Item 10 - Comprehensive Affordable Housing Strategy
DI5TRI~Ul-EP {Y~/#'/1f3
~ AGENDA REPORT
CITY OF POW A Y
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager/Executive Dir~
INITIATED BY: John D. Fitch, Assistant City Manager/Assistant Executiv~lr'
Director
David Narevsky, Redevelopment Manager
DATE; Pamela R. Colby, Senior Management Analyst ~
June 15, 1993
SUBJECT: Comprehensive Affordab7e Housing Strategy Recommended by the
Redevelopment and Housing Advisory Committee
ABSTRACT
It is recommended that the budget for the Comprehensive Affordab7e Housing
Strategy be revised as reflected on Exhibit "A" to this report and that the
Redevelopment Agency appropriate $16,768,832 from the Low and Moderate Income
Housing Fund to be expended in accordance with this revised budget.
BACKGROUND
The City Council/Redevelopment Agency previously received a staff report on
this item which recommended a housing program with a budget of $14,606,000.
However, due to the availability of additional Housing Funds in the Agency's
Unappropriated Reserve account, staff is recommending increases to the
original Comprehensive Affordable Housing Strategy budget. At the time of the
preparation of that report, staff was not aware of the availability of these
additional funds which should provide full funding of the programs and
projects recommended therein. In addition, appropriating these funds at this
time will prevent State officials from developing the incorrect perception
that the Redevelopment Agency has substantial Housing Fund reserves.
FINDINGS
Specifically, it is recommended that the level of funding in the original
budget be increases as follows: Gateway Park Road Property Acquisition
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ACTION:
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ITEM 10.1
JUN 1 5 1993
Agenda Report - Revised Materials
June 15, 1993
Page 2
from $1,606,000 to $1,756,332; Residential Preservation/Rehabilitation
program from $1,250,000 to $1,500,000; staff support and applicable overhead -
$1,762,500 (the staff support/overhead budget amount equals 15 percent of the
funds budgeted for the Huber and Breihan projects and the Residential
Rehabilitation/Preservation Program).
These revisions effectively restore funding levels to those amounts originally
approved by the Redevelopment and Housing Advisory Committee, but which were
subsequently reduced due to a change in the actual proceeds from the sale of
bond s .
In addition, it is recommended that the Redevelopment Agency appropriate funds
as proposed by the revised budget. With Redevelopment Agency approval, these
programs and projects will be reflected in the Agency's 1993-94 Capital
Improvement Budget. However, the Redevelopment Agency's 1993-94 budget does
not become effective until July 1, 1993. As a result, a significant
unappropriated reserve would be reflected in the Housing Fund at the end of
the 1992-93 budget year.
Having large unappropriated reserves in the Low and Moderate Income Housing
Fund is a flag to State officials that Housing Funds are not being expended in
a timely manner. While this is not the case, it is being recommended that
these funds be appropriated at this time to avoid this appearance.
FISCAL IMPACT
Approval of the staff recommendation would result in the appropriation of
$16,768,832 from the Redevelopment Agency's Low and Moderate Income Housing
Fund ($12,438,240 - 1993 TABs and $4,330,592 - Unappropriated Reserve).
RECOMMENDATION
It is recommended that the Redevelopment Agency approve the Comprehensive
Affordab7e Housing Strategy with the revised budget; authorize staff to
implement the programs and projects contained therein; authorize staff to
order appraisals for the Huber, Breihan and Gateway Park Road properties; and
appropriate $16,768,832 from the Low and Moderate Income Housing Fund in
accordance with the revised budget.
Exhi bit: Revised Budget for the Comprehensive Affordab7e Housing Strategy.
C:\RDHAC\615.REV
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. EXHIBIT "A"
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Huber Senior Project 2,750,000.00
Breihan Single-Family Project 7,500,000.00
Residential Rehabilitation Program 1,500,000.00
Direct staff supporVapplicable overhead @ 15% 1,762,500.00
Subtotal 13,512,500.00
Gateway Park Road Property Acqusition 1,756,332.00
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Haley Ranch Estates Acquisition/Operation Reserve 1,500,000.00
Funds Available (1993 TABs) 12,438,240.00
Unappropriated Reserve 4,510,890.00
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PC- :\123w\budget610.wk3
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AGENDA REPORT ~V '..}I..,l t !:,1..;' l
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- Honorable Mayor and Members of the City Council
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.
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager/Ex~e Director
.l--
INITIATED BY: John D. Fitch, Assistant City Manager/Assistant Executive Director ' J
DATE: Pamela R. Colby, Senior Management Analyst .~
June 15, 1993
SUBJECT: Comprehensive Affordable Housing Strategy Recommended by the
Redevelopment and Housing Advisory Committee
ABSTRACT
California Redevelopment Law requires the Redevelopment Agency to prepare a report
which outlines how it will meet the housing requirements of Section 33413 of the
California Health and Safety Code and the timely expenditure of its Low and Moderate
Income Housing Funds. The Redevelopment and Housing Advisory has developed the
Comprehensive Affordable Housing Strategy in response to these requirements. Staff
recommends approval of the attached Comprehensive Affordable Housing Strategy.
~NVIRONMENTAL REVIEW
This action is not subject to CEQA review.
FISCAL IMPACT
The plan provides for the expenditure of Housing Funds that are expected to be
available over the next five years from the sale of bonds; $12,438,240 from the 1993
Tax Allocation Bonds. Approval would result in the appropriation of $14,000 from the
Redevelopment Agency's Low- and Moderate-Income Housing Fund for property appraisals.
ADDITIONAL PUBLIC NOTIFICATION AND CORRESPONDENCE
NONE
RECOMMENDATION
It is recommended that the City Council/Redevelopment Agency: approve the
Comprehensive Affordable Housing Strategy; authorize staff to begin implementation of
the programs and projects contained therein; authorize staff to order appraisals for
the Huber, Breihan and Gateway Park Road properties; and, appropriate $14,000 from the
Redevelopment Agency's Low and Moderate Income Housing Fund for said appraisals.
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IACflON I
lOF26 JUN 1 5 1993 ITEM 1 () . I
AGENDA REPORT
CITY OF POW A Y
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: James L. Bowersox, City Manager/Executive Dire~ :-"
INITIATED BY: John D. Fitch, Assistant City Manager/Assistant Executive r~ !
