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CITY COUNCIL AGENDA ITEM NO. 22


Meeting Date: March 26, 2002

Subject/Title: Amendment of KB Home California Orchard Affordable Housing Guidelines

Submitted by: Mitch Oshinsky, AICP, Community Development Director
Winston Rhodes, AICP, Senior Planner

Approved by: John Stevenson, City Manager



RECOMMENDATION

Adopt the attached resolution amending the affordable housing guidelines for KB Home, California Orchard Tract 8199.

PREVIOUS ACTION

In June 2001, the Council approved the affordable housing guidelines for KB Homes California Orchard subdivision (TSM 8199). The adopted guidelines are attached. On February 12, 2002, the Council discussed two aspects of the guidelines: 1) the length of the required affordability of each affordable home and 2) the minimum household size. Council continued the matter to March 12, 2002 and directed staff to provide additional information. On March 12, 2002, The Council directed staff to modify the minimum household requirement from three persons per household to two persons per household.

BACKGROUND

The Mayor originally requested this item be brought to Council to address the concern that the three-person minimum household size requirement described in Guideline 1 is creating a barrier for otherwise eligible households to participate in the California Orchard affordable housing program. The concern expressed is that low-income single persons or single parents with one child are currently ineligible to participate in the program. The guidelines were brought back to the Council to eliminate or modify the minimum household size requirement and allow one- and two-person low income households to participate in the affordable housing program. On March 12, 2002, the Council directed staff to modify the guidelines and reduce the required minimum household size to two persons.

At the February 12, 2002 meeting, Councilman Petrovich expressed concern about the required length of the affordability controls and wanted staff to research this matter. Specifically, he wanted to review the required 30-year affordability controls period and price appreciation potential allowed under the affordability controls. On March 12, 2002, information was provided to the Council regarding the housing price appreciation for the affordable homes. In addition, staff forwarded copies of the resale restriction agreement to the Council on March 13, 2002. No concerns have been brought to staff’s attention since March 13 regarding the appreciation potential and the length of the affordability controls. Therefore, the guidelines have not been modified with respect to these issues.



FISCAL IMPACT

None


Attachments:

1. Previously Adopted Affordable Housing Guidelines
2. Resolution Amending Previously Adopted Guidelines



Attachment 1

PREVIOUSLY ADOPTED AFFORDABLE HOUSING GUIDELINES



1) In order to qualify, the household size shall be a minimum of three persons.

2) The head of household must be a first-time homebuyer or a single parent with at least two children who has primary or 50% joint custody of the children. For purposes of the guidelines, a first-time homebuyer shall be defined as a head of household who has not owned a home during the last four years, except there shall be no time limitation for the qualified single parent. 

A. Three (3) weeks prior to the release of an affordable unit, the developer shall provide priority application processing to East Diablo Fire Protection District personnel and any individuals employed by a school district operating within Brentwood. This first priority list shall remain valid for a two-year period. 

B. After the three-week period has passed, a second priority list shall be created by the developer for any qualified household currently living or working in Brentwood.

C. After five weeks from the release of an affordable unit, a third priority list shall be created by the developer for any qualified household not included in guideline #2A or #2B. All affordable housing unit marketing literature shall be forwarded for review and approval by the City Attorney prior to distribution.

3) Household expenses devoted to all home mortgage, homeowner insurance, homeowner association payments, mortgage insurance payment, and property tax payments shall not exceed 40% of the household’s gross monthly income and all household debt shall not exceed 41% of the household’s gross monthly income, except that this criteria may be permitted to be varied depending on the household’s respective credit acceptable to participating lenders and the Community Development Director.

4) The City's intent is to provide 20 homes affordable to households earning between 50% and 80% of the Contra Costa County median income. This shall be accomplished by requiring all 20 affordable homes to be priced at a level affordable to persons earning 65% of the Contra Costa County median household income adjusted for household size and based on available mortgage interest rates .

5) KB Home shall instruct potential homebuyers that all Plan 1 homes are restricted to first-time homebuyers and single parents who meet the income and household size criteria.

6) The initial home price shall be based upon a 4-person household and will be adjusted annually based upon the most recent income limit information provided by the State Department of Housing and Community Development and available 30-year fixed mortgage interest rates.

7) No sale shall be made to any relative or employee of KB Homes in the first or second degree of kinship.

8) Thirty (30) – year resale restrictions shall be required to be recorded against the affordable housing units prior to sale unless lending requirements require a shorter resale restriction period. Under no circumstances shall resale restrictions be in place for less than twenty (20) years. Any resale restrictions regardless of the term shall be subject to the City Attorney’s approval.

9) The home sale price shall be initially set at $200,000. However, if there is difficulty qualifying eligible buyers, City staff shall return with recommended changes to the affordable housing guidelines for further City Council action.




Attachment 2


RESOLUTION NO. 


