R 4300 RESOLUTION NO. 4300
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. 4300
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 reattor
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 two (2) years from the date of
adoption of this Resolution.
On a motion by Council Member Fellows, seconded by Council Member Costello, and
by the following roll call vote to wit:
AYES: Council Members Fellows, Costello, Ray, Guthrie, and Mayor Ferrara
NOES: None
ABSENT: None
the foregoing Resolution was passed and adopted this 10 day of August 2010.
RESOLUTION NO. 93o
PAGE 3
TONY FE ,MAYOR
ATTEST
♦' , , /Adocko9&c -
KELLY W M E, CITY CLERK
APPROVED AS TO CONTENT:
STEV _N ADAMS, CITY MANAGER
APPROVED AS TO FORM:
f�
DAVID H. HIRSCH�TY ATTORNEY
OFFICIAL CERTIFICATION
I, KELLY WETMORE, City Clerk of the City of Arroyo Grande, County of San Luis
Obispo, State of California, do hereby certify under penalty of perjury, that the attached
Resolution No. 4300 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
10` day of August 2010.
WITNESS my hand and the Seal of the City of Arroyo Grande affixed this 11 day of
August 2010.
°L►_. 1 1. /
KELLY W T % t o RE, CITY CLERK