable cost reductions, which may include o waiver of certain city fees (§ 8.52.050.C.1); c> priority processing. (§ 8.52.050.C.2.) · '(See also Gov. Code, § 65915, subd. (j).) The statute prOvides that the provision of direct financial incentives for the housing development, such as the waiver of fees and reduction in dedication requirements, is not required. (§ 65915, subd. (j).) Thus, in order to be entitled to a density bonus and one incentive (such as expedited processing), the applicant must propose or agree to construct either (a) 74 very low-income units (744 X 0.10 = 74.4) or (b) 149 low-income units (744 X 0.20 = 148.8). If the applicant wants a right to receive a density bonus and two incentives, the applicant must propose or agree to Construct both 74 very Iow-income units and 149 low-income units SUMMARY OF CURRENT PROPOSAL FROM DUBLIN RANCH: The proposed project has been modified in terms of the distribution of market rate and affordable units based on discussions with Staff. The breakdown of units as originally proposed on February 18th and the current proposal is shown on the Chart below: CHART 2 DUBLIN RANCH CHANGES FROM PRIOR PROPOSAL PROPOSAL BY FEBRUARY 18 APRIL 1 DUBLIN RANCH Total Number of Units 928 928 Third Phase Rental Homeow~nership Total Units 629 587 Inclusionary (68%) (63%) "Excess" Inclusionary 204 162 Units Inclusi0nary Units: Family Rental 23.4 243 Elderly Rental 161 292 Homeownership 234 52 629 - 587 Phase I Phase II Phase III Family Elderly (Family) (Senior) (Family) Rental Rental 1-bedroom 152 240 152 104 -156 2-bedroom 152 80 t 52 83 136 3-bedroom 0 0 0_ '56 _0 Total 304 320 304 243 292 Very-Low 127 127 Income Low Income 341 1.87 Moderate 161 273 629 587 'City Financial $6,786,000 $4,500,000 Assistance . City subsidy and/or fee waiver. Loan paid in two equal increments of $2.25 million ~ Phase I and Phase II Fixed payment schedule from years 4 to 6. Repaid in increments of 1/3 the principle of each year and interest. 6 The Applicant has also submitted a 7-page memorandum (Attachment 2). This information includes'the following:. A discussion ofprop°sed affordable units and number of bedrooms · Dublin Ranch's understanding of the terms and structure of the proposed City loan · The method of Dublin Ranch's financing including requests for bond allocations from the Califorrfia Debt Limit Allocation Committee (CDLAC) · A history of projects in recent years dealing with the increase of construction cost for prevailing wages and an estimate of additional costs for the phase I family project and phase II senior project if prevailing wages are required · A list of the project team and their experience in the design, construction and management of mixed income projects Analysis of Issues: Preliminary evaluation of the Applicant's ~ro~osal Attachment 4 includes specific ordinance requirements, the Applicant's proposal and the Staff recommendations, based on meetings Staff and the Applicant have had since the last Council meeting. There is general agreement between Staff and the Applicant on the proposed financing package issues for Fairway Ranch shown in Chart 3. There are some differences between Staff and the Applicant as shown in Chart 4: CHART 3 FINANCIAL PACKAGE AREAS OF CONSENSUS BETWEEN CITY STAFF AND DUBLIN RANCH ISSUE CITY oRDINANCE DEVELOPER PROPOSAL STAFF REQUIREMENTS (Current) PROPOSAL City Loan $4.5 million 6-year loan in Reduces borrowers cost for project and May limit City's two increments, defers need for cash equity, ability to assist other affordable projects. Or if City wishes to commit to other projects, before loan repaid, City may be asked to "guarantee" repayment. Units permitted in Phases 744 units No change No change I, II and IH without density bonus 25% density bonus permitted 186 units No change No change Total number of units permitted with 930 units No change No change density bonus Mix of Distributed tlu'oughout 535 clustered in Phases I and II (86% Same as Applicant Affordable/Inclusionary Dublin Ranch project of Phases I and II) ' Units - Location 52 in Phase III (20% of Phase III) 7 ISSUE CITY ORDINANCE DEVELOPER PROPOSAL STAFF REQUIREMENTS (Current) PROPOSAL Bedroom mix of affordable Same as market units in Rental Units: Same as Applicant units each Phase of Dublin Ranch 260 1-bedroom 2 t 9 2-bedroom 56 3-bedroom 535 Mix of Family/Elderly'per No requirement Rental Units Same as Applicant Phase: (other than bedroom size) 55% Elderly 45% Family Families Etdertv. Total Phase I I 1 br 104 0 104 } 2 br 83 0 83 3 br 56 0 56 Subtotal 243 0 243 Phase I Phase II t br 0 156 156 2 br 0 136 136 · . 3br __QO 0 0 Subtotal 0 292 292 " Phase II 1 br t 04 156 260 2 br 83 136 219 3 br 56 __Q0 56 Both Phases Subtotal 243 292 535 Both Phases Income Mix tnclusionary TotaI Same as Applicant Very Low-Income 128 127 Units (50% of median income) (30%) Low-Income 85 187 Units (80% of median income) (20%) (alt at 60% of median income) ~ cost covered by value of Federal Tax Credits Moderate 212 (120% of median income) (50%) 273 Total 425 587 Pro rata as market units ' Ail in initial Phases Same as Applicant Timing of Affordable Units built and fewer units (7.5%) (on average, estimate 7-years earlier could be built with payment than pro rata) of in lieu fees for 5% Key Agreement Provisions V~rhen market units are built Market units can only be Building permits can only be issued for built as inclusionary units market units when Same as Applicant are built building permits issued for inclusionary units 8 In General, Staff supports the Applicant's proposal. ConSensus has been reached, as noted above on · ¥ Chart 3 above on the following issues: · City loan amount and the 'majority of the terms; · Affordable and market rate unit and bedroom totals for the project; and · When the market units are to be built in relation to required affordable units: However, there are two issues where there is not agreement between Staff and the Applicant on the financing of the project. These issues are addressed in summary on the Chart below: CHART 4 ISSUES REMAINING FOR DISCUSSION ON FINANCIAL PACKAGE ISSUE REQUEST BY BENEFIT TO DUBLIN FINANCIAL IMPACT TO THE DUBLIN RANCH RANCH CITY Interest Rate 3% simple interest. Lowers effective rate to 3% compound interest needed so of Proposed borrower to about 1.5% normal Inclusionary Fund can keep pace City Loan interest for affordable project, with inflation. The City's consultant indicates a loan at simple interest is The Applicant believes that 3% unusual. simple interest is appropriate because the funds are affordable housing funds which would otherwise be loaned at such advantageous interest rate. Commercial Waive for Dublin Applicant is providing 162 Inclusionary units only meet Linkage Fee Ranch commercial "excess" inclusionary units, residential requirements. properties. The Applicant believes this is The Staff believes a waiver of an appropriate given there will be unrelated potential fee in an 162 excess affordable units, unknown mount is unwarranted, given that the Applicant's proposal includes other benefits to the Applicant in recognition for the excess 162 units Applicant also asking, for these 162 "excess" units, for: · $4.5 million loan · 186 Density bonus units · Concentration of units · Different mix of bedrooms · Expedited processing The issues on Chart 4, above, are the key areas of disagreement between Staff and the Applicant on the financial package. Analysis of the issues in the Chart should be factored into the total financial package contained in Attachment 4. Staff requests that the City Council review these issues and provide direction to the Staff (while taking into account that the issues above, should be factored and weighted along with the entire financial package to date, Attachment 4). There are other issues relating to the financial package that Staff believes are significant issues regarding the project. Staff and'the Applicant are continuing to work on these issues. The following discussion is an update and introduction to these issues. 1. Design, Construction and Management of the Project The Applicant's proposal for construction, management and long-term operation of the proposed project is included in Attachment 2. Quality long-term management is in the best interests of both the owner of the proposed project and/he City. The Applicant has proposed that Klein Financial will be a partner with a financial interest in the project and that Klein has extensive experience in these types of projects (Attachment 3). The proposed arrangement involves a different type of management than what City Council has selected for the new Senior Housing Project. In that project, there isa non-profit specializing in senior housing. That non-profit is involved in the design, construction and long-term management of the facility. Dublin Ranch's proposal involves several contractors and the concept ora "project team of contractors" that would design, construct and manage the facility. If the City Council has any concerns regarding this proposal, please provide Staff and the Applicant with direction at the meeting. 2. Subordination The Applicant has indicated it believes it may be difficult for it to obtain financing unless the City agrees that the affordable housing agreement, which includes what is called an "affordability covenant" assuring the units will remain affordable for 55 years, is made subordinate to Applicant financing. This would mean that a lender eould take over the property in the event of a default and turn the units into market rate units.. Staff has indicated to the Applicant that this is not acceptable because it would not assure that the requirements of the Inclusionary Zoning Regulations are met. The Applicant is contacting potential lenders to discuss this issue. Staff has contacted other cities with inclusionary zoning ordinances regarding their experiences with subordination of the "affordability covenant." All cities contacted have reported that they have not permitted their affordability covenants to be subordinated with rental inclusionary units. They have found that, although some lenders insist on subordination such as Fannie Mae, other lenders are able to provide loans without subordination of the "affordability covenant." Staff is bringing this issue forward at this point in the process to keep the City Council informed, because if the Applicant is not able to obtain financing which is subordinate to the "affordability covenant", the proposal would be inconsistent with the Inclusionary Zoning Ordinance2 3. Necessity of an Affordable Housing Agreement This project-will include an Affordable Housing Agreement which will ensure that the elements required by the City's Inclusionary Zoning Ordinance are set forth in Agreement form. While this is not an issue of'disagreement between the City and Applicant, Staff is providing this information so that the City Council will understand how the project will be implemented over time. The Inclusionary Zoning Regulations generally require that at the tentative map stage the City impose conditions that set forth the Applicant's inclusionary zoning obligations. The conditions must detail the number of affordable units required, specify the schedule of construction of affordable units, set forth the applicant's manner of compliance, provide for a management plan for rental inclusionary units, and marketing plan for "for sale" units to comply with inclusionary ordinance selection priorities and require the execution of an agreement imposing appropriate resale controls and/or rental restrictions on the affordable units. 