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD AMENDING RESOLUTION 2315 TO AMEND THE AFFORDABLE HOUSING GUIDELINES FOR KB HOMES CALIFORNIA ORCHARD SUBDIVISION (TSM 8199) BY DECREASING THE MINIMUM HOUSEHOLD SIZE FROM THREE TO TWO PERSONS

WHEREAS, Policies 3.1 and 3.4 of the General Plan Housing Element call for the integration of lower income households within residential areas of the City and to proactively encourage the development of affordable housing; and

WHEREAS, the General Plan Housing Element specifically identified the KB Homes California Orchard project site for the provision of lower income housing and specifies that in order to exceed the mid-range allowable density, a minimum of ten percent of the total dwelling units on the site be affordable to lower income households; and 

WHEREAS, on May 11, 1999, by Resolution No. 99-120, the City Council of the City of Brentwood approved the Tentative Subdivision Map 8199 for the subdivision of approximately 87.34 acres into 196 single family residential lots and four future office parcels, with conditions; and

WHEREAS, on May 25, 1999 the City of Brentwood, Frank Sciortino and the Estate of Theodore Sciortino and Kaufman and Broad of Northern California, Inc. entered into a Development Agreement which included provisions: requiring at least ten percent of the units in the residential project (20 units) be offered at sales prices affordable to low income households, requiring the affordable housing units be dispersed throughout the residential project, and requiring the affordable units to be constructed so as to have an exterior appearance substantially similar to the other housing units in the residential project; and 

WHEREAS, on May 22, 2001 the City Council approved guidelines necessary to implement the affordable housing provisions of the Development Agreement; and 

WHEREAS, the guideline which requires a minimum household size of three persons has served as a qualification barrier to certain single parents which decreases availability of affordable homeownership opportunities for low income households.

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby amend the Affordable Housing Guidelines for KB Homes California Orchard Subdivision (TSM8199) and decrease the minimum household size from three persons to two persons to qualify for purchase of an affordable housing unit, as shown in item number one, and two on Exhibit A attached hereto. 

PASSED AND APPROVED by the City Council of the City of Brentwood at a regular meeting on the 26th day of March 2002 by the following vote:






AYES: 
NOES: 
ABSENT: 
________________________________
Michael A. McPoland, Sr. Mayor
ATTEST:


__________________________________
Karen Diaz, CMC
City Clerk





EXHIBIT A

AFFORDABLE HOUSING GUIDELINES



1) In order to qualify, the household size shall be a minimum of three two persons.

2) The head of household must be a first-time homebuyer or a single parent with at least two children one child who has primary or 50% joint custody of the children child. For purposes of the guidelines, a first-time homebuyer shall be defined as a head of household who has not owned a home during the last four years, except there shall be no time limitation for the qualified single parent.

A. Three (3) weeks prior to the release of an affordable unit, the developer shall provide priority application processing to East Diablo Fire Protection District personnel and any individuals employed by a school district operating within Brentwood. This first priority list shall remain valid for a two-year period. 

B. After the three-week period has passed, a second priority list shall be created by the developer for any qualified household currently living or working in Brentwood.

C. After five weeks from the release of an affordable unit, a third priority list shall be created by the developer for any qualified household not included in guideline #2A or #2B. All affordable housing unit marketing literature shall be forwarded for review and approval by the City Attorney prior to distribution.

3) Household expenses devoted to all home mortgage, homeowner insurance, homeowner association payments, mortgage insurance payment, and property tax payments shall not exceed 40% of the household’s gross monthly income and all household debt shall not exceed 41% of the household’s gross monthly income, except that this criteria may be permitted to be varied depending on the household’s respective credit acceptable to participating lenders and the Community Development Director.

4) The City's intent is to provide 20 homes affordable to households earning between 50% and 80% of the Contra Costa County median income. This shall be accomplished by requiring all 20 affordable homes to be priced at a level affordable to persons earning 65% of the Contra Costa County median household income adjusted for household size and based on available mortgage interest rates.

5) KB Home shall instruct potential homebuyers that all Plan 1 homes are restricted to first-time homebuyers and single parents who meet the income and household size criteria.

6) The initial home price shall be based upon a 4-person household and will be adjusted annually based upon the most recent income limit information provided by the State Department of Housing and Community Development and available 30-year fixed mortgage interest rates.

7) No sale shall be made to any relative or employee of KB Homes in the first or second degree of kinship.

8) Thirty (30) – year resale restrictions shall be required to be recorded against the affordable housing units prior to sale unless lending requirements require a shorter resale restriction period. Under no circumstances shall resale restrictions be in place for less than twenty (20) years. Any resale restrictions regardless of the term shall be subject to the City Attorney’s approval.

9) The home sale price shall be initially set at $200,000. However, if there is difficulty qualifying eligible buyers, City staff shall return with recommended changes to the affordable housing guidelines for further City Council action.