REPORT TO COUNCIL
SUBJECT
Title
Action on an Affordable Housing Agreement with LS-SANTA CLARA, LLC for 1375 El Camino Real
Report
BACKGROUND
On May 22, 2018, the City Council approved land use entitlements for a 54-unit townhome project submitted by Citation Homes for the property located at 1375 El Camino Real. The property and entitlements have been transferred to LS-SANTA CLARA, LLC (Landsea) who will act as developer (the “Developer”). As a condition of the land use entitlements, and per the City’s inclusionary housing policy governing at the time of the entitlement, the Developer was required to enter into an Affordable Housing Agreement (AHA) to designate 10 percent of the total units (i.e., 5.4 dwelling units) as Below Market Purchase (BMP) units to be sold to qualified first-time homebuyers at an affordable price based upon Area Median Income (AMI).
DISCUSSION
The proposed AHA follows the City’s standard form and will enable and guarantee the delivery of six affordable ownership housing units within Santa Clara. The AHA fulfills an obligation placed upon the Developer through the City’s land use entitlement process.
The BMP Policies and Procedures Guidelines adopted by the City Council (“BMP Program”) provide that in the case of a fractional obligation of 5.4 units, a developer can either elect to provide six (6) BMP units or five (5) BMP units and pay a BMP in-lieu fee for the fractional units. In this case the Developer is proposing to provide six BMP units. The BMP units will be sold to households whose income range from 80 percent AMI to 120 percent AMI, in total averaging 100 percent AMI. Per the AHA the project will provide two (2) units at the 100 percent AMI level and one (1) unit each at four (4) other affordability levels. The resulting sales prices for the BMP units will be $210,000 (80 percent AMI), $339,000 (90 percent AMI), $390,000 (100 percent AMI) for two units, $441,000 (110 percent AMI), and $492,000 (120 percent AMI). To maintain long-term affordability, a 20-year restrictive resale covenant is enforced and recorded against the BMP unit. The resale restrictions within the covenant include:
1. If the home is sold within five years of acquisition, the homeowner must sell the BMP unit to another income-eligible homebuyer.
2. After five years of ownership, the homeowner can resell the home at market price; however, the City and the homeowner will share the appreciated value of the home. The homeowner's share of any appreciation beyond the Initial Market Value will increase by five percent (5%) per year for twenty years.
3. After the covenant expires in twenty years, the equity sharing requirements is exhausted and the homeowner will realize full gain beyond the Initial Market Value.
Approval of the proposed AHA will implement the City’s General Plan inclusionary housing policy consistent with the previous land use entitlements granted for the subject property.
ENVIRONMENTAL REVIEW
The potential environmental impacts of the project were addressed in an Environmental Impact Report/Mitigated Negative Declaration/ Negative Declaration prepared for the Project, which was certified/approved on May 22, 2018.
FISCAL IMPACT
In accordance with the policies of the BMP Program, the City will realize a recapture of the inclusionary subsidy value of the BMP units when resold in the future if the unit is sold within twenty (20) years of the date of the AHA.
COORDINATION
This report has been coordinated with the Finance Department and the City Attorney’s Office.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Approve and authorize the City Manager to execute the Affordable Housing Agreement with LS-SANTA CLARA, LLC, to execute amendments thereto, and to take any other action necessary to implement the requirement for the provision of six Below Market Purchase homes within a 54-unit townhome project at 1375 El Camino Real.
Staff
Reviewed by: Andrew Crabtree, Director, Community Development
Approved by: Deanna J. Santana, City Manager
ATTACHMENTS
1. Affordable Housing Agreement with LS-SANTA CLARA, LLC