Director J
David Narevsky, Redevelopment Manager
Pamela R. Colby, Senior Management Analyst~_
DATE: June 15, 1993
SUBJECT: Comprehensive Affordable Housing Strategy Recommended by the
Redevelopment and Housing Advisory Committee
BACKGROUND:
For the past seven months, the Redevelopment and Housing Advisory Committee
has been developing the Comprehensive Affordable Housing Strategy (Exhibit
"A") . This work was required as a result of the passage of Assembly Bill 315
by the State Legislature and to establish a plan for the expenditure of Low-
and Moderate-Income Housing Funds that are expected to be available during the
next five years.
AB 315 amended Section 33413 of the California Health and Safety Code, adding
subsection (4) which requires the Redevelopment Agency to prepare a compliance
report outlining how it will meet its housing requirements. Section 33413 of
the California Health and Safety Code requires that at least 30 percent of all
new or rehabilitated units developed by redevelopment agencies must be
available at affordable housing cost to households with low and moderate
incomes, at least 50 percent of which must be available to and occupied by
very-low income households [33423(b)(I)].
In addition, it requires that at least 15 percent of all new or rehabilitated
dwelling units developed within the Project Area by private or public entities
other than the Redevelopment Agency must be available at affordable housing
costs to households with low and moderate incomes [(33413(b)(2)]. At least 40
percent of these units must be available to very-low income households.
ACTION: I
JUN 1 ~ 1993 H' \
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The Redevelopment Agency's Housing Compliance Plan must outline how the Agency
will meet these affordable housing requirements, specifically, how the Agency
will meet these housing obligations every ten years from the effective date of
the Legislation, or January 1, 1992. Previously, redevelopment agencies had
the entire life of their redevelopment plan to meet these housing obligations.
The Agency is also required to update this Plan every five years concurrent
with the update of the Housing Element of the General Plan.
A primary component of the AB 315 Housing Compliance Plan is a strategy for
making up any previously incurred and anticipated affordable housing
obligations of the Redevelopment Agency. Accordingly, sections of the
proposed Comprehensive Affordable Housing Strategy would be included within
the AB 315 Housing Compliance Plan, in addition to establishing a five-year
housing program for the Redevelopment Agency.
Because the language used in Section 33413 is vague, staff has been working
with Legal Counsel and the California Redevelopment Association to develop
definitions to terms used therein. Staff is currently finalizing the
calculation of the Agency's Section 33413(b) housing obligations, and it is
felt that the five-year program being proposed within the Comprehensive
- Affordable Housing Strategy will bring the Agency into compliance with the new
"ten year requirement" resulting from the amendment to Section 33413(b) which
added subsection (4).
FINDINGS:
The attached Comprehensive Affordable Housing Strategy was prepared by the
Redevelopment and Housing Advisory Committee with the assistance of staff. It
outlines a five-year housing program which contemplates the expenditure of
approximately $14,606,000 in Low and Moderate Income Housing Funds. The
funding sources for the projects and programs contained within the Strategy
are the proceeds from the 1993 Tax Allocation Bonds and additional bond
proceeds that are anticipated to be available during fiscal year 1995-96.
Specifically, the Strategy recommends: the development of a llO-unit, very-low
income, senior affordable housing project on the Huber property (north-east
corner of Bowron Road and Civic Center Drive); the development of a 50-unit
manufactured housing subdivision for very-low income families on the Breihan
property (immediately south of Haley Ranch Estates); the acquisition of the
Gateway Park Road property for future development of an affordable housing
project (AH Overlay Zone site); the initiation of a Residential Preservation/
Rehabilitation Program for low- and moderate-income homeowner occupants; the
establishment of a reserve fund for the acquisition of Haley Ranch Estates;
and, if any Low and Moderate Income Housing Funds are available after
accomplishing the above projects and programs, the initiation of a Single-
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Family Acquisition Program. These projects and programs are described in
detail within the attached Strategy report.
If the Strategy report is approved by the City Council/Redevelopment Agency,
staff would proceed with property acquisition negotiations and program/project
development. Staff would order appraisals for the Huber, Breihan and Gateway
Park Road properties in order to initiate acquisition negotiations with the
property owners. The terms of all proposed property acquisitions would be
submitted to the City Council/Redevelopment Agency for approval and
appropriation. Once site control is obtained, staff would then seek proposals
from qualified developers for the Huber and Breihan projects, and submit the
proposed development agreements to the Redevelopment Agency for approval and
appropriation.
With City Council/Redevelopment Agency approval of the Comprehensive
Affordable Housing Strategy, staff would also seek consultant proposals for
the development of the Residential Preservation/Rehabilitation Program,
allowing staff to work with an experienced rehabilitation consultant to
finalize Program Guidelines and other necessary Program documents. The
contract for this consultant assistance would be submitted to the
Redevelopment Agency for approval and appropriation at a future date. If,
after accomplishing these projects and programs, there are monies available in
the Agency's Low- and Moderate-Income Housing Fund, staff would develop the
Single-Family Acquisition Program for Redevelopment Agency approval and
appropriation.
Staff would also work with the Redevelopment and Housing Advisory Committee to
incorporate these projects and programs, as applicable, into the required AB
315 Housing Compliance Plan. Once completed, the Housing Compliance Plan
would be submitted to the City Council/Redevelopment Agency for consideration.
In conclusion, staff is recommending conceptual approval of the projects and
program contained within the Comprehensive Affordable Housing Strategy as
submitted by the Redevelopment and Housing Advisory Committee. This would
enable staff to initiate property acquisition negotiations and to develop
these project and program concepts into proposals for City Council/
Redevelopment Agency approval and appropriation of funds.
FISCAL IMPACT:
Approval of the staff recommendation would result in the Redevelopment Agency
incurring costs associated with obtaining appraisals for the Huber, Breihan,
and Gateway Park Road properties; this cost is estimated at $14,000.
4 OF 26 JUN 1 5 1993 ITEM 10 - I
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RECOMMENDATION: .