10 In this case, since the Applicant is asking the Council to waive certain of the requirements of the Inclusionary Zoning Regulations, an affordable housing, agreement which assures the Council that the purposes of the Inclusionary Zoning Regulations will be met will be required. The affordable housing agreement will address the following issues: . Inclusionary Housing Credits. The agreement would set out the number affordable units proposed to be constructed and the number of units constructed in excess of the Inclusionary Zoning Requirements for which the Applicant would receive credits. The agreement would note that the Applicant is entitled to use the credits to satisfy its obligations for this project and the estimated buildout of the rest of the Lins' holdings which would be 2,657 units. The Applicant would not be entitled to a credit for the 162 units in excess of the obligation. · Use of credits. The agreement would establish when the credits could be used for the remainder of Dublin Ranch. · Dublin Ranch Projects in the Pipeline. The agreement would also provide for a manner of dealing with Dublin Ranch projects that may receive certain entitlements before credits are created. For instance, the Applicant expects to receive tentative map approvals for Area F prior to the creation of inclusionary credits from the Fairway Ranch. Ordinarily, the Inclusionary Zoning Regulations would require that the Applicant's obligations be set forth in the conditions for the tentative map approval. The Applicant would like to defer these obligations on projects in the pipeline (such as the anticipated Area F tentative map approval) until the building-permit stage, so that the Applicant can satisfy Area F requirements with the Fairway Ranch project. 4. Fee Deferral The Applicant has indicated that they are working on possible reductions or deferral of regional impact fees relating to water, sewer, schools and the TVTD fee. The City's TVTD fee includes an exemption for subsidized housing developments developed by'public agencies, limited dividend housing corporations or non-profit corporations which are exclusively affordable. The applicant is not asking for deferrals or waivers of any other local City impact fees, other than a complete waiver of the proposed commercial linkage fee. 5. Potential for for-Sale Housing The Applicant has stated that in order to accommodate moderate, for-sale units that the project's third phase will be designed for a for-sale condominium project with 52 units of the 304 total units in the moderate-income category. 6. Prevailin~ Wa~e The Applicant is asking for expedited processing and City assistance in obtaining bond financing in order to take advantage of a statute that exempts such projects from payment of prevailing wage if funding is obtained this year. The Applicant estimates a 15% increase in the cost of the construction cost of the project. The developer can address whether it can construct the project as proposed if it does not meet this time limit. Based on the information that we have received from our consultant as well as the Applicant, the difference in cost between prevailing wage and non-prevailing wage is estimated to be approximately 15 percent of the construction cost of the project or 7 percent of the total cost. The City Council will recall that the expedited processing of this application was so that the Applicant could secure bond financing in July and thereby avoid payingprevailing wage for the project. However, the Applicant has 11 indicated that.should they only get bond financing on one phase in July, the remaining project could continue to be feasible if bond financing or other sources of funding were secured at a later date (construction would be under the prevailing wage requirements). The Applicant also indicated that the second and third phases of the project could be substantially delayed. THE POTENTIAL FOR DEVELOPMENT OF AFFORDABLE HOUSING OUTSIDE THE DUBLIN RANCH HOLDINGS: The City Council requested that Staff provide information on the affordable units that would be built outside Dublin Ranch or Wallis Ranch. The following chart indicates the development potential of the remaining build out of the Eastern Dublin Specific Plan and Central Dublin areas excluding the Dublin Ranch holdings: CHART 5 POTENTIAL INCLUSIONARY UNITS ON NON-DUBLIN RANCH PROPERTIES Project/Property Owner ' Approximate Total Units at Required Affordable Units Build out (under Inclusionary Zoning Ordinance assuming 7.5% Built) '"Eastern Dublin Property 2,526 189 Ovmers Annexation Area Dublin Land Company 300 23 Pirm Brothers (Silveria 259 19 Property) Vargus, et al. 236 / 18 Moeller 11.9~! 9 Mission Peak 120 i 9 Greenbrier Phase III 193 14 Bancor (Dublin Blvd.). 247 19 Bancor (Alcosta) 60 4 Legacy (Corovan) 300 23 Downtown Core Specific 100 8 Plan TOTAL . 4,460 337 The following analysis of benefits and, impacts is the analysis that Staff used to formulate its position in relation to the Chart attached as Attachment 4 as well as Chart 4 above. Benefits For Applicant Bridge Loan. Since the loan is to be repaid with interest, the City recognizes that the value of the loan is not the face amount, but rather the value of the reduced interest rate compared to the expected rate of return on Applicant equity. At the terms and amounts described below, this benefit might have a present value of about 1.6 million if at 3 percent compound interest, or approximately 2 million if at simple interest. Density Bonus. The Applicant would receive a density bonus of t86 units without having to increase affordability. In other words, the same units would count toward meeting both inclusionary credits and the density bonus, so the density bonus has no offsetting cost. The effect would be to allow 186 12 additional units in the overall Dublin Ranch with the same amount of land. If rental.units have a (modest) land value of $40,000 each, the value of this benefit might be $7.5 million less some marginal construction cost for the higher density, say a total of $6 million. Reduced Cost to Dublin Ranch of Prow'ding Inclusionary Units. The Applicant's cost of providing the required inclusionary units for Dublin Ranch on this site rather than spread over the entire Dublin Ranch properties built out over a longer period of time will be much lower becaUse the: · The average size oft_he inclusionary units may be significantly smaller than the potential market units that can be built on the rest of the Ranch. · By clustering the affordable units, the City, would make it possible for the Applicant to efficiently use tax-exempt bonds and 4% Low Income Housing Tax Credits. This significantly lowers the cost of providing inclusionary units. The Applicant's estimated value of Low- Income Tax Credits for just the required Very Low-Income units is approximately $6.5 million. · The City inclusionary funds would be provided as a loan and the City would assist in applying for bond allocations this year. This maximizes, in accordance with State law, the potential number of units that can be built with public participation but without higher construction costs. · The extremely expedited proposed processing enables the Applicant to construct one or possibly two phases without being subject to prevailing wage requirements. Marketability of Dublin Ranch. By clustering all the inclusionary units, the Applicant will be able to market all the other land parcels without any inclusionary requirements, including the minimum 7.5% building requirement. This significantly enhances land value and marketability. Requested Exemption From Commercial Linkage Fee. AppliCant requests exemption, estimated to have the same value as an additional $2 million grant of City affordable funds. Benefits For City Additional Affordable Units. The Applicant would provide 162 units in excess of those required under the Inclusionary Ordinance. These would consist of 102 additional low-income units and 8 moderate-income units in the first two phases and 52 moderate-income units in Phase III. Deeper Affordability on Low Income Units. All the low-income units would be provided to tenants at 60% of median income rather than 80% of median income. Earlier Affordable Development. The affordable units at Dublin Ranch 'would all begin construction by the end of 2004 (to comply with the site development review time limits of 12 months from this summer plus a 6 month extension). Otherwise inclusionary units might only be developed pro rata as each phase of the Ranch is developed. This earlier approach would provide such units on average up to-7 years before they might otherwise be built. Built Affordable Units. The Applicant could otherwise satisfy the ordinance by meeting 40% of the inclusionary requirement (5% of 12.5%) through fees, for which the City would then have to find sites and interested Applicants. Under the suggested approach, these 170 affordable units would be directly built by the Applicant, instead of the City needing to find sites. 13 STATUS OFSITE DEVELOPMENTREVIEWAPPLICATION: } ~l~ C:~~'~ Staff has been meeting with the Applicant on a regular basis to discuss Site Development Review application issues. Staff has not received a complete pre-application packet that was required to be submitted by March 5, 2003. As was noted in the previous Staff report (Attachment 1), the Applicant has already slipped from the expedited time frames. In addition, Staff is concerned about the length of time that it is taking to work out issues related to the site. Issues of major concern that remain unresolved are fire access and on-site parking. Staff has been working with the Applicant for over two weeks to resolve fire access issues and has developed solutions that meet the standards required by the Fire Department; however, the Applicant has yet to make a decision as to which solution to employ to provide proper fire access. The expedited nature of this Application does not allow for these types of time delaYs by the Applicant. The second major issue of concern is on-site parking. Preliminary findings from the traffic study discussed parking ratios for the senior housing component of the project and indicate a lower parking ratio.' than what Staff believes would be appropriate for the project. A large portion of the senior component includes two-bedroom units and dual master units. Based on the floor plan issues combined with the minimum age restriction of 55 years old, Staff believes that a parking ratio of .8 parking stalls per senior unit for the 320 unit senior portion of the project would not meet the parking needs of future residents of the senior project. Additional studies still need to be completed to determine appropriate parking ratios for the remainder of the project and the final financing plan may need to be modified if the site plan has to be changed to reflect more parking on-site. Future Meeting issues: Prior to May 19, 2003, Staff will be preparing analysis for the City Council on the folloWing issues: Parking Standards for the project Any changes to the financial plan Additional information on project experience by the Applicant of managing and operating additional projects that are 10 years or older. RECOMMENDATION Receive Staff Report, take testimony from Staff and Applicant, and provide direction to Staff on whether to continue processing the Application. If yes, provide direction on whether to: 1. Proceed to complete the financial terms of this proposal as recommended by Staff that consists of: A. Financial assistance (loan) not to exceed $4.5 million for Phases I & II in equal increments B. A 3 percent compounded interest rate C. No waiver of future commercial linkage fees for Dublin Ranch commercial areas D. Other issues that have been agreed to by the Staff and Applicants (Attachment 4) E. Review and resolve whether to provide a loan for the project which will assist the applicant to construct the project without paying prevailing wage rates. F. Review and comment on Applicant's proposal for construction, management and long-term operation of the proposed project. 