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CITY COUNCIL AGENDA ITEM NO. 9



Meeting Date: June 12, 2007

Subject/Title: Adopt a Resolution approving and authorizing the City Manager to sign an Affordable Housing Agreement between the City of Brentwood and Suncrest Homes 25, a California LLC, a California Limited Liability Corporation for Subdivision 8954 (Prewett Ranch)

Prepared by: Ellen Bonneville, Housing Manager

Submitted by: Howard Sword, Community Development Manager



RECOMMENDATION
Adopt a Resolution authorizing the City Manager to sign an Affordable Housing Agreement between the City of Brentwood and Suncrest Homes 25, LLC for Subdivision 8954 (Prewett Ranch) and such other documents as may be needed to complete the transaction.

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

Ordinance 842 was adopted by the City Council on April 24, 2007 making certain amendments to Chapter 17.725, the affordable housing program.

At its meeting of January 6, 2005, the Housing Subcommittee recommended approval of the Affordable Housing Agreement with Suncrest Homes for Subdivision 8954.

BACKGROUND
Subdivision 8954 was approved (Tentative Map, Park, Open space and Trails) by the Planning Commission on August 16, 2005. The subdivision is located between Lone Tree Way on the north and Grant Street on the south. The Housing Division staff has negotiated an agreement with the Developer that meets their affordable housing obligation.

The Housing Subcommittee recommends the following approach for Suncrest Homes to meet its affordable housing obligation to the City Council for its consideration and approval:

Obligation

Section 5 of Ordinances 790 and 842 include the following phase-in exemption:
“The following residential developments shall continue to be subject to the City's phase-in partial exemption:
1. If subject to an affordable housing agreement with the City prior to December 15, 2004, any residential development of 4 or more units satisfying each of the following conditions:
a. An application for Residential Growth Management Program allocations has been deemed complete by the City.
b. A vesting tentative map or development agreement has been approved for the residential development prior to October 9, 2003.
c. The residential development's conditions of approval include a condition requiring compliance with the City's affordable housing program.
2. If not subject to an affordable housing agreement with the City prior to December 15, 2004, any residential development of 4 or more units with either:
a. An application for a Residential Growth Management Program allocation that has been deemed complete by the City between October 9, 2003, and the effective date of this Ordinance.
b. A vesting tentative map or development agreement approved between October 9, 2003, and the effective date of this Ordinance.
In accordance with the City's practice in effect prior to the effective date of this Ordinance, the residential developments specified above shall either:

1. Construct 5 percent of the total number of dwelling units within the residential development as affordable units, 70 percent of which shall be affordable to low income households and 30 percent of which shall be affordable to very low income households; or
2. If the Residential Development's average lot size exceeds 8500 square feet, pay the in-lieu fee in effect at the time of building permit issuance, 70 percent of which shall be the amount in effect for low income households and 30 percent of which shall be the amount in effect for very low income households.
This phase-in partial exemption shall sunset, and all residential developments shall be subject to the full requirements of this Ordinance, upon its effective date.”

Suncrest Development meets this criteria in Section 5, subsection 2(a) as they had a RGMP application deemed complete prior to the effective date of Ordinance 790, and they also meet the requirements of Section 5, Subsection 2(b) 2, in that the all 240 lots exceed 8500 square feet. Therefore, Suncrest Development is allowed to fee out of the affordable housing obligation at the 5% level. Their obligation is as follows:

240 units x 5% = 12 units

12 X 30% = 3.6 rounded to 4 units of very-low income
12 X 70% = 8.4 rounded to 8 units of low income

Ordinance 842 requires that in-lieu fees be paid at the time of the issuance of the first building permit; therefore the fees due at the current rate would be as follows:

4 X $ $243,536= $974,144
8 X $ 182,393= $1,459,144

Therefore, the total in-lieu fee payment would equal $2,433,288

Please note: The above fee is an estimate. The actual fee and will be calculated at the time the developer pulls the first building permit.

FISCAL IMPACT
As noted above, an estimated total of $2,433,288 will be collected as a result of the agreement at the time of building permit. As prescribed by Ordinance 842, all in-lieu fees collected are deposited into the Housing Fund. The $2,433,288 in-lieu fee payment will be used to pay for the administrative expenses of the Housing Division and will be used for affordable housing projects.


