Loading...
HomeMy WebLinkAbout070522-06.6 ADMINISTRATIVE STAFF REPORT 6.6 TO: Mayor and Town Council July 5, 2022 SUBJECT: Resolution No. 54-2022, authorizing the Town Manager to execute an amendment to the existing Resale Restriction and Option to Purchase Agreement for the below market rate single family residence located at 79 Haskins Ranch Circle BACKGROUND In December 1991, the Town Council approved Resolution No. 232-91, authorizing the execution of a Resale Restriction and Option to Purchase Agreement (“Agreement”) involving a project developed by bas of Tassajara II. The 72-unit project included 14 below market rate duet residences. The project was constructed south of Camino Tassajara and west of Rassani Drive under the approval granted to Planned Unit Development – Rezoning request PUD 90-7. The Agreement formalized the obligation to have 14 residences in the project designated, set aside and retained as moderate- income residences for a period of 20 years. The Agreement was the first affordable housing agreement that the Town and a residential builder had executed reflecting the Town’s inclusionary housing policies. One of the 14 below market rate residences sold was the unit at 79 Haskins Ranch Circle. The current owner, Kristi Anderson, purchased the property in October 2012. Upon her purchase of the property, the Town approved a revised agreement, extending the term of the agreement an additional 20 years, expiring in October, 2032. As indicated in the attached letter (Attachment B), Kristi Anderson is requesting the Town amend Section 3(b) of the Agreement to allow her to rent the residence for the period of time that she is unable to live in the property due to financial hardship. DISCUSSION Ten years after Ms. Anderson purchased 79 Haskins Ranch Circle, she has experienced financial hardship due to the diagnosis of a permeant disability, resulting in a loss of work and income. She submitted a request to amend the Agreement to allow her to rent the residence for a period of up to four years. Proposed Amendment to Existing Agreement The Town recommends Ms. Anderson’s request to amend the Agreement be authorized, 79 Haskins Ranch Circle 2 July 5, 2022 in this case allowing the residence to be operated as a rental for a period of up to four years. Such an amendment should specify that the residence be rented to a moderate- income household at a rental rate that assures that Ms. Anderson does not receive a financial windfall from being allowed to rent the residence (i.e., the rental rate should not allow Ms. Anderson to receive rent in excess of the current mortgage payment adjusted to reflect the tax advantages inherent with changing the property from an owner- occupied residence to a rental residence). In addition, the rental rate charged should be set at, or below, a rate that does not exceed 30% of the renting household’s annual gross income, adjusted to accommodate an appropriate allowance for utilities. Allowing this approach, the equity Ms. Anderson has invested into the home would remain tied up until she either returned to the residence or ultimately sells the residence under the provisions established by the Agreement. For the period of time the residence is rented, it would be occupied by a qualifying moderate-income household. Allowing the residence to be rented to a qualifying moderate-income household meets the intent of the original Agreement while allowing Ms. Anderson the opportunity to move back to the residence at a future time. To accommodate Ms. Anderson’s request to be able to rent out the residence, the existing Agreement will need to be amended. The amendment to the Agreement would need to be structured to outline the parameters of the exception to the Agreement’s “no-rent” clause. The amendment to the Agreement would also need to spell out: (1) the allowable income levels for the renters; (2) the means that the income level would be verified; (3) the allowable initial rental rate; (4) the manner in which the initial rental rate could be increased; and (5) the term the residence could be rented. Additional Changes to the Existing Agreement In addition to authorizing an amendment to the existing Agreement, it would be appropriate to make additional changes to the original Agreement to bring it in line with the most recently approved affordable housing agreements authorized by the Town. By making these changes, a new agreement would be recorded against the property. The new agreement should make the following substantive changes from the existing agreement for 79 Haskins Ranch Circle: 1.Inclusion of language that enhances the ability to re-sell the residence by including language reflecting FNMA (“Fannie-Mae”) requirements. 