2003 01 07 RDA Staff Report - Watercolors Silent 2nd Loan(�&4444"
COUNCIL/RDA MEETING DATE: January 7, 2003
ITEM TITLE:
Joint Public Hearing for Consideration of an
Affordable Housing Agreement by and Between the La
Quinta Redevelopment Agency and Santa Rosa
Development, Inc., a California Corporation, for the
Sale and Development of 20.04 Acres of Agency
Property Located Northeast of the Intersection of
Avenue 48 and Adams Street in La Quinta Project
Area No. 2
AGENDA CATEGORY:
BUSINESS SESSION:
CONSENT CALENDAR:
STUDY SESSION:
PUBLIC HEARING: 13
Adopt a Resolution of the Redevelopment Agency approving the Affordable Housing
Agreement and authorizes the Agency Chair and Executive Director to execute the
necessary documents to fund up to $7,800,000 in expenditures from the Project Area
No. 2 Low and Moderate Income Housing Accounts for this project; appropriate
$432,332 from the Project Area No. 2 Low and Moderate Income Housing Account
246-000-300-290 fund balances; appropriate $16,964 from the Project Area No. 2
Housing Tax Bond Fund; re -appropriate $350,704 from Project Area No. 2 Low and
Moderate Housing Projects Fund 246-906-684-000; and direct the Executive Director
to initiate activities that lead to the sale of new housing bonds.
FISCAL IMPLICATIONS:
The Affordable Housing Agreement ("Agreement") will result in expenditure of
$7,800,000 in housing funds; $800,000 will be expended after the Agreement is
executed for costs related to securing development entitlements. These expenditures
will be made from funds the Agency currently has on hand. The additional
$7,000,000 required to fund homebuyer second trust deed loans (anticipated to be
needed no earlier than 14 months after the Agreement is executed) will be derived
from the sale of housing bonds. The Agency's underwriter indicates a capacity to
issue up to $22.0 million in tax-exempt bonds to fund affordable housing activities.
The bonds can be structured and sold well in advance of the time second trust deed
loans must be funded to facilitate unit sales.
In 1995, the Agency purchased an approximately 50.0 acre parcel located northeast
of the Avenue 48/Adams Street intersection to reserve property for future affordable
housing development. Subsequently, .5 acres was transferred to the Coachella Valley 220
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Water District in 1999, to satisfy well site requirements related to the development of
the Miraflores affordable housing development; 14 acres were transferred to the A.G.
Spanos Corporation in February 2000, for the development of a 200 unit apartment
community that includes 20 affordable units; 11 .9 acres is the subject of a separate
agreement for purchase and sale and escrow instructions for the development of 36
market rate units; and the disposition of the remaining 20.04 acres is the subject of
this action.
Santa Rosa Development, Inc. ("Developer") first contacted the Agency in May 1998,
regarding their interest in developing both affordable and market rate housing on the
50-acre parcel. The Agency delayed moving forward with their request until a majority
of the dwellings in the Miraflores community (located at Avenue 48 and Jefferson
Street) were sold. This occurred in March 2002; the Agency then entered into
negotiations with the Developer to determine if a mutually acceptable transaction could
be consummated. Negotiations concluded in August 2002, and the Agreement was
subsequently drafted.
The Agreement facilitates the sale of the 20.04-acre parcel to the Developer and the
subsequent development of 149 one and two bedroom single story court homes
ranging from 1,175 to 1,300 square feet in size. The average home price will be
$177,320. The home sales will be restricted to moderate -income homebuyers (defined
as households earning from 81 % to 120% of the Riverside County median income)
aged 55 years and older.
Approximately 22,500 square feet of the 20.04 acre parcel will be partially improved,
and transferred to the Coachella Valley Water District for a well site. This requirement
will result in the Developer retaining 19.5 acres of the 20.04-acre Property for the
Development.
Per the Agreement, the Developer will have up to 180 days after the Agreement is
executed to prepare and process the entitlements and tract map required for Property
development. The Agency will provide up to $800,000 during this period to
underwrite costs associated with these activities. Upon receiving the entitlements, the
Agreement provides that the Agency will sell and transfer the Property to the
Developer for $1 .00.
Once the homes receive a certificate of occupancy from the City of La Quinta, the
Agency will provide up to $7,000,000 in assistance to fund homebuyer silent second
trust deed loans. The Agreement provides the latitude to fund second trust deed loans
that range from $23,000 to $67,000 per homebuyer. This latitude is being provided
to afford the greatest number of moderate -income households the opportunity to
purchase these units. Agency staff will work with the Developer to qualify prospective
homebuyers to insure that homebuyers requiring the largest mortgage amounts are not
the only ones funded, thus exhausting the funds allocated for second trust deed loans
before all of the units are sold.
The second trust deed loans will also feature covenants that require the dwellings to
remain affordable to moderate -income households for 45 years. Further, unlike past
Agency second trust deed loans, the affordability covenants will not afford the
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homeowner the option to sell their dwelling at prevailing market values and release the
unit from the affordability covenant. Instead, the homeowner must sell their dwelling
to either another qualified buyer (a moderate income households that is 55 years or
older), or if a qualified household cannot be found, as a last resort to the Agency.
Accompanying the Resolution is a Summary Report that further details this transaction.
LP 11TRWIN0 i :"
The alternatives available to the Redevelopment Agency include:
Adopt a Resolution of the Redevelopment Agency approving the Affordable
Housing Agreement and authorizes the Agency Chair and Executive Director to
execute the necessary documents to fund up to $7,800,000 in expenditures
from the Project Area No. 2 Low and Moderate Income Housing Accounts for
this project; appropriate $432,332 from the Project Area No. 2 Low and
Moderate Income Housing Account 246-000-300-290 fund balances;
appropriate $16,964 from the Project Area No. 2 Housing Tax Bond Fund; re -
appropriate $350,704 from Project Area No. 2 Low and Moderate Housing
Projects Fund 246-906-684-000; and direct the Executive Director to initiate
activities that lead to the sale of new housing bonds; or
2. Do not approve the Resolution of the Redevelopment Agency that approves the
Affordable Housing Agreement; or
3. Provide staff with alternative direction.
Respectfully submitted,
ierinan
unity Development Director
Approved for submission:
Thomas P. Genovese, Executive Director
Attachments:
1 . Summary Report
2. Affordable Housing Agreement
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