Attachments
Resolution
Affordable Housing Agreement

RESOLUTION NO.


A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD APPROVING AND AUTHORIZING THE CITY MANAGER TO SIGN AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE CITY OF BRENTWOOD AND SUNCREST HOMES 25, LLC, A CALIFORNIA LIMITIED LIABILTY CORPORATION FOR SUBDIVISION 8459 (PREWETT RANCH) AND SUCH OTHER DOCUMENTS AS MAY BE NEEDED TO COMPLETE THE TRANSACTION


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 adding Chapter 17.725 that establishes an Affordable Housing Program; and

WHEREAS, on April 24, 2007, the City Council adopted Ordinance 842, An Ordinance of the City of Brentwood Amending in part Chapter 17.725 of the City of Brentwood Municipal code and Ordinance No. 790 Relating to the City’s Affordable Housing Program; and

WHEREAS, Suncrest Homes LLC had a Condition of Approval to Subdivision 8549 to comply with the City of Brentwood Affordable Housing Program: and

WHEREAS, Suncrest Homes LLC had an RGMP application deemed compete prior to the adoption of Ordinance 790; and therefore is required to provide five percent of the units as affordable; and

WHEREAS, the Residential Development's average lot size exceeds 8500 square feet, the developer has the option to pay the in-lieu fees in effect at the time of building permit issuance, 70 percent of which shall be the amount in effect for low income households and 30 percent of which shall be the amount in effect for very low income households; and

WHEREAS, the Developer has agreed to pay in-lieu fees which are estimated to be the following amounts:

4 very-low units X $ $243,536= $974,144
8 low units X $ 182,393= $1,459,144

Total in-lieu fees - $2,433,288


NOW, THEREFORE BE IT RESOLVED that the City Council of the City of Brentwood does hereby approve and authorize the City Manager or her designee to sign an Affordable Housing Agreement with Suncrest Homes 25, LLC a California Limited Liability Corporation, in the form of Exhibit A attached hereto, subject to minor revisions approved by the City Attorney.

PASSED, APPROVED AND ADOPTED by the City Council of the City of Brentwood at a regular meeting held on the 24th day of April by the following vote:




RECORDED AT THE REQUEST OF
AND WHEN RECORDED RETURN TO:

City of Brentwood
150 City Park Way
Brentwood, California 94513
Attn: City Clerk


Free Recording Requested Per Government Code Section 27383
________________________________________



AFFORDABLE HOUSING AGREEMENT
THIS AFFORDABLE HOUSING AGREEMENT (“Agreement”) is entered into as of the ____________day of_______________, 200__, by and between SUNCREST HOMES, INC., (“Developer”), and the CITY OF BRENTWOOD and the REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD (collectively defined herein as “City”). The Developer and City agree as follows, with reference to the following facts:
RECITALS
A. Developer owns that certain real property identified as Subdivision 8954 (APN_______________ and _____________) and described in Exhibit A, attached hereto and incorporated herein by reference (the “Site”). Developer proposed to construct on the Site a single-family residential development consisting of approximately 240 detached residential units (the “Project”) (each lot, together with all improvements thereon and other rights appurtenant thereto, being referred to individually as a “Unit” and collectively as the “Units”), which Units shall be offered for sale.
B. City is acting to carry out its obligations under its General Plan, Ordinance No. 790 (Brentwood Municipal Code Chapter 17.725) (the "Ordinance") and any implementing regulations (collectively, the "City Inclusionary Housing Requirements"), and Developer agrees to comply with the City Inclusionary Housing Requirements.
C. As a project with an application for a Residential Growth Management Program allocation that was deemed complete by the City between October 9, 2003, and the effective date of the Ordinance, the Project is subject to the phase-in provisions of the Ordinance. Further, since the minimum lot size associated with the Project is over 8,500 square feet, the Developer may elect to pay an in-lieu fee to satisfy its inclusionary obligations. The Developer has elected to comply with the City Inclusionary Housing Requirements by paying an in-lieu fee, as provided in Section 5 of the Ordinance.

AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Developer and City agree as follows:
ARTICLE 1
IN-LIEU FEE
1.1 Pursuant to Section 5 of the Ordinance, Developer shall pay to the City the in-lieu fee in effect at the time of building permit issuance for twelve affordable units, four very low income units and eight low income units (the "In-Lieu Fee"). No earlier than 30 days prior to building permit issuance for the first Unit to be constructed on the Site, Developer shall request, in writing, the City's Housing Manager to calculate the applicable In-Lieu Fee. The City's Housing Manager or designee shall calculate the In-Lieu Fee within ten business days of such written request by Developer and shall notify Developer in writing of the fee amount. The In-Lieu Fee shall be due and payable to the City at the time of building permit issuance for the first Unit to be constructed on the Site.
1.2 Developer’s execution of this Agreement and compliance with the terms and conditions herein, shall be deemed full and final satisfaction of the City Inclusionary Housing Requirements applicable to the Project.
ARTICLE 2
GENERAL PROVISIONS
2.1 Conditions of Approval. This Agreement shall not supercede any conditions of approval for the Project imposed pursuant to the Ordinance or other applicable City Inclusionary Housing Requirements, but is intended to be consistent with the Ordinance and other applicable City Inclusionary Housing Requirements.
2.2 Notices. Notices required to be given to the City or to Developer shall be given by hand delivery, recognized overnight courier (such as UPS, DHL, or Fed Ex) or certified mail, return receipt requested, to the following addresses, or to such other address(es) as a party may designate from time to time by written notice to the other. All notices so given shall be deemed received (a) on the date delivered if hand delivered or delivered by overnight courier, or (b) one day after postmark if sent postage prepaid by certified mail, return receipt requested.

To City:

Housing Manager
The City of Brentwood
City Hall
150 City Park Way
Brentwood, CA 94513

To Developer:

Suncrest Homes, Inc.
300 H Street, Suite D
Antioch, CA 94509
Attn: Gordon Gravelle