14 · . , ,,. . AGENBA. S~ATEMEN~ ~ , ci~ CouNC![i~.EYING. DATE~· 'March 4; 2003 3. Site Development Review Ap:p~cafiOn ~CO~~A~ON: t. Ree~ive'-S~g~ ma ~fieipmd ~o~bie' ho~s~g ' pro~e~ sched~e. · 2. ~eVle~.e0m~Y Deve'lopmem Work Pm'~m provide dkecfion on presmt ~ priorities ~d proposed ch~ges. 3. Dete~e if S~ shoed eo~enCe expected processing of ~e D~a ~Oh ~ordable HOUS~g project when a compIete appelation is r~eivea. 4. ~mct S~fto re~ at ~e. M~ch 18~ m~g . prelim'report ~a ad~esses 6~er O~ Co,oil F~Ci~ STAT~NT: Delay ofce~ 2002-03 Oo~s ~d Objectives ~1 occ~ ifps · . ~ ~0ject. is ~e ~eSt pfi~fi~. Proposed speoffie CiW f~c~g ~om ~'?;::.': " ~e hct~'io~ Hous~g ~d ~ no~ be ~o~ Applier sUb'ts a f~ propos~ ~d ~c~g pl~ ~d St~h~ c0mpte~ed its evM~fion of'~e pmposM. . BACKGROUND: At the City Council meeting of Febrtmry ! 8, 2003, the City CoUncil heard a proposai from a representative o~ Dubl~ Ranch for a high-density 928-urdt multifamily pr~ject-~Cith a si~'eant affordable housing component. The Dublin Ranch representative indicated that in order for this project to be 5nan¢i~y feasible the City wOUld need to' contribute the equivalent of 6.,786' million dollarS, m the projeet and oomptete the projeet mfitlement process prior to the deadline of July 16; 2003 for app!ying for a state Ho~ing Bond Allocatiom In addition, the Applicant requested that the City to waive any further inclusionary zoning COPILES TO: Ia-House Distribution . Dul~iin Ranch m,~i.~'t.-~e, po~!~ie...com~iaI linkage requirements for ~e b~ce 0f Dub~n ~ch ofp~g p~ev~g w~ge. on ~e p~ojee~ ~,.i~'e 9f.~0~g~!~ ~s~g cream, ~e patenfi~ f0~ ~e ~e ~eHfie 0f ~e p~opOgefi, project on o~ Ci~ projecm. App~c~f pr6vide~ ~b ~6~fiO'n ~q~ted 'b'y f~i'~:.~' fi~by'Feb~ 2g, 2003): Pre~~' ev~on 6f~eAp~e~Ps ~mcing fequ~t;' ~e iSS6~.ofaffOrdable houg~g ~e pote~fi~ for ~e development of~°rdable ~g' outside 0f~e'Dubl~ ~ch holdings; ~e pote~al for for-s~e ~ts. ~ addition, Stuff my idenfi~ o~er isles ~at ~e.~po~t for City Co~cfl comiderafion when ev~uathg ~e to~ package proposed bY ~e ~s S~'Repo~ ~&eSses ~e ~o issues'~t St~h~eated co~d be provided by ~e M~ch 4~ Ci~ Co~eg mee~g ~ follows: 1. ~e Emifiement Process ~d appmx~ate ~e~meS; ~d 2. ~e c~ent Co~~ Developmen$ Dep~ment well as ~pac~ to wor~oad on oth~ CiW Dep~ents. 1. Entklem~ Process ~d Time~meS for ~oeessing the Lin Proposah ~e project, ~ c~entty-~o~ wo~d req~e ~e CiW m process ~e foBo~ng entitlements: · SiteDeveIopment Renew Approv~ ' Density Bonus ApproV~ . · Development A~eement · ~0rdabte Hous~g A~eement - CiW to [S~ue:bofids o ~eluaes ~g fin~ci~~ad~ser o ~oludes ~g bond co--scl 'o. ~clUdeS ~g mder~iter Gener~lY~ a project of ~s eomple~W f~t-~aCked wo~d t~e ~e CiW approx~mety 8 - 1.2 mon~ ~om s~ t.0;.bond isSue~ ~e entffiemehts would be plmed over ~e one-ye~ period. ~ ~s ~smce ~e A~Sc~t h~ requested ~t ~e Site Development Review Appro~ De~elapment A~eement ~DA) be eomptet~'br::~Ja~g:~;~2O.0g~,0"~). ~e o~er enfitlemenm' coda inyo~m'aS~ :ve~ea to. ~o~ess SO~ ~n~ OZ ~.ord= to be~ pr°cessNg of = SDK ~d DA yew ~'eeific items ~e n=eded.' A COPY of~e S~R': Chee~st (~ ~e items checked ~ n~cess~y for a. Predeve!opment SDk A =~c smdy.mus:l be per. fo~ea by a ciW.aom~t~t. ~s Study p~ovia~s ~e ~o~ation nreded to prep~0 a. Si~e~t po~on of me DA. ~e ~fie ~ry'..~eS a ~~-6f:'6 weekS, to prep~e (~eiu&g ~review): Neg.o~atiom m~f ~e place 0~ the Developme~..Agcemem. ~s NO!~ge~ si~'~t aaention ~om b0~ ~e Cfw ~or ~d. Ci~ Aaomey. U~o~tefy; ~e timeff~es '6~g:.WNeh ~e Development A~er~eat ~ be..aegofi~ed ~e place a~g ~e ~ s~ges of~e City B~dget.p~oeess wNeh req~es a silent occident of ~e CiW M~ger's aDP' and DA T~.efr~m~ S~has experience N pro~ssNg eomphcated Site Development Renews N ~e Ci~. Some of~e more complex mulfi-fmily projects ~d associated ~ek~es ~e ~ follows: 7 - [ To~ ~= G 5(m~ff~Iy p?0ject coming of lOne [ 1,396"nits in 4 projects) . I · ~ ' ' [ Waterford Apmmem~ .(3 90 ,~its) } g monks ~oth of these projects were processed with expedited ~me~amex; · The Table below iS ~ ~ysis of~e request by ~e Apptic~t ~at St~procesS ~e SDK ~d firg rea&g of~e D~ by 5~y 16, 2003. ~s ~ysis ~smes tMt Staff~li have'a complete sub~ by M~ch 5, 2003. Addition~ly, ~t ~ Developer ~11 work cooperatively ~ St~d m~e revisions ~equested N ~ expected maker. It sh0~d be noted that there is no room for slipuaae schedule. ~e Scherzo ~SO ~smes ~at ~e Ci~ Co'oil ~tI delay other N~ priority p~ojec~.N order that development S~'c~ be'm~signed'~tit AU~ to ~s project., I~ s~Oatd be noted, however, ~at ~min~s~ativc S~ who play a key r01e N ~e' development a~demem pr~on 0f~s project c~ot be keed up ~om ~e~ n6~ t~ - ~efrfore ~g project ~!1 be concen~amd a~ention d~Ng ~s time period, such ~ ~e budge~ etc. FAST PRocESS:L' XSS~ .U~O~'i',~T~ COOPE~ON BY' PARTmSOF ~JOR tSS~S March S /Pp!i~fit fi'!~ ~}-e'Ap~n0aaon with detailed site'plans (see filled oat Cheeklist- A~Shment 3), Sta'~ Tr~e Repo~ (6~ Ho~g A~e~n~; rou~g~ or application t0' ~mcies' m~ Be resolved ~d he~gs c6nclUded by above or pmje~ stops ciw.comcfi on ~ese ~sues. Jme 17. co~plefi0n 6~ s~rep0n ~d a~eeme~ by AppHc~t ~.Con~om of Approv~ for J~e 18 He~g fi6~de (i4~s pfi0~) for July 8 Pl~ifig Co~ssi0fi he~g on SDK ~d DA mad~g on DA. t¢~er m CDLAC wi~ Ci~'s commi~ent on Jffiy 16 Sab~ ofapDr0vals to CDLAC by apPlic~t' Au~ 5 ~ Ci~ Comcit (2~D he~g on D~vel0pment I A~eement for proj¢~ . Au~st 6-t 0 Sub~i~ of D~Ve[°Pmem A~emem to Notice of awed of fi~ohg by CDLAC to CDLAC by applic:~t . applicmt; ifhot.appmv¢~ project R~ofU~on of Other C~ Counc~ Concerns that may effect Ti~table: As norad above reg~g kem~ s~hed~ for ~e. M~ch' 18, 2003,. CiV Co~e~l meeting, ~ere ~e issues ~at mint. ~so be mat. yzed wM~e~'i's be~nping m procesS ~e.SDR ~d DA. ~e resolution of ~ of ~ese isles ~H not ~e-plaee pfi~r to ~e ~e~.'i 8, 2003, CiV ComeH m~g ~d may, ~efore, delay ~e prQeet beyond ~e schedule limed ~ ~e Table above. ~ese issues ~e Hmed on A~ae~ent 1. ~ese ~ecifie Co,tit conce~ must be mmpteted or ~e process M~ stop ~d ad~tio~ ~e beyond J~y 16 ~11 be req~ed~ ~e S~ ~iI b~n'g ba.¢k -~ brief ~ys~:'~f ~e,i~sge8 .id0ntified above on' M~eh '! 8, .g00$.~ ~t is mfieipgt0d ~ fh~re ~1t b~ s.ever~! ~.~fionM ~'~epo~. key policy ma ~m,i~ issues be~oen April· i 5m ma Mag 19~ so ~aZ.~e Ap~iich~t ~te~ate ~e issues ~ both ~e Hous~g Fin~cing ~d B!.~g approvMs.. it is St~s belief, b~'~d on' p~t mMfi~f~Iy Pmj eels ~f have been processed ~ ~e ci~, ~at ~ikely ~f ~S e~po~ed t~el~00f-¢ monks) as.n~ed ~ ~e Table ab'o~e will be succeedS. It is St~s e~edence that issues rose w~e processing ~ ~foje'ct ~at cause. ~e delays. However, shoMd'~e City Co, oil d~dire Staffto m~e ~is project its nmber one pfiofi~; St~fis'prep~ed to be~ ~e d~g ~e ~6~meS for ~e"L~ ~of~ble.. P. rdj e~. sU~a.~ prepm~on ct me Co~Cii s~ee ~e Go~s ~d Objectives were app~0ved; · Deveiope~ ~¢~ted.mdiee~'- ~-i~ ~¢igdes p~0jec~ sub~ea ~Im ~e'n~e~ts), ~ well' ~. p~j'~ ~i ~e mb~ed by app~e~ts ee~ ~me~ames ~or proeess'~g ruder. State LaW; , ' ......... '" ~ ~s ~ ~6tudes ke~ doe~enm updated, code e~orcement, prolog data"to o~e~ dep~enU ~d ag~eieS.-~ojeefio~ for ~AG, C~ ~d v~ous · Ci~ sm~es - i.e., P~k M~ter Pi~) ~ wdil ~ prep~tio~ of~e next fise~ ye~s Budge. h order to ~semble a St~tem to work on the L~ ~ordable' Ho~g project~ City S~ff ~ll need to ' ei~er be re~si~ed mmpo~Iy ~om some of~e projeem ~ey ~e e~ently wor~ng on or slow do~ on · -. - oth~ PrQeets to ~ee up ~e m Work on ~e proposed ~ord~le prQ eet. B~ed on ~ysis of S~ s wor~oad ~d ~e ~s of s~lls neces~ to process the proposed app~cafion, St~is recommen~ng ~m ~e work prO,ams for ~e ~llo~g items be pos~on~ mill AU~ (a sehed~e delay of 5 mon~s) DUbl~ Rm¢h ~ea F W~Iis Anne~on ~ub~.~eh West) R~ Or~ee (onsite) ~te~tive~- · Co~erei~ Ne~ Study (slowed 6o~, not postponed) tn addition, St~ reeo~ends ~m ~y prQects on A~c~e~t 2 ~at ~cate no pro~ess ~d my new projecB proposed for ~fiafion by ~e ci~ be.automfie~ly ~s¢oned mill m le~ Au~ 2003. ~ese ' new prQeets Would ~en be placed ~to ~e 'schedule folloMng ~ose items t~t were eider pos~oned by ~s app~cmion or showed no' pro~ess. ~ o~er words, sho~d ~e Ci~ Comcil ~fiate a new prQeet Smffwould not beg~ work on it mt~ ~ Au~st 2003. ~s wo~d ~clude ~ose ~e FY 2002-2003 Oo~s. ~d Objectives Est, but show n0 pro~ess, such as well ~ ~ projecm ~at ~e li~ed as not yet ~fimed at ~e md of ~e ~st (A~e~t 2).' S~ expl0red ~e ~temafive of ~g t~m~ted tern S~f so ~t prQects co~d.proceed ~out po~o~emmt. However, b~ on ~e shod-tom need ¢ - 5 mon~)..for s~g md ~e ~e~me for ~ .) ~g ~d ~ng, it is no~ a fe~ibie ~temafive. ~ough S~ believes ~at ~s massi~ment ofwor~oM Mll ~e up ~e 8~tem to work on the ' proje~ ~ ~ ex~emely expedited m~er, ~e success of~e obtaining ~ SDR approval by~e Ci~ ~11 .4;p~H~ti.'6~i. ~d fi~ fma~cin~'p~opes~, i~ ~c ~el~ {ud~d'md abo~e.; ~ ~en,as CONCLUSi6N: ~at r~ae~{~ere ~H be Ci~ ~e!~. c0n~bado~ 6f.m ~Om motor. . C-~ S~'h~ ~ed.~e i~gues, of e~e~ing ~e pr0ce~sNg of~e appelation m a ~effme ~at is. ApP!i~mt~ ~ a~fion, ~ ~i. ~e~ Co~ibufion ~d m~ys'~ a ~e~ ~ o~e~ Ci~ iSmes'maY not be acccptabi'~ t¢ ~e O¢~ of i~i¢i~; ~e ~o*es~g o'f ~s. en~ifi'ement c0~d wa~e' City.' fe~o~ee~ ~at co~d Mve been sp. em on ot~er' ~r0~e~. h order f~r ~e Ci.~ m' b'~n work on ~s proj.ee~, o~er ~ pfiofi~ p[oj.~B Mil ~ve.m be p~oned or slowed do~. ~. addifio~ o~r-proje, e~g ~a~ have not yeI be.~ ~ be ~.~r a ayea w~e me complete, facu, policy. ~d ~ane~'~piieafi~S. ~e exp!or~d md mM.~.ea so. ~at CiV Comoil e~ m~e m i~o~ed decision as to whe~er' or not ~ey wish to fi~e~y p~cipme ~ ~s project. If ~e City ComciI de~e~i.nes ~at ~s project shoed no~ be processed ~ m e~edited m.~er, S~ co~d process k ~der ks n0~ fime~m~s..w~ch would ~ve ~e CiV C6~cfl md S'~.m~re time to explore ~e issues rela~g t0)~e Proje,t, w~.le, oon~u~g to work on the o~er ~ Pfiofi~ projecm ~at - were idenfifi~ in. the CiW Co~cfl's Go:~s ~d Obje,fives. ~CO~~ATiON: It is re~o~ended ~at'~e CiW Co~cil: I. Receive Smffr~o~ ~d ~ticipated .~or~bi~om~g prQect schedule. . 2. Review Co~iV DeveloPment Dep~en~ ~d provide dkecfion to Mgh priorities. · 3. Deteme if S~ shoed, co--eh'ce expected processing of~e Dubl~ ~eh Affordable Ho~g PrQeet when a complem application is received. 4. I~mct S~fto re~ at ~e M~ch 18m mee~g M~ a prelimin~ rePo~ ~at ad&esses o~er City Comeil con~. 'STAFF EVALUATIONS · Actual entitlement n~essary for submi~al of financing and Cit~: · What credit pro¢~d~e (n~'~e~id~-~al;'~M''~esidential) · Th~ s(/bsYa~'r~a~f~''and credit issues' . ' ·smms of~ p~/s~',~d potefitial affoi'd~bl~::='.'.~ts and ~pacts on.other Hast ~b!