CC Resolution 1989-078^#: RESOLUTION NO.89-78
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
LA QUINTA APPROVING THE EXPANSION OF A PROGRAM
FOR THE FURNISHING OF ASSISTANCE FOR
AFFORDABLE HOUSING AND AUTHORIZING THE
EXPENDITURE OF FUNDS OF THE LA QUINTA
REDEVELOPMENT AGENCY PURSUANT TO SUCH
PROGRAM
WHEREAS, the La Quinta Redevelopment Agency the *`Agency*') is in the
process of implementing the Redevelopment Plan for Redevelopment Project Area No.1
as adopted by City of La Quinta Ordinance No.34 the *Project'*); and
WHEREAS, the Redevelopment Plan the *RedeveIopment Plan') for the Project
provides that certain funds are to be made available to improve and expand the supply
of low and moderate income housing, in conformity with the provisions of Section
33334.2 of the California Health and Safety Code; and
WHEREAS, the Redevelopment Plan provides for the provision by the Agency of
certain public improvements; and
WHEREAS, the City of La Quinta the City*') is establishing an Assessment
District, Assessment District 89-2, the District) which Will provide certain gas utility
infrastructure improvements the Improvements'*) and benefit residents of the Project
Area of the Project; and
WHEREAS, Hook-Up Fees will be levied against property owners wishing to have
their property connected to the Improvements; and
WHEREAS, although the Improvements will be of benefit once completed, the
imposition of Assessments and Hook-Up Fees to fund the cost of the Improvements
would create a burden for certain residents within the District, particularly those of limited
means; and
WHEREAS, the Agency currently implements an Assessment/Hook-Up Fee
Subsidy Program the Program'*) which provides assistance to defray the cost of
Assessments and Hook-Up Fees for the benefit of persons who qualify due to income or
who covenant to provide affordable housing for a fifteen-year period; and
WHEREAS, the Improvements necessitate the need for subsidy assistance for
eligible Participants; and
WHEREAS, it is proposed that the Program be augmented to include
Assessments and Hook-Up Fees for the construction of natural gas lines within the
District; and
WHEREAS, the Program for the provision of such assistance and the inclusion of
a subsidy for Gas Hook-Up Fees and Gas Assessments is described in the Statement of
the La Quinta Redevelopment Agency Assessment/Hook-Up Fee Subsidy Program the
Statement"), which is attached hereto as Exhibit A", and which, together with all
attachments thereto, is incorporated herein by reference; and
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^#: WHEREAS, the provision of the Improvements will benefit the Project; and
WHEREAS, there is no other reasonable means available to the community to
finance the Improvements; and
WHEREAS, the implementation of the Program benefits the Project and the
community and the proposed expansion of the Program will provide further benefits.
NOW, THEREFORE, the City Council of the City of La Quinta does resolve as
follows:
1. The City Council finds and determines that: a) the provision of the
Improvements will benefit the Project Area; b) there is available to the community no
other reasonable means of financing the Improvements than that set forth in the
Statement, and C) the Assessment/Hook-Up Fee Subsidy Program is currently being
implemented.
2. The City Council approves the Program to include the provision of
subsidies for Gas Assessments and and Gas Hook-Up Fees and consents that the
Chairman and Executive Director are authorized to execute on behalf of the Agency all
documents necessary and proper to effectuate the provisions of the Program, as
described in the Statement.
PASSED, APPROVED AND ADOPTED this 20tb:lay of June 1989 by
the following vote:
AYES: Council Members Bosworth, Rushworth1 Sniff, Mayor Pena
NOES: NQne
ABSENT: Council Member Bohnenberger
ABSTAIN: None
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^#: STATEMENT OF THE I-A QUINTA REDEVELOPMENT AGENCY
ASSESSMENT/HOOK-UP FEE SUBSIDY PROGRAM
PROGRAM PURPOSE
The La Quinta Redevelopment Agency acknowledges that the Cove community lacks and/or is
in need of infrastructure improvements, and that these deficiencies adversely affect housing
conditions. Additionally, the Agency has determined that it is vital that such infrastructure
improvements be made to enable the Agency and the City of La Quinta to increase and
improve the supply of affordable very low, low and moderate income housing that is located in
the area. Therefore, the Agency and the City will jointly institute and finance a public
improvements program utilizing an Assessment District with improvements funded by 1915 Act
Improvement Bonds. Although the infrastructure improvements will benefit Very Low, Low or
Moderate Income Households in the area, the imposition of the assessments and subsequent
hook-up fees may create financial difficulties. In an effort to achieve needed public
improvements, to increase and improve the community's supply of affordable housing, and to
alleviate any financial hardship, the Agency established the following Assessment/Hook-Up
Fee Subsidy Program to maintain the affordability of the community's housing stock.
