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CITY COUNCIL AGENDA ITEM NO. 17

Meeting Date: August 9, 2005

Subject/Title: Approve a Resolution Approving the Deal Points and terms for an for Affordable Housing Agreement between the City of Brentwood and Mark Taylor for Subdivision 8808

Prepared by: Kwame P. Reed, Senior Housing Analyst

Submitted by: Howard Sword, Community Development Director

RECOMMENDATION
Approve a Resolution approving the deal points and concepts for an Affordable Housing Agreement between the City of Brentwood and Mark Taylor for Subdivision 8808.

PREVIOUS ACTION
Ordinance 790 was adopted by the City Council on January 11, 2005 amending the City of Brentwood Affordable Housing Program.

BACKGROUND
Mark Taylor received tentative map approval for Subdivision 8808 on December 7, 2004. This project consisted of the creation of seven (7) new parcels and one (1) remainder parcel. In March of 2005, Mr. Taylor approached the Housing Division to discuss satisfying the affordable housing obligation that was required for the project. Because Mr. Taylor is the first Custom Lot developer to bring a project forward that meets the requirements of being a major subdivision and thus having to satisfy the Affordable Housing obligation, staff was directed to bring forward both the specific Deal Points for Subdivision 8808 as well as the proposed method at which custom lot developers can satisfy their affordable housing obligation.

Both Ordinances 756 and 790 require residential projects that are creating five (5) or more new lots to comply with the Affordable Housing Program. The Affordable Housing Ordinance also states that smaller projects that range in size between five (5) and ten (10) lots are not required to construct an affordable unit but have the option of paying the appropriate in-lieu fee. Subdivision 8808 obtained both its Tentative Map approval and RGMP allocation prior to the approval of Ordinance 790 and thus only needs to satisfy the fee structure that was created in Ordinance 756 (shown below in the Deal Points).

Deal Points
Staff is recommending the following affordable housing obligation.

• 8 units x 10% = .8 unit or 1 units X 50% = .5 unit, say 1 unit

For projects that generate one unit and have the ability to fee out, the in-lieu fee shall be calculated as follows:

• In-Lieu Fees for 1 VL unit ($238,995) x 30% = $71,699
• In-Lieu Fees for 1 L unit ($178,992) x 70% = $125,294
• Total Fees = $196,993

Custom Lot Developers – Ten (10) Lots or Less
The Affordable Housing Ordinance requires payment of all in-lieu fees at the time of building permit issuance. With custom lot developers like Mr. Taylor, who do not intend on constructing a unit, the first building permit will be issued to either a private owner or a custom lot developer. Staff determined that the individual pulling the first permit should not pay the entire fee. The fee should either be paid by Mr. Taylor or proportionally among the individual lots. The satisfaction of the affordable housing obligation can be any of the following:

1. Payment at the time of final map approval: Mr. Taylor or the creator of the custom lots can pay the appropriate in-lieu fee based on Council’s approval of the final map.

2. Payment at the time of the first building permit: Mr. Taylor or the creator of the custom lots can pay the full in-lieu fee at the time the first building permit is issued.

3. Payment at the time of each building permit: The appropriate in-lieu fee can be calculated at the time of the first building permit issuance but divided amongst the newly created lots. Each purchaser shall pay his/her appropriate in-lieu fee amount at the time of building permit issuance.

RECOMMENDATION
Staff recommends option 3 above and has worked with our attorney in developing the procedures and processes required to implement this option. Our attorney has advised us that we will need more than just a paragraph within a project’s CC&R’s regarding the payment of the affordable housing fees. We were advised the following is recommended:
(1) An Affordable Housing Agreement with an indemnity clause whereby the developer will indemnify the City in the event of a claim raised by a property owner challenging the requirement to pay his/her portion of the in-lieu fee; and
(2) a form of In-Lieu Fee Payment agreement that each property owner will be required to sign prior to the close of escrow and which will be recorded against each lot; and
(3) a disclosure statement that the developer must have each purchaser sign that describes in simple terms the requirement to pay such purchaser's portion of the in-lieu fee at building permit issuance

In Mr. Taylor’s case, if the final map was approved and the first building permit was issued, option 3 would be the following:

• Total Fees for the project calculated at $196,993

• $196,993/7 lots = $28,142 per lot

If directed, staff will continue to work with the attorney in developing the above mentioned documents and present the package to Mr. Taylor. Upon his execution of the Affordable Housing Agreement, the agreement will return to Council for its approval on the Consent Calendar.

Please note: The above fee is an estimate. The actual fee in effect at the time of building permit will be calculated. The City also reserves the right to apply any increases to the fee that is allowed through the fee structure.

FISCAL IMPACT
None at this time.

Attachments
Resolution

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING THE DEAL POINTS FOR AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF BRENTWOOD AND MARK TAYLOR FOR SUBDIVISION 8808

WHEREAS, on January 11, 2005, the City Council adopted Ordinance 790, an Ordinance of the City Council of the City of Brentwood approving an amendment to the Municipal Code Chapter 17.725 that establishing an Affordable Housing Program; and

WHEREAS, Mark Taylor’s Subdivision 8808 had a Condition of Approval to comply with the City of Brentwood Affordable Housing Program; and

WHEREAS, Mr. Taylor has agreed that the payment of the in-lieu fees will be based on the following formula and due at the time of each building permit:
Very-Low Unit In-Lieu Fee x 70%
Low Unit In-Lieu Fee x 30%
Total Fee divided by 7 lots

WHEREAS, Mr. Taylor has agreed to entering into an Affordable Housing Agreement that contains the following:

(1) an Affordable Housing Agreement with an indemnity clause whereby the developer will indemnify the City in the event of a claim raised by a property owner challenging the requirement to pay his/her portion of the in-lieu fee; and
(2) a form of In-Lieu Fee Payment agreement that each property owner will be required to sign prior to the close of escrow and which will be recorded against each lot.
(3) a disclosure statement that the developer must have each purchaser sign that describes in simple terms the requirement to pay such purchaser's portion of the in-lieu fee at building permit issuance;

NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby approve the Deal Points and terms for an Affordable Housing Agreement with Mark Taylor for Subdivision 8808 as set forth above, which Agreement will be brought back to the City Council when its executed by Mr. Taylor.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 9th day of August, 2005 by the following vote:

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