It is recommended that the City Council/Redevelopment Agency: approve the
attached Comprehensive Affordab7e Housing Strategy; authorize staff to begin
the implementation of the programs and projects contained therein; authorize
staff to order appraisals for the Huber, Breihan and Gateway Park Road
properties; and, appropriate $14,000 from the Redevelopment Agency's Low and
Moderate Income Housing Fund for said appraisals.
Attachment: Comprehensive Affordable Housing Strategy submitted by the
Redevelopment and Housing Advisory Committee.
C:\RDHAC\615STAff.RPT
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5 OF 26 JUN 1 5 1993 ITEM 10. I
TO: Honorable Mayor and Members of the City Council
Honorable Chairman and Members of the Redevelopment Agency
FROM: Redevelopment and Housing Advisory Committee
DATE: June 15, 1993
SUBJECT: Comprehensive Affordable Housing Strategy
ABSTRACT:
It is recommended that the City Council/Redevelopment Agency adopt this
Comprehensive Affordable Housing Strategy which includes proposals to:
develop the Huber Property Senior Project, develop the Breihan Family Project,
acquire the Gateway Park Road property, initiate the Residential Preservation/
Rehabilitation Program, initiate a Single-Family Acquisition Program, and
establish a reserve fund for the acquisition of the Haley Ranch Estates
Project, for a total estimated cost of $14,606,000.
BACKGROUND:
Over the past seven months, the Committee has been working on the development
of an affordable housing strategy for the Redevelopment Agency. The primary
objective of this work has been to develop specific housing strategies for
inclusion within the Redevelopment Agency's Housing Compliance Plan, as
required by Assembly Bill 315. These programs would also serve as the housing
related goals for the Redevelopment Agency over the next five years.
With the impending sale of tax allocation bonds during June 1993, it is
anticipated that the Redevelopment Agency will have approximately $13,683,240
available for affordable housing programs over the next three years.
Requirements relative to the use of bond proceeds make it necessary for the
Redevelopment Agency to expend these funds within that three year period. In
addition, the State Legislature requires that the Agency expend these funds
within a specific period of time to ensure that an "excess surplus" does not
accumulate in the Redevelopment Agency's Low and Moderate Income Housing Fund
(Housing Fund). Therefore, once the bond proceeds are available, the
Redevelopment Agency will need to move in a timely manner to develop and
implement programs to which these funds may be applied.
The budget for the Affordable Housing Strategy exceeds the funds that will be
available from the 1993 bond issue. However, it is anticipated that the
Redevelopment Agency will issue additional bonds in 1995-96 that should result
in adequate funds being available for the implementation of the projects and
programs outline in this Strategy.
FINOINGS:
On May 24, 1993, the Redevelopment and Housing Advisory Committee, approved
this Comprehensive Affordable Housing Strategy which includes the
recommendation to initiate the following projects and programs:
60F26
JUN 15 1993 ITEM 10. I
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RDHAC Report
June 15, 1993
Page 2
Huber Property Senior Project
As described in detail in Exhibit "A", the Committee recommends that this
property be acquired and developed as a privately owned affordable housing
project for very low-income seniors. It is estimated that the site could
accommodate 110 dwelling units. As recommended, the Agency would work with a
qualified private developer who would construct and ultimately own and manage
the project. This project represents the Committee's first priority for the
construction of new affordable dwelling units.
Breihan Family Project'
It is recommended that the Redevelopment Agency acquire this property and work
with a qualified developer to construct a 50+ unit, manufactured housing
subdivision for very low-income families. The City/Agency would retain
ownership of and management responsibilities for the project, as described in
detail in Exhibit "6". This project would effectively be an extension of the
existing Haley Ranch Estates project.
Gateway Park Road Property Acquisition
-- Approval of this item would allow the Redevelopment Agency to acquire the
subject property for future development. The site currently is designated as
an AH Overlay Zone site for very low-income seniors, at a density of up to 25
d.u./AC. In addition, the Committee suggests that if this property is
acquired by the Agency, that prior to its development, the City Council give
consideration to this site being developed as either a family site or a
seniors only facility.
The acquisition and recommendations for the property's future development are
described in detail in Exhibit "C".
Residential Preservation/Rehabilitation Program
Approval of this program would establish a three-year fund for a housing
improvement and preservation program which is described in detail in Exhibit
"0". Generally, this program would involve making loans to income-qualified
homeowner occupants who wish to make health and safety, and some basic
cosmetic improvements to their homes. The program would offer loans up to
$10,000 per household that would gradually convert to grants if the home was
occupied by the program participant for specified periods of time.
Haley Ranch Estates Acquisition Fund Reserve
The Poway Redevelopment Agency, through an Owner Participation Agreement with
the property owner, financially assisted in the development of this
affordable/replacement housing project. The $6,471,599 in assistance granted
the Agency a master lease for the entire site, guaranteed that all units would
be affordable to low- and moderate-income families, and provided the Agency
7 OF 26 JUN 1 5 1993 ITEM 10. I
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RDHAC Report
June 15, 1993
Page 3
with a ten-year period in which it may acquire this project. The Committee
recommends that $1.5 million from the 1993 bond proceeds be set aside in a
reserve fund for this acquisition.
Single-Family Acquisition Program
As described in detail in Exhibit "E", this program would allow the
acquisition and rehabilitation of an undetermined number of single-family
dwellings which would then be rented to lower-income families. The program
would seek to acquire those single-family units and mobilehomes (within the
City-owned Parks) most in need of rehabilitation. These dwellings potentially
represent the best value and, when rehabilitated, would serve to enhance the
immediate neighborhood while providing unconcentrated affordable housing.
The single-family residential acquisition program is the lowest priority to
the Committee of the projects and programs being recommended; therefore, it is
recommended that it only be undertaken if adequate funding exists for the
previously mentioned programs.
CONCLUSION:
The estimated budget for the programs recommended within this Comprehensive
Affordable Housing Strategy report (summarized below) is within the total Low-
and Moderate Income Housing Funds that are anticipated to be available to the
Redevelopment Agency over the next five years.