The Assessment/Hook-Up Fee Subsidy Program for Low and Moderate Income Households
will provide the funding mechanism to enable the Agency and the City to utilize the 1915 Act
Improvement Bonds to pay for needed infrastructure improvements while maintaining
affordable housing for Very Low, Low and Moderate Income Households.
The Program was initially limited to qualified Very Low, Low and Moderate Income Households
within Assessment District 88-1 and provided for Assessment Subsidies only. This Program
has been expanded to cover Sewer Hook-Up Fees. Sewer Hook-Up Fees are voluntary and
are required to collapse or fill the property's septic tank and connect the property to the new
sewer system.
Additionally, the Program now includes Assessment District 89-2. The Assessment/Hook-Up
Fee Subsidy Program will fund Gas and Sewer Assessments and Gas and Sewer Hook-Up
Fees. Gas and Sewer Hook-Up Fees are voluntary.
If continued to be successful, the Assessment/Hook-Up Fee Subsidy Program may be made
available to other qualifying areas of the community; however, no commitment has been made
to extend the availability of the Program beyond the scope described in this Statement.
DEFINITIONS
The meaning of the various terms, as used herein, shall be as follows:
Assessment/Hook-Up Fee Subsidy Definitions
Affordable Housing Cost" means that total housing cost shall not exceed 25% of the
Household's Gross Income except that in the case of a Very Low Income Household,
Affordable Housing Cost shall mean not less than 15% and no greater than 25% of their
Gross Income. Total housing cost includes: 1) the principal and interest on a Mortgage
loan including any rehabilitation loans and any loan insurance fees associated therewith;
2) property rental payments; 3) property taxes and assessments; 4) fire and casualty
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^#: insurance covering replacement value of property/improvements; 5) property
maintenance and repairs; 6) a reasonable allowance for utilities; 7) homeowner
association fees; and 7) space rent if the housing unit is situated on rented land.
Affordable Unit" means a dwelling unit maintained by an Owner whose Affordable
Housing Cost" is within the Program guidelines previously defined. Additionally, the
Gross Income of the qualified Household shall not exceed 120% of the median income
during the period of Program participation.
Annual Gas/Sewer Assessment Payment" means the annual levy of principal and
interest that would be charged against property through the enactment of Assessment
District 89-2.
Annual Sewer Assessment Payment" means the annual levy of principal and interest
that would be charged against property through the enactment of Assessment District
88-1.
Applicable Anniversary Date" means the second anniversary of the provision of the
Initial Agency Assistance and each second anniversary date thereafter during the
Minimum Period.
Assessment District" means a district formed under the Improvement Act of 1915
through which bonds are issued to fund the construction of public improvements. This
program is applicable to Assessment Districts 88-1 and 89-2.
Certification of Eligibility" means an affidavit, to be provided by the Owner and Rental
Household upon application to the Program and biannually during the Minimum Period,
which states that the Household qualifies for the Assessment/Hook-up Fee Subsidy
Program.
Conditions to Assistance" means all of the following, which must be satisfied on a
continuous basis throughout the Minimum Period: the Unit is maintained as an
Affordable Unit; Certification(s) of Eligibility are provided in accordance with the
Program; the Covenant of Affordability is recorded and remains in full force and effect;
the use of the property subject to the Covenant of Affordability conforms to the
Redevelopment Plan; and the use of the property conforms to the nondiscrimination
limitation set forth in Section 33436 of the California Health and Safety Code.