2.3 Amendment. This Agreement may be amended only in writing by City and the Developer.
2.4 No Third Party Beneficiaries. Notwithstanding anything in this Agreement to the contrary, there are no third party beneficiaries of this Agreement.
2.5 Effect of Agreement. Notwithstanding anything in this Agreement to the contrary, nothing in this Agreement shall have any force or effect on any buyer of a single Unit with respect to the buyer's right, title or interest in or to such Unit.
2.6 Default.
2.6.1 Any failure by Developer to perform any term or provision of this Agreement shall constitute an “Event of Default” if Developer does not cure such failure within thirty (30) days following written notice of default from the City.
2.6.2 Any notice of default given hereunder shall specify in detail the nature of the failure in performance alleged by the City and the manner in which such failure of performance may be satisfactorily cured in accordance with the terms and conditions of this Agreement. During the time periods herein specified for cure of a failure to perform, the Developer shall not be considered to be in default of this Agreement for any purposes.
2.6.3 Any failure or delay by the City in asserting any of its rights or remedies as to any Event of Default shall not operate as a waiver of any Event of Default or of any such rights or remedies or deprive the City of its right to institute and maintain any actions or proceedings which it may deem necessary to protect, assert or enforce any such rights or remedies.
2.6.4 In the Event of Default under this Agreement, City shall have the right to exercise all of the rights and remedies, and to maintain any actions at law or suits in equity or other remedy proceedings to cure, correct or remedy such Event of Default.
2.6.5 In the Event of Default, failure by Developer to comply with the terms of this Agreement shall be grounds for the City to suspend issuance of building permits for the Project, pursue any other remedy available to it pursuant to this Agreement or applicable law and/or demand payment of the In-Lieu Fee.
2.7. Successors and Assigns.
2.7.1 Binding Effect; Covenants Run with Land. Subject to the restrictions on Transfer set forth in section 2.7.2 below, the covenants contained in this Agreement shall inure to the benefit of the City and its successors and assigns and shall be binding upon Developer and any successor in interest as owner of fee title to the Site, or any part thereof. Upon the transfer by Developer of all of its interest in the Site, all references in this Agreement to Developer thereafter shall mean and refer to such successor in interest of Developer as may then be the owner of the Site. In the event that Developer transfers the Site to more than one successor in interest, all successors in interest shall be collectively required to comply with the provisions of this Agreement and shall be jointly and severally liable for any breach or failure to comply, unless each successor and City enter into an agreement outlining the specific obligations of each successor for compliance with this Agreement. The covenants shall run in favor of City and its successors and assigns for the entire period during which such covenants shall be in force and effect.
2.7.2 Transfer by Developer of Site. Except as expressly permitted by this Section 2.7.2, Developer shall not sell, transfer, convey, assign or ground lease the Site or any part thereof or interest therein (a "Transfer") during the period between the date of recordation of this Agreement and the payment of the In-Lieu Fee without prior written approval of the City. The City's approval shall not be unreasonably withheld or delayed. This restriction shall not apply to (i) any Transfer of a Unit to an individual homebuyer, (ii) any Transfer of Developer's interest in the Site to any trust, partnership, corporation, limited liability company or other entity that is managed and controlled by Developer whether through any trust, partnership, corporation, limited liability company or other entity, or (iii) any Transfer after full payment to the City of the In-Lieu Fee. This restriction on Transfer shall not be deemed to limit or restrict the making of dedications or granting of easements or permits to facilitate the development of the Site, or to limit or restrict the sale of any individual Units. This restriction on Transfer shall also not be deemed to prohibit, limit or restrict the assignment or granting of any security interests in the Site for the purpose of securing loans or funds to be used for financing the construction of the improvements on the Site, or the exercise by any lenders of their rights and remedies, including without limitation foreclosure, under the agreements and instruments evidencing or securing any such financing.
2.8 California Law. This Agreement shall be construed in accordance with and be governed by the laws of the State of California.
2.9 Severability. Should any provision of this Agreement be found invalid or unenforceable by a court or other body of competent jurisdiction, said invalidity, unenforceability or ineffectiveness shall not affect the validity of the remaining provisions which shall remain in force to the maximum extent possible.
2.10 Entire Agreement. This Agreement contains the entire understanding between the parties relating to the transaction contemplated hereby, and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect. No provision of this Agreement may be amended, waived, or added except by an instrument in writing signed by the Parties hereto.
2.11 Incorporation of Exhibits. All exhibits referred in this Agreement are incorporated herein by reference.
2.12 Counterparts. This Agreement may be executed in counterparts, which when taken together shall constitute a single signed original as though all parties had executed the same page.
2.13 Effective Date. The Effective Date if this Agreement shall be the date this Agreement is executed by both parties.
2.14 Attorney’s Fees. In the event any party to this Agreement commences litigation for specific performance or damages for the breach of this Agreement, the prevailing party shall be entitled to a judgment against the other for an amount equal to reasonable attorneys’ fees and court costs incurred.
[Signature page follows]

IN WITNESS WHEREOF, City and Developer have caused this instrument to be executed on their behalf by their respective officers thereunto duly authorized.

Date: THE CITY OF BRENTWOOD and THE REDEVELOPMENT AGENCY OF THE CITY OF BRENTWOOD
By:
City Manager and Executive Director

ATTEST:
By:
City Clerk

"CITY"
APPROVED AS TO FORM:

City Attorney
Date: SUNCREST HOMES 25, LLC, a California Limited Liability Company
By: Suncrest Homes, Inc., a California Corporation
Its: Manager
By: ____________________________
Gorden Gravelle

Its: President

"DEVELOPER"
SIGNATURES MUST BE NOTARIZED

STATE OF CALIFORNIA )
) ss
COUNTY OF )
On , before me, the undersigned, a notary public, personally appeared ,
( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that executed the same in authorized capacity(ies), and that by signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.

Signature
~~~~~~
STATE OF CALIFORNIA )
) ss
COUNTY OF )
On , before me, the undersigned, a notary public, personally appeared ,
( ) personally known to me, or
( ) proved to me on the basis of satisfactory evidence
to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that executed the same in authorized capacity(ies), and that by signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.

Signature

EXHIBIT A
Legal Description of the Site
[To be inserted]


 

City Administration
City of Brentwood City Council
150 City Park Way
Brentwood, CA 94513
(925) 516-5440
Fax (925) 516-5441
E-mail allcouncil@brentwoodca.gov