Huber Property Senior Project $2,750,000
Breihan Property Family Project 7,500,000
Gateway Park Road Property Acquisition 1,606,000
Residential Preservation/Rehabilitation 1,250,000
Haley Acquisition Reserve 1,500,000
Total $14,606,000
If adequate funds exist during this five-year period, the Committee recommends
the development of the Single-Family/Mobilehome Acquisition Program as
described in detail in Exhibit "E".
It is recognized that the implementation of this Strategy would require
significant involvement of Redevelopment Agency staff. The cost of this staff
time would be added to the final budget figures for each of these housing
programs. There are no funds reserved for this purpose above the costs
provided for the project and program budgets noted above.
RECOMMENDATION:
It is recommended that the City Council/Redevelopment Agency approve the
recommendations outlined in this Comprehensive Affordable Housing Strategy
report. C:\RDHAC\61S93.RPT
8 OF 26 JUN 1 5 1993 ITEM 10 . l
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Exhibit "A"
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HUBER PROPERTY SENIOR HOUSING PROJECT
Site Description
This vacant site is located at the north-east corner of Bowron Road and Civic
Center Drive (Attachment "A"). It is a large, flat, centrally located parcel
surrounded by commercial and residential land uses. The total area of the
site is 4.4 acres which could accommodate approximately 110 dwelling units for
very-low income seniors. This property is currently zoned Commercial General
(CG), with the AH Overlay Zone designation option at 25 d.u./AC for a very-low
income senior project.
The site is in close proximity to food store shopping and, if developed with
the AH Overlay Zone option, would be a compatible land use to the adjacent
apartments and condominiums. An important issue for the elderly population is
the site's proximity to the Weingart Center at the Community Park which
provides numerous programs and services for the community's elderly
population.
Project Description
Given the densities of this AH Overlay site (25 d.u./AC), it is anticipated
that the project would be designed as a two-story complex and would require
elevator service. As the units would be serving the housing needs of the
elderly, the project would include a number of handicapped equipped units, and
certain amenities such as grab rails throughout the project. It i s 1 i ke 1 y
that parking requirements could be reduced in consideration of the size of the
units and the population they are reserved for. This would allow more
flexibility in the site design than with a standard development. The actual
size, distribution, and amenities of the units within this project would be
determined at the time of the actual development.
Estimated Project Cost
These estimates are being provided solely for the purpose of enabling
conceptual discussion and decisions. The actual pro forma analysis would take
place after the Redevelopment Agency's approval of the project concept. It is
estimated that this project would cost in the range of $5 to $5.5 million.
The Redevelopment Agency assistance necessary to "write-down" the project
costs to a level that the revenue stream generated by rents would cover debt
service, operations and maintenance, and management is estimated at $25,000
per unit or $2,750,000 for the entire project. The level of Agency assistance
could increase based upon the project design and amenities included.
Estimated Project Revenue Stream
In determining if a project is financially sound, it is appropriate to ensure
that the revenue stream generated by the rents will cover the operations and
maintenance costs for that project. Table I below illustrates the rent that
.- could be generated would equal 30 percent of the monthly income for a very-low
income household of one ($362), less a reasonable utility allowance estimated
9 OF 25 JUN 15 1993 ITEM 10. I
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Exhibit "A"
Page 2
at $50. This equals $312 per month per unit as shown below, multiplied by 110
units equals $34,320 per month or $411,840 per year.
Table I
RENT PAYING ABILITY - Single Person Household
% of Annual Monthly 30% of Util ity Max. Allowable
Median Income* Income Income Allowance Monthly Rent
50 $14,500 $1,208 $362 $50 $312
This revenue projection is conservative, as it does not account for higher
rent that may be charged when two persons occupy a one or two-bedroom unit.
However, it also does not account for loss of revenue due to temporary
vacancies or non-payment of rent. The project would be structured such that
it would not require any ongoing assistance from the Redevelopment Agency for
operations and maintenance. Therefore, the revenue generated by rents would
cover costs associated with debt service, operating, maintaining, and managing
the project, and to establish a long-term capital improvement fund. The level
of Redevelopment Agency assistance would be calculated as that amount
necessary to ensure that the net revenue stream would be adequate to cover
these costs.
Development Process
It is recommended that the Redevelopment Agency acquire the property from the
current owner, and work with a developer/owner to construct and manage the
project. The Redevelopment Agency staff would seek the participation of
qualified developers through the Request for Qualifications (RFQ) process, and
then invite the qualified developers to compete for the project through the
Request for Proposal process (RFP).
The Redevelopment Agency would "buy down" the cost of the units, thereby
enabling the developer/owner to charge rents affordable to very-low income
households. The developer/owner would retain ownership and management
responsibility for the property. An agreement would be effected with the
developer/owner requiring the owner to operate and maintain the project at
pre-established standards.
Housing Goals Achieved
The Affordable Housing Needs Assessment found that 15% of Poway's population
falls within the 55+ age group, and this number is expected to increase by an
additional 10 percent over the next 10 years. In addition, it was found that
10 OF 26 JUN 1 5 1993 ITEM 10. I
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Exhibit "A"
- Page 3
21% of the households with a senior member overpaid for housing, and 49% of
the lower-income (~ 80% area median) senior households overpay for housing.
Seventy percent of the lower income senior households are renters. In
conclusion, this study found that the "housing needs of the elderly can be
addressed through the provision of smaller units..." The development of this
project would specifically assist this special needs group.
As the property is located within the Paguay Redevelopment Project Area, this
project could count toward meeting the redevelopment housing obligations
pursuant to Section 33413(b)(2}, or the 15 percent affordability requirement
for private development within the Project Area. The Redevelopment Agency
would not financially assist this project to an extent that it triggers the
"Agency developed" definition, therefore 15 percent of the units (17) must be
deed restricted for affordability to households with low and moderate incomes;
at least 40 percent of this number (7) must be deed restricted for households
with very-low incomes [(Section 33413(b)(2)].
The dwelling units deed restricted above this base requirement could be used
to meet the redevelopment housing requirements of Section 33413(b)(2) that may
have been previously incurred. It is recommended that 100 percent of the
dwelling units be deed restricted for affordability to very-low income, senior
households.