~. PmlO~ Owners' and newly annexed areas · A' a¢fi~ite. ~~ -for each Phase(n~mber,.'i~i~nits, mod/low/very low totals) · (Minor) parking'standards · More family units (3 bedrooms). J~ each:afror:dable category 7~ . Loan/grant/funding ofproposed~:a~or~bI~ ~!n~s by City (over Inclusionary 12.5% requirements, as requeSted'Sy A~Ii~fi: etc.) · Grading requirements (Are~ F ann"B) to ATTAC1tMENT 1 community Development Department City Projects: Project Tire Goals & Objective Level Current Status or or Initiated After FY Estimated Completion 2002-2003 G&O Meeting Date or other Reason 5 year Affordable Housing High lV~arch t 8, 2002 City Plan Council Open Space Implementati°n High April' 2003 .City CoUncil Mtg Scarlet Court SP High Tabled Until.I0/03 Resolve Final boundaries of High Priority (Parks & In progress Sports Park in Eastern Community Services) Dublin S.P. area Necessary for other high priority ptarming projects - A2 & A3 Development Agreements cannot, be approved prior to location 'being determined Cnence no building permits) Historic Specific Plan High RFP for Survey is out for ProPosal Community Facilities Task High Study Completed - March, Force and development of 2003 meeting to determine policy Task Force composition Streetscape Master Plan I-rAg;h Development of Work Program in progress Downtown Monument CIP PrQects (funded). Going tO bid in March, Project 2003 Intersection ImprOvement CIP Projects (funded) PreparatiOn °fbid docs, Design '(Lewis & Village Draft received on 2/26 for. staff review F:XAdministrafion~pr°J~cta&A~signfor Counoi134-03.doe " ATTA~CHMENT 2 Project Title t Goals & Objective Level. Current S~O_~s or or Initiated After FY ' ' Estimated Completion 2002-200.3 G&O Meeting Date or 'other Reason Housing Element Update. Assigned by City Council Received comme~nm from · HCD on draft Housing Element- drafting revisions Senior Housing Project Assigned by CkY'Council 20 hours per week fill July - time increases Garage Conversion Assigned by City C0unciI March 18 City CountS1 Heritage Tree Ordinance Assigned by City Council Address comments by Mr. · David Bcwley- March 18, 2002 City Council Meeting Initiation Scheduled -for Transit Corridor GPA 3/4/03 Investigate parking and Medium No progress access alternatives' for Village Parkway S.P. Area gpd~te"CiW's General plan Medi~,m ~ No progress Develop City Low No progress Telecommunications Policy beyond Zoning Ordinance for Wireless Communications . View and Solar Access Low ' No progress' Ordq~anee Develop .Ordinance to' limit Low No progress amount of square footage' increase on remodel of existin g l~ouses Zoning Ordinance Amendments required by No progress Amendment: Second Unit, State law Emergency .Shelter & Densit~ Bonus Auditing- 6 hours per CDBG administration week through JUly -Toll Brothers Affordable 4 hours per week though RegulaTions (must be July .. completed to allow unim to be sold in Area G) 2 D'e;~eloper Initiated Projects:. Project Title Goals & ObjeCtiVe Levd Cu.rre~t Status or or Initiated Alter FY 2002 Estimated Completion - 2003 G&O Meeting or Date other Reason 'EDPO RMP - part of rural High Development of RFP in project listed in Stares as progress (developer EDPO Annexation changed process after : Proposals were received) EDPO Land-Use Plan-part High Will begin approximately 6 of total pr~ect listed in months after start of RMP Status as EDPO Annexation preparation Pinn Annexation, PD/SDR High Annexation complete, (referred to as Silveria PD/SDR in presubmittat g~exation in O&O) Juvenile Hail, East County High 6 months - 12 months from Hall of Justice ?roject submittal (currently in (SDR)... i preapPlication prgceSS) Juvenile Hall, East County High County Board of Hall of Justice Project I Supervisors schedule shows 0EISfEIR that they plan to take action in May, 2003 VglleY Christian Center Assigned by City Counc~ Waiting for issues on · GPA Downtown TIP - Admin draft Final EtR under review Bancor Pak & Say. Assigned by City Council Information not provided by ~' projectappticant to be~n work on Project Title Goals & Objective Level Current Status or ' or Initiated After FY 2002 Estimated Completion L 2003 G&O Meeting or Date other Reason Evaluate D. ublin Rajah Assigned by City Council In progress- March 4 & 18 Affordable Housing - reports to CiW. Council Project/Proposal (This is not work on the processing ' of the actual project- see below under projects not yet submitted) Site 15 A Transit Center Required by Transit Center Planning commission GPA_ Approval (Park and Grant Meeting - March, 2003 Issue) Transit Center Master DA Required prior to any September; 2003 ' development in Transit Center Transit center Avalon Bay One Transit Center project Presubmittal PD/SDR (690 units) is required to bc approved · and construction begun prior to September, 2003, so that City remains/n compliance with MTC Crmnt requirements ...... 2~ansit Center BART ' One Transit Center project Presubmittal Garage. iS required to be approved and construction begun prior to SePtember, 2003, so that City remains in compliance with MTC Grant requiremems Lennar t Affordable Project One Transit Center project Presubmittal - Transit Center (114 units) is required to be approved and construction begun prior to September, 2003, so that City remains in comphance with MTC Grant requirements. 4 P~0'j6ei"Ti~ie. ..... ." : G6~i~'&'.Obj~e~eL~el curr~nt sta~'s or . . .. or~ed~e~.~.2002. Es~ated Completion - 2003 :G&O:Me~g or:-- Date Cemer.(280 ~ts) is req~ed m be approved prior to Septem~r, 2003, so · at Ci~ rem~ in' compli=ce ~ MTC Toll A2 ~d ~ M~ be approved prior m M progess- Need location D~velopment A~eem=t ~c is~ce of ~y b~l~g of Spots P~k fled do~. B=~:%!~.~'~.~ojee~. ..- ] Me.~m ... Applieafon ~eceived in Feb. Village Shopp~g Comer) Compt~e P~;~TA Me~m, No.~m~ess GPA B~ ~T ~fion ~ prgappiieafion s~ge by ~d residenti~ Projee~ (at 0fi~ west DublM B~T ~mfion) ~gaey PD/SDR (at west .: DeVeloper Delay- DublM B~T ~tion) ...... ..: prep~ng new sub~ 1197 B'fi~ey L~e SD'K Kecenfl~,Snb~d - ~ot 6) crated completion ' approximately 3 mont~ Q~y L~e SDR ~' . ' , '. ~ Developer delay Honda PD/SDK [ Developer delay ~e=brier Ph~¢ ~. Presub~l- PD/SDR approximately 6 mon~ he~ng Mo=~ ~scen~eo~ que~o~ by ~pl~enmfion prope~ o~ers (10 ho~s. pc week) Lot 7 Black Mo~ SDR Keoenfly sunred, es~ated completion 3 monks B~ ~SDK .Developer De'ia3 Project Title ' ' Goals & Objective Level i Current Status or or Initiated After FY 2002 ·Estimated Completion - 2003 G&O.Meeting or Date other Reason' .: ..... ' 'M~scelIaneous CUPslSDRS: Various - depends on · Tri Valley Marshal devei~per submittals Arts · Dublin Theatre. · Parkway Autobody shop .. · Volkswag~'n MSP/SDR. · BMW MSP/SDK · Dance StUdio CUP -i · . Jaliscos SDR · · CasaOrozco SDR " · Gallucci Collision Center CUP/SDK Other Ongoing Tasks: Project/Tasks t Status/Completion CMA - Document · Lett~ sent on Tier 2 compi~ance with Tier 1 and requirements, quarterly Tier Tier 2 requirements 1 compliance report in progress, Annual land use survey completed Projectirms for budget In progress ,, Budget preparation May; 2003 General Plan Circulation Need to amend for No progress Map consistency with Land Use Map Downtown .Specific Plans Document does not No progress Integrate Amendments currently reflect amendments Update zoning Maps for in progress t consistency with General ~ Plan' and current zoning or,inch ce , , ~Update EDSP ~ Text completed - maps in progress Co(~e Enforcement t Ongoing 6 ·.Project/T~ks . I .......... Status/Completion Implementation of aPproved. ' Ongoing projects such as plan checks and'field checks for Area G, Armstrong Garden Center, Areas A, Biaok Mountain; etc. Counter and P~ones ..... Ongoing PreparatiOn of Ongoing environmental documents for other CityProjecSs - Park Master Plan Environmental Doc - currentl, y in progress Projects Not Yet Submitted: 1. Moller GPA/SPA Annexation-.Approximate submittal March - April, 2003 2; Dimanto GPA - March '18t~ CC meeting for' initiation - project Includes a proposal by Pacific Properties for a multi-family project 3. Dublin Security Storage GPA .. 4. Vargas Annexation 5. Lin Affordable Project-.If approved byCity Council on March 18, 2003 6. Dublin Ranch Detention Basin SDR - expected after 404 permit approval. 7. Bank of America a¢ Koll Center . · plauner Date · ~ OF.DUBLIN ~R~ -~?!~OA~QN SL~M~TTAL ~Q~S FOE SITE DEVELO.PME'NT REVI'E~' (SDR) ~ ffordable HO.usin~ ': Applic~t Nme: Phone: · · .... S~~ QmCK ~Q~ED C~CK ~E OF S~T~ ~Q~ Comple~d ~pUc~fion Fora ~c~ding ~ i~s~;~ ~((~:~ of A~t(s) md Pro~ ~ AppUcafion F~ and Process~g.De~osit 214199 ATTAC~NT 3 Completed Processln~ Fee Am'cement Fo.tm Written .Statement (1 ~py) des~r~be the reqUested u~o'in detz~l.'.' ~d g~ve reaSOns Why the app~iva~ion should b~ approved. Provide facet informa~on suppqr~/~g th~ following: a_.., What tYPe of business, activity or use are you proposing? ~ ' How'_m_s,:y employees will you have or' propose to have? c. What are the proposed hours and days. of operation? d. Are there any ways in which your business, activity or use have a neg:~tive effect on the health or safety of per~0us residing or w. orking in the vicinity, or be de~'.~enta! to the public health, safety or g .en. eral welfare. (~) Describe how the design of the p'roj ect inctu .di~.g s~te layout, structures, vehicular access, eirculafion and parking etc. wilt provide a desirable environment for the future development. (~) Is the site physically suitable for the type and intensity of development proposed? (~' Describe how.the proposed development may impact views. (~) Describe the physical characteristics of the site ineltrding existing slopes and. topographic . features. ~) Describe the architectural design/theme o3 the developmentineludlng character, scale and quality of the desi~, and expi'ain how fl~e Project.will relate to and be compatible with the existing site and the character of adjacent buildings, neighborhoods and uses. ~) Describe how the landscape features h~ve been desired so' as'to insure visual relief and an attractive environmen~ for the public. ~ Is the proposed project located on a hazardous waste and substances-site pursuant to Government Code Section 65962.5? (A list is of these sites is available in the Depar~en~. of Community Developmen0. Preliminary. Title ReoortfPropertv Profile (1 copy) to document ownership, prepozcd wi~ three mon~ of applica~ion submittal Public. Notice Materials: ~. P~eprodu~ed c0. py o~'Alameda Co. ~Umy Ass.e~Sor's Parco[ M~p showing the project parcel(s) ouClh~ed in r~[ and ~ 300-foot radius in blue dr~w~, fi'om the per]meter of~e parcel,s), b. .Two sets o£rno~l~r~g Iabels;.one set addressed to ~rent property owners by ~c; and another set addressed to all current oc~upants/te~z, nts on the prooerfies cont~g'aous to project site. 'The labels need to show tho addresses and Assessor's Parcel Number's within 300 feet o£th¢ parcel(s) typed 0~ 8~" X-I~" .~h~et labels. (ExampIe of how these labels should be typed:) J. Doe (Proper0y owner) Occupant/Tenant APN: 941-042-0003 A~N:. 941-012~-34~6 1010 Main Street 1010 Dublin Bird. Anytown,. CA 91234 . D~bli~n, CA 94568 c. Plain envelopes (1 set) 4~"xg~A'' wi~ first class postage (stamps only, metered mail wili not be accepted, no r~varn address) with labels affixed on envelgp..~. ~:Leorm~pp su~oreq/s~ ~ , ~ (t ~opy) showing the sim in mtatio~ to n~est ~ross ~. site Pla~ (10 copi~) ~w~ to I" = 20' sc~e S~O. ~e p!~n~ mint ~ ~ ~d ~ by a ~c~ed ci~ ~, ~or~"~ or d~si~er. ~e P~ ~ ~p~c~ty md ~rs~bly des~be ~e ~pos~ ~ p~ mu~$ show ~e a. ~o~ ~ow ~ - p~ ~o (i.e. p~g spac~lO00 sq. . p~g pro~de~ - ~ proje~ - n~ber ofp~g spa~es ~r ~w (~ca~e comp~ ~accs - ~ic~ p~ s~ ~e~iom, . - p~g ~les - ~mce ~v~ '~ ~e~ b~k-~ ~i~ - s~ing d~ e. Loa~rec~g ~: - ~k 1ooa~on ~ ~k a~e~ - po~e eoehere f. ~ea~ se~aek ~g d~o~ of - ~veways, . ~ ~gs, - ~o~g ~, - ~ca~ ~ps, - ~pa~, . pedes~ - ~C~, - si~gc, ' - U~ CO~dO~ On site; . ~cado~ setb~'~d dlme~om of aH e~s~g ~d ~opos~ s~, p~, ~veways, g. ~, l~cape me~, fmcs, ~ -. ~ - sim ~ea ~oss.~d neq e~h floor ~ mini) ~ - floor ~ Of ~ b~ng~ md ~, J - lot ~ cov~ge'(~w~ ~d pr~esed), ~ occup~u, e~loye~ of~e~ work s~ or s~ ~et of ~s~blyfloor ~ ~re~a~ Gr~ng~rainage ~1~ (10 ~ies, folded, 9" x 1F' ~ ~e) sho~g: ~ ~s~ ~o~hy (~h~ ~e) - one-foot ~t~ (sl~ ~: 1 or ~ ~ b. . ~opos~ or ~-igh ~e conm~ (so~d ~) -.one-foot ~ c. Cross-seo~o~ of si~ ~h~e topogr~c o~gcs ~o~ 5% d. D~on ~d pa~ of ~o o% ~ ~d off~e sffe (~ca~ ~ propos~ ~d ~ catchb~ ~d pipe) ~ ?~ ele~6om for ~p~ces (Le. ~go~or, g~e~, e~.) ~ F~sh floor . ~ ~c S~ce r°U~g ~om e~g supply to b~g (~Clu~g poles, ~y (min. 5~'3, ~ct~s (n~ ~d-s~) etc. b. T~fo~, ge~tor, propme ~ck ~cl~ (~o~ ~om ~i~ mom) c. G~ s~ce & Wa~ s~, location ~d s~e ~c1~g, dotage ~ter ~ meter, b~kflow ~even~ e. S~ S~w~ lo~afion md s~e ~e~g, manhot~ ~d ete~outs (100' O.C.) f, Tel~hone se~ce : g. ~~ (e~g ~d proposed) ~ k CH~e~ ~oss~gs c~cuta~ for cle~e (~c~em~ ~ ~ . t. Stub out loca~ for ~ Pa&, ~ ~y m. F~h floor -4- . c.,rc . o, . ..... ~ ..praBmlna~ L~fls~u~g Pi~'.'