Covenant of Affordability" means a document recorded against the participating
property that stipulates that the housing unit shall remain available at an Affordable
Housing Cost to Very Low, Low or Moderate Income Households for a Minimum Period
of fifteen years. Over the life of the covenant, Household incomes will be allowed to rise
to a level of 120% of median income, adjusted annually, and remain in compliance with
the Covenant of Affordability.
Elderly Household" means a Household in which the head of Household or spouse is 62
years or older.
Gas Hook-Up Fee" means the payment required to be made to an unrelated third party
in order to connect the property to the new gas lines and pay any fees in connection with
the hook-up levied by the gas company within Assessment District 89-2.
Gas Hook-Up Fee Payment" means the one-time charge for the Gas Hook-Up Fee.
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^#: Gas Hook-UD Fee Subsidv" means the financial assistance the Agency provides toward
Gas Hook-Up Fee Payments.
Gas/Sewer Assessment Payment" means the total of the annual installments of principal
and interest that would be levied against property through the enactment of Assessment
District 89-2.
Gas/Sewer Assessment Subsidy" means the financial assistance the Agency provides
toward the Gas/Sewer Assessment Payment for Owners in Assessment District 89-2.
Gross Income" means the total of all annual income of any nature from any source
derived, including, but not limited to, salaries, wages, dividends, interest, capital gains,
rents, income from operation of a farm or business, income from the sale or exchange of
property, gifts, inheritances, Social Security payments, other retirement benefits, welfare
benefits, alimony and support payments and any other thing of economic value of the
entire Household less the following:
1. 10% of the total income for an Elderly Household, and/or
2. recurring, extraordinary medical expenses that exceed 3% of Gross Income,
and are not compensated for or covered by insurance or other sources, such
as public assistance or tort recovery.
Household" means a person, persons or family residing in a dwelling unit.
Initial AGency Assistance" means the initial payment of Agency assistance to a
Participant pursuant to the Program.
Minimum Period" means the continuous time period commencing with the recording of
the Covenant of Affordability and ending on the fifteenth anniversary thereafter, in which
the program Participant maintains an Affordable Unit as defined by the definitions of the
Program.
Mortgage" means a mortgage deed, a deed of trust, or any other instrument which
constitutes a lien on real property.
Net Assets" means all real and personal property of any character which an Owner or
Rental Household owns or has an interest in, including stocks, bonds, and savings
accounts. For Owner occupants this excludes the real property within the Assessment
District.
Owner" means a person or persons owning real property which is included in the
Assessment District and successors in interest or the legally appointed representatives
of such person or persons.
Participant" means an Owner of a dwelling which participates in the Program.
Program" mean the Assessment/Hook-Up Fee Subsidy Program as set forth in this
Statement of the La Quinta Redevelopment Agency Assessment/Hook-up Fee Subsidy
Program Assessment Districts No.88-i and 89-2).
Rental Household" means a person, persons or family that occupies a dwelling unit for
which they compensate an Owner for use of the dwelling.
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^#: Repayment Amount" means the pro-rata share of the Assessment and Hook-Up Fee
Payments calculated by dividing the total Assessment and Hook-Up Fee Payments plus
interest expense by the number of years as originally set forth in the Covenant of
Affordability multiplied by the number of years remaining to run on the Covenant of
Affordability as of the time payment becomes due to the Agency.
Example:
Assessment Payment $1,300.00 + Interest Expense*
Hook-Up Fee Payment $1,700.00
Number of years set forth in the Covenant 15
Property has been in program for 5 years
10 years remain under the Covenant
Expense* si 300 + Interest ExDense* + $1700) X 10 $2,000 + Interest
15
* The amount of interest expense shall be the lesser of: 1)12% simple interest per annum
or Ii) the highest interest rate that may lawfully be charged by a redevelopment agency.
Sewer Assessment Payment" means the total of the annual installments of principal and
interest that would be levied against property through the enactment of Assessment
District 88-1.
Sewer Assessment Subsidy" means the financial assistance the Agency provides
towards the Sewer Assessment Payment for Owners in Assessment District 88-1.
Sewer Hook-Up Fee" means the payment required to be made to an unrelated third
party in order to collapse or fill the Owner's septic tank, connect the property to the new
sewer system, and pay any fees in connection with the hook-up levied by the water
district.
Sewer Hook-UD Fee Payment" means the one-time charge for the Sewer Hook-Up Fee.