~
Article XXXIV of the California State Constitution
As the project would be privately developed and owned, not exempted from
paying property tax, and the level of Agency assistance would not effectively
make this an "Agency developed" project, it would be exempted from the voter
approved requirement pursuant to Article XXXIV.
f
11 OF 26 JUN 1 5 1993 ITEM 10. I
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HUBER PROPERT'"
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12 OF 26 ATTACHMENT "A" JUN 1 5 1993 ITEM 10.
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Exhibit "B"
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BREIHAN PROPERTY FAlfILY PROJECT
Site Description
This vacant parcel is located on east side of Community Road, south of Poway
Creek, and immediately south of Haley Ranch Estates (Attachment "A"). The
property is adjacent to Haley Ranch Estates to the north, Poway Royal
Mobilehome Park across Community Road to the west, and is bounded by open-
space to the south and east. Comprised of 33 gross acres, with approximately
82 net usable acres, the property is zoned PC (Planned Community) and has an
approved Tentative Parcel Map for a 50-unit mobilehome/manufactured housing
subdivision. Merged with the Haley Ranch Estates project, it would be
possible to gain up to 5 additional lots on the site due to shared
recreational/office facilities.
The site is in close proximity to food shopping and other amenities, with the
Town and County Center and Creekside Plaza to the north of the property.
Access to this property would be off of Midland Road, through the Haley Ranch
Estates subdivision. In addition, the site is on a public transit line and is
approximately two blocks from the Poway Community Park and Valley Elementary
School.
The site has also been identified within the Poway Redevelopment Plan as a
location where the Agency could meet replacement housing obligations.
Project Description
It is recommended that the property be developed as a publicly owned
manufactured housing subdivision, like Haley Ranch Estates. This would
involve the development of a manufactured housing subdivision consisting of
approximately 50 units, each with three bedrooms. It was found during the
development process for Haley Ranch Estates, that 3 bedroom units are only
slightly more costly than comparable 2 bedroom units. The extra bedroom
allows for greater flexibility and value for a project of this kind. The
project would be developed as a very-low income (~ 50% area median) family
renta 1 proj ect.
Estimated Project Cost
These estimates are being provided solely for the purpose of enabling a
conceptual discussion and decision. This site would be less costly to develop
compared to the Haley Ranch Estates site, as the property is not within the
flood way/plain and is not adjacent to a biologically sensitive wetland area.
Based upon the experience gained through the development of the Haley Ranch
Estates project, it is estimated that the total project cost could be in the
range of $7 to $7.5 million. This range is based upon a preliminary pro forma
developed by the current property owner with actual cost information from the
Haley Ranch Estates project provided by staff.
13 OF 26 JUN 1 5 1993 ITEM 10. I
Exhibit "B"
Page 2
Estimated Project Revenue Stream
As illustrated in Table II below, the estimated annual rent stream that this
project could be expected to generate would be an amount equal to: 49 units
(one reserved at no rent for the on-site managers who would serve as assistant
managers for the entire Haley Ranch Estates) multiplied by $453 per month
which equals $22,197 per month, or $266,364 annually. This amount could be
higher if the number of units increases due to a project merger.
Tabl e II
RENT PAYING ABILITY (Revenue Stream)
% of Annua 1 Monthly 30% of Ut il ity All owabl e
Median Income* Income Income Allowance Monthly Rent
50 $20,700 $1,725 $518 $65 $453
*assumes family size of 4 persons
An amount equal to 5 percent of the total rent stream is typically deducted to
allow for vacancies.
These rent revenues would cover costs associated with operating, maintaining,
and managing the project, as well as to establish a 10ng-term'capital
replacement fund. As no debt service is contemplated for this project,
because the Agency would provide funds to cover the total cost of development,
the rent stream would be adequate to cover all anticipated operations,
maintenance and management costs.
Development Process
It is recommended that the Redevelopment Agency acquire the property from the
current owner, request proposals from developers to construct the housing.
The Redevelopment Agency staff would seek the participation of qualified
developers through the Request for Qualifications (RFQ) process, inviting the
qualified developers to compete for the project through the Request for
Proposal process (RFP). The City/Redevelopment Agency would retain ownership
of thi s project.
Housing Goals Achieved
According to the Affordable Housing Needs Assessment, 87 percent of the low
income renters in the community are overpaying for housing, that is they are
expending more that 30 percent of their total household income on housing
14 OF 26 JON 1 5 1993 ITEM 10.1
-- --
Exhibit "B"
Page 3
related expenses. A rental manufactured housing project on this site would
provide affordable housing to families with very-low incomes.
As the property is located within the Paguay Redevelopment Project Area, any
new dwelling units developed on this site could count toward meeting the
redevelopment housing obligations pursuant to Section 33413. As the
Redevelopment Agency would entirely fund or "develop" this project, at least
30 percent of the units (15) must be deed restricted for affordability to
households with low and moderate incomes; at least 50 percent of this number
(8) must be deed restricted for households with very-low incomes [Section
33413(b)(1)] .
It is possible that any dwelling units deed restricted above this base
requirement could be used toward meeting the redevelopment housing
requirements of Section 33413(b)(2) or the 15 percent rule for private
projects developed within the Project Area. It is recommended that 100
percent of the units be deed restricted for very-low income households.
Article XXXIV of the California State Constitution
This project would serve to meet the Redevelopment Agency's current
outstanding replacement housing obligation of 15 dwelling units, as well as
provide for a future replacement hOijsing obligation of 35 dwelling units. The
Special Counsel to the Redevelopment Agency has opined that the Agency may
replace units that it anticipates may be removed from the affordable housing
market in advance of the actual displacement.
-
15 OF 26 JUN 1 5 1993 ITEM 10.1
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16 OF 26 ATTACHMENT II All JUN 1 5 1993 ITEM 10, I
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Exhibit "c"
GATEWAY PARK ROAD PROPERTY ACQUISITION
Site Description
This 3.36 acre site is currently vacant and zoned Commercial Office (CO), with
the Affordable Housing Overlay Zone option of development up to 25 d.u./AC.
for very-low income senior housing (Attachment "C"). The property is a flat,
long, rectangular shaped lot immediately north of Gateway Park Road and east
of Pomerado Road. It is located very close to services needed by seniors,
including, transit, shopping (supermarket .2 miles in Rancho Bernardo),
churches and medical facilities.