(iO o~i~, fol~ 9" x 11 ~ s~e) T~ p~ s~ bo ~ Oo~t~t ~ ~e si~o pl~ ~ ~o~tec~ p~ for ~e p~posed project. ~e p~ ~ ~o~a~ ole=ty ~e o~o~r~ ~s~g ~d site c~pa~b~W of ~e proposed ~&cap~g a D~ ~yout ~o~ ~e d~d ~p~ pro~ ~ ~ o~lo~on of ~opos~ lm&cap~g ~ ~&c~e, (~ciu~g ~ov¢ ~ udhW s~c~es ~h as PO~ ~fo~ers). c. P~cent ofl~cap~g (~d how it ~ ~oca~d) e. ~ p~sed for o~door ~e g. Li~g pl~ ~l~g p~ level sec~W ~d pg~g lot B~d~g Ele~o~. (10 c~i~) ~y ~e~ioned ~d ~ to a 1/B" ~ 1' scMe of ~ sid~ of ~ proposed s~c~es. El~a~ m~t ~cl~e bu~g ~t~, colo~, ~h ~clo~es, .... Colored B~g El~a~on~. (1 s~, ~ siz~ ~d'mo~t~) ........ Color a~d Mate~M Pale~ (1 set) ~cat~g ~e proposed ~hes of ~ exte~or (~cl~g roof ~d ~) ~d color s~pl~ ofp~t or ~~ed p~duc~ to be app~ed on b~d~g ext~or (~clu~g ~c~ ~d ~). S~le Model of Proi~t A model ~ mq~ed ~y ff ~e propos~ k for ~o or mom b~gs.: ~e sc~ model s~t bc sub~ atl~t 2 wee~ p~or ~ a decision berg ~e by ~¢ Comm~W DeveI~t D~ector or ~ one mon~ of a p~Iic he~. (ch~k ~pl~er for ad~6on~ ~o~6on) Floor P~ns (10 c~i~) ~y d~ioned, ~ to scMe, 'sho~g exm~o~ doors md w~dows, ~ ~ys, m~ba~c~ roo~ ~d ~ys (fol&d, 9" x 11", m~ s~e). R~f Pl~ (10 ~i~)' ~ to sc~e ~o~ ~ ~on of slope of roof ei~ ~d l~a~on of ~ mec~c~ eq~P~q &cra ~d v~ts (fot~d, 9" x i 1" ~ s~e). :- .. Reduced Copies (10 copies, 11''~ x 17") of~chpl~. " Traffic Data specie ~ ~e site or P~pos~ pmje~ W~c genemdon m~s, pe~ ho~ po~, ~' ~on ~d similg ~o~ (~h~* ~ ~eck ~ Pub~ Wo~ D~t. for ~c~ ~o~o~ ) D~ent g:~~s& USE ON/,Y ~ ~ ~ Planner ,, ~ .Date ~ · Thc Quick Check has d~fmmlnocl.that the application submitIaI is incomplete and cannot be accepted. Tho Qui~k Che~k has determined that the application appears to.contain theltems requir.ed by this. checklist (~omplet~ness as defined by Sectio~ 65943 will by determi.ed within 30 days of application) and processing will be~in. For assistance or questions regarding this form, please contact: PLAtNNING DEPARTM~ENT STAFF, CITY OF DUBLIN, 100 CMC PLAZA, DUBLIN, CA ~4568; (925') 8:33-6610. g:~'o~ppsubr~I/sdr lvla~h 25, 2003 .... Page 1 Date: March 25, 2003 Re: Fairway Ranch Affordable Housing Proposal - City of Dublin The purpose of this memorandum is to ~_~rnarize the currera Fairway Ranch Affordable Housing Proposal in the City of'Dublin and to outline the applicant's proposal with regard to a variety Of'OUtStandlng issues. This memorandum is the result of numerous discussions with the Staff and the perceived direction of City Counet~ from prior meetings, We. have made this proposal in o?der to take advantage of existing ~ opportunities and available, land to meet the overall purposes of the City's inclusionary zoning regulations. It is our .sincere belief that this project when approved and built, will contribute significantly to the attainment of the City's housing gods by increasing the production of residential traits affordable by households of very low, tow and moderate income. It is important to emphasize that the commitment to produce these units now will eliminate the risk that financing will no longer be available in the future as the project develops over time and/or that the Iand will no longer be available. While it is true that the proposal may result in smaller units that might otherwise be produced and that they will not be as widely dispersed as might otherwise occur under the terms of the ordinance, the project wilt result in substantially more ur~ts and they will be produced at a broader level of affordabitity; thus, resulting in a much greater number of households that can be accommodated and at a much more diverse income mix than would otherwise be accommodated. This project applies for a waiver of the specific requirements of the inclusionary zoning regulations pursuant to Se~ion 8.68.040E which reads as follows: "The City Council, at its discretion, may waive, wholly or partially,. the requirements of this ordinance and approve alternate methods of compliance with this Chapter if the applicant demonstrates, and the City Counc'fl finds, that such alternate methods meet the purposes of this Chapter." Attachment t summarizes the Fairway Ranch affordability mix by phase. The first chart shows the distribution of units as presented to the Council on February 18, 2003 and the second ehar~ shows the current proposal. You will note that we have held the number of very tow-income units constant at 127 (they will be equally divided between the family · rental project and the senior project). We have reduced the number of units in the low income category from 341 to 187 (they are s'tmilarty divided roughly eqUally between the $.25d~c -Ma~h 2~,~. 2003. Page 2 of 7 family rental and senior projects). The number of moderate units has been increased f~om 161 to 273 units with 90 of those units in the fan~ rental project and 13I in the senior project. In order to accommodate moderate for-sale units we have proposed to convert the third phase of' the' project into a for-sale condominium project restricting 52 of the units to the moder~te category. There have been a number of other design ch_auges to go along with these modifications in order to accommodate a broader mix of units as between one-, two-, and thre~-bedroom units. Specifically, at the 'City's reqneSt, we have added 56 affordable three-bedroom maits, whereas our original proposal h2d no three-bedroom units. The chart also provides an easy comparison as between the current project proposal (both as to the total number of units and as to the poteritiat affordability mix) and the City ordinance assuming application of the City's ordinance at 12.5% and 7.5%;. As cma be seen, the projeet will' exceed the maximum-reqnirement~ of the City's ordinance ia the low category .by 102 units and the moderate category by 60 units. It should be noted, however, if Dublin Ranch were to build out under the terms of the existing ordinance it is more likely that inclusionary units would be built at the rate of 7.5% and that fees would be paid ha lieu of the rem_a, inlng 5% units. This, I believe, emphasizes the significance of this proposal in terms of producing actual affordable traits for the City, The produaion of these additional units will have no impact outside of Dublin Ranch because we do not seek credit to "sell" to other builders and developers. Rather, our request is limited t° meeting> full compliance for Dublin Ranch, both residential and non- residential. The request for participation by the City of Dublin in this proposal has been reduced to a request/'or assistance in the application for bond' allocations this year and a $4.5 rn/llion loan which would be paid back with interest over six years. · stye.tare, of Citr Loan t. Two Ioaaq from the City in the aggregate amount of $4.5 million, allocated evenly between the PhaSe 1 family and Phase 2 senior projects, i.e., a $2.25 million loan for Phase t family project and a $2.25 million loan for Phase 2 senior project. 2. The loan term would be 6 years, commencing at the dosing of the cons'auction loan for each project. 3. The loan will accrue interest at a fixed, simple interest rate o/'3% untg repayment. 4. Prineipat and aeemed interest on the loan will be repaid in three equal installments, with 1/3 repaid by the end elyear 4, 1/3 repaid by the end of year 5, and i/3 repaid by the end of year 6. This repayment, schedule avoids a large, sudden cash eat1 on the project (which could upset the financial stability of the project, and would be unacceptable to the lenders and tax credit investors), while providing certainty and a predictable schedule for repayment to the City. The repayment is not dependent on cash flow fi.om the property. 3.25doe DR- 26.4 Fainvay Ranch A~ordable- Housing Pl~uosal - City of Dublin - lvim'ch 25, 2003 5. The loan would be secured by a deed of trust on a parc~I(s) of Commercial land in Dublin Ranch that has a cui'ren~ market equity value (as undeveloped ~d) of at least 3 times the amount of the City loan. Property substitutions would be allowed during the term of the loan, provided the substituted property has an equity value of at least 3 times the amount of the City loan. The City would agree to subordinate its deed of mast on the collateral property to a lender's first deed of mist, provided the net value of the collateral is at least 3 times the aggregate amount of the City loan and lender's debt. nnoact of, SB 97s 1. If both the Phase 1. family project and Phase 2 senior project receive tax-exempt bead allocations from CDLAC in the third round of 200~ (with applications due July 16, 2003), both projects would qualify for an exemption from the payment of prevailing wages under the affordable housing exemption in SB 975. The bonds would close by Deemnber 31,. 2003 and the both projects would commence construction in the' first quarter of 2004, subject to the re~ipt of final building 2. If only one of the two projects receiVes a bond allocation from CDLAC in the third round of 2003: a. The developer would apply for a CMifomia Housing and Community Development Multifamity Housing Program loan 0VIHP. loan) to cover the additional costs imposed by the payment of prevailing wages. bl The construction of the second phase, and the timing for the funding of the $2.25 __million City loan, would both be delayed by the time required to obtain the MHP loan, This could delay the second phase proje0t by as much as 3 years. c, If one of the two projects does not receive a bond allocation, the City of Dublin would lose that bond allouation to an affordable multifamily housing project in another city. 3. If neither of the two projects receives a bond allooation, we would abandon the current' proposal and comply with the minimum requirements set forth in the City of Dublin's Iudusionary Zoning Ordinance. We would not be able to provide the number of affordable units nor the depth of affordability proposed here.. The timing of'the development of the affordable units would be extended throughout the time period required for the build out Dublin Ranch (approximately ? to 15 years). As a result, fewer affordable units would actually be built (because we would build 7 ~ % of'the inclusionary requirements and pay affordable housing fee for the remaining 5%). 4. SB 975 would, result in an estimated 15% increase in construction costs (i.e., garage, site work and building costs) and associated costs. This equates to a $4,335,000 cost increase for the Phase 1 family project, and a $4,068,000 cost increase for the Phase 2 senior project. The 15% estimate is based on the following: 3.25do~ DR- 26.4 . Fairway Ranch Affordable Ho,-~. 'rig Proposal - City of Dublin March. 25, 2003 Pag~ ¢ of 7 a. Pacific Union "Apartments is currently oonstmoting two mixed income mulfif~_mity rental apanme~ projects (112 and 206 units,.rcspectively) in Santa Cruz. Payment of prevailing wages on these projects in accordance with SB 975, as estimated by the general conlxactors (Sitveri Construction and Bogart Construction, respectively), would have added t8% to the hard construction costs. . b. Pacific Union Apartments is currently entitling an appmximately 200-unit 100% affordable (to households at 50% and 60% of Area Median Income) multifamily rental project in Livermore. The contractor estimates that payment of prevailing wages would increase construction costs by 25%. ¢. Klein Financial Corporation, in conjunction with Callahan Property Company and Protech Development Corporation, are currently constra~ling 250 units of mixed income multifamity rental hous'mg for seniors that will provide congregate care and ass'reed living services, The general contr~tor (Sundt Constru~n) es6mates that payment of prevailing wages would increase construction costs by approximately 10%. d. USA Properties, a Koseville-based commercial d~veloper, estimates that payment of prevailing wages would increase construction costs on its multifamily affordable rental housing projects by 20°/6, e. Mid-Peninsula Housing Coalition, a Redwood City-based nonprofit housing developer, estimates that payment of prevailing wages would increase the constm~ion costs of a 71-unit 100% affordable multifamily rental housing project in Santa Clara by 27%. f. Community Housing Opportunities Corporation, a Davis-based nonprofit housing developer, estimates that payment of prevailing wages would add 12% to the costs of renovating a 44,unit 100% affordable mulfifamily rental housing project in Winters (west of Davis). g. Lisa Bates, Director of Community D~velopment for th~ Sacramento Hous'mg and Redevelopment Agency, expects payment of prevailing wages to ino~ase const-mction costs for afford_able multifamily rental hous'mg proj~,cts by I5% to 30%. h. Public agencies estimate that payment of prevailing wage~ will increase the costs of providing affordable housing by 20% to 30°,4 (Floor California State Assooiation of Counties, League of C_~tifornia Cities). 