Sewer Hook-Up Fee Subsidy" means the financial assistance the Agency provides
toward Sewer Hook-Up Fee Payments.
Very Low. Low and Moderate Income Household" means Households whose Gross
Income is respectively defined as not exceeding 50%, 80% and 100% of area median
income the median income of a geographic area of the State, as annually estimated by
the United States Department of Housing and Urban Development HUD) pursuant to
Section 8 of the United States Housing Act of 1937, adjusted for family size).
DESCRIPTION
The Agency pursuant to Section 33334.2 of the California Health and Safety Code, a portion of
the Community Redevelopment Law) will utilize tax increment funds to provide subsidies to, or
for the benefit of, Very Low, Low and Moderate Income Households residing in the Cove
community and are part of the Assessment Districts see map for District boundaries). Upon
the establishment of the Assessment District, the Agency will disseminate information on the
Assessment/Hook-up Fee Subsidy Program to Owners within the District. Owners interested in
assistance are required to make application to the Agency through the Executive Director).
Agency staff will review the applications and determine eligibility based upon established
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^#: criteria. If an application is approved, the Agency staff will facilitate the payment of the
determined Sewer or Gas/Sewer Assessment Subsidy amount. The Sewer or Gas/Sewer
Assessment Subsidy will be made in the form of a one time lump sum payment that will equal
the Participant's total Sewer or Gas/Sewer Assessment Payments. The Gas and Sewer Hook-
Up Fee Subsidies will also be made in the form of a one-time lump sum payment that will equal
the Participant's total Gas and Sewer Hook-Up Fee Payments. ProDerty owners who have
already qualified for the Assessment Subsidy Program which did not include Sewer Hook-Up
Fee Subsidies must submit a Request for Sewer Hook-UD Fee Subsidy form.
ELIGIBILITY
The Assessment/Hook-up Fee Subsidy Program is available to all qualified Very Low, Low and
Moderate Income Households who are within the boundaries of the Assessment District. The
provision of subsidies is also subject to the availability of funds. The following requirements
must be met in order to qualify for participation:
a. The real property for which Assessment/Hook-Up Fee Subsidy is sought must be
developed with a housing unit or a housing unit that is under construction. Only one
property per Owner is eligible to receive a subsidy.
b. The Household's Gross Income must meet the requirements for Very Low, Low and
Moderate Income Households. The City of La Quinta's median income for a family of four,
as established by the United States Department of Housing and Urban Development HUD)
for 1989, is $32,200. Crhe median income for the City is taken from HUD's established
median income for the Riverside/San Bernardino Primary Metropolitan Statistical Area
which is adjusted for family size and is updated annually). Based upon this median income,
the following table depicts the eligible income levels for the Assessment/Hook-up Fee
Subsidy Program.
Income Category 1 Person 2 Persons 3 Persons 4 Persons
VeryLow $11,250 $i2,900 $14,500 $16,100
Low 18,050 20,600 23,150 25,750
Moderate 27,048 30,912 34,776 38,640
Income Category 5 Persons 6 Persons 7 Persons 8 Persons
VeryLow $17,400 $18,700 $19,950 $21,254
Low 27,350 28,950 30,600 32,200
Moderate 41,056 43,470 45,886 48,300
c. The Household's Total Housing Cost, when combined with the Annual Sewer or
Gas/Sewer Assessment Payment and Gas and/or Sewer Hook-Up Fee Payment(s),
exceeds the established Affordable Housing Cost for the Household's Gross Income.
d. The value of the Household's Net Assets may not exceed $225,000, excluding the value of
the property being assessed and two automobiles.
e. The Owner must record a Covenant of Affordability.
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^#: f. In the case of a Rental Household, the Owner must agree to record a Covenant of
Affordability that maintains affordable rents for the duration of the Covenant. The Agency
will monitor rent levels from time to time.
AMOUNT OF SUBSIDY
For qualifying Households, the Agency will subsidize the full amount of the Sewer or Gas/Sewer
Assessment Payment and Gas and/or Sewer Hook-up Fee Payment.