An affordable senior housing complex would be compatible with surrounding
development, including, the single-family homes to the north, the Gateway
Retirement Center to the east, the church to the south and Gateway Medical
Center offices to the west. This project would represent a good transitional
land use between medical and offices uses to the west and the senior housing
facility to the east.
Project Description
It is recommended that the property be acquired at this time and retained for
future development of an affordable housing project. No project development
is being recommended at this time.
However, it is estimated that, if developed in accordance with the AH Overlay
Zone designation of 25 d.u./AC, the project site could ultimately accommodate
84 dwelling units. The AH Overlay Zone, as approved by the City Council,
would require that the project be developed exclusively as a very-low income
senior project at a density of up to 25 d.u./AC. The size and distribution of
the units would be determined at the time of the actual development.
While the site is currently designated with the AH Overlay Zone for a senior
project of up to 25 d.u./AC, the Committee suggests that the City Council
consider whether a multi-family project may be more appropriate. This would
provide affordable, convenient housing for employees of Pomerado Hospital and
the surrounding medical offices.
Estimated Project Cost
At this time, the project contemplates property acquisition only. The
property is currently listed for sale at $1,756,332. However, it is not known
at this time if this represents a value that could be supported by an
appraisal of the property.
Estimated Project Revenue Stream
Not applicable at this time. The project being recommended at this time
involves the acquisition of the property only to ensure that this prime site
is not lost to other uses. However, assuming a conservative rent stream of
$310 per month per unit, a project on this site would generate an annual
amount of $312,480. The project ultimately developed on this site would be
17 OF 26 JUN 1 5 1993 ITEM 10. I
-- ---.-.---
Exhibit "C"
Page 2
structured to ensure that the revenue stream would be adequate to cover costs
associated with operations, maintenance, and management.
Deve70pment Process
Not applicable at this time, however, it is anticipated that development would
progress in the manner being recommended for the Huber Senior project
discussed above. Whether developed as a senior project or some other
affordable housing project, it is recommended that it be privately developed
with Agency assistance, with ownership held by the developer/property owner.
Housing Goa7s Achieved
Acquisition of this property alone would not meet any of the Agency's housing
goals, although it would ensure that a particularly well suited piece of
property would be held for future development of affordable housing.
Otherwise, this site may be lost by being devoted to another use.
The ultimate development of this site would satisfy Agency housing goals much
like the proposed Huber project, as this site would serve the affordable
housing needs of very-low income seniors. This need was confirmed by the
Affordable Housing Needs Assessment which found that 49 percent of the lower
income (~ 80 area median) seniors overpay for housing, with seventy percent of
this group being renters. If developed as a non-senior project, it could
serve to make additional affordable rental units available to the 87 percent
of the lower income renters in the community who are overpaying for housing.
The subject property is not located within the Paguay Redevelopment Project
Area, hence, these units could not be credited toward the Agency meeting its
housing obligations pursuant to Section 33413(b)(2), or the 15 percent
affordability requirement for non-Agency development within the Project Area.
The level of Agency assistance to this project would not trigger the "Agency
developed" definition, therefore, the 30 percent deed restriction requirement
of Section 33413(b)(1) would not apply. Irrespective of the California
Redevelopment Law requirements, it is recommended that 100 percent of the
units be deed restricted at the very-low income level.
This project would also demonstrate to the State, that the Affordable Housing
Overlay Zone concept is effective. Further, in terms of the Committee goal of
distributing affordable housing throughout the community, it should be noted
that the Gateway Park Road property is in north Poway.
Article XXXIV of the California State Constitution
Acquisition of vacant property alone would not trigger any Article XXXIV
requirements. Ultimately, the project would be privately developed and owned,
would not be exempted from paying property taxes, and the level of Agency
assistance would not trigger the "Agency developed" definition, therefore it
would be exempted from the voter approval requirement pursuant to Article
XXXIV.
18 OF 26 JUN 1 5 1993 ITEM 10./
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19 OF 26 ATTACHMENT "A" JUN 1 5 1993 ITEM 10.1
-_._-- --~---
Exhibit "E"
ACQUISITION OF EXISTING SINGLE-FAMILY DWELLING UNITS
Program Concept
It is recommended that the Redevelopment Agency acquire existing singly-family
homes throughout the community, rehabilitate them, and rent them to low- and
moderate-income families. The Agency would focus on acquiring older housing
throughout the community and include a rehabilitation component to the program
which would improve the appearance and safety of the existing residential
areas. These units would be deed restricted for affordability for the longest
feasible time and at least the term of the land use controls of the
Redevelopment Plan, currently the year 2028.
It is recommended that a loan/mortgage component be involved, making it
possible to amortize the cost of the unit over the duration of the mortgage or
30 years. The rent revenues generated by the units would be used to cover
operations, maintenance, and management costs of the units and the mortgage
payments. The Redevelopment Agency would make a down-payment on these homes
in an amount adequate to allow the rent revenues to cover associated
operations, maintenance, and management costs.
Program Cost
According to a local realtor, the Redevelopment Agency could acquire
older single family homes in the price range of $140,000 to $155,000. The
less expensive units would be in the area of 1,000 square feet, and the more
expensive units in the 1,200 - 1,400 square foot range. Rehabilitation work
would include the correction of all health and safety problems, including
plumbing, roofing, and electrical work, as applicable. It could also involve
painting the structure, replacing carpet, and minor landscape restoration as
applicable. It is estimated that the average rehabilitation would range in
cost between $15,000 - 20,000 per dwelling unit.
Depending upon the availability of suitable housing on the market, the cost
could vary significantly. Using an average cost of $180,000 per single-family
home acquired and rehabilitated, the program costs could be quite substantial.
Therefore, it is recommended that the Redevelopment Agency finance a portion
of this cost; a mortgage component is being included in the structure of the
program.
It is estimated that a down-payment of approximately $100,000 per unit would
be needed to make the rent revenues adequate to cover operations, maintenance,
management, and mortgage costs. Again, program activity would be limited by
the availability of funds and suitable dwelling units on the market.
Estimated Program Revenue Stream
It is estimated that the annual rent stream generated by a three bedroom house
occupied by a lower income family (not exceeding 80% of the area median
income) would be approximately $9,900.