3,2~do~ DR- 26.4 Fairway ~eh Affordable Ho~,~ng Proposal - City o/Dublin Ma~ch 25, 2003 Page 5 of 7 ~ro,ie~ Te~m The project te~-n combines expertise in all phases .of the developmen~, financing and opexations of mutti~_mily rental-mixed income projects. The members of the project team, their areas of expertise, and representative examples of their experience relevant to the Phase 1 family and Phase 2 seaxior projects are descnq:n~d below. A Lin Family Entity and Charter Properties will each own one of the two mulfifamily remal projects. ,l~mes Tong and Martin W. Inderbitzen will sot as the'Developer for both projects. In this capacity theY will direct and oversee the entitlement process, including working with the City and Project Team to design the projects, set objectives for financing, engage and oversee the construction manager and general contractor, engage and direct the property manager, and implement the Owners' objectives for the projects:. Klein Finsncisl Corporation will provide development and financial consulting services for both projects. Klein. Financial has provided, development and. 6n~ncial advisory services to private sector developers of multifamitY affordable housing projects for the 'past 30 years. It has obtained an aggregate of more ~than $2.5 billion in financing for private developers and governmental agencies, including aPProximately $575 tall!ion in bond, tax credit and/or equity financing for approxi~aately 8,300 units of affordable multifamily rental housing in the past five years. A summary of these projects is attached. Klein Financial has also developed, as a principal/owner and/or development consultant, more than 10,000 units of residential multifanfily property. A summary of representative examples of these properties is attached. Navy Bsnvard of Van Tilb'urg~ Banvard'& Soderbergh~ will be the Projea Architect. Navy .will work with the Project Team to design the projects so that they meet the needs of the tenants, can be financed, are marketable, can be operated efficiently and feature quality designs and construction matexials that will be an asset to the City over the life of the projects. This ~ has jointly worked with Klein Financial Corporation on mixed income apartment with affordable components, starting in 1990. These projects included 1,000 units with a value exceeding. $200,000,000'. Professional market analysts and appraisers selected by the construction and permanent lenders based on their .expertise in the project type will provide input t° the project design and unit mix based on their analyses of the demand for and absorption rates for the projects~ 1Viike Conion of ESG is preparing the initial market study for the Develope~ to verify tho demand for se~iior units. Bovis Lend Lease or its equivalent will be the construction manager for both projects. Bovis will solicit and re.view bids.from §enexal contractors, to constru~ the projects, 3.25doe DR - 26.4 Fairway Ranch Affordable Hou.~ng Proposal - City of Dublin lynch 25,' 2003 Page 6 of 7 oversee the general contractors' and architect's work, and work with the Developer to ensure that Lhe projeCtS are built to the Sl~ecifications and delivered on ~me and within budget. The construction contracts will guaranty a maximum price for the construction of' each project. The payment and performan, ce bonds required by the construction lender and tax credit investor for each project will ensure that construction of eaCh project is completed and. that ttmds are ava~able for completio~ Boris ranks as one of the world's leading project aud construction management companies, is the third largest construction manager in the United States and is a premier builder of'luxury condominh_~m~ apartment buildings and senior residential projects in the United States. It employs 7,500 employe~s world-wide, and operates in 38 countries spa~ing six continents. Approximately 30% of Boris' current and past clients are in the Fortune 500 list of the world's leading businesses. Bovis is currently working with the Developer aud the City on the cons~on of the Dublin Ranch fire A general contractor experienced in the consU'uction of the subject project types with substantial tlnancial capaCity will be retained for these projects. We are attempting to iden~y a general contractor a~ early in the process as possible. Legacy l~roperties or its equivalent w~ be the property manager for both projects. -. Legacy will be retained on a consulting basis during the predevelopment phase of' the projects to advise the Project Team on marketing and operational issues that h'~luc~nce project design. Upon completion of' the projects, Legacy will rent the unit~ manage the units and have primary responst~ility for compliance with the City's, bond and tax credit affordability requirements. Legacy has sp .eciSc expertise in Norther California in managing large scale, mixed income apartments that are bond financed and that utilized federal .tax credits. Legacy has developed more than 55,000 apartments, and currency manages in excess of 33,000 apartments. A~ affiliate of l~arsmount Financial Group wilt be the tax credit investor in both projects. Paramount will raise the' tax credit equity to be invested in the project (approxima~ly ~0% of which will be invested during the construction of the projects, with the balance invested at aud. shortly after achievement of' stabilized operations and conversion to permanent financing), monitor the construction of the projects, and oversee the projects' compliance with the Cky's, bond and ~ax credit affordability requirements. Investing tax credit .equity in mult~family affordable housing projects is Paramount's core business. Because Paramount will have a substantial invc~anent in these projects (approximately SI5,300,000 in aggregate) and has long-standing relationships with ks investors, it has extremely strong incentives to assure that consm~ction of' the projects is completed, the proje.~ts are leased-up according tO schedule, and the projects comply with the affordability re, fictions. Paramount has funded more than $100,000,000 o£ equity to Klein Financial Corporation-sponsored (as the Cteveloper or consultant) projects. It is one of' the nation's largest tax credit syndicators, placing over $400,000,000 in equity ~nvestmem's last year alone. Paramount has more than $1.7 billion c~' real estate assc~s under management, inclnding more than 24,000 apartment units. Paramount's 3.25d~ D~ - 26.4 ' March 25, 2003 .. Page 7 of 7 e~xtraordinarily successful record in affordable housing led to GMAC's Commercial Division acquiring the company, approximately two years ago. tt now operates as a .subsidiary of GMAC Commercial Holding Company. Novogradac and Company will be the independent CP-& for both projects, Novograda¢ will prepare audits of the compliance of both projects with the. City's, bond and tax credit affordability requirements. Novogradac will also provide training to Legacy on-site property management .personnel, as neede~t, in the finer points of compliance with the tax credit requirements. Novogradac. is highly respected as a national leader in the affordable .... housing field. A full set of' resumes for the development team will be prepared and delivered'to the City within the next two weeks. 3.25do~ DR - '2 Elizabeth X. Sliver ~y ~t ~w VIA FACSIBILE & U.S. BAIL' 'March 24, 2003 February 18, 2003 ProPosal Phase I Phase H Phase lTl Affordability Family Senior Family Total Affordable City Ordinance Current Proposal Based On Staff Discussions Phase I Phase II Phase m Affordability Family Senior Condo Total Affordable City Ordinance ' ~ · 12.5% . 7. Robert N. Klein Development History Summary Repre~ent_n_t!ve Exe._mp!e~ of __~._n_jor Res!dentla! Projects Robert Klein has served as the Managing Partner, the Managing Member of. the General Partner LLC, as a Director of the Corporate General Partner, and/or as the Development Consultant for more than 10,000 units of residential multifamily property. Highlighting only representative examples of major residential projects, the bullet point summaries, presented below, provide insight into the extensive time period and the complex scope of the properties where Robert Klein has played a key or central development role in driving project development. The summaries below, spanning from 1976 through 2002, indicate the development period and a brief project description, as follows: In 1976 to 1979, as the Managing Partner of Huntington Park Apartments I and II, Robert Klein developed 220 units of bond-financed residential apartments in Fresno, California; an additional 88 condominium units were concurrently developed, as a part of this project, for a total u.nit count of approximately 308 units. These were the first bond-financed apartments in the history of California. 1981 to 1983, Robert Klein - through Klein Financial Corporation - served as the Managing Partner of the development of 422 condominium units in FreSno, California. After the successful build-out of the first 210 units, Klein Financial Corporation sold its interest in the final 212 units to its partners. This project was financed with a Fannie Mae-Ginnie Mae tandem plan, condominium mortgage take-out loan program. · 1987 to 1991, development co-venture with Watt HOusing of 600+ residential apartment units for Cai State Northridge on a turnkey development agreement with the California State University System. This is a bond-financed project for student housing. · 1991 to 1995, development of 374 apartments and 15,000 square feet of related retail in Pasadena, California, with Robert Klein serving as a Director of the Holly Street Development Corporation and as the Development Consultant to the partnership of which the Holly Street Development Corporation was the Managing General Partner. This project also included the shell construction for a light rail station. This is a bond-financed project with tax credits. 1 ATTAC N1ENT * 3 1993 to 1995, development of 188 townhouse and stacked flat apartment project in Orange Cove, California. This is a 9% tax credit project, proving large project feasibility in rural cities. 1996 tO 1998, development of 250 apartments in San Jose, California, where Klein Financial Corporation served as the Development Consultant and as a co-developer - in the initial stages. From acquiring the development rights, the project redesign, land lease restructuring, public works structuring, construction pricing direction, and all of the other stages of development, Klein Financial Corporation took a project which had been stalled for 4-1/2 years into a construction loan recording, with a recapitalization, and a restructured development team in 9 months. 1997 to 1999, the acquisition-rehab of 600 units of apartments was accomplished in Cotton, California, where Klein Financial Corporation served as the Development Consultant and the Financial Consultant. Klein Financial Corporation directed unit redesign; seismic retrofit; project amenity construction program; project construction budgeting; project operational budgeting; utility systems analysis and restructuring; and numerous other general development functions, while structuring and implementing'the funding of construction, equity, and permanent financing. 