COVENANT OF AFFORDABILITY
The Assessment/Hook-up Fee Subsidy Program will be funded from the La Quinta
Redevelopment Agency's Low and Moderate Income Housing Fund. The Redevelopment Law,
which governs the use of this fund, requires the recordation of deed covenants against
properties that benefit from the expenditure of these funds. The covenants are to ensure the
continued affordability of the housing unit.
The recordation of a deed restriction in the form of a Covenant of Affordability will be required.
This Covenant of Affordability will require that the housing unit shall remain affordable to Very
Low, Low or Moderate Income Households for fifteen 15) years for both owner-occupied units
and rental units. Over the life of the covenant, Household incomes will be allowed to rise to a
level of 120% of median income, adjusted annually, and remain in compliance with the
Covenant of Affordability.
Acceleration of the Covenant of Affordability
In the event the housing unit is to be sold, payment shall be due in the amount equal to the
Repayment Amount. Provided that the housing unit and property) have been operated on a
continuous basis with all of the Conditions of Assistance, the Agency will agree to defer receipt
of the Repayment Amount in the event the prospective buyer executes and records or
otherwise agrees to be bound by and remain subject to the Covenant of Affordability for the
remainder of the Minimum Period.
Subordination of the Covenant of Affordability
The Covenant of Affordability shall contain a lien upon the Participant's property; such lien in
favor of the Agency shall be subordinate to all deeds of trust or similar instruments recorded in
favor of a bank, savings and loan association or other similar institutional lender securing
repayment of the Participant.
ASSESSMENT/HOOK-UP FEE SUBSIDY REPAYMENT
The Assessment/Hook-up Fee Subsidy may require repayment if one on the following occurs
during the period the covenant is in effect:
1. The housing unit is sold or rented at a cost that is no longer affordable to Very Low,
Low or Moderate Income Households; or
2. The housing unit is sold; or
3. The income level of the qualified Household exceeds 120% of median income,
adjusted annually.
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^#: The Repayment Amount will become due and payable should any of the three circumstances
described above occur. The repayment period i.e., the period during which repayment shall
be made) shall be no longer than immediately for rental properties and five 5) years for Owner-
occupied residences.
The Repayment Amount shall be all due and payable upon the first to occur of: 1) any failure of
one or more of the Conditions to Assistance; or 2) the sale for assignment of the property; the
date upon which either such event shall first occur shall constitute the Due Date."
UPON FULL PAYMENT THE COVENANT OF AFFORDABILITY SHALL BE RESCINDED.
MONITORING OF ELIGIBILITY
Program Participants will be required to complete a Certification of Eligibility form on a biannual
basis.
Owner*occupants will be required to state that their Gross Income does not exceed 120% of the
median Gross Income for the Riverside/San Bernardino Primary Metropolitan Statistical area.
Certification of Eligibility for Owners of rental property will include notification to the Agency
when there is a change in tenancy. The Gross Income of the original and subsequent tenants
shall not exceed 120% of the median Gross Income for the Riverside/San Bernardino Primary
Metropolitan Statistical Area. Additionally, the rental unit must remain at an Affordable Housing
Cost to the tenant.
APPLICATION AND APPLICATION PROCESS
All interested Owners are required to submit the following: 1) A completed application along
with Federal tax returns for the two previous years, the name and address of any dependent's
employer, a most recent pay stub, a monthly mortgage stub, a most recent property tax bill and
most recent utility bill and 2) A completed Certification of Eligibility Form. Applications for
Owner Occupied and Renter Households are enclosed. Owners who qualified for the
Assessment Subsidy which did not include Sewer Hook-Up Fees need only submit a Reciuest
for Sewer Hook-Up Fee Subsidy form. Upon approval of the application, the Owner and Renter
Households are required to execute the Covenant of Affordability. Please send completed
applications and written inquiries to:
City Managers Office
City of La Quinta
78-105 CaIle Estado
La Quinta, California 92253
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^#: CITY OF LA QUINTA
ASSESSMENT SUBSIDY PROGRAM
APPLICANT'S REQUEST FOR SEWER HOOK-UP FEE SUBSIDY
I, qualified for the Assessment Subsidy
Program on I am now requesting additional subsidy for the Sewer
Hook-Up Fees levied for property owners of Assessment District 88-1.
Signature Date
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