20 OF 26 JUN 1 5 1993 ITEM 10.1
- -
Exhi bit "E"
Page 2
Housing Goals Achieved
As noted in the Affordab7e Housing Needs Assessment, this type of program
would have the advantage of not concentrating a specific area with lower
income households. In addition, the program could target the special needs
groups not easily assisted by other housing programs, such as lower income,
1 arge fami 1 i es. It would also have the secondary benefit of improving the
community's older housing stock. It is possible that dwelling units made
affordable in this manner could count toward the Redevelopment Agency's
housing requirements pursuant to Section 33413(b)(2) of the California Health
and Safety Code; the subject unit would need to be located within the Paguay
Redevelopment Project Area.
Article XXXIV of the California State Constitution
As the distribution of acquired units would not significantly impact anyone
area of the community, this program would not be subject to the voter approval
requirements of Article XXXIV. Small projects not exceeding four adjacent
dwelling units are specifically exempted.
MOBILEHOME COMPONENT
This program would extend to the City's mobilehome housing stock as well. The
Redevelopment Agency would acquire mobilehome units on the market and place
restrictions on the units that would only allow the unit to be sold to income
qualifying low- and moderate-income households. The Redevelopment Agency
would then resell the unit. This resale is currently required, as the City's
mobilehome park rules do not allow rental units; occupants must own the
mobilehome units.
Estimated Program Cost
There is a broad range of mobilehome sales prices, currently between $5,000
and $60,000 per unit. The less expensive units would likely require more
significant rehabilitation. For the purposes of this program, it is
anticipated that mobilehome units could be acquired and rehabilitated at a per
unit cost in the range of $10,000 to $30,000. The cost of this program
component is included within the overall program budget of $1,200,000.
Housing Goals Achieved and Article XXXIV
The City-owned mobilehome parks are not located within the Redevelopment
Project Area, and therefore this program component would not count toward
meeting the Redevelopment Agency's previously incurred housing obligations
pursuant to Section 33413(b)(2). This program would be exempted from the
voter approval requirements of Article XXXIV. These properties are already
held by a public agency and, while not deed restricted, do currently provide
affordable housing to low and moderate income households.
21 OF 26 JLJN 1 5 1993 ITEM 10 . l
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Exhibit "D"
RESIDENTIAL PRESERVATION/REHABILITATION PROGRAM
Program Description
The following is the program outline developed by the Redevelopment and
Housing Advisory Committee with the assistance of staff. If the program
concept is approved, it would be recommended that a consultant would take
following program outline and finalize the actual program and all necessary
program documents.
Income Eligibility: As with any program funded by the Redevelopment Agency's
Low and Moderate Income Housing Fund, program participants must income
qua 1 i fy . Each program participant must provide verification that their total
household income does not exceed the income limit established for the moderate
income category (~ 120% area median income), adjusted for family size. This
income limit is established each year by the State Department of Housing and
Community Development for each County in the State, and is adjusted for family
size. Household income is based upon the total income of all residents in the
household and those individuals on the grant deed.
Caretaker exception: A live-in care provider's income would not be counted as
part of the total household income. Correspondingly, the care provider would
not included in determining the household size, as the household size impacts
the income limits for each income category. However, in no case would a loan
be approved for a household whose total household income, including that of a
caregiver, exceeds the income limits for the moderate income category.
Residency Eligibility: The program would be available to any income eligible
homeowner-occupant residing within the City of Poway; rental properties would
not be eligible for the proposed program. Specifically, the proposed program
would be offered to the owner-occupants of single-family dwellings, attached
family dwellings, condominiums, and mobilehome units within the City-owned
mobilehome parks. No "pre-residency" requirement would apply to this
program; the applicant must only be a current City resident at the time the
application is filed.
BASIC PROGRAM FOR SINGLE-FAMILY, ATTACHED-FAMILY AND CONDOMINIUMS
Program Rules and Guidelines: The program would offer "no-interest" loans of
up to $10,000 per eligible participant. An additional amount could be
authorized by the Executive Director of the Redevelopment Agency, or his/her
designee, for circumstances that require a higher loan amount. The
Redevelopment Agency would not make any loan where the total amount of loans
on the property, including the Agency loan, exceed 100 percent of the value of
the dwelling unit. The loan would be secured by a deed of trust recorded with
the San Diego County Recorder's Office. The Redevelopment Agency would not
subordinate its interest at any time.
If the program participant remains in the dwelling unit for a period of 10
years, the loan would convert to a grant. In addition, the loan would be
forgiven on a 10 percent basis each year. If the dwelling unit was rented
(with a family member exception) prior to the end of the ten year period,
22 OF 26 JUN 1 5 1993 ITEM 10. I
-
Exhibit "0"
-- Page 2
repayment of the unforgiven balance of the loan would be required. Simil arly,
if the dwelling unit was sold prior to the end of the ten year period,
repayment of the unforgiven balance would be required.
Trust issues - property owned by a Trust would be eligible for Program
participation if all other requirements were met. All trustees would be
required to sign the appropriate program documents, and the income of all
trustees would be included to determine if the income eligibility criteria was
met. Transfer of the property by a homeowner into a trust would not
automatically trigger the repayment clause.
In the event that a program participant dies, the property, which by operation
of law goes to a family member defined as a natural or adopted child and
otherwise qualifies as a very- low, low, or moderate income household, the
loan shall transfer to that individual pursuant to the original terms of the
Agreement. This program transfer provision would apply only if the subsequent
owner actually occupies the subject dwelling unit. If repayment of the loan
is required, said repayment would be on a proportional basis; for example, 50%
after 5 years, 20% after 8 years and so forth.
Program Mechanics: Three (3) bids would be required from the applicant for
each portion of the work, from a licensed contractor for those items requiring
- a licensed contractor. The selected contractor would receive a written notice
approving the commencement of work. Work shall be completed within 90 days of
this letter, with a possible extension period granted under extraordinary
circumstances.
A "Flexibility Clause" would be included which would enable the Executive
Director of the Redevelopment Agency to reasonably address unanticipated
circumstances that may arise during the implementation of the Program. The
following language could be incorporated into the Program guidelines to
accomplish this: "It is understood that the program reserves the right to
modify the program rules and regulations into the future based upon new
circumstances."