1998 to 2002, Bayport Apartment Project was an acquisition-rehab project of 402 units in Garden Grove, California. Klein Financial Corporation, as rePresented by Robert Klein, served as the Managing Partner of this acquisition/development partnership. This is a bond- financed project. 2000 to 2002, Livermore Senior Apartments is a congregate and assisted living project of 250 units in Livermore, California. This project is in construction; Robert Klein has personally guaranteed the construction loan and the Bank of America is the construction lender. Robert Klein has a local co-development partner, who has no previous experience as the lead developer of residential apartment units. 2002 to 2003, River Run Apartments in Corona, California, is a 360-unit senior apartment project which went into construction in February, 2003; Klein Financial Corporation served as the Development Consultant and the Financial Consultant. The lead developer, for whom Klein Financial Corporation served as the Development Consultant, had not done a residential new construction project for approximately 12 years. Klein Financial Corporation provided the development expertise from land acquisition, through development design, value engineering, site plan development, financing, operating budget design, infrastructure on-site and off-site structuring and financing. 2 Regardless of whether it is specifically discussed above, Klein Financial Corporation structured all construction financing, permanent financing, and equity capital funding, as well as implementing that funding, for the above- listed projects, except for the equity capital required of the Holly Street Development Corporation partner, in the Pasadena, California, ' project. DUBLIN RANCH ZONING AND INCLUSIONARY ORDINANCE REq}UIRMENTS DEVELOPER PROPOSAL STAFF PROPOSAL Total Units Units permitted in Phases I, II and III 744 units No change No change without density bonus 25% density bonus permitted 186 units No change No change Total number of units permitted with 930 units No change No change density bonus Inclusionmw Units~ lf,,,N,.0 Deusity Bonus Inclusionary requirement for Dublin 1.2.5% 12.5% 12.5% Ranch (min. 7.5% built on-site) : (all built on-site) (all built on-site) Number of inclusionary units for 425 required 587 587 3,399 total units (assuming 186 (162 "excess" units) (162 "excess" units) density bonus units not subject to 12.5% inclus[onary requirement) ° lnclusionary units required Very Low Income 128 127 -1 127 Low Income 85 187 + 102 187 Moderate Income 212 273 +61, 273 Total 425 587 162 587 ATTACHMENT 4 G:\PA#~2003\03-010\SlatcrZoning 1 .doc DUBLIN RANCH ZONING AND INC'LUSIONARY ORDINANCE REQUIRMENTS DEVELOPER PROPOSAL STAFF PROPOSAL Assistance From City Processing Normal Expedited processing Expedited processing Financial assistance for providing None * $2.25 million loan for each Phase I · 3% compound interest (to help inclusionary/density bonus units (Family) and II (Elderly) keep up with inflation (for needed · To be repaid in years 4, 5 and 6 housing assistance) · Interest rate 3% simple · interest (about 1.5% normal * 'other terms the same interest) ~Vaiver of Commercial Linkage Fee No waiver Waiver of Commercial Linkage Fee No waiver on Dublin Ranch Commercial for all commercial development in Development Dublin Ranch (est. $2 million cost to Rationale: City) * Inclusionary units only meet · residential requirements Rationale: Developer is providing 162 "excess" units · Developer also asking for $4.5 million loan for 162 "excess" units plus 186 density bonus units, plus concentration of units, p!u~ different bedroom sizes and mix of units G:\PA#k2003\03 -010\SlaterZoning 1 .doc DUBLIN RANCH ZONING AND INCLUSIONARY ORDINANCE REQUIRMENTS DEVELOPER PROPOSAL STAFF PROPOSAL Mix of Inclusionarg/Affordable Units Location Distributed throughout Dublin Ranch 535 clustered in Phases I and II (86% Same as Developer project of Phases I and II). 52 in Phase Ill (20% of Phase III) Bedroom size Same as market units in each Phase of Rental Units: Same Dublin Ranch 260 1-bedroom 2 l 9 2-bedroom 56 3-bedroom 535 Family/Elderly No requirement Rental Units Same (other than bedroom size) 5.5% Elderly 45% Family Phase t Families Elderly,, Total I br 104 0 104 2 br 83 0 83 3 br 56 ~ 56 Subtotal 243 0 243 Phase I Phase II 1 br 0 · 156 156 2 br 0 136 136 3 bt' .__Q _0_ 0 Subtotal 0 292 292 Phase II G:LPA#~003\03-010\SlaterZoning I .doc ,,,~ DUBLIN RANCH ZONING AND INCLUSIONARY ORDINANCE REQUIRMENTS DEVELOPER PROPOSAL STAFF PROPOSAL Both Phases 1 br 104 156 260 2 br 83 136 219 3 br 56 __q0 56 Subtotal 243 292 535 Both Phases Key Agreement provisions When market units are built Market units can only be built as Building permits can only be issued Same inclusionary units' are built for market units when building permits issued for inclusionary units What happens if foreclosure Inclusionary zoning requirements Concern that lenders may only lend Inchsionary Zoning requirements remain for 55 years money if they can convert all units to remain for 55 years market rate Package Agreement as a whole must provide Assumes all reqUirements must be If only Phase I built, receive City loan an alternative way of satisfied to receive all benefits, for $2.25 million and credit for satisfying ordinance that inclusionary units built. provides at least as much affordability Density bonus only provided for Dublin Ranch (e.g., extra 186 units) if all inclusionary units provided -4- ~ :~' G:2'A#~2003\03-010\SlatcrZoning [ .doc ~'?~2"' DUBLIN RAN'CH ZONING AND INCLUSIONARY ORDINANCE REQUIRMENTS DEVELOPER PROPOSAL STAFF PROPOSAL Income Mix Inclusionary Density Total~ Total Bonus Units ~ 128 units 74 202 127 Units Very Low-Income (30%) Same as Developer' (50% of median income) 85 units 148 133 187 Units Low-Income (20%) (all at 60% of median income) (80% of median income) : cost covered by value of :: Federal Tax Credits 212 units 0 213 Moderate (50%) 273 · (120% of median income) 425 74 ~ 222 499 - 647 587 Total Pro rata as market .units built and fewer All in initial Phases Same as Developer Tinning of Affordable Units units (7.5%) could be built with payment (on ave., est. 7-years earlier of in lieu fees for 5% than pro rata) ~ These totals reflect if the Applicant were to not receive a benefit as a result of counting the Density Bonus Units towards {he Inclusionary requirement and requested 2 concessions under the Bensity Bonus Ordinance. If one concession was requested, the total Density Bonus Units would be either 74 very Iow-income or 148 Iow-income units with the combined Inclusionary and Density Bonus Units totaling 499 or 573 under each respective scenario. G:\PA#~2003\03-0 t 0\SlaterZoning l'.doe Elizabeth H. Silver Attorney at Law 510,808.2000 June 9, 2003 Masood. Sohaili, Esq. O'Melveny & Myers 400 South Hope Street Los Angeles, CA 90071-2899 Steven Fayne, Managing Director GMAC Commercial Mortgage 550 California Street, 12th Floor San Francisco, CA 94104 RE: Proposed Fairway Ranch Multi-family and Senior Housing Project in City of Dublin Dear Mr. Sohaii and Mr. Fayne, As you will recall, we met on May 29 with representatives of the Lin Family, Klein Financial Corporation and the City of Dublin to discuss the Lin Family's proposed Fairway Ranch project and the financing for that project, in particular. It is the City's understanding that the Lin Family will ground lease their land to two limited partnerships ("Limited Partnerships") which will, respectively, be the developers of the proposed multi-family project and the proposed senior housing project. The Lin Family has proposed 304 multi-family rental units, which would include 243 units available at affordable rents to households of very low, Iow and moderate income pursuant to the City's Inclusionary Zoning Regulations (Dublin Municipal Code ("DMC"), § 8.68.030.A.). The senior housing project is proposed to include 322 multi-family rental units which would include 292 units available at affordable rents to households of very Iow, Iow and moderate income pursuant to the Inclusionary Zoning Regulations. In addition, the Lin Family has asked the City to approve a "density bonus" to increase the density on the entire site from 744 units, which is the maximum permitted by the zoning, to 930 units. The breakdown of affordable units within each project is shown below: MULTI FAMILY PROJECT SENIOR HOUSING PROJECT Very Low 63 units 64 units Low 90 units 97 units Very-low income is defined by the City's lnclusionary Zoning Regulations as 50% or less of adjusted median income. Low income is defined as 50% to 80% of the adjusted median income. Rents shall not exceed 30% of maximum income level, adjusted for household size. (Dublin Municipal Code §8.68:020.) The Lin Family has proposed, however, to define Iow income levels to 60% or below the adjusted median income, rather than 50% to 80% as part of their application. ATTACHMENT Masood Sohaili, Esq, Steven Fayne, Managing Director June 9, 2003 Page 2 The Lin Family has indicated that the Limited Partnerships will ask the California Statewide Communities Development Authority to submit an application to the California Debt Limit Allocation Committee for an allocation of tax-exempt private-activity bonds for each of the two projects. Under the City of Dublin's inclusionary zoning ordinance and its density bonus ordinance, both discussed below, the affordable units must remain restricted for 55 years and 30 years, respectively. You have indicated that Fannie Mae's practice with respect to the provision of credit enhancement for bond issuances of the size anticipated for these projects has been to require subordination of regulatory agreements that restrict rents unless state or federal law mandates such restrictions. The City has explained to the Lin Family that the proposed affordable units must remain restricted for 55 years. The purpose of this letter is to provide you with my opinion regarding the legal requirements within the City of Dublin. I. ISSUE A. Does state law require that inclusionary units constructed in the City of Dublin be maintained as affordable units for a period of 55 years? B. Does state law require that units constructed within the City of Dublin to obtain a density bonus be maintained as affordable units for a pedod of 30 years? !1. CONCLUSION A. Yes. The requirements in the City's Inctusionary Zoning Regulations requiring affordability restrictions for a 55-year period are requirements of state law. B. ' Yes. State law requires that the City "ensure" that the units for which a density bonus is granted remain affordable for at least 30 years. II!. DISCUSSION A. The Requirements in the City's Inclusionary Zoning Regulations that Subject Inclusionary Units to Affordabilit¥ Restrictions for a 55-year Period are Requirements of State Law 1. Summary of Inclusionary Zoning Regulations The City's Inclusionary Zoning Regulations are zoning requirements that apply to all residential projects over 20 units. (Dublin Municipal Code ("DMC"), § 8.68.030.A.) They generally require that 12.5% of the units constructed be affordable units. (DMC, § 8.68.030.A.) Of the affordable units, a. 30% must be affordable to very Iow-income households; b. 20% must be affordable to Iow-income households; and 632930-3 Masood Sohaili, Esq. Steven Fayne, Managing Director June 9, 2003 Page 3 c. 50% must be affordable to moderate-income households. (DMC, § 8.68.030.B.) Conditions of approval on the residential project must require the execution of an agreement imposing appropriate resale restrictions or rental restrictions on the affordable units. (DMC, § 