R 4497 RESOLUTION NO. 4497
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARROYO
GRANDE TEMPORARILY AUTHORIZING THE CITY MANAGER TO
AMEND AFFORDABLE HOUSING AGREEMENTS UNDER SPECIFIED
CIRCUMSTANCES
WHEREAS, the City's Inclusionary Affordable Housing regulations sets forth
inclusionary housing requirements for all residential projects over four (4) units to
include a percentage of moderate, low and very low income units; and
WHEREAS, the City has entered into several affordable housing agreements since
certification of the City's Housing Element; and
WHEREAS, as a result of the significant downturn in the housing market, the maximum
affordable sales price (hereinafter referred to as "Maximum Sales Price") calculation
required by any affordable housing agreement now often results in a Maximum Sales
Price below the original purchase price and/or above the market rate; and
WHEREAS, requiring a Maximum Sales Price below the original purchase price results
in an incentive for each seller of an affordable housing unit to simply allow foreclosure
as opposed to incurring a shortfall on the sale and the corresponding liability for the
balance of any mortgage on a go forward basis; and
WHEREAS, requiring an owner to list a deed restricted unit at a Maximum Sales Price
above the market rate eliminates the ability of the owner to sell the unit in a reasonable
time period and increases the likelihood of foreclosure; and
WHEREAS, upon foreclosure, any deed restriction requiring continued affordability of
the property recorded subsequent to the trust deed is eliminated; and
WHEREAS, foreclosures result in blight and negative economic conditions; and
WHEREAS, the City Council, in an attempt to maintain the affordable housing deed
restriction on affordable housing units and avoid foreclosures, deems that it is in the
best interest of the City to authorize the City Manager to amend any affordable housing
agreement under the specific facts and circumstances described herein.
NOW THEREFORE BE IT RESOLVED by the City Council of the City of Arroyo Grande
as follows:
1. Upon a clear showing that the seller of an affordable housing unit will incur a
financial loss if required to sell the affordable housing unit at the Maximum Sales
Price, the City Manager shall be vested with the authority to make any or all of
the following amendments to such affordable housing agreement:
RESOLUTION NO. 4497
PAGE 2
a. Upon identifying a willing buyer, the seller may be allowed to sell the
restricted property at a Maximum Sales Price up to the seller's original
purchase price;
b. If, ultimately, the affordable housing unit is converted to a market rate
unit, thereby placing no restrictions on the potential sale price, the seller
would be required to pay to the City the difference between the sale price
and the balance owed on the mortgage, after deducting customary realtor
commissions and closing costs; or
c. If the sale of the affordable housing unit is unlikely, the seller may be
allowed to rent the unit at a market rate for a period of up to five (5) years.
d. If the Maximum Sales Price exceeds the market rate for the unit, the City
Manager may waive the requirement to list the unit at the Maximum Sales
Price as a deed restricted unit for ninety (90) days.
2. The City Manager shall provide the Council with Annual Reports describing any
amendments to affordable housing agreements.
3. The City Manager's right to amend affordable housing agreements, absent
further action by the City Council, shall expire one (1) year from the date of
adoption of this Resolution.
On a motion by Council Member Ray, seconded by Council Member Guthrie, and by the
following roll call vote to wit:
AYES: Council Members Ray, Guthrie, Costello, Brown, and Ferrara
NOES: None
ABSENT: None
the foregoing Resolution was passed and adopted this 27th day of November, 2012.
RESOLUTION NO. LP-1917 •
PAGE 3
c •e-
TONY FER -
' ' ' MAYOR
ATTEST:
Xj/2t7;
`- �-KELL ETMORE,'CITY/CL KL2
`Jv�
APPROVED AS TO CONTENT:
StEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
)/),/t/`- ■
TIM,THY J. CARMEL, CITY ATTORNEY
•
•
•
•
OFFICIAL CERTIFICATION
•
I, KITTY NORTON, Deputy City Clerk of the City of Arroyo Grande, County of
San Luis Obispo, State of California, do hereby certify under penalty of perjury,
that Resolution No. 4497 is a true, full, and correct copy of said Resolution
passed and adopted at a regular meeting of the City Council of the City of Arroyo
Grande on the 27th day of November 2012.
WITNESS my hand and the Seal of the City of Arroyo Grande affixed. this 28th
day of November 2012.
L7 /1
KITTY N TON, DEPUTY CITY CLERK
•
•
•
•
•