2.Inclusion of language that directs that the amended agreement be recorded against this individual property. In addition to these changes, additional minor adjustments should be made to reflect 79 Haskins Ranch Circle 3 July 5, 2022 changes to the affordable housing agreements that have evolved since the execution of the subject agreement in 2012. RECOMMENDATION Adopt Resolution No. 54-2022, authorizing the Town Manager to execute an amendment to the existing Resale Restriction and Option to Purchase Agreement for the below market rate single family residence located at 79 Haskins Ranch Circle. Prepared by: Riley Anderson-Barrett Associate Planner Reviewed by: Tai J. Williams Assistant Town Manager Attachments: A - Resolution No. 54-2022 B - Letter from Kristi Anderson dated March 25, 2022 RESOLUTION NO. 54-2022 AUTHORIZING THE TOWN MANAGER TO EXECUTE AN AMENDMENT TO THE EXISTING RESALE RESTRICTION AND OPTION TO PURCHASE AGREEMENT FOR THE BELOW MARKET RATE SINGLE FAMILY RESIDENCE LOCATED AT 79 HASKINS RANCH CIRCLE (APN 206-410-049) WHEREAS, in December, 1991, the Town Council approved Resolution No. 232-91, authorizing the execution of a Resale Restriction and Option to Purchase Agreement (“Agreement”) involving a project developed by bas of Tassajara II; and WHEREAS, the 72-unit project included 14 below market rate duet residences constructed south of Camino Tassajara and west of Rassani Drive reflecting the approval granted to Planned Unit Development – Rezoning request PUD 90-7; and WHEREAS, the Agreement formalized the obligation to have 14 residences in the project designated, set aside and retained as moderate income residences for a period of 20 years, being the first affordable housing agreement the Town and a residential builder executed reflecting the Town’s inclusionary housing policies; and WHEREAS, the construction of the 14 below market rate residences in the project was subsequently completed and the residences were sold, with the residences being sold to households whose household income aligned with the then current moderate income levels for a four-person household; and WHEREAS, one of the 14 below market rate residences was 79 Haskins Ranch Circle, purchased in October 2012 by the current owner, Kristi Anderson; and WHEREAS, a revised Agreement was approved at that time, extending the term of the Agreement until October 2032; and WHEREAS, the Agreement stipulates that the residence may not be rented out by the owners of the property; and WHEREAS, the current property owners have requested the Town authorize an amendment to the Agreement and allow them to rent the residence for a period of up to four years, due to Ms. Anderson’s temporary relocation due to financial hardship; and WHEREAS, this temporary relocation will move Ms. Anderson out of the Bay Area, forcing her to either sell the residence or to secure Town approval to amend the Agreement to allow her to rent the residence for the length of time she will be relocated; DocuSign Envelope ID: 1FBC4ABF-DA30-4CBE-89FC-DB074FD2E918 ATTACHMENT A PAGE 2 OF RESOLUTION NO. 54-2022 and WHEREAS, a staff report was submitted to the Town Council recommending the Council approve the request to allow the residence to be rented on a temporary basis; and WHEREAS, it was recommended that the amendment to the Agreement require the residence be rented to a household whose combined household income does not exceed 120% of the published median income (adjusted for household size) and setting the maximum rental rate at, or below, a rate that does not exceed 30% of the renting household’s annual gross income and reflecting credit for an appropriate utility allowance; and WHEREAS, amending the existing Agreement allows the intent of the original Agreement to be met (i.e., assures the below market rate unit is occupied by a qualifying moderate-income household) without placing an undue financial burden on Ms. Anderson who indicates an intent and desire to move back to the residence when financially feasible; and WHEREAS, it was recommended that additional changes to the existing Agreement be made to bring it in line with the most recently approved affordable housing agreements authorized by the Town; and WHEREAS, given the above considerations, an amendment to the original Agreement to allow the residence to be rented on a temporary basis does not set an inappropriate precedent for other below market rate units subject to resale restrictions; now, therefore, be it RESOLVED, that the Danville Town Council hereby finds that amendment of the existing Agreement to allow short term rental of the residence to a qualifying moderate- income household to be consistent with the goals and policies of the Town’s Housing Element and to be consistent with the intent of the existing Agreement; and, be it further RESOLVED, that the Danville Town Council directs that the following changes be made to the existing Agreement: 1.Inclusion of language that enhances the ability to re-sell the residence by including language reflecting FNMA requirements (“Fannie-Mae”); 2.Inclusion of language that directs that the amended Agreement be recorded against this individual property; DocuSign Envelope ID: 1FBC4ABF-DA30-4CBE-89FC-DB074FD2E918 PAGE 3 OF RESOLUTION NO. 54-2022 3.Additional minor adjustments to reflect changes to the affordable housing agreements that have evolved since the execution of the existing agreement in 2012; and, be it further RESOLVED, that the Danville Town Council hereby authorizes the Town Manager to execute an amendment to the existing Resale Restriction Agreement and Option to Purchase for 79 Haskins Ranch Circle in the form as submitted to the City Clerk, together with such changes as may hereafter become necessary, provided such changes do not materially increase the obligations of the Town. APPROVED by the Danville Town Council at a regular meeting on July 5, 2022, by the following vote: AYES: NOES: ABSTAINED: ABSENT: _____________________________ MAYOR APPROVED AS TO FORM: ATTEST: _______________________________ ______________________________ CITY ATTORNEY CITY CLERK DocuSign Envelope ID: 1FBC4ABF-DA30-4CBE-89FC-DB074FD2E918 ATTACHMENT B