8.68.030.C; see also DMC, § 8.68.050.A [requiring agreement before issuance of building permits].) Those resale controls and rental restrictions require that affordable units be affordable to very Iow-, Iow-, or moderate-income households, as applicable, for a period of not less than 55 years. (DMC, § 8.68.030.E.) With respect to rental units, rent restrictions are imposed in the form of a regulatory agreement recorded against the applicable property. (DMC, § 8.68.030.E.) 2. The Inclusionary Zoning Regulations Implement State Law The inclusionary zoning regulations are derived from and imposed to implement the obligations imposed on cities by California statutes relating to the production of affordable housing. State law requires each City to adopt a General Plan. (Gov. Code, § 65300.) All zoning regulations and other land-use regulations must be consistent with the general plan. (See Gov. Code, § 65860.) The Housing Element is among the elements of the general plan required by state law. (See Gov. Code, § 65302, subd. (c).) The statutorily mandated Housing Element must contain (Gov. Code, § 65583) the following: a. An assessment of housing needs and inventory of constraints and resources relevant to meeting those needs. (subd. (a).) b. A statement of community's goals, quantified objectives, and policies relative to the maintenance, preservation, improvement, and development of housing. (subd. (b).) c. A five-year schedule of actions the city is undertaking or intends to undertake to implement the policies and achieve the goals and objectives of the housing element through the administration of land use and development controls. (subd. (c).) Each jurisdictions' share of the regional housing needs is determined by the Council of Governments, in Dublin's case the Association of Bay Area Governments. (See Gov. Code, § 65584, subd. (a).) The "need" for each jurisdiction is broken down into the various income categories: very iow-, Iow-, moderate-, and above moderate-income. The schedule of actions to implement the goals and objectives of the housing element requires the City to make adequate provision for the housing needs of ail economic segments of the community through various means. (See Gov. Code, § 65583, subds. (c)(1)-(c)(6).) Furthermore, the policy statements preceding the Housing Element Law direct cities to use their powers to create housing for all segments of the community. The provision states that cities "have a responsibility to use the powers vested in them to make adequate provision for the housing needs of all segments of the community." (Gov. Code, § 65580.) 632930-3 Masood Sohaili, Esq. Steven Fayne, Managing Director June 9, 2003 Page 4 Following from this statutory requirement to exercise its powers to create housing for all segments of the community, in the 1990 Housing Element the City set forth a requirement that the City adopt and implement an inclusionary zoning ordinance. (pp. 46-47.) Subsequently, the City adopted the Inclusionary Zoning Regulations as required by the 1990 Housing Element. In 2002, the City Council amended the Inclusionary Zoning Regulations, but did not change the basic requirements. The amendment included increasing the percentage of required affordable units and prohibiting the option of payment of an in lieu fee for 60% of the required affordable units. The City's recently adopted 2002 Housing Element continues the requirement that the City require development of lower-income housing through the implementation of an inclusionary housing ordinance. (See 2002 Housing Element, p. 27-28 [Policy 3, Program B.3.1].) The Inclusionary Zoning Regulations require all affordable units to be restricted for 55 years through a regulatory agreement (DMC §8.68.030.C, 8.68.050). This provision implements §65583(b)'s requirement that the city adopt policies for the maintenance of affordable housing and §65583(c)'s requirement that the city take actions to implement such policies through land use and development controls. Although it is possible that the City Council could amend the Inclusionary Zoning Regulations to eliminate the requirement of a regulatory agreement as the action that implements the policy of maintaining affordable units, the City Council would have to replace the requirement of a regulatory agreement with some otheriegally-binding mechanism. One such optional mechanism could be a requirement that conditions, covenants and restrictions be recorded against the property to assure that the affordable units remain affordable for the required 55 years. 3. The City's Inclusionary Zoning Regulations Have the Force and Effect of State Law Within the City of Dublin California's Constitution broadly delegates the power to regulate to cities. The Constitution provides: A... city may make and enforce within its limits all local, police, sanitary, and other ordinances and regulations not in conflict with general laws. (CaI.Const., art. XI, § 7.) In turn, the Government Code provides that a city council "may pass ordinances not in conflict with the Constitution and laws of the State and the United States." (Gov. Code, § 37100.) The courts have made clear that cities' regulatory authority under the police power is very broad. For instance, the California Supreme Court stated: [C]ities have plenary authority to govern, subject only to the limitation that they exercise this power within their territorial limits and subordinate to state law. Apart from this limitation, the police power. ·. is as broad as the police power exercisable by the legislature itself. (Candid Enterprises, Inc. v. Grossmont Union High Sch. Dist. (1985) 39 Cal.3d 878, 886.) Ultimately, properly enacted City ordinances constitute state law within the City. It has long been the law that an ordinance passed by a city within the scope of its authority has the same force within the City that a statute passed by the legislature has throughout the state. (Exparte Roach (1894) 104 Cal. 272, 274; Marculescu v. City Planning Commission of City and County of San Francisco (1935) 7 Cal. App. 2d 371, 632930-3 Masood Sohaili, Esq. Steven Fayne, Managing Director June 9, 2003 Page 5 373.) Thus, "[t]he adoption of the ordinance, being the exercise of a delegated legislative power, is to be construed with the same effect as if it had been adopted by the legislative power itself." (Ex parte Roach, supra, 104 Cal. at p. 275.) The Inclusionary Zoning Regulations are a zoning requirement adopted pursuant to the police power.~ (Cal. Const., art. XI, § 7.) Thus, much like one could not build a commercial structure or operate a commercial use in a residential zone (see Cooper v. County of Los Angeles (1946) 75 CaI.App.2d 75 [restraining construction of commercial use in residential zone]; Jones v. Robertson (1947) 79 CaI.App.2d 813 [real estate office in residential zone]), all development subject to the Inclusionary Zoning Regulations' terms must include the construction and maintenance of affordable units as required by the zoning regulations. Because the Inclusionary Zoning Regulations were adopted by an ordinance passed by the City of Dublin within the scope of its authority, the requirements of the City's Inclusionary Zoning Regulations have the same force as state law requirements within Dublin. 4. Summary To summarize, it is my opinion that the City's Inclusionary Zoning Regulations have the force and effect of state law within the City of Dublin and that the provisions requiring affordability restrictions for a 55-year period implement the City's Housing Element, a requirement of state law. B. State Law Requires that the City "Ensure" that the Units for which a Density Bonus is Granted Remain Affordable for At Least 30 Years. If an applicant seeks the benefits of the density bonus statute, state law requires the applicant to agree to restrictions that ensure the continued affordability of the units for which the density bonus is sought, Subdivision (c)(1) of Government Code §65915 states: An applicant [that meets the requirements for a density bonus and/or other incentives] shall agree to, and the city.., shall ensure, continued affordability of all lower income density bonus units for 30 years or longer period of time if required by the construction or mortgage financing assistance program, mortgage insurance program,, or rental subsidy program. Thus, state law requires that the City "ensure" that the units for which a density bonus or other incentive is granted remain affordable for at least 30 years. The requirements of the Density Bonus statute are implemented by the City of Dublin in its Density Bonus Regulations (see DMC, ch. 8.52), which have the effect of state law within the City. The regulations require that the restricted units "must remain affordable .... for 30 years from the date of final occupancy clearance .... "(DMC, § 8.52.070, subd. A.) The restrictions are implemented through an Affordable Housing Agreement that creates deed restrictions. (DMC, § 8.52.070, subd. C.) ~ California courts have held that local inclusionary zoning regulations substantially advance the important state interest in providing housing to Iow- and moderate-income families. (See Home Builders' Association of Nor. Calif. v. City of Napa (2001) 90 CaI.App.4th 188, 195-196.) 632930-3 Masood Sohaili, Esq. Steven Fayne, Managing Director June 9, 2003 Page 6 As noted above, the Lin Family has applied for a density bonus to increase the density from 744 to 930 units. They have also requested two "incentives" in accordance with §65915, subd. (b) and DMC, Chapter 8.52. In order to be eligible for the density bonus and two "incentives", however, the applicant must "agree or propose to construct" either. 1. 20 percent of the total units for lower income households; 2. 10 percent of the total units for very Iow income households; or 3. 50 percent of the total units for seniors. (See DMC § 8.52.040; Gov. Code, § 65915, subd. (b).) Thus, to qualify for a density bonus for both the multi-family project and receive two incentives, as requested,2 the applicant must restrict 20% of the units for Iow-income households and 10% of the units for very Iow income households. These units must remain restricted for 30 years pursuant to Government Code §65915 and the City's density bonus ordinance, which as discussed above, has the effect of state law. C, Conclusion The City of Dublin cannot agree to subordinate those provisions of the regulatory agreement for the proposed Fairway Ranch project that restrict the affordable units for 30 years, in the case of the units which must be restricted by the density bonus law, and 55 years, in the case of the units which must be restricted by the zoning. The City recognizes that in order to grant a waiver from its general policy, Fannie Mae will need to approve the underwriting of the proposed project based on the City's regulatory requirements. These affordability restrictions are legally required for the development of the proposed project and should, therefore, be taken into account by Fannie Mae or any lender. The City will continue to work with the Lin Family in their efforts to finance the proposed Fairway Ranch project, to the extent possible. Please let me know if you have any questions about the matters contained in this letter. Very truly yours, MEYERS, NAVE, RIBACK, SILVER & WILSON Elizabeth H. Silver City Attorney City of Dublin EHS:rja 2 The two incentives requested by the Lin Family are priority processing and the inclusion of 5,000 square feet of commercial development on land otherwise zoned to prohibit commercial development. (See {}65915, subd. (j) and DMC §8.52.050.B). 632930-3 Masood Sohaili, Esq. Steven Fayne, Managing Director June 9, 2003 Page 7 c: Martin Inderbitzen Robert Klein Terry Freeman James Tong Steven Ryan Richard Ambrose Eddie Peabody Julia Abdala Gene Slater 632930-3