Eligible Rehabilitation Items: The first priority for the program would be to
correct health and safety items identified during the home inspection. One
requirement of this program is that all health and safety deficiencies must be
corrected first, before any of the more cosmetic rehabilitation work is
considered. Health and Safety repairs include: roofing (composition shingle
only); electrical; plumbing; heating; wall and floor repairs; water heater
repair/replacement; foundations; structural members; siding; windows/doors;
weatherization; painting (when necessary due to construction/improvements);
and, other health and safety items as required by law.
Rehabilitation funds would also be available for making dwelling units
handicapped accessible. Improvements to make a dwelling unit handicapped
accessible would be categorized as health and safety improvements. These
improvements include: shower units with seats; grab rails; lever hardware;
23 OF 26 JUN 1 5 1993 ITEM 10./
Exhibit "D"
Page 3
retrofitting toilets to achieve adequate height; moving power points and
light switches to 3-4' from floor; ramping entrances to dwelling unit;
insulating hot-water pipes adjacent to sinks; reconstructing doorways for
adequate width; and, lowering sinks in kitchen and bathroom.
Once it has been confirmed that all health and safety deficiencies have been
corrected, participants would be allowed to undertake other eligible
improvements, including: paint (interior and exterior); basic landscaping and
irrigation; roll-up garage doors; driveways; rain gutters; exterior lighting;
fencing (where there is a concern for safety); repair of existing air
conditioners and furnaces; and, pre-fabricated kitchen cabinetry (not custom
built) . Additional items may be approved on a case-by-case basis as
determined to be appropriate by the Executive.Director of the Redevelopment
Agency or his/her designee.
Eligible improvements to condominiums would be covered under this program,
however, the loan is only for those items within the individual homeowner's
area of responsibility, as set forth within their CC&R's and ByLaws. For
example, roof repairs are typically part of the home-owner's association
responsibility and would not be eligible.
Ineligible Rehabilitation Items: The following are examples of ineligible
improvements for the program: kitchen and laundry appliances; BBQ pits;
fireplaces; alarm systems; ceiling fans; flower boxes; garden windows;
skylights; greenhouses; room additions; awnings; patios or decks; new concrete
work; storage sheds; detached workshops and non-permanent structures; new air
conditioners; and; any other improvements not listed that may be deemed
ineligible by the Executive Director or his/her designated representative.
BASIC MOBILEHOME PROGRAM ,.
The rules outlined above would generally apply, with eligibility restricted to
owner-occupants of units within City/Agency owned mobilehome parks. However,
the maximum loan amount may be reduced, based upon the value of the mobilehome
unit. The loan may not exceed 20% of the unit value, as determined by an
appraisal, up to a maximum loan of $10,000. To ensure compliance with this
provision, Agency staff would contract with an appraiser who would conduct a
cursory (drive-by) appraisal of the unit.
Because mobilehomes are personal property, a grant deed may not be used to
secure the loan. Alternately, the loan would be secured with a promissory
note, and made a part of the homeowner's file with the Poway Royal Estates,
Poinsettia Senior, and Poinsettia Family Park. Loan repayment would be
triggered in the event that the mobilehome was sold or title transferred,
based upon the unforgiven loan balance at the time of sale or title transfer,
and prior to the Park Management approval of the subsequent buyer/occupant.
EXCESS LOAN PROGRAM
Under certain warranted circumstances, as determined by the Executive Director
24 OF 26 JUN 1 5 1993 ITEM 10. I
.
-- _.
Exhibit "D"
- Page 4
of the Redevelopment Agency, or his/her designee, the $10,000 loan limit per
participant could be exceeded. The additional amount approved above the
$10,000 basic program limit would be offered strictly in the form of a loan
which would become due upon sale or transfer of the property. None of the
"excess" loan balance would be forgiven. In no event would a "substantial"
rehabilitation be undertaken through this program without the recordation of
affordability covenants (deed restrictions) against the property, pursuant to
State Law.
The excess loan would be offered at "no interest" to very-low and low income
residents. For moderate income residents, the excess loan amount would be
fully amortized at a rate of 3 percent, paid over a period not to exceed 15
years. It is contemplated that these loans would be serviced by banks.
Agency staff would identify a local lender needing Community Reinvestment Act
credit to assist the Program with servicing, credit issues, and perhaps loan
write-down amount. The Agency would take no greater than a 3rd position on
the bank loan.
Program Staffing: Initially, staffing for the program would also be provided
through consultant services. Should program activity warrant a full-time
position, the Redevelopment Agency would be asked to consider replacing the
contract service with a Redevelopment Agency employee. This recommendation
- would only be made if the program could justify this level of staffing and
there was a commitment to a multi-year or long-term program.
Preliminary Cost Estimate
Initial Program participation is difficult to gauge, however, a program budget
of $1,250,000 could assist 125 10w- and moderate-income households at the
maximum loan amount of $10,000 per household. This would equal 40 loans
processed each year during this initial three year period.
Housing Goals Achieved
A Residential Preservation/Rehabilitation Program would serve to improve and
preserve the supply of housing available to households with low and moderate
incomes. This is one of the primary goals for which the Housing Fund was
established by the State Legislature. This program would not help the
Redevelopment Agency in meeting its housing obligations pursuant to Section
33413(b). This program would, however, ensure that the Redevelopment Agency's
affordable housing strategy is a balanced one in terms of the goal to
increase, improve and preserve the supply of affordable housing available to
10w- and moderate-income households.
Article XXXIV of the California State Constitution
This program is exempt from the voter approval requirements of Article XXXIV.
-
25 OF 26 JUN 1 5 1993 ITEM 10. !
REDEVELOPMENT AND HOUSING ADVISORY COMMITTEE
Comprehensive Affordable Housing Strategy
Tom Tremble, Chair Gordon Meyer, Vice Chair
Carlton Ayers David Churchi 77
James Crosby Fran Davenport
Lois Downs Darwin Drake
Alan Dusi Joyce Eiswald
Stephen Kuptz Margaret Lester
Mary Mitchel I Robert Wo Ii nski
26 OF 26 JUN 1 5 1993 ITEM 10. I